Travel restrictions weigh on IHH Healthcare Q2 earnings

The lack of new foreign patients would mean a near-zero patient revenue for its Singapore unit.

With travel bans and lockdowns imposed at its key markets, IHH Healthcare could record its worst quarter in FY2020 in Q2, but could recover in Q3 as these travel restrictions are lifted, according to a Maybank Kim Eng report.

In particular, Singapore has banned foreigners into the country, with no end date mentioned so far. Though foreign patients already at Singapore can still be treated at its hospitals, the lack of new foreign patients would eventually cause a near-zero foreign patient revenue to the group’s Singapore unit.

Singapore is IHH’s largest market, accounting for 89% of the group’s profit after tax and minority interest (PATMI) in FY 2019, and foreign patients comprise about a quarter or 25% of its Singapore revenue for the year.

Some of the noncritical COVID-19 patients from public hospitals have been transferred to its hospitals, but margins from this are projected to be low for IHH.

In Malaysia, IHH hospitals could also record a sharp drop in patient volume during the 1-month Movement Control Order (MCO). Already, competitor KPJ Healthcare’s bed occupancy has plunged to 30% after the order came into effect.

Meanwhile, Turkey urged its locals to observe “voluntary quarantine” and may consider a full lockdown, which would lead to a drop in both local and foreign patient volume. In FY19, foreign patients accounted for 6% and 16% of its Malaysia and Turkey revenue, respectively.