Financial Review Overview In 2023, IHH achieved remarkable financial performance across all business units – our hospitals, clinics, and laboratories. This mirrors the success of previous years, and our financial resilience has been a strong contributor to the trust fostered between the Group and all stakeholders, and vice versa. Throughout the year, IHH has demonstrated robust earnings driven by its core operations, with 2023 standing out for surpassing expectations and achieving double-digit growth across most of its financial indicators. IHH’s lauded financial performance comes on the back of strong inpatient volumes and higher revenue intensity from higher-acuity treatments, along with our strategic portfolio recalibration. Collectively, these factors have driven positive growth for the Group across all markets, underscoring our operational excellence and strategic foresight. Organic Growth Plans We are working to add close to 4,000 beds by 2028 to our existing hospitals facilities in Malaysia, India, Türkiye, Europe and Hong Kong, giving us a total added capacity of 33%. We are positive on our brownfield expansion strategy as it is considered low-risk and capital efficient. The capacity expansion will also encompass facelifts and renovations to existing facilities, building of extensions, new constructions and relocating some of its complementary ancillary services to alternative sites near the hospitals to avail more space for inpatient admits. In Singapore, we embarked on Project Renaissance, a three-year refurbishment project on the iconic Mount Elizabeth Hospital. The major refurbishment and overhaul is primarily to enhance patient care and experience, such as increasing the number of single bed wards to address the sophisticated needs of both local and foreign patients more effectively. Additionally, we opened the Haematology and Stem Cell Transplant Centre at Mount Elizabeth @ The Heeren. Integrated with a tertiary hospital in its immediate vicinity, this facility serves to right-site lower-acuity healthcare services, freeing up hospital beds for higher-acuity treatments. This ensures greater convenience and accessibility for those who require inpatient services or a closer proximity to in-hospital facilities, thereby enhancing overall patient experience and optimising care delivery. Overall, the increase in bed capacity will allow IHH to remain on a sustained growth trajectory while meeting the increasing inpatient healthcare needs of local communities. Inorganic Growth Decisions In Türkiye, Acibadem solidified its expansion strategy by acquiring Kent Health Group, the largest private hospital operator in Izmir, the third largest city in Türkiye. This move is a strategic step in solidifying our presence within the Turkish healthcare landscape. Furthering our footprint in India, We increased our stake in Gleneagles Healthcare India Private Limited (formerly known as Ravindranath GE Medical Associates Private Limited) (GHIPL) by an additional 24.53% stake, bringing our total ownership to 98.17%. In a strategic branding initiative that took place in March 2024, Gleneagles Global Hospitals will be rebranded as Gleneagles Hospitals. Gleneagles Hospitals operates six multi-super-specialty hospitals across Hyderabad, Chennai, Bangalore, and Mumbai, with a capacity of approximately 1,500 beds and state-of the-art, worldclass facilities. Together with Fortis Healthcare, which acquired the 350-bed Medeor Hospital in Manesar, Gurugram, these two brands will spearhead IHH’s expansion in India and represent our twin growth engines in this important market. Another noteworthy acquisition was that of Timberland Medical Centre in Sarawak, Malaysia, which has a vacant plot of land earmarked to construct a new 200-bed tertiary hospital. This acquisition, which completed in February 2024, has strengthened IHH’s market dominance in Malaysia and amplified our influence, catering to both domestic healthcare demands and the burgeoning medical sector from Indonesia. In 2023, we completed the sale of International Medical University (IMU) in Malaysia to focus on our core business of providing hospital and healthcare services. The gains from this divestment were fully distributed in a special dividend payout to shareholders. In addition, we divested Fortis hospitals at Arcot Road and Malar, both situated in Chennai, as part of Fortis’s ongoing portfolio rationalisation strategy. Our FY2023 Performance IHH continued to exceed financial expectations, achieving strong performance year-on-year. Revenue: Revenue increased 16% to RM20.9 billion from higher inpatient admission and on higher revenue intensity across all markets. As per the year before, the Group’s hospital segment continues to be a core contributor to our total revenue. The growing inpatient volumes are a strong testament to the trust that local and foreign patients have in our hospital brands to deliver optimal medical outcomes. EBITDA: We closed the year with an EBITDA of RM4.6 billion, a 15% increase from the previous year, mainly from higher revenue and strong core operational growth. PATMI: IHH’s PATMI, excluding exceptional items, stands at RM1.3 billion. PATMI increased by 91% to RM3.0 billion, including one-off gains from the sale of IMU. Capital Management and Liquidity: Financial sustainability is of utmost importance to a global healthcare organisation like IHH. We maintain a solid capital base and a healthy debt-to-equity ratio by way of prudence and strategic investments. In 2023, our net debt-to-equity ratio was 0.24. Our net cash generated from operations was RM3.8 billion and the total cash balance was RM2.4 billion. Our strong IHH Healthcare Berhad 42 Strategic Report
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