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JOHANNESBURG (Reuters) - South Africa's biggest private hospital group by market value, Mediclinic International, reported a 19 percent drop in underlying annual earnings on Wednesday, hurt by regulations in the Middle East that have now been changed.
Mediclinic, which has stakes in Britain's Spire Healthcare (SPI.L) and Switzerland's Hirslanden, extended its reach into the United Arab Emirates when it bought Al Noor last year.
Underlying earnings per share came in at 29.8 pence per share for the year to the end of March compared with 36.7 pence a year earlier, largely impacted by shares issued to acquire Al Noor and adverse operating performance in Abu Dhabi.
A co-payment system for private healthcare in Abu Dhabi had weighed on the firm's operations in the UAE, but the government has since scrapped it.
"Recent regulatory changes provide support for the gradual recovery in performance of the Abu Dhabi business and future investment decisions," the firm said in a statement.
Progress on the regulatory front has also been made in recent weeks in Switzerland, Chief Executive Danie Meintjes said.
In the Zurich region, after lobbying by Mediclinic's Swiss business, lawmakers last month voted against a hospital levy on privately insured patients, the company said.
A slowdown in economic growth in Mediclinic's home market convinced the company to explore more affordable options there.
"In South Africa we decided on a strategy to roll out day clinics adjacent to our main hospitals that are under pressure in terms of occupancy," Meintjes told Reuters.
While the firm's priority is to extend its reach in its current markets with a new hospital in the UAE and more outpatient facilities in Switzerland, it is also looking at possible expansion in other regions.
"We are looking to grow, and part of that growth could come outside of the existing platforms," said Chief Financial Officer Jurgens Myburgh, referring to the areas where the company operates.
Mediclinic said revenue rose 30 percent to 2.75 billion pounds and operating profit was up 26 percent.
Johannesburg-listed shares in Mediclinic declined 2.2 percent to 144.50 rand and was down 1.7 percent in London by 0830 GMT, compared with a 0.2 percent drop in the JSE's benchmark Top-40 index.
Reporting by TJ Strydom; editing by Susan Thomas and Keith Weir