Mediclinic Slides on Concerns of Slow Recovery in Middle EastBy
Abu Dhabi business hurt by doctor exits; regulatory changes
Stock slides 3.1% in London; steepest fall since April 28
Mediclinic International Plc, the combination of the biggest private health-care providers in South Africa and Abu Dhabi, fell the most in almost a month on concerns of a slow recovery in the United Arab Emirates and weaker patient growth in Switzerland.
In the Middle East, revenue fell 8 percent in the year through March, the hospital operator said in a statement on Wednesday. Trading in the region was hurt by the departure of about 157 Abu Dhabi doctors ahead of last year’s merger with Al Noor Hospitals and regulatory changes such as a required up-front payment for some patients. Total sales rose 15 percent, excluding currency moves.
“It will take time for the U.A.E. business to recover,” Deutsche Bank analysts Marc Hammoud and Letlotlo Lenake wrote in a note, while cutting their recommendation on the stock to hold from buy. “Intensifying competitive landscapes in South Africa and Switzerland make for a challenging operating environment,” they said.
Shares of Mediclinic, which also owns almost 30 percent of Spire Healthcare Group Plc in the U.K., fell 3.7 percent to 836.50 pence as of 10:13 a.m. in London, paring the gain this year to 8.5 percent. That’s the steepest fall since April 28.
Mediclinic reported a decline in both the number of bed days sold and the average length of stay at its Swiss business, which accounts for almost half the company’s revenue. In Southern Africa, which generates 28 percent of sales, Mediclinic reported marginal increases by both those measures. South African rival Netcare Ltd. last week reported a 1 percent decline in patient days sold.
Mediclinic maintained the full-year dividend at 7.9 pence a share.
The outlook “points to challenging conditions across its platforms, while a gradual recovery in the U.A.E. over time may disappoint those who may have expected a stronger” rebound, UBS analyst Kane Slutzkin wrote in a note.