LONDON: The UAE-based private health care operator NMC Health is looking to further expand into Saudi Arabia, buoyed by strong revenue growth and strategic acquisitions made in the first half of the year.
The company reported on Monday a 20.2 percent increase in revenue in the first six months of the year, to reach $932 million. Healthcare revenues alone rose by 25.8 percent to $706 million. Net profit also rose to $116.7 million, a 19.3 percent increase on the same time period the year before.
The stock was up more than 3 percent in early afternoon trade in London.
The results met with analysts’ expectations, who continue to be upbeat about the company’s prospects.
“These are good results from NMC Health and the positive outlook has clearly been well received by the market. The shares are up 5 percent in early trading following a strong run already this year,” said analyst Ian Forrest at the UK-based The Share Center.
“NMC’s impressive H1 results demonstrated that it continues to deliver its operational and strategic targets,” said Charles Weston, senior equity research analyst at Berenberg, in a note on Monday.
“We had projected 20 percent revenue growth and a 32 percent rise in EBITDA (earnings before interest, tax, depreciation and amortization), and both were met.”
Acquiring new assets and growth in existing home markets helped drive the increase in revenue, said Prasanth Manghat, chief executive officer, in a statement on Monday.
“The first half of 2018 saw NMC continue to demonstrate strong organic growth alongside complementary acquisitions, resulting in the realization of improved financial results,” he said.
The health care operator has made a number of acquisitions in the UAE and Saudi Arabia over the last year as it looks to capitalize on Kingdom’s health sector privatization plans.
Earlier this year, it completed the acquisition of the Chronic Care Specialist Medical Center in Jeddah. It also obtained an 80 percent stake in the Riyadh-based Al Salam Medical Group in April 2018.
The company took its first steps into the cosmetics market this year, acquiring a 70 percent stake in the Dubai-based CosmeSurge, which has an expanding network of clinics throughout the UAE.
In June, NMC signed a joint-venture agreement with the Saudi Arabian Hassana Investment Company — the investment arm of the the state-backed pension fund, General Organization for Social Insurance.
It is a move which is expected to “substantially” increase the company’s expansion in the Kingdom.
“Our previously announced agreement with Hassana Investment Company to form a joint venture, good macro-economic conditions in the health care sector in Saudi Arabia, and a strong country management team provides an exciting platform from which our Saudi Arabian business will be grown further,” said Manghat.
The JV is anticipated to become the second largest health care operator in Saudi Arabia in terms of the number of beds, according to a company statement. It is due to be completed in the fourth quarter this year, and a management team are in place in the Kingdom.
NMC’s planned expansion into Saudi Arabia will be further supported by the $450 million convertible bond it issued in April.
The bond forms part of the company’s strategy to retain its recently-won place on London’s FTSE 100 index. It was one of the first Middle Eastern companies to join the index when it qualified last September. It first listed on the London Stock Exchange in 2012.
The company’s growth this year has been also attributed to organic growth in the UAE with the increase in the number of operational beds at the NMC Royal
Hospital in Abu Dhabi as well as the introduction of mandatory health insurance in Dubai last year.
Health care is seen as a lucrative sector in the Gulf due to its relatively wealthy population becoming increasingly at risk of problems related to obesity and diseases such as type 2 diabetes.