The global economic landscape has become increasingly volatile, driven in large part by protectionist policies and escalating tariffs, particularly between the US and China. While some sectors, such as electronics and manufacturing, are grappling with significant headwinds, healthcare remains relatively sheltered.
The direct impact of US tariffs on Singapore is likely less severe than on other economies. The city-state maintains a tariff-free regime on most goods, including pharmaceuticals and medical devices, and continues to benefit from uninterrupted access to essential imports despite global disruptions.
Dr Loo Choon Yong, executive chairman of RMG, tells The Edge Singapore in an interview that the city-state is a small yet affluent market that US exporters of medical goods are keen to protect. “Singapore is less affected by tariffs, being hit with 10%, the lowest compared to the other countries. While Singapore has not yet announced what it intends to do, it has always remained a free-trade country.”
When it comes to importing healthcare consumables, Dr Loo says: “I don’t expect any change. In fact, the US dollar is expected to weaken and that will make these goods cheaper for us.”
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While the healthcare export sector, particularly producers of test kits and contact lenses, may face some margin compression from tariffs, most domestically delivered healthcare services are expected to remain unaffected. Still, broader economic weakness could have indirect effects. Dr Loo notes that a trade war could trigger a global slowdown, potentially shifting healthcare demand depending on “who you are providing the healthcare services to”.
That said, Dr Loo points out that healthcare services are essential, regardless of the economic cycle. “When you are sick, you will spend the money on yourself. You don’t need a Birkin bag or a Prada. If you are sick and don’t do the surgery [that is required], it will have serious health repercussions,” he adds. This kind of inelastic demand makes healthcare a more resilient industry.
Essential service
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In Singapore, funding healthcare demand is backed by a deeply rooted public policy framework. The government’s longstanding commitment to co-funding healthcare costs via MediSave, MediShield Life and other schemes has helped create a well-capitalised, reliable ecosystem. Patients receive quality care at subsidised rates, while private players such as RMG offer additional capacity, specialisation and choice.
Dr Loo says: “We are lucky to be in Singapore, a country where the public sector has good quality and highly subsidised healthcare services for its people.” With MediSave, which was started about 40 years ago, the Singapore government has already prepared Singaporeans to save for their future healthcare needs. The local healthcare system is also well-funded, so the service is reasonable.
While RMG is a private hospital, it supports the public healthcare system through a programme that helps manage overflow from local hospitals. In addition, Dr Loo notes that the government requires all hospitals to accept emergency cases, particularly those involving 995 calls or ambulances needing urgent care. “The patients will pay the government hospital rates,” he continues, adding that aside from the emergency cases, the spillovers have declined after the Covid-19 pandemic.
In Singapore, RMG has also built a $200 million health insurance business. Rather than offering general insurance or life products, the group focuses exclusively on health coverage — a niche that aligns with its operational strengths and patient insights.
RMG recently partnered with leading regional life insurer AIA, adding to its network of over 100 international insurance collaborators. “The goal is not to compete directly with insurers but to serve as a trusted provider,” says Dr Loo. As the insurance base grows, RMG benefits from scale efficiencies, shared risk management and better cost control. The same technological systems and clinical protocols used across its hospitals can also support the insurance side, improving margins and service delivery.
RMG will mark its 50th anniversary next year, having come a long way since Dr Loo co-founded the business with just two clinics. Supportive public policies have played a key role in enabling the group’s long-term organic growth. Its vertically integrated model — spanning general practice clinics to fully equipped hospitals — ensures seamless patient care and greater cost efficiency.
Crucially, RMG employs its own doctors and healthcare professionals rather than lease out clinic space – a different operating model compared to its main local rival, IHH Healthcare. Many of these professionals also own shares in the group, ensuring alignment between patient outcomes and shareholder returns.
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RMG’s approach is designed to attract and retain staff. Junior doctors receive performance-linked share options, while senior professionals are incentivised through equity and internal promotion opportunities. Dr Loo says that the group is careful when it comes to hiring staff, ensuring that they are not just in it for the money. “Doctors do not stay because of bonuses, but because they feel part of something bigger.”
Rising wave of medical tourism
Medical tourism is another growth lever for RMG. Despite strong competition from lower-cost destinations such as Thailand and South Korea, Singapore continues to attract high-net-worth individuals (HNWIs) from across Asia seeking complex treatments and specialist expertise. RMG’s brand reputation, high clinical standards and integration across the care continuum make it an attractive choice for international patients.
This segment is expected to continue growing, albeit selectively. “We’re not chasing mass volume,” says Dr Loo, admitting that with Singapore’s strong currency and high healthcare costs, it will be tough for the overall industry to bring in medical tourists in droves.
He believes that patients who come to Singapore are those “who value reliability and safety, especially for procedures like surgery or paediatrics”. They are also not price-sensitive.
However, the group is cautious not to overcharge, noting that reputational damage from perceived profiteering can erode trust. “Patients will pay for quality, but they must feel they are treated fairly and efficiently,” adds Dr Loo.
