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Mediclinic nudges up guidance after strong second half for its Middle East division

The turnaround at the Middle East division is progressing well while the Swiss division, which was affected by regulatory changes, is performing in line. The South African division saw second-half revenue growth that was ahead of expectations.
Care worker and patient
Mediclinic has a 29.9% investment in Spire Healthcare Group

Mediclinic International Plc (LON:MDC), the international private healthcare services group, cheered the market Wednesday by raising profits guidance.

Driven by a significant second-half improvement from the group's Middle East division, management said the group expected to deliver adjusted financial results for the year to the end of March 2018 that are marginally ahead of expectations.

On a constant currency basis, revenue is expected to be up by around 2% year-on-year and adjusted underlying earnings (Ebitda) are expected to be flat.

Factoring in beneficial currency effects, revenue is expected to show a 4% increase to around £2.9bn and adjusted Ebitda by around 3% to £500mln or so.

"We are succeeding with the turnaround of the Abu Dhabi business and laying the foundation for long-term, sustainable performance,” claimed Danie Meintjes, the group's chief executive officer.

“The Middle East division is now entering an expansionary phase that we expect will drive a strong increase in revenue and improvement in margins over time. In Abu Dhabi, the growth will be driven by an improved operating performance in the existing business and strategic expansion projects at the Mediclinic Airport Road, Mediclinic Al Noor and the new Mediclinic Western Region hospitals,” Meintjes added.

In Dubai, the group expects that the ongoing performance of the existing business will be supported by significant growth from the new 182-bed Mediclinic Parkview Hospital, which is scheduled to open six months earlier than expected in October 2018.

There was also good news from South Africa, where the growth in revenues in the second half of the financial year just ended was ahead of expectations.

In Switzerland, the Hirslanden division performed in line with expectations as it began to absorb the initial impact of regulatory changes.

“The demand for the provision of quality healthcare services continues to increase driven by factors including an ageing population, growing disease burden and new technologies. Mediclinic, as the largest independent pan-EMEA private healthcare services group with market leading positions across all our operating divisions, is well positioned to benefit from these trends. Through our relentless focus on patient safety, excellent clinical performance, and sustainable and efficient operating practices, Mediclinic expects to continue to create long-term shareholder value," Meintjes said.

The shares were up 5.9% at 661.4p in lunchtime trading.

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