JOHANNESBURG, Feb 21 (Reuters) - South African private healthcare provider Mediclinic expects a drop in revenue and margins at its Middle East business, it said on Tuesday, sending its shares down more than 5 percent in London and Johannesburg.
Mediclinic took over Abu Dhabi’s Al-Noor last year and started consolidating the group’s hospitals with its own Dubai operations.
However, patient volumes and trading performance in Abu Dhabi have been below expectations and the company said it has decided to cut administrative personnel and look for other ways to cut costs in the region.
“The challenging environment in Abu Dhabi has unfortunately continued into the second half of the year. We are taking many steps to build the foundations for a successful, sustainable, long-term business in the Middle East,” it said in a statement.
Chief executive Danie Meintjes said in a conference call that the company expects declines in revenue and its underlying EBITDA margin for the Middle East for its 2016/17 financial year.
The company said it expects an EBITDA margin of 10-11 percent, compared with 20.9 percent before the Al Noor deal.
The Al Noor hospitals, the rebranding of which is expected to be completed by next year, have also been dogged by a significant outflow of doctors, even before Mediclinic took over. Meintjes said he will focus on recruitment to address arrest the skills losses.
Mediclinic said that its two largest platforms in Switzerland and southern Africa traded in line with full-year expectations. ($1 = 3.6727 UAE dirham) (Reporting by TJ Strydom; Editing by David Goodman)