2Q24 review: Healthcare still showed some of the strongest sector growth in JCI Index
Overall strong results were pretty much in line with what we had expected (read: A naturally defensive sector). A q-q decline in overall metrics was seen in 2Q24 more due to the Lebaran holiday that took place in early April, resulting in overall lower traffic in the quarter.
Hermina(HEAL IJ, Buy) booked the highest overall revenue/NPAT growth among the hospitals, attributable to the larger addition of operational beds in YTD and increasing its bed occupancy ratio (BOR) compared to hospital peers (Fig. 3 and Fig. 4). 1H24 EBITDA margin arrived at 29.5%, slightly higher than company guidance of 28.7%; this should provide enough cushion for potentially a lower 2H24F EBITDA margin, as we expect three new built hospital (PIK 2, Nusantara, and Madiun) to be finished in the period.
Mitra Keluarga (MIKA IJ, Neutral) and Siloam (SILO IJ, Neutral) book revenue trendsroughly similar to that of HEA. However, we believe that it is worth highlighting the ability for MIKA to improve its EBITDA margin both q-q (37% in 1Q24) and y-y (35% in 2Q23) to 39% in 2Q24. This signifies its operational efficiency compared to its peers, in our view.
Prodia (PRDA IJ, Neutral) booked an in-line result, signalling an earnings recovery amid declining testing volume, attributable to management’s main focus on savings on opex. However, we don’t expect testing volume will rebound easily in 2H24F, as we think that challenge that PRDA faces from the routine testing price war with other hospital/lab testing players will not be easy to counter, given the similarity in product offering in routine testing (92% of PRDA testing volume in 1Q24).
Performance should remain solid for the rest of the year
We are expecting the overall solid result for the hospitals to continue in 2H24F. Typically, there are no seasonality difference across quarters for the hospitals unless we are seeing more holidays in a certain period.
Our verdict on the sector
Our pecking order for the healthcare sector remains : HEAL> MIKA> SILO> PRDA. HEAL remains our top pick for the sector, as the company boasted the highest growth compared to other hospital with relatively cheap valuation compared to the local and regional peers. While MIKA is the best operator compared to its peers, its expensive valuation is still the main pushback. While the ongoing voluntary tender offer (VTO) proposal for SILO from a consortium led by CVC Capital Partners (CVC NA, Not rated) is still worth monitoring, we remain skeptical that PRDA will experience a volume recovery in 2H24F.
SUMMARY OF HOSPITALS OPERATIONAL HIGHLIGHTS (IDRbn)
Outpatient Revenue (IDRbn)
1Q23
2Q23
3Q23
4Q23
1Q24
2Q24
Q-Q
Y-Y
HEAL
539
529
591
612
630
586
-6.9%
10.8%
MIKA
344
330
359
359
401
371
-7.3%
12.6%
SILO
1,143
1,126
1,242
1,294
1,322
1,295
-2.1%
15.0%
Outpatient Visits (000s)
1Q23
2Q23
3Q23
4Q23
1Q24
2Q24
Q-Q
Y-Y
HEAL
1,900
1,728
2,072
2,300
2,200
2,047
-7.0%
18.5%
MIKA
711
676
733
739
763
724
-5.0%
7.2%
SILO
925
910
1,047
1,066
1,051
1,018
-3.1%
11.8%
Average Revenue per Visit (OP, IDRmn)
1Q23
2Q23
3Q23
4Q23
1Q24
2Q24
Q-Q
Y-Y
HEAL
0.28
0.31
0.29
0.27
0.29
0.29
0.0%
-6.5%
MIKA
0.48
0.49
0.49
0.49
0.53
0.51
-2.4%
5.0%
SILO
1.24
1.24
1.19
1.21
1.26
1.27
1.1%
