MD Medical Group Investments (LSE, MOEX: MDMG) — holding company of one of the largest Russian networks of private medical clinics "Mother and Child". With 9 November 2020, the company's shares began trading on the Moscow Exchange.
6 September, the company released financial statements for the first half of 2021, which showed strong operating and financial results.
Operating indicators
The number of delivered deliveries in clinics increased by 10% and amounted to 4 thousand compared to 3.7 thousand births in the first half of 2020. The main drivers were the growth in the birth rate in Russia and the possibility of childbirth in specialized hospitals for patients with coronavirus.
The number of IVF cycles increased by 41% and amounted to 8.1 thousand cycles compared to 5.8 thousand cycles a year earlier. Growth factors were the realization of deferred demand for IVF due to the coronavirus and the continued growth of IVF popularity in Russia, low compared to developed countries.
The number of bed-days in the first half of the year amounted to 76.2 thousand - an increase of 49% in relation to the same period a year earlier. One of the reasons is the expansion of the list of services in private hospitals and the increase in capacity. In February, a new Lapino-4 building was opened in the Lapino medical cluster to treat patients with coronavirus infection.
The total outpatient attendance increased by 23% and amounted to 897.3 thousand visits: expanded the list of services and increased capacity utilization.
The company divides outpatient visits into three segments:
- Obstetrics and Gynecology: 280,4 thousands of visits, growth by 10%;
- pediatrics: 213,2 thousands of visits, growth by 28%;
- other medical services: 403,5 thousands of visits, growth by 31%.
Over the past year, Mother and Child has been actively diversifying its business, both through expansion into the regions, and through the expansion of the portfolio of medical services.
The growth of revenue in previously non-core areas amounted to 212% in oncology, 121% in therapy, 124% in other medical revenue, 79% in physiotherapy, 54% in surgery and cardiology.
The company assigns a special role to the growing demand for oncological care: actively expands the oncology service and invests in the growth of the capacity of oncology departments in all its hospitals.
Scope of services rendered, things
| 2019 | 2020 | 1п2020 | 1п2021 | Growth for 1p2021 | |
|---|---|---|---|---|---|
| Childbirth | 7446 | 7759 | 3669 | 4027 | 10% |
| ECO | 18 004 | 15 264 | 5797 | 8154 | 41% |
| Bed days | 79 689 | 116 417 | 51 242 | 76 196 | 49% |
| Outpatient visits | 1 745 133 | 1 613 630 | 729 081 | 897 396 | 23% |
Loading of medical facilities of the Mother and Child Group of Companies in Moscow
| 1п2020 | 1п2021 | |
|---|---|---|
| Childbirth | 67% | 67% |
| ECO | 45% | 59% |
| Bed days | 85% | 70% |
| Outpatient visits | 42% | 46% |
Loading of medical facilities of the State Corporation "Mother and Child" in the regions
| 1п2020 | 1п2021 | |
|---|---|---|
| Childbirth | 38% | 45% |
| ECO | 30% | 44% |
| Bed days | 42% | 54% |
| Outpatient visits | 38% | 45% |
Financial indicators
Revenue for the first half of the year increased by 51%, to 12 009 million rubles, compared to 7974 million rubles for the same period in 2020.
40% The company's revenue is occupied by the segment of women's and children's health: Obstetrics and Gynecology, childbirth and IVF. But other segments are growing faster.
The revenue structure for the first half of 2021 and 2020 is as follows:
Revenue structure, million rubles
| 1п2020 | 1п2021 | The change | Fate in 1p2021 | |
|---|---|---|---|---|
| Therapy, surgery and other inpatient services | 1316 | 2566 | +95% | 21% |
| Laboratory tests, diagnostics and more | 1476 | 2352 | +59% | 20% |
| Obstetrics and Gynecology | 1376 | 1571 | +14% | 13% |
| Childbirth | 1148 | 1340 | +17% | 11% |
| ECO | 1346 | 1908 | +42% | 16% |
| Pediatrics | 810 | 1032 | +27% | 9% |
| Oncology | 329 | 1027 | +212% | 9% |
| Other revenue | 173 | 213 | +23% | 2% |
Gross profit increased by 71% and amounted to 4550 million rubles. Gross profit margin increased by 4,5 percentage points and amounted to 37,9%.
EBITDA increased by 66% and amounted to 3777 million rubles. Growth is due to the rapid growth in the volume of services and the average check in relation to costs. EBITDA margin was 31,5% - growth by 3 percentage points.
Net profit increased by 83% and amounted to 2688 million rubles. Net profit margin was 22,3% - it's on 3 percentage points more than a year earlier.
In the wake of improving performance, the company announced an investment program worth RUB 12 billion for 2021-2024. The money will be used to expand the Lapino medical cluster with new buildings for the Lapino-3 nuclear medical center and the Lapino-5 psychoneurological center, construction of three new hospitals in Domodedovo, Petersburg and Tyumen, expansion of the outpatient network, including continued expansion in the market for receiving laboratory tests.
Remarkably, that the company plans to implement the entire program without external funding. This is a logical decision during the growth of the key rate of the Central Bank of the Russian Federation, and also due to the large stock of money in the accounts: should be effectively invested.
Dynamics of indicators, million rubles
| 2019 | 2020 | 1п2020 | 1п2021 | Growth for 1p2021 | |
|---|---|---|---|---|---|
| Revenue | 16 160 | 19 133 | 7974 | 12 009 | 51% |
| Gross profit | 5784 | 7127 | 2663 | 4550 | 71% |
| EBITDA | 4635 | 6008 | 2270 | 3777 | 66% |
| Net profit | 2787 | 4333 | 1471 | 2688 | 83% |
| Net cash flow | 988 | 2737 | 1180 | 3012 | 155% |
Profitability indicators
| 2019 | 2020 | 1п2020 | 1п2021 | Growth for 1p2021 | |
|---|---|---|---|---|---|
| Gross profit | 36% | 37% | 33% | 38% | 4% |
| EBITDA | 29% | 31% | 28% | 31% | 3% |
| Net profit | 17% | 23% | 18% | 22% | 4% |
Debts and dividends
The financial position of the company is extremely stable. Net debt decreased by 33% and amounted to 1,835 million rubles. The indicator "net debt / EBITDA "is at a record low level in recent years and is 0,2. This is a comfortable level of debt burden: cash flow will go to promising investment projects, not to pay off debts.
In 2022, the Mother and Child Group of Companies will have to repay almost 1,914 million rubles of debt. It's not critical: net cash flow even for half of 2021 will be more than enough. It will not significantly affect dividends.: according to the results of the first half of the year, the company will pay shareholders 1352 million rubles, or 18 P per share. The resulting dividend yield for 2021 will exceed 4%.
Since 2019, the amount of dividends is 50% from net profit. According to the CEO, This payout ratio is planned to be maintained in the future..
What's the bottom line?
Mother and Child is a sustainable business with high margins, who will suffer the least in a crisis. The main potential for its further growth is the development of high-tech medical services. The population demands a higher level and service of state medicine in oncology, rehabilitation and laboratory diagnostics.
The average check for the company's main services has been steadily growing since 2018, as in Moscow, as well as in the regions. Changes are taking place in favor of complex medical procedures, also increases the number of services per visit to the doctor.
Given the large stock of loading of medical facilities, active expansion into the regions and consolidation of the private medicine market, the company has to meet a significant share of demand.
