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Mediclinic jumps as profit fall likely to be better-than-feared

Full-year results are due out next month, and Mediclinic expects underlying earnings to fall by 3.5%, although analysts had thought they might tumble by as much as 4.8%
hospital
Recent regulatory changes in Switzerland have dented margins in its Hirslanden subsidiary

Private hospital operator Mediclinic International PLC (LON:MDC) has braced investors for a 3.5% fall in underlying profits when it publishes its full-year results in a month’s time.

But shares jumped 7% to 324.7p in early deals on Wednesday as the profit fall wasn’t as bad as analysts had feared.

READ: Mediclinic reports first-half profits drop

Underlying earnings (EBITDA) are expected to fall 3.5% year-on-year (2018: £515mln).

That is despite a 2.0% rise in revenue (2018: £2.87bn), with growth in all regions, including Switzerland, South Africa and the Middle East.

The drop-off in profitability comes amid a “challenging healthcare environment”, with regulatory changes in the Swiss healthcare market denting margins in that region by two percentage points.

Margins were also under pressure in the Southern Africa business, although they held steady in the Middle East.

Results in line with bosses’ expectations

As for Mediclinic’s share of the profits from its 29.9% stake in Spire Healthcare Group PLC (LON:SPI), that is expected to total £2.7mln (2018: £2.8mln).

“Our group results for the 2019 financial year were in line with market expectations in a challenging healthcare environment,” said chief executive Ronnie van der Merwe.

“I am encouraged by our operational progress this year, delivering on our strategic objectives. We executed against our growth strategy with investments across the continuum of care in all regions.”

Shares rose 5.5% to 320p in early deals on Wednesday.

-- Updates for share price --

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