€1.8bn in write-downs and impairments for big hospital/care stocks
Did you know the last two years has seen a combined €1.8bn in goodwill write-downs and impairment charges at seven of the largest listed hospital and elderly care stocks in the sector? And that NMC Health had nearly that amount of goodwill before it de-listed?
The infographic below shows the write-downs and their proportion of total annual revenue for the company during the reporting period (or previous one if the write-down came in an interim report).
Mediclinic International has had a particularly turbulent time with its Swiss subsidiary Hirslanden and its Middle East segment both seeing huge charges, while 29.9%-held subsidiary Spire comes in third. For the first two the charges were tariff-related while Spire’s was related to the weighted cost of capital (WACC) during COVID-19.
Pan-Nordic Aleris suffered a big write-down before being sold to Triton while Ramsay UK, IHH Healthcare and Attendo have seen similar amounts. Ex-owner of Aleris, Investor AB, is vague on the reasons but the latter three can be put down to rental inflators (Ramsay) and acquisitions which haven’t gone brilliantly (IHH & Attendo).
NMC Health, which is in-administration and may sell in April 2021, had around $1.4bn in goodwill at the end of 2018 originating from the acquisitions of Al Zahra (28.9%), Fakih IVF (12.9%), CosmeSurge (9.0%), Provita (8.4%) and Clinica Eugin (8.0%). In mid-2019, a spokesperson told HBI: “Given NMC’s strategy of using a combination of organic and inorganic expansion to drive growth, a sizable goodwill component is a natural outcome. That being said, we remain very comfortable with the performance of our acquired assets and see no risk at all in terms of impairment requirement.”
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