MD Medical Group Reports 31% Revenue Grouth in 1H 2013

MD Medical Group Investments Plc (“MDMG”, the “Company”, or the “Group”), Russia’s leading provider of private women’s and children’s healthcare, announces its reviewed consolidated interim condensed IFRS financial statements for the six months ended 30 June 2013.

1H 2013 Financial Highlights (in RUB mln)

1H 2013

1H 2012






Cost of sales




Gross profit




Administrative expenses




Operating profit








EBITDA margin



-18 p.p.

Net profit for the period




Net profit margin



-27 p.p.

1H 2013 Operating Highlights

  • Successful ramp up of the Group’s second hospital at Lapino, where 521 deliveries were registered in the reporting period.
  • Acquisition of 100% of Vitanostra ltd, an operator of a Samara-based chain of clinics, focused on IVF, out-patient obstetrics and gynaecology as well as paediatrics, is delivering on the Company’s objective to broaden its network across Russia[2].
  • Acquisition of 80% of LLC Centre of Reproductive Medicine (Mother & Child Irkutsk medical company) focused on IVF and gynecology, which had previously operated through a franchise agreement with MD Medical Group[3].
  • Commenced construction of MDMG’s third hospital in Ufa, the capital of Bashkortostan.
  • Completed refurbishment of additional premises at the Clinic of Health in Moscow.

Commenting on the first-half financial results, Chairman of MD Medical Group, Dr Mark Kurtser said:

“MDMG continues to demonstrate significant progress in its aim to become an internationally-recognised healthcare leader. In the first half, we have achieved strong operational growth across all of our services including 14% growth in the number of deliveries, significantly outpacing the Moscow birth rate, driven in large part by the successful ramp up of our new Lapino hospital.

“We remain focused on our strategic objective to build capacity and broaden our presence in Russia’s fast-growing regions demonstrated by the acquisition of clinics in Irkutsk and Samara and the start of construction of our third hospital in Ufa.

“In order to ensure we can continue to grow effectively, we have made important investments in our IT and reporting systems, and in addition, to our ongoing investment in the recruitment of high calibre professionals. We are now extremely well positioned to capture the ongoing growth opportunities available in the provision of high quality healthcare services throughout Russia.”

During the first half of 2013, total revenue increased by 31%, from RUB 1,967 million to RUB 2,578 million. Revenue growth was primarily driven by:

  • 14% increase of total number of deliveries following the successful ramp up of Lapino hospital.
  • Solid growth of the Group’s IVF segment: 20% increase in number of IVF cycles.
  • 32% increase of outpatient visits as a result of expansion of the range of services provided by the Group and integration of new clinics.
  • Increase in average check in line with the Group’s price indexation policy as well as changes in the composition of services towards more expensive services.
The dominant share of total revenue was derived from obstetrics and gynecology services. The fastest growing revenue segments were IVF, due to the integration of a number of clinics, and other medical services after opening surgery, trauma and rehabilitation departments as well as a new diagnostics centre at Lapino hospital.

Revenue, RUB mln

1H 2013

1H 2012


OBGYN excl. deliveries
















Other medical services




Sales of goods and other revenue




Total Revenue




Cost of sales grew by 63% to RUB 1,605 million against RUB 982 million in the same period last year, reflecting the following factors:

  • An increase of depreciation due to recognition of Lapino on the balance sheet.
  • Growth of payroll and materials and supplies used, as well as property tax due to the opening of Lapino hospital and the acquisition of IDK Samara and M&C Irkutsk.
Payroll including related social taxes as well as materials and supplies used accounted for the majority of the Group’s cost of sales. A 47% growth in payroll was primarily driven by an increase in the number of the Group’s medical personnel including to staff the newly opened Lapino hospital, in addition to the growth of variable wages in line with revenue growth.

Cost of sales, RUB mln

1H 2013

1H 2012


Payroll and related social taxes




Materials and supplies used








Property tax




Energy and utilities




Medical services




Repair and maintenance




Other expenses




Total cost of sales




Administrative expenses amounted to RUB 524 million in the first half of 2013 – a 173% increase year-on-year. A significant part of this growth, RUB 236 million, came from an increase in payroll (including related social taxes), as well as in utilities and materials. More than 45% of the increase in SG&A accrues to Lapino operations.

As a result, EBITDA declined by 24% in the reporting period to RUB 645 million, compared with RUB 851 million in the first half of 2012.

