Healthcare provider expects earnings to rise by 45% this year, could tap loan and convertible bond markets
NMC Health, the United Arab Emirates-based healthcare provider, expects earnings to increase by 45 percent this year on the back of recent and future acquisitions as well as organic growth, its deputy chief executive said on Sunday.
The company could also tap loan and convertible bond markets to supplement the near-$300 million it has available for acquisitions, Prasanth Manghat told Reuters.
NMC, like a number of other healthcare companies, is benefiting from substantial growth in the UAE healthcare sector as an increasingly wealthy population becomes more susceptible to lifestyle diseases such as diabetes.
The company reported 2015 revenue and core earnings up 46 percent and 61 percent respectively last week and Manghat said on Sunday that strong earnings growth is expected to continue into 2016 as bed count rises further. He said that earnings before interest, tax, depreciation and amortisation (EBITDA) is forecast to jump by 45 percent to $240 million on revenue up 28 percent at $1.2 billion.
"Our new acquisitions and existing businesses will help us achieve the growth projected. Further expansion in the UAE and some Gulf markets will also drive growth," he said, adding that its hospital bed count is expected to hit 885 by the end of the year, from 560 in 2015.
NMC made five acquisitions last year, four in the UAE and one in Spain, and further deals are expected.
"We are looking at the market closely for consolidation in the UAE and for knowledge-based acquisitions in Europe," Manghat said, adding that valuations could be lower this year because of broader global economic weakness.
However, NMC faces competition as rivals look to build market share, including Al Noor Hospitals' $2.2 billion reverse takeover by Mediclinic International.
Manghat said his company's acquisitions war chest consists of $150 million in cash, plus $136 million from a $825 million loan finalised with banks in early 2015, but that there is room to take on further debt, citing a net debt-to-EBITDA ratio expected to drop to 2.6 by the end of the year.
"There's a high possibility for us go for loans. We haven't tried the bond market, but with our stock doing well there's opportunity for a convertible bond," he said without elaborating.
NMC's Gulf expansion is on track, with the company planning to spend $20 million on opening fertility clinics in Oman and Qatar in the second half of 2016 after the receipt of approvals.
Assent is also expected soon for a long-term healthcare facility in Saudi Arabia, Manghat added.