Raffles Medical Group’s (SGX: BSL) First Half of 2021 Earnings: Strong Business Growth

Raffles Medical Group Ltd (SGX: BSL) is a Singapore-grown private healthcare provider.

Other than having operations here, it also offers comprehensive medical services in 13 other cities spanning five Asian countries. 

Earlier this morning, Raffles Medical announced its financial results for the 2021 first-half (six months ended 30 June 2021), which looked extremely healthy despite the challenges brought about by the COVID-19 pandemic. 

Let’s find out more about the company’s earnings and how it’s positioning itself for growth.

TL;DR: Raffles Medical’s Earnings Grew Over 100%

Here are some highlights from Raffles Medical’s 2021 first-half results:

• Revenue for the period rose 42.4% year-on-year to S$343.8 million.
• Net profit more than doubled to S$39.4 million.
• The healthcare company’s balance sheet remains healthy and it continues to generate strong free cash flow.
• Raffles Medical expects to pay a total dividend of not less than 2.5 cents per share for 2021.

Revenue Up Despite the Pandemic

For the first half of 2021, Raffles Medical’s revenue rose 42.4% year-on-year to S$343.8 million. 

The increase was thanks to higher revenue from its Healthcare Services and Hospital Services business segments. 

Revenue from Healthcare Services comes from the operations of medical clinics and other general medical services. This segment also provides health insurance and is involved in management and consultancy services.

Next, the Hospital Services segment offers specialised medical services and operates hospitals.

The Healthcare Services division’s revenue climbed 65.4% while revenue from the Hospital Services grew 35.4% for the latest period. 

Raffles Medical actively supported the Singapore government in its COVID-19 vaccination and Polymerase Chain Reaction (PCR) swab tests initiatives and that contributed to higher revenue. 

With that, Raffles Medical’s net profit grew by 128.7% year-on-year to S$39.4 million.

Balance Sheet Remains Healthy

A strong balance sheet is the trademark of a healthy company. In that aspect, Raffles Medical ticks the right box. 

As of 30 June 2021, the company had S$215.7 million in cash and cash equivalents and S$211.8 million in total debt. 

This translates to a net cash position of around S$4 million.

Companies with strong balance sheets will be able to ride through tough economic conditions relatively unscathed, compared to those bogged down by huge amounts of debt.

Raffles Medical also generated strong free cash flow for the latest period, which came in at S$43.2 million, up from S$7.4 million a year ago. 

Free cash flow is money that can be used by Raffles Medical to reinvest into its own business, pay off its borrowings, buy back its own shares, or dish out dividends to its shareholders.

It’s commendable that the healthcare outfit is able to generate strong free cash flow, especially amid a harsh operating environment.  

Dividend Update

Starting from this year, Raffles Medical would consolidate its interim and final dividends into a single annual core dividend of up to 50% of its average sustainable annual net profit. 

The move was announced in February 2021. 

Raffles Medical may consider paying a special dividend after the consideration of the core dividend payment, share buybacks, financial resources needed for continued growth, and gearing level. 

For 2021, which is a transition year, Raffles Medical expects to pay a total core and special dividend of not less than 2.5 cents per share.

The company is not declaring any interim dividend due to the above arrangement.

Looking Ahead

Raffles Medical opened its newest hospital in China — Raffles Hospital Shanghai. 

Located in Qiantan, Pudong, the hospital will provide a suite of comprehensive medical services ranging from 24/7 emergency medicine, inpatient and outpatient services that include family medicine, cardiology, obstetrics and gynaecology, and dentistry. 

The 12 storey facility with a capacity of 400 beds will start receiving patients starting today. 

Its other hospitals in China — Raffles Hospital Chongqing and Raffles Hospital Beijing — “continue to see improved patient loads amidst an improving operating environment”.

Raffles Medical offers a teleconsultation service, Raffles Connect, as well.

It has since been expanded to include specialist services and is also open to foreign patients. 

With the enhancement, Raffles Medical’s team of specialists can continue providing medical care to existing patients residing outside of Singapore.  

Raffles Medical said that it expects to be more profitable in 2021 as compared to last year, barring any unforeseen circumstances.

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Disclaimer: The information provided by Seedly serves as an educational piece and is not intended to be personalised investment advice. ​Readers should always do their own due diligence and consider their financial goals before investing in any stock. The writer owns shares in Raffles Medical.