Mediclinic falls after impairing Swiss operation. The private hospitals group says regulatory changes are significantly

impacting the healthcare market in Switzerland and all operators are affected.

Mediclinic has slumped into a loss after it wrote down the value of its

investment in Switzerland's Hirslanden by 98 million and took a non-cash

impairment on Spire Healthcare in the UK.

Following a recovery in the United Arab Emirates, the private hospitals group

now faces issues in Switzerland due to regulatory changes which have impacted

all healthcare providers. It said the combined effects of tariff reductions

and a less favourable insurance mix had a big than expected impact on results

from Hirslanden.

Mediclinic reported a 1% decline in revenue to 1.39 billion for the six months

to end-September in constant currency terms as growth in Southern Africa and

the Middle East was offset by a weaker performance in Switzerland. Hirslanden

also weighed on earnings before interest, tax, depreciation and amortisation

(EBITDA), which fell 8% to 213 million. Operating profit fell 71% to 39

million after the Hirslanden impairment and was down 15% on an adjusted basis

at 137 million. It reported a loss of 168 million, reflecting a non-cash

impairment charge on its equity investment in Spire. Adjusted earnings per

share fell 9% to 10.3p. It's maintained its interim dividend at 3.2p.

The rapidly implemented regulatory changes regarding outpatient tariff

adjustments and outmigration of care in Switzerland are significantly

impacting the healthcare market in that country," CEO Dr Ronnie van der Merwe

said. "Steps have been taken to improve the current financial performance

through securing revenue growth, reducing costs and driving efficiency savings

in different areas of the business."

Mediclinic said Hirslanden was likely to report moment revenue growth for the

full year, while growth in Southern Africa would be driven by an expected

increase in bed days sold of between 1% and 2%. In the Middle East, it expects

revenue growth in the high single digits as additional bed capacity comes

online.

Its shares fell 5.2% to 6319 rand yesterday.

At 63 rand, Mediclinic is down 70% since the high of 214 rand reached post the Al-

Noor transaction in Jun'16. Seventy percent. That's real wealth destruction.

-- Karin Richards (@Richards_Karin) November 15, 2018

Mediclinic Switzerland much worse than expected had to take an impairment on

investment. While one theme supports medical companies: living longer, the

second theme unfortunately may be bigger: government initiatives to reduce

costs and grow cover

-- Wayne McCurrie (@WayneMcCurrie) November 15, 2018