Raffles Medical buys regional clinic stakes

Raffles Medical is building a hospital in Shanghai to serve the top 10 per cent of the area's income bracket.
Raffles Medical is building a hospital in Shanghai to serve the top 10 per cent of the area's income bracket.PHOTO: RAFFLES MEDICAL GROUP

With 10 clinics acquired, firm hopes to raise share of overseas turnover to more than 50%

Private healthcare provider Raffles Medical Group has acquired stakes in 10 clinics around the region as it seeks to increase revenue from overseas.

The group hopes to lift turnover from outside Singapore from below 10 per cent now, said executive chairman Loo Choon Yong at a briefing yesterday.

"One day, I don't know when, (but) as soon as possible I hope, our total revenue will be more than 50 per cent from overseas," he added.

  • AT A GLANCE

  • NET PROFIT:

    $15.6 million (+1.2%)

    REVENUE:

    $101.5 million (+7.4%)

The group's 55 per cent share of the 10 clinics in China, Vietnam and Cambodia acquired on Oct 16 will contribute 10 per cent of its sales next year, Dr Loo said.

They were run by international medical assistance firm International SOS and will be operated by Raffles Medical "in due course". Raffles Medical now has outlets in 13 cities in five countries.

Raffles Medical also expects to finish building a hospital in Shanghai by 2018 that will aim to serve the top 10 per cent of the area's income bracket, added Dr Loo, who was speaking at a briefing on the firm's third-quarter results.

"Around Shanghai, in the delta area, (there is a) population of 400 million. They're all connected by fast train, (and can) get to Shanghai within two hours," he added.

The size of the top 10 per cent of income earners is 40 million, that is more than seven times Singapore's population, he noted. "(There will be) plenty of work to do," he added.

Raffles Medical reported yesterday that net profit rose 1.2 per cent to $15.6 million for the three months to Sept 30 compared with the same period a year ago, while revenue increased 7.4 per cent to $101.5 million.

A "strong performance" from the hospital services division was offset by higher depreciation and operating lease expenses. Increased costs from opening new facilities and clinics also affected profit, it said.

Revenue from hospital services improved 11.7 per cent from a year earlier, with turnover from healthcare services expanding 3.5 per cent.

Dr Loo noted that staff costs had increased at 6.6 per cent in the quarter, a slower rate than that for revenue. This reversed a trend in the first and second quarters, where costs increased quicker than sales, he said, noting that such costs comprise about 50 per cent of every dollar earned from a patient.

Earnings per share for the quarter was 2.72 cents, down from 2.74 cents last year, while net asset value per ordinary share was 102.06 cents as at Sept 30, up from 95.5 cents as at Dec 31 last year. The group did not declare a dividend.

Raffles Medical said the more measured pace of economic growth in Singapore and the region may have a dampening effect on demand.

The results were announced yesterday morning. Raffles Medical shares closed unchanged at $4.39 yesterday.

A version of this article appeared in the print edition of The Straits Times on October 27, 2015, with the headline 'Raffles Medical buys regional clinic stakes'. Print Edition | Subscribe