Nawaloka Hospitals 3Q profit falls as overheads, finance costs rise

Nawaloka Hospitals PLC, the Dharmadasa family-controlled medicare service provider, reported an earnings of 5 cents a share or Rs.72.4 million net profit for the October-December quarter, down 24 percent year-on-year (YoY) as the overheads rose, the interim results showed. 
The revenue grew a modest 4 percent YoY to Rs.1.65 billion.  However, the staff costs rose by 12 percent YoY and administrative expenses rose by14 percent YoY to Rs.315.3 million and Rs.313.9 million, respectively.  
The finance cost rose by 24 percent YoY to Rs.136 million as the new long-term loans and leases rose by Rs.1.5 billion. Sri Lanka’s private healthcare industry has a positive outlook given many people being able to afford private medicare as their disposable incomes are seen on the rise. 

But the recent imposition of value added tax (VAT) on certain healthcare services could have a bearing on the sector. 
Softlogic Chairman, Ashok Pathirage who runs a rival private hospitals chain under Asiri Hospitals group recently told the increase in VAT had resulted in such healthcare services being treated by public as too expensive to bear. 
Meanwhile, for the nine months ended in December 31, 2016,Nawaloka Hospitals reported an earnings of 12 cents a share or Rs.168.7 million, down 23 percent on year. 
The revenue rose by 7 percent YoY to Rs.4.7 billion. 
In March, 2016, Dhammika Perera making a foray into the thriving hospital sector upped his stake in Nawaloka from little under 3 percent to 24.45 percent. As of December 31, 2016 he held 26.1 percent stake being the third largest shareholder.