Raffles Medical could lose $15m from Chongqing hospital

The hospital could open in Q4 2018 and get startup losses.

Raffles Medical Group is expecting losses of $8m-$10m for the first year and $4m-$5m losses in the second year of its Chongqing hospital operations. Breakeven is seen to come only in the third year.

According to UOB Kay Hian analyst Andrew Chow, the Chongqing hospital is on track for opening in Q4 2018, whereas the Shanghai hospital is expected to commence operations in 2H 2019. “Piling for the latter is completed and management expects the construction of the building structure to commence soon,” he added.

In terms of beds, the hospital will open in 4Q2018 with 200-300 beds, out of which 200 will be private beds and 100 would be public (Yibao) beds. Chow added, “The timing for the roll-out of the public beds is still fluid given that it may be back-loaded. To manage costs, new foreign doctors will be hired on a contractual basis and matched to revenue. All costs incurred prior to the 4Q2018 opening of the Chongqing hospital are expected to be capitalised as pre-operating costs. Currently, RFMD has six full time staff in Chongqing but more will be deployed closer to the opening in 4Q2018.”

It was a decent 2017 for Raffles Medical as its profit for the full year expanded by 0.8% YoY to $70.7m. It was pushed by growth in their Investment Holdings and Hospital Services divisions.