Net profit decreased by 66% to RUB 250 million compared with RUB 728 million in the same period last year.

Key indicators of MD Medical Group’s financial position as of 30 June 2013

As at 30 June 2013, total assets increased by RUB 584 million to RUB 13,498 million. This growth is attributable to the following factors:

  • Increased property, plant and equipment due to the launch of Lapino hospital, the start of the construction of the hospital in Ufa, in addition to the acquisition of outpatient clinics in Samara and Irkutsk.
  • Increased intangible assets due to goodwill arising from the acquisition of outpatient clinics in Samara and Irkutsk.

As at the end of the reporting period, the Company's total liabilities rose by RUB 430 million since 31 December 2012 to RUB 4,720 million. The growth in liabilities was primarily caused by an increase in loans and borrowings amounting to RUB 127 million, as well as by an increase in payables related to the construction of the hospital in Ufa.

MD Medical Group’s total CAPEX rose by RUB 180 million or by 15% year-on-year and amounted to RUB 1,401 million in the first half of 2013, of which RUB 648 million was spent on the acquisition of outpatient clinics in Samara and Irkutsk.

Subsequent events

  • In July 2013 the Company increased its stake in outpatient clinics in Irkutsk (LLC Centre of Reproductive Medicine) by 5% to a total of 85%.

Condensed consolidated interim financial statements are available on the Company’s web site:

Conference call:

The release of the full year financial results will be accompanied by an analyst and investor conference call hosted by:

  • Mark Kurtser, Chairman of the Board of Directors
  • Elena Mladova, Chief Executive Officer
  • Vitaly Ustimenko, Chief Financial Officer
  • Alexander Rayt, Head of IFRS Department
  • Maxim Novikov, Head of Investor Relations

Date: Monday, 9 September 2013
Time: 17.00 MSK/ 14.00 BST / 9.00 EST

Conference-call details: Access Code: 4638933#

  • Russia Toll Free: 8-495-580-9543
  • UK Access Number: +44-(0)207-153-2027
  • UK Toll Free: 0800-358-0886
  • US Access Number: +1-480-629-9673
  • US Toll-Free Number: +1-877-941-1469

The call will be held in English and will start with a 10-15 minute presentation followed by Q&A.

The replay of the call will be available until September 23, 2013.

Replay Numbers: Access Code: 4638933#

  • UK + 44 (0)207 154 2833
  • UK Toll Free 0800 358 3474
  • US +1 303 590 3030
  • US Toll Free +1-800-406-7325

* * *

For further information please contact:

Maxim Novikov
Head of Investor Relations
MD Medical Group Investments Plc
Tel: +7 495 331 16 50

EM – Moscow
Tom Blackwell
Tel: +7 919 102 9064

Consilium Strategic Communications – London
Emma Thompson / Matthew Neal
Tel: +44 20 7920 2354

Forward-Looking Statements:

This press release contains forward looking statements, which are based on the Company’s current expectations and assumptions and may involve known and unknown risks and uncertainties that could cause actual results, performance or events to differ materially from those expressed or implied in such statements. The forward looking statements contained in this press release are based on past trends or activities and should not be taken that such trends or activities will continue in the future. It is believed that the expectations reflected in these statements are reasonable, but they may be affected by a number of variables which could cause actual results or trends to differ materially, including, but not limited to: conditions in the market, market position of the Company, earnings, financial position, cash flows, return on capital and operating margins, anticipated investments and economic conditions; the Company’s ability to obtain capital/additional finance; a reduction in demand by customers; an increase in competition; an unexpected decline in revenue or profitability; legislative, fiscal and regulatory developments, including, but not limited to, changes in environmental and health and safety regulations; exchange rate fluctuations; retention of senior management; the maintenance of labour relations; fluctuations in the cost of input costs; and operating and financial restrictions as a result of financing arrangements.

No statement in this press release is intended to constitute a profit forecast, nor should any statements be interpreted to mean that earnings or earnings per share will necessarily be greater or lesser than those for the relevant preceding financial periods for the Company. Each forward looking statement relates only as of the date of the particular statement.

[1] EBITDA calculated as operating profit before depreciation and amortization

[2] Consolidated in the financial statements as of 01-04-2013

[3] Consolidated in the financial statements as of 01-05-2013

[4] Year-on-year change (%) is calculated using RUB thsd. figures from IFRS financial statements

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