The Cleopatra Hospitals Group (CHG) is targeting revenue growth of 25%-30% year-on-year (y-o-y), which will come from organic growth, polyclinics, and its IVF centre.
The group will also focus on its normal business development plans, capturing attractive mergers and acquisition opportunities, mostly framed in terms of what CHG did not achieve in 2020.
CHG is looking to continue its strategy of volume and price growth, a favourable case mix, and creating centres of excellence. Given a weak base in the second quarter (Q2) of 2020, the company’s management expects a growth in volumes of around 10% in 2021.
The Al-Katib and Queens hospitals will keep operating as facilities treating patients with the novel coronavirus (COVID-19), at least for Q1 and Q2 of 2021. Following this, the Queens Hospital will operate as a centre of excellence for oncology, and the Al-Katib Hospital will return to its service as a general hospital.
This will ensure that there will be no need for a pause in operations at the Queens Hospital, and will not impact the consolidated revenue growth guidance.
On the margins side, CHG continues to focus on achieving efficiency and margins improvements. During 2021, capex will be directed to electromechanical upgrades and renovations, which will be followed by lower capex spending in the following years.
On the potential of its acquisition of the Alameda Healthcare Group, CHG sees the transaction as transformational, which will allow the Cleopatra Hospitals to double the number of beds. It will also ensure that it can double the EBITDA value, whilst allowing for a wider patient segmentation and extend the geographical coverage.
The huge opportunity comes from the fact that Alameda Healthcare Group’s hospitals are post-capex and class A facilities, that do not require any spending on renovations.
Currently, due diligence is taking place and should last for two to three months, which sees CHG working closely with the Egyptian Competition Authority (ECA). The efforts will create a reply to all considerations and confirming that the company’s strategy is focused on growing the market and narrowing the demand/supply gap, rather than monopolistic practices.