- With Raffles Medical’s reclassification of its healthcare services and insurance services segments, we still see healthy segmental margins, driven by cost savings and the Transitional Care Facility (TCF). However, we expect increasing manpower costs to drag margins for 2H23.
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Healthy margins.
- Given the reclassification of Raffles Medical Group (SGX:BSL)’s insurance services business, we revisit our healthcare services segment estimates to calculate Raffles Medical’s 1H23 transitional care facility (TCF) contribution.
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- From our estimates, the TCF has exceptionally high margins of 61.0%. We reckon that this is primarily driven by cost efficiency as 1H23 staff cost as a percentage of revenue is currently at a historical low of 43.7%. Assuming staff cost accounts for 50% of revenue, we add back ~S$20m of wage costs which would imply normalised TCF margins of around 30%.
Higher manpower costs & insurance loss.
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