While the Healthcare Services division recorded a modest 0.6% increase in revenue to $142.2 million, the group’s Hospital Services division saw a 3.8% gain and the Insurance Services segment saw a 9.5% y-o-y growth. The group’s Investment Holdings segment stayed rather stable, reporting revenue of $22.2 million from $22.7 million last year.
While the insurance services saw revenue growth, it incurred an operating loss of $3.1 million, compared to a loss of $6.4 million last year. Losses narrowed, thanks to more rigorous claims adjudication and prudent expense management.
During the group’s results briefing, Dr Loo Choon Yong, executive chairman of RMG says: “The whole [insurance] industry is facing issues [with profitability].” This is due to the common “fraud, waste and abuse” problems in the industry when it comes to hospital insurance claims.
On a geographical basis, the group’s China business saw revenue increase marginally, as its hospitals move towards their breakeven point to start being profitable. Revenue increased marginally from CNY162.9 million ($30.5 million) to CNY163.6 million. Cost-saving measures that were put in place earlier have proven effective in helping to reduce initial losses.
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While China as a whole may be affected by macroeconomic volatility and tariffs, Dr Loo is keeping a positive stance on the larger China economy. “We have to give credit to the Chinese. They are [and have been] prepared for it since Trump’s first term.”
Dr Loo attributes the slower growth in China due to the current tariff situation, but he adds that healthcare services are unlike purchasing discretionary consumer products. “You don’t need to buy a Prada bag, but you will need to seek healthcare services,” he says. He acknowledges too that RMG operates private hospitals and medical centres in China, which typically targets the “upper 30% of the Chinese population”, international expats and foreign students.
That being said, China will continue to be a focus for RMG. Already, two of its hospitals formed two separate partnerships with large local hospitals to share medical resources and expertise. Dr Loo shares that the group will continue looking for such partnership opportunities.
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While the immediate profit gains are not seen in these partnerships, he shares that the long-term gains are in tact. “We won’t see an immediate and big revenue and profit bump. But overtime, the partner doctors and our doctors will be able to take care of more patients,” he says and this will eventually be translated into higher revenue.
For now, the group is focused on turning around its China businesses, with expectations for it to turn around by FY2026. Perhaps after the group’s business in China starts showing meaningful profits, then the group will consider expanding in presence – be it via organic or inorganic means. Dr Loo has also showed interest of expanding its insurance business in China.
“If we can successfully attract patients, why stop at one hospital?” says Dr Loo, adding that it could also be a possibility for the group to further expand its presence in a city that it already has presence in. It is also in talks with couple of provincial governments in China to invest in new hospitals, but the group has yet to confirm any plans.
While the group did not declare any interim dividends, Dr Loo shares that the group now pays out at least 50% of its profits to shareholders and last year, the group paid out 70%. The group also has share buyback schemes in place to improve earnings per share.
Based on current conditions and barring unforeseen circumstances, the board expects the group to remain profitable in FY2025.
As at 1.20pm shares in RMG are trading 2.9% higher for the day at $1.08.
