Sickly bankers push Raffles Medical healthy bottom line

New MBFC Clinic part of strategy.

Looking for the wealthy unhealthy is not a bad strategy as far as running a hospital group goes, and is exactly what Raffles Medical is doing with a rising number of corporate contracts helping boost its patient volume.
Of course the wealthiest potential patients are in the glitzy CBD areas like MBFC which is why Raffles is opening a new mega clinic there to service patients who are on its corporate program.

The company is pursuing a ‘volume first, pricing second’ strategy and an expanding clinic network to ensure it secures the corporate contracts it wants to keep growing.

Here is more from CIMB's Gary Ng:

Higher patient load and patient acuity characterised the results. The increase in patient load from the expansion of the clinic network and more corporate contracts secured are fuelling growth. This is also helped by the higher volume of healthcare insurance services seen in 1Q14 as well as first fruits from the decision to add on more specialist consultants to its group practice late last year. 

As a result, the hospital and healthcare services divisions increased revenue by 4.8% yoy and 14.3% yoy, respectively.

Progressive increase in dividends 

The group finished 1Q14 in a solid net cash position of S$93m, having invested S$186m in the purchase of properties and capex for expansion during the quarter. A robust balance sheet and strong free cash flow, with some leverage, will ensure that the group has the ability to fund the extension project and its Holland Village project (total c.S$270m investment capex) without sacrificing a progressive increase in dividends.

Volume key to sustainable growth 

Management gave strong insights into its philosophy of continuous revenue growth through managing volume growth, then patient charges. The medical centre at Marina Bay Financial Centre (MBFC) is expected to be operational by June 2014 and will offer a more comprehensive range of services to patients, further enhancing 2H14 healthcare services revenue.