- Raffles Medical’s 1H25 results were a slight miss, despite higher revenue (+3.5% y-o-y) and PATMI (+4.8% y-o-y). Management remains hopeful that China operations can achieve an EBITDA-breakeven in 2026.
1H25 results a slight miss.
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- However, the 1H25 net profit was still deemed a slight miss, forming 45.4% of our full year forecasts. The lower-than-expected bottom line was due to a few factors, including:
- muted revenue growth of the healthcare service segment and China hospitals,
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- some unfavourable forex translation from the weakened US dollar.
- Excluding all one-offs, Raffles Medical's 1H25 core net profit would have risen 8.8% y-o-y to S$32.5m (1H24: S$29.9m), by our estimate.
Better cost profile.
- 1H25 EBITDA and net margins were largely stable, backed by better cost discipline across its hospitals. 1H25 staff costs to revenue ratio was better than expected (-0.6ppt y-o-y) while 1H25 consumable costs to revenue also improved y-o-y (-0.1ppt y-o-y). However, driven by competition for nurses in Singapore, we expect staff costs as a percentage of turnover to normalise closer to the historical pre-pandemic level of 50% moving forward.
- As a recap, the Ministry of Health announced pay increases of up to 7% for healthcare professionals starting 2H25, with public nurses receiving increments of up to 4%. Thus, we expect to see increased manpower costs moving into 2H25.
Healthcare services: Expecting moderate growth driven by healthy underlying demand.
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