NMC Health reports first half profit rise amid stock buyback effort
London-listed healthcare operator's shares surged in volatile trading after reports of investors bidding for 40% stake in the company
NMC Health, a London-listed UAE healthcare operator, on Thursday reported a 19 per cent rise in its first-half net income as revenue rose and margins improved. The company also said it will seek shareholders’ approval to buy back up to $200 million (Dh734m) of its shares.
Net profit for six months ending June 30 climbed to $138.1m, NMC said in a regulatory filing to London Stock Exchange, where its shares trade. Revenue for the reporting period climbed 33 per cent year-on-year to $1.24 billion, it added.
Strong performance in its core market of the UAE and its expansion in other territories within the six-member economic bloc of the GCC boosted both top and bottom line growth. The UAE, the second-biggest GCC economy, recorded a 15.6 per cent year-on-year growth in revenue. Saudi Arabia posted the highest growth on a country-by-country basis with revenue during the first half of 2019 jumping 71.8 per cent from a year earlier. However, the home market of the UAE still accounts for close to 80 per cent of the company’s total revenue, it noted.
NMC said it remains on track to meet the revenue and profit guidance it provided in May.
“We continue to deliver on our growth strategy in our attractive target markets. Our ability to perform strongly in a challenging environment [is] testament to NMC's strategy of developing niche, differentiated verticals in our core markets,” NMC chief executive Prasanth Manghat, said.
“All key financial and operational metrics of our healthcare and distribution businesses performed in line with our guidance. We also made good progress on increasing free cashflow during the period and we see room for further improvement in H2 2019, as has been the trend in previous years.”
The company, which formed a joint venture with Hassana Investment Company, a unit of Saudi Arabia’s General Organisation for Social Insurance, to capatalise on the growth potential in the kingdom on Thursday said it is also ‘immediately initiating” a process to seek shareholders’ approval to buy back its shares.
“The company has a number of very attractive investment opportunities for the short and medium term which it remains committed to deliver,” NMC said in a separate filing to LSE. “The company also maintains a strong balance sheet to provide suitable optionality of funding and therefore the share buyback programme will, subject to shareholder approval, only be employed opportunistically to take advantage of exceptional price volatility and will be limited to a maximum of $200m,” it said.
The company’s biggest shareholders have indicated that they would not be willing to participate in the buyback at current valuation, it noted.
The company’s shares on Tuesday gained as much as 39 per cent in volatile trade in London after Reuters reported that two investor groups are competing to buy a 40 per cent stake in the company, worth up to $1.9bn.
The surge entirely erases a year-to-date decline of its shares, which before today had dropped 29 per cent since the beginning of the year. It was trading 25.3 per cent higher at £24.50 at 1.15pm Dubai time.
One of the competing investors’ groups is backed by Chinese international conglomerate Fosun and the target stake is jointly owned by the chairman of Abu Dhabi-based investment firm KBBO Group, Khalifa Butti Bin Omeir, UAE-based businessman Saeed Bin Butti Al Qebaisi, and Infinite Investment, a vehicle linked to the two men, according to Reuters.
Updated: August 22, 2019 02:14 PM