Lokman Hekim 2020 results and outlook

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High double digit growth with wider operating margins

  • December quarter revenues +30%. Lokman Hekim’s December quarter revenues grew 30% on the year. The outpatient revenues per visit grew 26% while inpatient revenues per visit posted a higher 32% growth on a like-for-like basis. Gross income and EBITDA for the quarter posted stronger 47% and 51% year on year growth, respectively.

  • December quarter added 700bp+ to EBITDA margin. EBITDA margin for the quarter is 23.8% versus 16.6% in the same quarter of 2019. The margin growth is due to both improved pricing and increasing contribution from the margin accretive Medical School research hospital.

  • Full year EBITDA strongly beat the guidance. Lokman Hekim’s full year EBITDA exceeded the high-end of management guidance. Despite rising costs and somewhat declining patient traffic, EBITDA beat the high end of guidance by 10%. The positive surprise is driven by improved product mix with the growth in quality care procedures, adjustments made to regulatory pricing by the Ministry of Health, and the income generated from the Lokman Hekim University Hospital.

  • EPS + 91%. Net income available for shareholders and earnings per share is up more than 91% on the year. The December quarter net income available for shareholders reads TL11.8 million versus TL8.0 million in the September quarter of 2020 and TL6.1 million reported for the same quarter of 2019.

  • Leverage ratios down. The balance sheet remains well capitalized with continued improvement in leverage ratios. Net debt to EBITDA for 2020 full year stands at 1.27x versus 2.42x in 2019. The sharp decline in this particular metric is driven by both strong growth in EBITDA (+65%) and decline in net financial debt itself (-14%).

  • Outlook. No guidance statement for 2021 is yet published. What should drive sales growth and earnings this year are, in decreasing order of importance, recovery in patient traffic and longer stays as COVID related lock-downs and curfews ease, price hikes in selected lines and services, momentum in revenues generated from the LHU Research Hospital.