Asklepios: Revenue growth in first nine months of 2019

In the first nine months of 2019, Asklepios Kliniken GmbH & Co. KGaA increased its revenue by 4.0% to EUR 2,637 million. The main driving factor was still strong growth in outpatients. Due to the forward-looking focus on the prescribed thresholds for nursing staff, there was a substantial increase in staff costs in the current financial year. Consolidated net income (EAT) and the return on sales were accordingly slightly lower than in the previous year.

At a total of EUR 2,637 million, Asklepios’s revenue in the first nine months of 2019 was up 4.0% year-on-year (9M 2018: EUR 2,537 million) and thus still higher than the forecast for the current financial year of between 2.5% and 3.0%. However, at the same time staff costs recorded a larger increase. The main cost driver was the recruitment of new medical and nursing staff. Asklepios is thereby preparing itself for the regulatory interventions arising from the Pflegepersonalstärkungsgesetz (German Act on Support for Nursing Staff), the Pflegepersonaluntergrenzen-Verordnung (German regulation on the threshold of nursing staff) and the flat-rate fee system for psychiatry and psychosomatics. Overall, Asklepios posted additional staff costs of EUR 89.4 million as compared to the same quarter of the previous year.

Although EBITDA was up year-on-year at EUR 280.0 million and a margin of 10.6%, it was not comparable due to the new accounting standard IFRS 16 that has been applied since 1 January 2019. The effects of the regulatory changes can be seen in EBIT and particularly in consolidated net income (EAT), with EBIT declining to EUR 127.7 million (9M 2018: EUR 141.9 million) and EAT to EUR 84.0 million (9M 2018: EUR 98.8 million). The EAT margin fell to 3.3% (9M 2018: 3.9%).

In the first nine months of the year, Asklepios Kliniken treated a total of 1.86 million patients, representing a year-on-year increase of 10.7% (9M 2018: 1.68 million). There was once again a clear trend towards outpatient treatment, with the number of outpatients at Asklepios rising by 15.5% year-on-year to 1.35 million.

“Our strategic measures are taking effect operationally, which enabled us to accelerate Asklepios’s growth further from January to September,” says Kai Hankeln, CEO of Asklepios. “With regard to the foreseeable regulatory requirements, we have taken the initiative over the past months and successfully recruited around 1,000 additional full-time equivalents in the medical area. At the same time, we are keeping an eye on economic balance and examining our productivity and efficiency in non-patient-centred areas.”

Net cash flow from operating activities fell by 20,1% to EUR 190.2 million in the first nine months of the year (9M 2018: EUR 238.1 million). Investments totalled EUR 198.9 million (9M 2018: EUR 189.8 million), of which EUR 146.3 million (9M 2018: EUR 125.9 million) was financed with the Group's own funds. The equity ratio came to 33.8% (31 December 2018: 36.9%). “Asklepios is well prepared for the current challenges. We have a stable financing structure and the necessary financial scope to shape our future development in a difficult market environment,” says Hafid Rifi, CFO of Asklepios.

The company’s net debt amounted to EUR 1,051.5 million in total (31 December 2018: EUR 1,027.0 million). The ratio of net debt to EBITDA (not including liabilities from leasing) for the past 12 months was 2.8x (31 December 2018: 2.6x). Cash and cash equivalents amounted to EUR 321.8 million (31 December 2018: EUR 351.6 million).

Forecast

For the 2019 financial year, Asklepios anticipates organic revenue growth above the previous forecast of 2.5% to 3.0%. EBITDA will remain stable in the period from October to December. However, we expect consolidated net profit (EAT) to decrease year-on-year. Absolute equity as at 31 December 2019 will be higher than the previous year’s level, while the equity ratio will be down compared to the end of the previous year due to the balance sheet extension resulting from IFRS 16.