Investing in growth
Although Singapore’s small and ageing population limits the addressable market size, RMG continues to find growth avenues. The group has developed a larger specialist centre in Holland Village — a comfortable distance away from its main premises at North Bridge Road. The facility aims to expand outpatient capabilities and support the increasing complexity of care needs.
The group acquired the Holland Village property from DBS Bank over a decade ago for $54.8 million and redeveloped it for around $65 million. The mixed-use property features a selection of retail shops, and more than 9,000 sq ft has been allocated to expanding the group’s outpatient medical and specialist clinics. Additionally, RMG acts as landlord, leasing back 4,500 sq ft of space to DBS.
When it comes to M&A, RMG remains opportunistic. “In Singapore, M&A is not easy,” says Dr Loo. “Valuations are high, and with 85% of hospital beds in the public sector, there’s limited scope for acquisition.” While the group is open to M&A, any deal must be earnings-accretive and priced sensibly. “We won’t buy at an arm and a leg. If the right opportunity comes, we’ll look, but organic growth has served us well for decades.”
Beyond traditional hospital services, the group continues to explore ambulatory care and outpatient facilities, which allow for cost-effective scalability. Dr Loo says that there is still some room to grow for the group’s clinic and ambulatory services business in Singapore, although not at a “20% to 30%” growth rate.
Apart from investing in organic and inorganic business growth, the group is also venturing into technology and artificial intelligence (AI). Dr Loo shares that the group sets aside “a few million” to improve and replace machines and technology in the hospital. Most recently, the group has implemented Total Laboratory Automation (TLA) to enhance operational efficiency, accuracy, and consistency.
In response to rising labour costs and increasing test volumes, the system integrates robotics, data systems and sealed conveyor mechanisms to automate the entire laboratory process, from sample sorting to analysis.
“It looks like a toy train going around the lab,” Dr Loo adds, “but it’s a serious investment.” The initiative easily results in about 20% cost savings in manpower and per-test efficiency for the group. More importantly, it enhances accuracy, minimises human error and shortens turnaround times.
Overseas markets
Besides the home market of Singapore, RMG has a significant presence in China. Due to the broader slowing down of its once-rapidly growing economy, China’s healthcare industry is not increasing as rapidly as one would imagine.
RMG remains committed to this market, operating three hospitals in Beijing, Shanghai and Chongqing. While some operators are feeling the squeeze, RMG has maintained focus on the upper 30% of the income bracket — those with insurance or the ability to pay out of pocket for premium services.
“Healthcare is not a luxury in China; it’s a necessity,” says Dr Loo. He adds that the mass-market general practitioner-to-hospital model practised in Singapore does not exist in China. Patients go straight to large hospitals, and quality is in high demand. With a “bigger is better” mindset in China, RMG is hence focused on opening up hospitals, rather than clinics or ambulatory centres there.
RMG’s Beijing hospital is already profitable, while the other two, which were built more recently, are scaling up. The Chongqing facility, a brownfield investment, and the Shanghai hospital, developed from scratch, may come with high upfront capex, but the group expects them to break even in the short term. RMG also has outpatient clinics in five Chinese cities.
To broaden its China presence, RMG in March this year partnered with the historic Shanghai Renji Hospital. Under the collaboration, Raffles Hospital’s international-standard service system will be integrated into the domestic Chinese healthcare systems, while Renji’s Chinese medical expertise will be promoted through Raffles Hospital’s global network.
Two initiatives will be launched — the Renji International Cloud Clinic, which enables cross-border telemedicine consultation with Renji physicians, and collaborative activities between the medical teams from both institutions.
Most recently, in June, the group formally signed a strategic cooperation agreement with the First Affiliated Hospital of Chongqing Municipality to integrate international expertise with local strengths to enhance the overall medical service capabilities of Chongqing and benefit more patients in the city with high-quality medical resources.
“This strategic partnership signifies a tangible implementation of the China-Singapore (Chongqing) Demonstration Initiative on Strategic Connectivity in the healthcare sector. It aligns with the ‘Healthy China 2030’ strategy and the call to deepen international medical cooperation,” says Loo, adding that this partnership also offers a “Chongqing model” for international medical cooperation under the Belt and Road Initiative.
RMG is also exploring outpatient clinics and rehabilitation centres as lower-cost, higher-return entry points into new markets within China. While management is not actively pursuing acquisitions, it remains open to opportunities that make strategic and financial sense.
“We cannot build hospitals like Lego,” says Dr Loo, emphasising that it is as easy to expand when the beds in one hospital are full. The way Dr Loo sees it, there is still plenty of room for RMG to grow in China, but it will cost money. “So, we are trying to think of various user spaces that will focus on outpatient care to rehabilitation,” he says.
“As we grow and we do better, then we will be emboldened and encouraged to do more. But in the meantime, we are looking.”
Beyond China, RMG further expanded its presence in Vietnam by taking over the management of a hospital in Ho Chi Minh City in late 2023. Prior to this, the group was already operating three ambulatory care facilities in Vietnam and had an established footprint in the region.
