Shares in private hospital operator Mediclinic (MDC) shot up 17% to 855p after the Abu Dhabi rulers waived healthcare treatment payments. Crown Prince Sheikh Mohammed bin Zayed Al Nahyan has axed the 20% co-payment previously demanded from holders of a Thiqa medical insurance card, effectively the state insurance membership handed to United Arab Emirates (UAE) nationals.
The decision mean that Thiqa card holders will in future avoid having to find the extra cost of care offered by private hospitals in Abu Dhabi. Mediclinic operates six hospitals and more than 30 clinics across the UAE region, with more than 700 inpatient beds, including the Mediclinic Corniche in Abu Dhabi.
It also has operations in Southern Africa and Switzerland, as well as a 29.9% stake in Spire Healthcare (SPI).
Investors clearly believe that the change of rules will bolster earnings from its Middle East business. Revenue from this division declined 8% in the full year to 31 March 2017 after the co-payment was introduced in July 2016 by the Health Authority Abu Dhabi.
Broker Jefferies expects Mediclinic to experience a greater benefit from the change compared to peer NMC Health (NMC), which also runs private clinics in the Middle East, because of its greater focus on Thiqa member patients.
Earlier in April, we flagged Mediclinic’s upbeat outlook.
Mediclinic has also dodged a proposed tax levy in Switzerland that would have hit its 2017 earnings by 10%.
