NMC Health’s 2021 EBITDA forecast surpasses FY19 by far!

By CL Jose

‘Non-core assets will likely be sold before end-2021’

ABU DHABI/February 24-2021: Is the debt-laden NMC Health, the Abu Dhabi-headquartered healthcare group that made headlines even in the London market, slowly returning to normal, at least on the financial front?

The Administrators of NMC Healthcare have forecasted the earnings before interest, taxes, depreciation and amortisation (EBITDA) for Oman and UAE operations to reach $162.8 million for 2021 surpassing by 61 per cent the pre-Covid EBITDA at $101 million, which the company earned for 2019.

But financial experts refuse to buy that argument as, according to them, the interest on NMC Health’s debt pile could still pose serious challenges to the bottom line because the debt is too huge to be serviced by the revenue.

The current Administrators of the healthcare major had stated earlier that the financial statements published by the ‘now-infamous’ company had been mis-stated right from the year of its initial public offering (IPO) in 2012.

There were several reports that loans valued at $4.5 billion availed by the company, once solely owned by BR Shetty, may have disappeared even as $6.6 billion has been borrowed from about 80 banks, local and foreign, – the major lender being Abu Dhabi’s ADCB, and only $2.1 billion has entered the official books of the company.

While the gross revenue for 2021 has been forecasted to grow by 6.3 per cent to $1.19 billion as against $1.12 billion in 2020, the net revenue is projected to grow by 7 per cent to $1.16 billion in FY21, close to that of FY19.

According to a company document released by the Administrators, in 2021, NMC Group is expected to be comprised of UAE & Oman as non-core assets will likely be sold by that time.

“Savings are expected from labour and rent costs as the performance improvement plan reaches target results,” Administrators noted.

Group performance in 2020

The performance in 2020 also showed a silver lining in the clouds. Group EBITDA for 2020 had surpassed the business plan by a whopping 559 per cent to $106.3 million, whereas it was only a tad, 1.7 per cent, less than the actual EBITDA the company recorded in 2019, at $108.2 million.

NMC Health was brought under Administration more than a year ago following the legal measures initiated by ADCB, the largest lender to the company. And currently, it is under the ADGM regime.’

Though the question whether NMC could report a net profit in the near future still begs an answer, the financials have been witnessing steady progress ever since the Administrators took the helm of the healthcare major.

The current management, which is the Administration, has been able to cut down on the expenses substantially strengthening the bottom line.

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