SINGAPORE (Oct 29): Raffles Medical Group (RMG) posted $16.4 million in earnings for the 3Q ended Sept, unchanged from a year ago on higher expenses.
Revenue for the quarter grew 1.2% to $121.4 million from $119.6 million previously, as the healthcare services division recorded an 8% growth in revenue due to an influx of new corporate clients and a new contract to provide Air Borders screening services.
This more than offset a decline in revenue from the hospital services division from a year ago, due in part to the refurbishment of current inpatient facilities.
Other operating income grew to $1.1 million from $0.2 million a year ago.
On the other side of the equation, staff costs fell 0.5% to $62.3 million.
Inventories and consumables used grew 4.5% to $14.5 million from $13.8 million previously.
Purchased and contracted services rose 16.3% to $10.7 million.
Depreciation of property, plant and equipment widened 25.2% to $4.5 million from $3.6 million a year ago.
In all, profit before tax grew by 2.8% to $19.1 million from $18.6 million in 3Q17.
Tax expense grew 6.2% to $2.9 million from $2.7 million in the previous year.
After accounting for the distribution of a $9 million interim dividend and payment of $24.8 million for investment properties under development, RMG’s cash and cash equivalents stood at $102.6 million as at end-Sept.
Moving forward, attracting foreign patients to the group's Singapore hospital will remain challenging, executive chairman Dr Loo Choon Yong said at the Monday results briefing.
Singapore healthcare players used to have an edge in attracting Indonesian medical tourists, he notes. But with the Singapore dollar strengthening against the ringgit and Thai baht, regional competition is stiff.
For instance, many Indonesians in Medan and Riau are now heading to the Malaysian states of Penang and Malacca for cheaper treatment, Loo adds.
In this environment, Raffles Medical will have to focus on attracting the well-heeled medical tourists.
"You will lose people who are more price sensitive, but the tycoons will still prefer to come to Singapore," Loo says. "They know the doctors here, and we believe our quality [of care] is better. You will still have customers but the volume is lower."
Meanwhile, the group expects continuing renovation works at Raffles Hospital to add more inpatient facilities in the next quarter to support the group’s growth strategies for the coming year.
In China, RMG is also anticipating Raffles Hospital Chongqing, whose construction and procurement of equipment are progressing according to schedule, to open by end-2018.
Construction of Raffles Hospital Shanghai in Pudong, which is slated to open in 2H19, is progressing well.
Shares in RMG closed 2 cents higher at $1.07 on Friday.
