UK Edition
Mediclinic shares nosedive as Swiss business continues to struggle
Mediclinic's shares tumbled by nearly a fifth after the hospital group warned its Swiss business was not performing as well as expected.
The FTSE 250 company, which runs hospitals across Southern Africa, the Middle East and Switzerland, said its Swiss division was still under pressure from regulatory changes that have reduced the fees it can charge patients and insurers.
As a result, revenue growth and profit margins from this division will be weaker than forecast in the current financial year.
The South African company said it expected to report a 2pc rise in sales in the first half of its financial year, which ended in September, and a 4pc decline in adjusted profits, both of which are lower than analysts had expected.
Ronnie van der Merwe, Mediclinic's chief executive, said the company had not expected the regulatory changes in Switzerland to impact the business as quickly as they have.
"The market was obviously surprised by this, but we don’t see this as a big stumbling block in the long-term and are dealing with it," he said.
He said Mediclinic was cutting costs, slashing capital spending, recruiting more doctors and changing its hospital layouts in Switzerland to deal with the changes.
"It's very difficult to say (how long it will take to recover). But it will future-proof the business and I don't want to spend ten years doing it."
The news sent shares in Mediclinic down by nearly 20pc to 380p in morning trade. The company's performance has been patchy since its shares listed on the London Stock Exchange two and a half years ago. Problems with its hospital businesses in Abu Dhabi and, more recently, in Switzerland, have resulted in a number of profit warnings and led to a £479m pre-tax loss in Mediclinic's last financial year.
Former chief executive Danie Meintjes stepped down in June when Mr van der Merwe, a former anesthetist, took the helm and began a company-wide shake-up.
Mediclinic also owns a 29.9pc stake in UK rival Spire, which was forced to set aside £27m last year to compensate patients of rogue cancer surgeon Ian Paterson. As a result, Mediclinic had to take a £109m charge on its investment.
Mr van der Merwe said: "Since being appointed chief executive, I've spent time with all the executive teams across the group which has reinforced my confidence in our focused approach to grow and improve our business. We are adapting the business to the changing healthcare landscape."