Abu Dhabi-based Al Noor Hospital Group yesterday reported a 21.6 per cent increase in operating profit to US$75.1 million last year as it recruited more physicians, expanded services and added medical centres.
However, net profit increased by a marginal 2 per cent to $61.7m.
The company said the difference was due to one-time costs last year, including IPO expenses and “a write off of unamortized facility cost”.
The underlying earnings before interest, taxes depreciation and amortization rose by 16.9 per cent to $82.8m.
At the end of last year, the group’s net cash position was $107.4m and an unutilised $82m for future acquisitions, capital expenditure and working capital.
Al Noor’s initial public offering on the London Stock Exchange in June raised $342m.
It also announced a dividend of 9 pence per share.
“The growth driver for last year was recruitment of doctors, which eventually contributed to the 11 per cent increase in outpatient volumes, and 13.7 per cent increase in inpatient volumes, and we commissioned three new medical centres last year,” said Sami Alom, the chief strategy officer at Al Noor.
Al Noor, which has three hospitals in its portfolio besides medical centres, reported 1.67 million outpatients and 40,475 inpatients last year, an increase of 13.7 per cent over 2012.
It also focused on new services such as reconstructive surgery and paediatric cardiology.
The group added 120 revenue-generating doctors last year, a 34.3 per cent increase over the previous year. Of these, 42 were from two acquisitions.
Revenue-generating physicians are defined as those to whom patients would go directly as the primary contact rather than being referred.
The group said last year the target was to add 90 to 100 doctors.
Wage increase and attrition rate among doctors were among the challenges, the company noted in its filing.
“Last year, there was a wage increase of 7 to 8 per cent for doctors, and will continue this year,” Mr Alom said. “The attrition rate was 15 per cent last year, and that is equal to that of 2012.”
This year, he expects the company to recruit 75 to 80 revenue-generating physicians.
Last year, Al Noor acquired Manchester Clinic in Jumeirah, a polyclinic that marked Al Noor’s entry into Dubai, and Al Madar Medical Center in Al Ain, which specialises in dentistry and cosmetic surgery.
At the end of this month, the company will open a medical centre in Baniyas in Abu Dhabi, its second this year after a previous one in Al Bateen in January.
It costs about $2m to fit out a medical centre, Mr Alom said.
These will bring Al Noor’s total number of medical centres to 12. Last year, it opened one at Al Mamoura in Abu Dhabi, Sanaya in Al Ain and Muscat in Oman.
It expects to open two more medical centres in Abu Dhabi by the end of the year. While the locations are not yet decided, the company is looking at a mix of residential and labour camps.
“Outside Abu Dhabi, we are interested in Dubai, and the compulsory health insurance makes it even more appealing than it was before,” Mr Alom said. “We are looking at acquisitions primarily to grow.”
In February it completed its acquisition of Gulf International Cancer Center for $21.8m, billed as Abu Dhabi’s only private cancer treatment centre.
It is also looking to manage a 40-bed hospital in Al Ain that will be commissioned by the end of 2016. Al Noor will not own the land or the building, and is expected to spend about $20m for the fit-outs in 2015.
The Deutsche Bank analyst Marc Hammoud has a “hold” rating on Al Noor’s shares.
“We still believe that Al Noor is proactively working on some bigger [merger and acquisitions] that are likely to materialise in first half of this year, in Dubai in particular,” he wrote in a note. “The company has also been looking at some sites in Sharjah to potentially start a greenfield medical centre.”
Shares of Al Noor were trading at 876 pence at 4:50pm UAE time, down 1.57 per cent from Friday’s close. The shares are down 2.4 per cent since the start of the year.
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