Mediclinic statement - Revenue down, cost cutting going well

Mediclinic produced a trading update at the get go on Friday that the market received favourably, the stock was up two and a half percent. Remembering however that the stock took some heat on Thursday, during that session the share price sank five percent. Hmmm .... if the market knew this was coming it could have been some positioning of some sort, call me a sceptic on share prices moving heavily on larger volumes ahead of an announcement. The trading update is titled Trading update and Middle East integration.

The company has been able to save more money than they initially thought in the integration process with their facilities and those of Al Noor. There have however been some issues in Abu Dhabi, a loss of quality staff before the integration and the inability to source quality in the region is understandable. The lead health insurer (Daman) in the region has no doubt been under some pressure, a certain membership of the scheme has been forced to implement a 20 percent co-payment when using private healthcare in the UAE, which as Mediclinic says "is likely to have an impact on patient mix and volumes."

Lastly, and again understandably so with the deal pending, there is a delay in a 40 bed facility in Al Ain (Southern Abu Dhabi, the 4th largest city in the Emirates), which will be commissioned in October this year. With all these issues swirling around, Mediclinic Middle East (the expanded company) is expected to deliver "low to mid-single digit revenue growth and underlying EBITDA margins of mid to high teens with performance being materially second half weighted."

For their other two businesses, trading remains inline with expectations, i.e. in Switzerland and South Africa, all is good in the hood. Whilst this is an early look into the first six months as a UK listed entity, the half year only ends at the close of this month. Results themselves are only expected 10 November and another trading update will provide more clarity in due course, we should expect that in the last week of November.