2.9%
Inpatient Revenue (IDRbn)
1Q23
2Q23
3Q23
4Q23
1Q24
2Q24
Q-Q
Y-Y
HEAL
780
764
914
916
1,036
1,005
-3.0%
31.5%
MIKA
684
691
749
748
842
838
-0.5%
21.2%
SILO
1,511
1,502
1,722
1,651
1,705
1,694
-0.6%
12.8%
Inpatient Admission (000s)
1Q23
2Q23
3Q23
4Q23
1Q24
2Q24
Q-Q
Y-Y
HEAL
138.6
140.0
161.9
178.1
180.0
187.5
4.2%
33.9%
MIKA
70.3
71.6
78.2
76.6
81.7
81.3
-0.5%
13.6%
SILO
71.3
71.6
80.2
79.3
82.8
81.6
-1.5%
13.9%
Average Revenue per Inpatient (IDRmn)
1Q23
2Q23
3Q23
4Q23
1Q24
2Q24
Q-Q
Y-Y
HEAL
5.6
5.5
5.6
5.1
5.8
5.4
-6.9%
-1.8%
MIKA
9.7
9.7
9.6
9.8
10.3
10.3
-0.1%
6.7%
SILO
21.2
21.0
21.5
20.8
20.6
20.8
0.9%
-1.0%
Average length of stay (in days)
1Q23
2Q23
3Q23
4Q23
1Q24
2Q24
Q-Q
Y-Y
HEAL
2.8
2.8
2.8
2.8
2.9
2.7
-6.8%
-3.4%
MIKA
2.8
2.8
2.7
2.7
2.8
2.8
-1.2%
-0.1%
SILO
3.2
3.2
3.1
3.1
3.1
3.1
-0.5%
-1.0%
Average Revenue per Patient/day (IP), in IDRmn
1Q23
2Q23
3Q23
4Q23
1Q24
2Q24
Q-Q
Y-Y
HEAL
2.01
1.95
2.02
1.84
1.99
1.98
-0.2%
1.7%
MIKA
3.45
3.48
3.50
3.60
3.67
3.72
1.2%
6.8%
SILO
6.71
6.64
7.02
6.80
6.55
6.64
1.4%
0.0%
Quarterly BOR (IP)
1Q23
2Q23
3Q23
4Q23
1Q24
2Q24
Q-Q
Y-Y
HEAL
65.9%
66.5%
75.6%
82.8%
77.9%
74.7%
-4.2%
12.3%
MIKA
57.9%
57.9%
60.2%
58.4%
63.4%
61.7%
-2.8%
6.6%
SILO
63.6%
62.2%
67.7%
66.2%
69.8%
67.3%
-3.6%
8.3%
Source: Company data, Verdhana research
Fig. 10: Hospitals financial highlights
SUMMARY OF HOSPITALS FINANCIAL HIGHLIGHTS (IDRbn)
Revenue
1Q23
2Q23
3Q23
4Q23
1Q24
2Q24
Q-Q
Y-Y
HEAL
1,353
1,339
1,538
1,554
1,706
1,638
-4.0%
22.3%
MIKA
1,028
1,021
1,108
1,107
1,243
1,209
-2.7%
18.4%
SILO
2,654
2,628
2,964
2,945
3,027
2,990
-1.2%
13.8%
Gross Profit
1Q23
2Q23
3Q23
4Q23
1Q24
2Q24
Q-Q
Y-Y
HEAL
506
457
583
529
669
616
-7.8%
35.0%
MIKA
505
511
557
556
666
653
-2.0%
27.6%
SILO
1,640
1,630
1,745
1,720
1,872
1,783
-4.8%
9.4%
EBITDA
1Q23
2Q23
3Q23
4Q23
1Q24
2Q24
Q-Q
Y-Y
HEAL
333
354
460
417
493
492
-0.2%
38.9%
MIKA
361
361
417
362
463
470
1.5%
30.0%
SILO
411
418
560
489
500
483
-3.4%
15.4%
NPAT
1Q23
2Q23
3Q23
4Q23
1Q24
2Q24
Q-Q
Y-Y
HEAL
109
93
146
89
191
152
-20.3%
62.9%
MIKA
231
222
233
230
289
312
7.9%
40.1%
SILO
8
5
12
11
12
11
-9.2%
99.8%
Source: Company data, Verdhana research
Fig. 11: Hospitals financial ratio highlights
SUMMARY OF HOSPITALS FINANCIAL RATIO
GPM
1Q23
2Q23
3Q23
4Q23
1Q24
2Q24
HEAL
37.4%
34.1%
37.9%
34.0%
39.2%
37.6%
MIKA
49.1%
50.1%
50.2%
50.2%
53.5%
54.0%
SILO
61.8%
62.0%
58.9%
58.4%
61.8%
59.6%
EBITDA Margin
1Q23
2Q23
3Q23
4Q23
1Q24
2Q24
HEAL
24.7%
26.5%
29.9%
26.9%
28.9%
30.0%
MIKA
35.1%
35.4%
37.6%
32.7%
37.2%
38.8%
SILO
15.5%
15.9%
18.9%
16.6%
16.5%
16.1%
NPM
1Q23
2Q23
3Q23
4Q23
1Q24
2Q24
HEAL
8.1%
7.0%
9.5%
5.7%
11.2%
9.3%
MIKA
22.4%
21.8%
21.0%
20.8%
23.2%
25.8%
SILO
0.3%
0.2%
0.4%
0.4%
0.4%
0.4%
Opex as % of sales
1Q23
2Q23
3Q23
4Q23
1Q24
2Q24
HEAL
23.4%
21.7%
20.9%
23.5%
19.8%
20.5%
MIKA
21.6%
22.9%
21.5%
23.3%
23.4%
22.5%
SILO
29.5%
28.9%
28.9%
29.7%
28.0%
29.6%
Annualized quarterly ROE
1Q23
2Q23
3Q23
4Q23
1Q24
2Q24
HEAL
9.2%
7.7%
11.9%
6.9%
14.2%
10.9%
MIKA
14.8%
14.3%
15.0%
14.2%
17.1%
18.2%
SILO
13.9%
13.9%
18.9%
17.9%
0.7%
14.9%
Net gearing (%)
1Q23
2Q23
3Q23
4Q23
1Q24
2Q24
HEAL
20.5
23.6
26.6
27.0
27.3
34.8
MIKA
- 24.7
- 20.2
- 20.3
- 12.8
- 26.3
- 25.3
SILO
- 4.7
2.8
- 1.9
- 6.7
0.7
3.4
Source: Company data, Verdhana research
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