Mediclinic shares surge on change to Abu Dhabi co-pay rules

Shares in healthcare providers Mediclinic and NMC Healthcare surged yesterday, following the removal of insurance co-pay requirements for Emirati patients in Abu Dhabi.

Sheikh Mohammed bin Zayed, Crown Prince of Abu Dhabi and Deputy Supreme Commander of the Armed Forces, ordered on Wednesday that Emiratis holding Thiqa health insurance cards would no longer be required to pay 20 per cent of private treatment costs.

The 20 per cent co-pay arrangement was introduced in July of last year.

Shares in South Africa’s Mediclinic, which acquired Abu Dhabi’s Al Noor Hospitals Group last year, soared by as much as 21.5 per cent in London yesterday, eventually closing up 17.5 per cent at 859 pence.

The company’s chief executive, Daniel Meintjes, earlier this month said that the healthcare group’s profitability had been dragged down by the new payment requirements in Abu Dhabi.

“The group awaits to receive precise details of the changes from the Health Authority Abu Dhabi,” Mediclinic said in a statement on its website yesterday.

“Mediclinic will continue to monitor the regulatory environment and the extent to which these changes will affect the operating platform.”

The investment bank Jefferies said in a research note that Mediclinic “had greater exposure to this reform given a greater focus on Thiqa patients, so it should see a greater benefit, but we await details as to the expected effect at its FY Results on 24 May”.

JP Morgan upgraded the stock to overweight yesterday, raising its target price to 860 pence.

NMC shares, which likewise are listed in London, finished up 2.2 per cent at their highest ever close of 1,955 pence.

“The benevolence of the rulers of Abu Dhabi, and of this country at large, is known to the world,” NMC Health’s chief executive, Prasanth Manghat, said in a statement.

“This is a wise step in the right direction which promotes public-private partnership.”

Mediclinic acquired Al Noor to expand its footprint in the region, setting it up as the main competitor of NMC. Abu Dhabi’s NMC said last month that it had a profitable year in 2016 despite the new co-pay regulations.

Despite regulatory challenges, the private healthcare sector remains poised for growth amid rising populations and a strain on government health care, according to analysts at Alpen Capital, a Dubai investment bank.

Sheikh Mohammed’s announcement of the co-pay scheme’s cancellation coincided with an order for the establishment of a specialist medical college and a healthcare city in Abu Dhabi, to strengthen the emirate as a destination for medical tourism and services.

* with Bloomberg

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