MD Medical Group posts 66% EBITDA, 83% Net Profit growth in 1H 2021

6 September 2021, Moscow. MD Medical Group Investments Plc (“MD Medical Group,” “MDMG,” the “Group” or the “Company” – LSE and MOEX: MDMG), a leading Russian private healthcare provider, announces its audited consolidated financial statements for the 6 months ended 30 June 2021 under International Financial Reporting Standards (IFRS).

1H 2021 Financial Highlights

• Revenue increased by 51% year-on-year (y-o-y) to RUB 12,009 mln vs. RUB 7,974 mln in 1H 2020, mainly driven by in-patient treatments and such segments as oncology, internal medicine, trauma and cardiology.
• EBITDA increased by 66% y-o-y to RUB 3,777 mln with EBITDA margin of 31.5%, up 3.0 p.p. y-o-y. This growth was mainly driven by performance at Lapino.
• Net profit grew by 83% y-o-y to RUB 2,688 mln.
• Operational cash flow grew by 51% y-o-y to RUB 3,724 mln.
• Capex amounted to RUB 712 mln, down by 45% y-o-y. Key investments included expansion of the service range at Lapino-2 (such as oncosurgery and dentistry), the completion of construction of Lapino-4, design of the new Lapino-3 building, launch of three out-patient clinics and two test collection laboratories.
• Debt decreased by 10% to RUB 6,130 mln at the end of 1H 2021 from 31 December 2020, while net debt decreased by 38% from the end of 2020 to RUB 1,835 mln. The net debt to EBITDA ratio amounted to 0.2x.
• Net working capital remained negative at RUB (2,135) mln and represented 8.9% of revenue.
  

Commenting on the 1H 2021 financial results, Mark Kurtser, CEO of MD Medical Group, said:

“In the first half of 2021, we demonstrated significant improvement in our financial performance. The Company’s revenue grew by 51% on the back of strong operating results across the board as well as further expansion and diversification of our healthcare services portfolio. Operating performance improved in our traditional competencies of women’s health and paediatrics as well as in other profiles, primarily in oncology, internal medicine, trauma care and cardiac surgery. We intend to further develop these areas by adding new competencies and responding to patients’ growing demand for effective high-tech medical care.

“In the first six months of the year, EBITDA increased by 66%, generating a 3.0 p.p. increase in EBITDA margin to 31.5%. At the same time, net profit increased even faster – by 83% to RUB 2,688 million. I would like to note that the average ticket increased in every operational area.

“The key driver behind this impressive growth in all areas was the successful development of the Lapino clinical hospital, where capacity continues to expand in existing competencies, and essential new medical services are being offered.

“I would like to note that, for the first time in our history, services that are not directly related to women’s health and paediatrics brought in more than half of the Group’s total revenue. Our doctors recently performed a number of complex operations, which demonstrated simultaneously our expertise in paediatrics, in endovascular surgery and in cardiology. These achievements open up new opportunities for us.

“Since its very first days, Mother and Child has been carrying out a successful growth strategy. Today we affirm our status by announcing a large-scale programme for the construction of new medical centres.

“First of all, this concerns the major expansion of our facility in Lapino, where two hospitals will be built on new grounds – Lapino-3 and Lapino-5, specialising in radiology and psychoneurology, respectively – with a total area of about 22,000 square metres. In partnership with MGIMO University, we are going to open a medical school in Lapino, where highly qualified personnel will be trained, including for the needs of our growing company. The commissioning of these facilities is just the intermediate stage in the large-scale expansion of the entire cluster in Lapino.

“Continuing our successful work in the Moscow region, we have begun preparations for the construction of a multidisciplinary hospital in Domodedovo with an area of 15,000 square metres. The construction will be in line with our standard regional hospital design.

“At the same time, we are going beyond the capital region and preparing projects in large Russian cities where we have been working successfully for several years. We have started the construction of a hospital in St Petersburg as well as the construction of a separate new building next to the existing hospital in Tyumen for the treatment of patients with infectious diseases, including COVID.

“In addition to building hospitals, we are going to open new clinics in Moscow and other Russian cities, while also introducing a network of sampling labs – a new format for us – in Moscow and the Moscow region under the MD LAB brand.

“In total, the Company plans to allocate RUB 12 billion for its large-scale development programme for 2021–2024. Backed by our sustainable financial and operating results, we are going to implement the programme at our own cost. I hope that I will be able to focus more on these and our other future projects in more detail during the first-half conference call.

“In conclusion, I would like to say that, in line with our previous statements, we will continue to share our success with our shareholders. As part of our decision to pay dividends twice a year in the amount of 50% of net profit, the Board of Directors has approved the payment of interim dividends for the first half of the year in the amount of RUB 18 per share.”

Highlights for 1H 2021 and after reporting period

Operational results

MD Medical Group continued to develop its business and demonstrated the following operational results for 1H 2021:

• Total deliveries grew by 10% y-o-y to 4,027.
• Total IVF cycles grew by 41% y-o-y to 8,154.
• Total in-patient treatments grew by 49% y-o-y to 76,196.
• Total out-patient treatments grew by 23% y-o-y to 897,396.

Expansion of our hospital network

• Opening of a new multifunctional medical centre Lapino-4 with 100 beds and an area of 4,200 sq m. The construction of the new two-storey multifunctional medical centre intended to treat patients with infections, primarily coronavirus patients, was achieved within a short period of time using rapid construction technology.

Strengthening our medical expertise

• Strong results in treating COVID-19 patients. The Group has gained expertise in treating a large flow of patients of all ages, including pregnant women and new mothers.
• First open-heart surgery at Lapino and first endovascular heart surgery on a newborn in Russia. Coronary artery bypass surgery involving the insertion of a shunt was performed on a patient with massive coronary artery damage for the first time at Lapino clinical hospital. Also, endovascular heart surgery was performed for the first time in Russia on a premature newborn with low birth weight.
  

1H 2021 Financial Highlights (RUB mln)