Egypt: Mixed H1 results for Egyptian hospitals

Egyptian healthcare companies have released their H1 figures, showing a distinctly mixed bag of results across the board.

Cleopatra Hospitals Group (CHG), the country’s largest private hospital operator, has reported a 27% decline in profits.

This should not have been a surprise. Ahmed Abdelnaby, analyst at Shuaa Secuities, has long warned about the threat of impairments. ‘According to management, this impairment is part of the company’s strategy to move away from clients with weak credit profiles, which we believe should help improve receivables collection going forward,’ he said.

CHG admitted that impairments were at the heart of the decline in profits. It acknowledged them ‘as the group works to enhance the quality of its claim collection and revenue cycle management.’ Investors should take heart from the fact that the group’s claim collection procedure has already started to bear fruit with impairments down 70% quarter-on-quarter.

As it was, profits stood at E£97.7m (£6m) for the first six months of the year, down from E£133.4m in the same period last year. Revenues were up 22% to E£825m over the same period.

Last month, CHG signed a E£360m deal to develop Al Nahda Hospital in Beni Suef in its second significant deal within a couple of months. And in June it acquired a majority stake in one of Egypt’s largest IVF fertility centres.

The outlook for the rest of the year looks rather more positive. ‘As we head into the second half of the year our focus will shift towards integrating the newly acquired facilities into our established operational model to ensure they deliver the quality of care patients have come to expect from CHG hospitals,’ said chief executive Ahmed Ezzeldin, adding that he expected to deliver an ‘even more impressive second half’ based on strong organic and inorganic growth.

Cleopatra shares have been punished by investors on the Egyptian Exchange. They slipped 3.3% last week to close at E£5.95.

It was rather better news for Nozha International Hospital. At the beginning of August, the operator of a single international hospital in Cairo, reported a 44.4% jump in H1 profits.

It did well to shun Cleopatra’s takeover attempt last year. Its offer was turned down by the The Financial Regulatory Authority in June.

Net profits increased to E£27.8m from E£19.24m on revenues that rose to E£101.21m from E£89.3m.

Alexandria Medical Services had similarly good news when it reported its H1 figures in mid August. The company, which is best known for the Alexandria New Medical Centre in Alexandria, reported a 12.5% bump in profits to E£12.8m, although revenues fell from E£80.2m to E£52.1m.