The group acquired a “majority stake” in American International Hospital (AIH) in Ho Chi Minh City valued at US$45.6 million ($58.64 million). RMG, which will fund the acquisition via its internal resources, did not disclose the exact stake it will hold in AIH.
The facility had been operational for several years but struggled to turn a profit. Since RMG stepped in, operational metrics have improved, and the group expects a full turnaround in the near term. “This hospital started about four to five years ago, and since we took over managing it, it has done better, and we expect it to turn around soon,” says Dr Loo.
The business and assets are currently undergoing restructuring, and RMG is in discussions to take ownership, subject to Vietnamese regulatory approvals. The group is deploying its hospital management team and medical experts to ensure standards are brought in line with its wider network. “It’s coming along nicely,” adds Dr Loo.
RMG had previously expressed interest in entering the Malaysian market, specifically in Johor, to tap into the buzz of the upcoming Johor-Singapore Special Economic Zone and Rapid Transit System, although it has yet to announce any concrete plans.
Dr Loo alludes to the untapped opportunities serving the growing proportion of older adults in China and Japan. However, these ambitions are likely further down the road, if at all. “Young lady, we are already quite busy,” he says when asked if he plans to expand his geographical presence.
Capital management and outlook
RMG continues to deliver steady financials. On Feb 24, RMG released its FY2024 ended Dec 31, 2024, results, which saw earnings for the full year decline by 31% y-o-y to $62.2 million due to lower government grants and the absence of the fair value gain of investment properties.
In 2HFY2024, earnings rose 4.3% y-o-y to $31.6 million. Excluding fair value gain of investment properties, 2HFY2024 earnings would have been a 38% y-o-y gain.
Revenue for the full-year period was 6.3% higher y-o-y at $751.6 million, while 2HFY2024 saw a 14.8% y-o-y increase to $385.9 million. This was due to higher contributions from across its business divisions — hospital, healthcare and especially insurance services.
On a full-year basis, RMG generated $86.3 million in cash from operating activities and has cash and cash equivalents totalling $343.7 million. “We are accumulating cash faster than we can invest. So, we want to distribute that to our shareholders,” says Loo.
RMG has revised its dividend policy to pay out at least 50% of its sustainable earnings annually. For FY2024, it declared a final dividend of 2.5 cents, improving slightly from FY2023’s 2.4 cents. On top of that, RMG intends to buy back up to 100 million ordinary shares over the next two years, and help support earnings per share. “We feel that shareholders will benefit,” he says. If the group needs more cash, he says he is not worried because there is room to increase gearing.
As of June 25, shares in RMG are trading at 95 cents, up about 13% ytd. This translates to a market capitalisation of $1.78 billion with a P/E of 28.4 times. However, at current levels, the share price is around two-thirds of the $1.55 peak achieved in October 2021 from the pandemic boost.
Dr Loo is optimistic. Its businesses in both China and Vietnam are improving and are expected to contribute more moving forward. Meanwhile, Singapore, its home market, continues to grow steadily. “Our operating efficiency is there, and although we had some headwinds on the insurance side, things are getting better now,” says Dr Loo. “Healthcare is less cyclical, more essential, and fundamentally resilient,” he adds. “And fortunately, current [market uncertainties] will affect us less than others.”
RMG outlook brightens
Maybank Securities is reiterating its “buy” recommendation on RMG but with a higher target price of $1.13 from $1.03, given the group’s more optimal capital structure. RMG is also the research house’s top pick in the Singapore healthcare sector.
Analyst Eric Ong is positive on the group’s latest agreement with Renji Hospital and also on the group’s overall outlook in China. “The group’s China hospitals look set to continue their positive trajectory in terms of patient volumes and revenue on increased service offerings and community engagement efforts,” says Ong.
Despite potential competition in China’s new health policy allowing wholly-foreign-owned hospitals, RMG remains optimistic about the immense opportunities in the country, given its growing brand recognition. Management expects its China operations to achieve ebitda breakeven by the end of FY2026 as it continues to ramp up its bed utilisation there.
Meanwhile, in his June 23 report, RHB Group Research’s Shekhar Jaiswal is reiterating his “buy” call on Raffles Medical Group(RMG) with an unchanged target price of $1.08. This follows the analyst upgrading RMG from “neutral” to “buy” earlier in April.
While he calls RMG a “defensive option in a volatile market”, in his April report, he maintains an upbeat sentiment on the stock in June, as the group scales up on its partnerships in China.
“We remain positive on Raffles Medical’s outlook, with healthcare revenue set to surpass prepandemic levels as patient loads normalise, and as hospital revenue grows, with China operations scaling up post Covid-19,” says Jaiswal, who is in the view that strategic partnerships, such as Shanghai’s Renji Hospital and the First Affiliated Hospital of Chongqing Municipality, should enhance capabilities and support margin gains as the China unit moves towards ebitda-breakeven by 2026.
