Raffles Medical Group sees 63.8% fall in second-half profit

SINGAPORE – Integrated private healthcare provider Raffles Medical Group saw its net profit drop 63.8 per cent to $30.3 million in the six months ended Dec 31, 2023, from $83.7 million in the year-ago period.

This was on the back of Covid-19-related activities being discontinued in the 2023 financial year, the group said on Feb 26.

The company is cautiously optimistic in its 2024 outlook, said executive chairman Loo Choon Yong.

“Despite geopolitical and economic headwinds, we see a growing demand for quality healthcare services in Singapore and the region,” he said.

Dr Loo added: “Our operational strengths and agility enable us to meet the evolving healthcare and wellness needs of those we serve and care for in Asia.”

The group said it will continue to embark on transformative growth strategies and build on its existing strengths through its network of hospitals and clinics across 14 cities in Asia.

Revenue declined 18.6 per cent to $336.2 million in the second half of 2023.

Full-year revenue dropped by 14.1 per cent to $706.9 million.

Meanwhile, net profit for the full year fell 37.1 per cent to $90.2 million, down from the $143.2 million recorded in 2022.

Earnings per share stood at 4.85 cents for the full year, down from 7.71 cents in 2022.

The directors recommended a final core dividend of 2.4 cents per share.

Even though net profit has fallen, Dr Loo said in a briefing on the results that the company has still grown in 2023, compared with 2019, the last set of full-year results before the pandemic, which he called exceptional.

“It’s just that with Covid-19, suddenly, you’ve got to do a lot more things, but those things will not go on forever,” he said.

But he added that the pandemic period also taught the group many lessons, such as learning to be very agile and flexible, managing to open vaccination centres, operating the lab round the clock and dealing with swab tests. These skills and ability to quickly mobilise manpower remain, he said.

The group continues to work with the Ministry of Health to operate step-down care facilities at the Singapore Expo and Raffles Hospital Singapore, with 176 additional beds dedicated to the transitional care facilities programme.

These facilities were set up during the pandemic to prevent hospitals from being overwhelmed, but are being retained now for medically stable patients from public hospitals waiting for long-term care arrangements, such as home or nursing home care.

But another challenge that the group faces now is the loss of foreign patients due to higher healthcare costs, inflation and the strong Singapore dollar against regional currencies, said Dr Loo.

Instead, the group is expanding in the region, bringing its services through hospitals and medical centres to regional patients.

It is positioning itself for growth in China, noting that its hospitals there are getting better known and recognised by expatriates and local communities, with growing patient numbers.

Revenue for the China region grew 18.1 per cent to $59.3 million in the 2023 financial year, from $50.2 million in 2022, although the hospitals in Shanghai and Chongqing are still in the developmental phase and continue to incur losses, the group noted.

To strengthen its presence in Vietnam, the group also entered into a strategic partnership to manage the American International Hospital in Ho Chi Minh City.

It also expects to expand its footprint in Japan, as it completed an acquisition of the remaining 49 per cent of its Japanese subsidiary from its joint venture partner in January.

The subsidiary operates Raffles Medical’s medical centre in Osaka.

Dr Loo said it will be adding more branches in regions such as Tokyo in the next two years.

Moving forward, Raffles Medical said it expects to bring in more specialists, family physicians, nurses and allied health professionals to strengthen the breadth and depth of its capabilities across all its operations.

It will also continue to fine-tune its capacity management strategies, including the enhancement of its teleconsultation platform, to handle patient growth efficiently and enhance patient experience, it said.

“Despite a possible slowing down of economic growth, the group sees a growing demand for high-end healthcare services in the region and will continue to explore new business opportunities regionally,” it said.

Shares of Raffles Medical closed four cents lower at $1.01 on Feb 26.