Healthcare

Profile:

Mediclinic’s business consists of the provision of comprehensive, high-quality hospital services on a cost effective basis in Southern Africa, the United Arab Emirates, Switzerland and the United Kingdom.

Mediclinic International plc (Mediclinic)

Mediclinic has a March year-end and the results for the 12 months to 31 March 2022 have been equity accounted in Remgro’s results for the year under review. Mediclinic’s contribution to Remgro’s headline earnings for the year under review amounted to R1 267 million (2021: R674 million).

Mediclinic uses adjusted income statement reporting as non‑IFRS measures in evaluating performance and as a method to provide clear and consistent reporting.

The group delivered a strong financial performance compared to the prior year, driven by increased client activity. Compared with pre-pandemic levels, the volumes in Switzerland and the Middle East increased, while Southern Africa gradually recovered after a more severe impact from the pandemic. The improvement in current financial year was despite the disruption of further Covid-19 waves – with the Omicron wave proving particularly challenging from a staffing and patient scheduling perspective due to its high transmissibility and regulated self-isolation.

The group revenue was up 8.0% to £3 233 million (2021: £2 995 million) driven by the recovery in client activity and reduced restrictions on elective and non-urgent care. Compared with pre-pandemic financial year ending March 2020, group revenue was up 5% (2020: £3 083 million). Revenue increased in all three divisions compared with both the prior year and the pre-pandemic March 2020 financial year.

Adjusted EBITDA was up 22% to £522 million (2021: £426 million). Across the group, incremental Covid-19-related expenses totalled around £27 million (2021: £32 million), reflecting the ongoing treatment of Covid-19 inpatients during various pandemic waves. The group’s adjusted EBITDA margin increased materially to 16.1% (2021: 14.2%), driven by the revenue performance.

Compared with the pre-pandemic March 2020 year-end, adjusted EBITDA was down 3%. The adjusted EBITDA margin is approaching pre-pandemic levels (2020: 17.5%) while still reflecting increases in employee costs and in consumable and supply costs driven by Covid-19-related expenses and input costs associated with higher acuity revenue, the impact of which is expected to reduce over time.

A robust performance in Switzerland was underpinned by the recovery in client activity, exceeding pre-pandemic levels. Revenue for the period increased by 6% to CHF1 885 million (2021: CHF1 784 million; 2020: CHF1 804 million), exceeding pre-pandemic revenue by 4%. This was due to a good recovery in inpatient activity, up 2.1% compared with the prior year, and 2.0% compared with the pre-pandemic March 2020. Average length of stay increased by 0.4%, which in combination with the increase in inpatient activity delivered an occupancy rate of 62.6% (2021: 61.1%).

Despite the significant demands and disruption caused by the pandemic, the Southern African division delivered an exceptional performance compared with the prior year. The division continued to adapt and effectively navigate multiple pandemic waves during the year, treating 18% more non-Covid-19 admissions compared with the prior year. Revenue increased by 18% to R18 416 million (2021: R15 573 million; 2020: R17 031 million), reflecting the recovery in client activity. Revenue was ahead of pre-pandemic levels by 8%. Compared with the prior year, paid patient days (PPDs) increased by 14% and remained marginally below pre-pandemic levels, down 3%. Occupancy improved with the growth in PPDs to average 64.3% (2021: 56.3%), approaching pre-pandemic levels (2020: 67.9%). Encouragingly, February and March 2022 had the strongest occupancy levels experienced since the start of the pandemic at 69%.

In the Middle East, the group delivered a strong performance driven by inpatient and outpatient volume growth. Volumes reached new highs exceeding the pre-pandemic period, underpinned by investment over recent years to expand and enhance facilities and services in the region.

Revenue for the period increased by 9% to AED4 111 million (2021: AED3 760 million; 2020: AED3 445 million) reflecting a move towards pre-pandemic acuity levels and revenue mix.