Here Are The 3 Ways Health Management International Ltd Makes Its Money
Health Management International Ltd (SGX: 588), or HMI, is a healthcare services provider with a presence in Singapore, Malaysia, and Indonesia.
Over the past five years, Health Management International’s stock price has climbed by a massive 500%. This led me to take a closer look at the company’s business to learn how exactly it makes its money.
Here’s a chart showing the revenue contributions from the different parts of Health Management International’s business in its fiscal year ended 30 June 2016 (FY2016):
Source: Health Management International FY2016 annual report
The Mahkota Medical Centre was the biggest revenue contributor to the company in FY2016. Health Management International runs the Malacca-based medical centre and holds a 49% stake in it.
The centre is the largest private hospital in the southern region of Malaysia. Up to 20% of the Mahkota Medical Centre’s patients are from overseas; in fact, Health Management International estimates that as a stand-alone hospital, Mahkota Medical Centre, which has a bed capacity of 288, attracts up to 10% of the total number of medical tourists in Malaysia.
For this part of the business, the company’s focus is on developing Centres Of Excellence within the hospital, which would allow it to treat patients in a more holistic manner by combining expertise from various disciplines.
Regency Specialist Hospital is the next largest revenue driver for Health Management International. It is a 218-bed tertiary care hospital located within the Iskandar region in Johor, Malaysia. The hospital is about a 15 minutes’ drive from the Singapore-Woodlands Checkpoint. Health Management International has 61% interest in the hospital.
Regency Specialist Hospital was the fastest growing segment within the company in FY2016, with a revenue increase of 27.8%. The company expects to start construction of a new block for the hospital in the second half of this year. Once completed, the new block will double Regency Specialist Hospital’s existing capacity.
The HMI Institute of Health Sciences is the smallest segment within Health Mangement International.
The institute provides healthcare education and it is one of the only two Singapore Workforce Development Agency appointed Continuing Education and Training (CET) centres for the healthcare support sector in Singapore. The HMI Institute of Health Sciences has trained over 110,000 individuals in life-saving skills.
A Foolish conclusion
There are a few moving parts to Health Management International’s business. By understanding how the company earns revenue, it can help current and prospective investors in the company form a better judgement on its long-tern prospects.