OUE Healthcare : 5WA 0% on Friday (Aug 4) posted earnings of S$1.8 million for the first half of the year ended June, down 79 per cent from its earnings of S$8.4 million in the corresponding year-ago period. 

The weaker bottomline showing came despite an 85 per cent increase in revenue for the period to S$78.7 million, which the group chiefly attributed to the consolidation of First Reit and other medical partners, as well as higher contributions from the Wuxi Lippo Xi Nan hospital and the China pharmaceutical distribution business.

The increase in revenue for Wuxi Lippo Xi Nan hospital came from an increase in demand for outpatient services and medical check-ups, while that for the China pharmaceutical business was due to higher sales of biologic products.

Cost of sales rose to S$18.2 million from S$3.1 million due to the consolidation, the group said. 

No interim dividend was declared by OUE Healthcare’s board after the consideration of the group’s financial cash flow requirements. 

As at end-June, the group’s net current liabilities amounted to about S$10.7 million, down from S$24.9 million as at end-December last year. 

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The negative working capital position was due chiefly to provisions of S$20.2 million; the group said this was related to legal and related expenses, which included provisions relating to obligations arising from contract and commercial arrangement. These were based on the best estimate of the possible outflow, considering both contractual and commercial factors.

The board said the group is able to meet its debt obligations when they fall due, after having assessed the sources of liquidity, the available cash reserves as at end-June and the projected net operating cash flows.

Looking ahead, OUE Healthcare said the global economic outlook  remains uncertain due to geopolitical tensions and persistent inflationary pressures. 

“With central banks around the globe tightening monetary policies to address inflation, acute stress in the financial services sector seems to have receded, but persistent challenges remain, given the weakening economic growth and declining demand in advanced economies under a high-interest-rate environment,” it said. 

However, the company said healthcare remains an essential service, and termed the industry “a bright spot”, given the growing affluence and ageing population, which will drive demand for quality healthcare services.

“The group is committed to building a regional healthcare ecosystem through a three-pronged strategy to continually expand its healthcare network, broaden its service offerings and capitalise on new business opportunities,” it added. 

Shares of OUE Healthcare closed flat at S$0.032 on Friday.