TRIS Rating Co., Ltd. has assigned a company rating of "A" to Bumrungrad Hospital PLC (BH) with "stable" rating outlook. The rating reflects BH's leading position in the private hospital market, the capabilities of the hospital's physicians and management team and its high service quality. The rating also takes into consideration BH's ability to attract new medical staff, and its improving financial position. However, these strengths are partially offset by the intense competition in both the local and international healthcare markets and concern about its rapid expansion into international markets.
The "stable" outlook reflects the expectation that BH will be able to maintain its leading position in Thailand's private hospital market. With its strong brand name and efficient operations, the company should be able to maintain its ability to attract new medical staff and more patients. The outlook also assumes that the company will mainly fund its international investments from operating cash flow. BH should also be able to maintain the funds from operations to total debt ratio at around 50% while keeping the total debt to capitalization ratio at around 40%-50%.
TRIS Rating reported that BH has recorded strong revenue growth from hospital operations in the last five years, with a compound average growth rate (CAGR) of 18.3%. The CAGR of total outpatient visits and inpatient admissions in the last five years was 12.9% and 13.8%, respectively. International patient volume accounted for around one third of total patient volume, while revenue from foreign patients accounted for almost one half of total patient revenue. Operating income as a percentage of sales increased steadily from a low level of 10.6% in 1998 to 20.5% and 22.1% in 2003 and 2004, respectively. The debt to capitalization ratio declined from 78.08% in 2002 to 64.28% in 2003 and 45.3% in 2004. This ratio is not expected to improve during the next few years since planned expansion into foreign markets, coupled with the capital expenditures needed to fund construction of its new building and medical equipment, will cause debt to remain high. However, the high level of debt does not represent a major concern since funds from operations to total debt was as high as 60.3% in 2004 and is expected to remain at around 50% in the next few years.
TRIS Rating said that several other private hospitals are expanding and they, along with specialized clinics at university hospitals, are all competing for the same group of patients. Though the healthcare business is less volatile than other businesses, several private hospitals, including BH, were faced with difficulties during the financial crisis in 1997-1998 due to increased costs of medicine and medical supplies and high debt levels, which has been used to fund their investments. During the crisis, profit margins of private hospitals fell sharply as costs increased while volume declined as patients sought less costly alternatives (e.g. public hospitals and clinics) to the high medical costs associated with private hospitals. -- End
Bumrungrad Hospital PLC (BH)
Company Rating: A
Rating Outlook: Stable
The "stable" outlook reflects the expectation that BH will be able to maintain its leading position in Thailand's private hospital market. With its strong brand name and efficient operations, the company should be able to maintain its ability to attract new medical staff and more patients. The outlook also assumes that the company will mainly fund its international investments from operating cash flow. BH should also be able to maintain the funds from operations to total debt ratio at around 50% while keeping the total debt to capitalization ratio at around 40%-50%.
TRIS Rating reported that BH has recorded strong revenue growth from hospital operations in the last five years, with a compound average growth rate (CAGR) of 18.3%. The CAGR of total outpatient visits and inpatient admissions in the last five years was 12.9% and 13.8%, respectively. International patient volume accounted for around one third of total patient volume, while revenue from foreign patients accounted for almost one half of total patient revenue. Operating income as a percentage of sales increased steadily from a low level of 10.6% in 1998 to 20.5% and 22.1% in 2003 and 2004, respectively. The debt to capitalization ratio declined from 78.08% in 2002 to 64.28% in 2003 and 45.3% in 2004. This ratio is not expected to improve during the next few years since planned expansion into foreign markets, coupled with the capital expenditures needed to fund construction of its new building and medical equipment, will cause debt to remain high. However, the high level of debt does not represent a major concern since funds from operations to total debt was as high as 60.3% in 2004 and is expected to remain at around 50% in the next few years.
TRIS Rating said that several other private hospitals are expanding and they, along with specialized clinics at university hospitals, are all competing for the same group of patients. Though the healthcare business is less volatile than other businesses, several private hospitals, including BH, were faced with difficulties during the financial crisis in 1997-1998 due to increased costs of medicine and medical supplies and high debt levels, which has been used to fund their investments. During the crisis, profit margins of private hospitals fell sharply as costs increased while volume declined as patients sought less costly alternatives (e.g. public hospitals and clinics) to the high medical costs associated with private hospitals. -- End
Bumrungrad Hospital PLC (BH)
Company Rating: A
Rating Outlook: Stable