Raffles Medical Group: Financial Report

2021-04-26 18:21:37
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This is the largest private medical group offering diversified practice in Singapore. In the beginning, the company begun with the 2 clinics in the country and has since expanded over the years, spreading its wings. Currently, the group of hospitals provides medical services to over 2 million patients in a global market, with a large number of corporate clients who provide their employees with cover in this hospital. This paper is aimed at doing a financial dissection of Raffles Medical Group, hereinafter referred to as the Group, for the purpose of testing understanding on basic financial principles in theory and practice.

Organization The company operates over 80 clinics across the country, most of which offer multi-disciplinary approaches in the country, as well as 6 offshore centers in Hong Kong and Shanghai. Airport clinic services are also available in 2 of Singapores major airports. In addition, the group manages a number of diseases from the common cold and cough to offering of emergency services, full-body checks and health checks. The group also offers screening and travel services, as well as workplace consultancy. Some of these corporate entities include government agencies, national and multinational corporations. Having being fully integrated, the group now offers a network of services including dental services, a Chinese medical service facility, family medicine, tertiary private care institutions, an educational centre and the consumer healthcare division of the company. Being a patient with Raffles ensures that one can receive a variety of care specialties including basic care needs as well as tertiary care. It is an integrated member of the Mayo Clinic Care Network, and thus has the best physicians from the United States practicing in the locally in Singapore.

Raffles Hospital

The Raffles Hospital is the flagship project of the group, being a tertiary medical institution in itself. This hospital is right in the capital of the country and offers a variety of specialist services at cutting edge medical technology. From fields such as cardiology, neurology and orthopedics, the company offers services meeting the needs of various patients, becoming a reputable destination of choice for patients in the international scene. As of today, the hospital has had patients from over 100 countries flowing in to receive treatment at the facility.

Group practice model

The Institutional Group Practice is the model in use within the institution and the group as a whole. This is a model of practice adopted by American institutions such as the Mayo Clinic, where there is coordinated working of professionals as a team to assure quality medical services are provided to the patient, in an affordable and transparent manner. Evidence-based practice is largely used in this approach in making sure that medical services afforded to the patient are peer-reviewed, audited by relevant medical authorities and integrated into the general practice of medicine. As a potential investor in companies in the region, it is important to consider this group, noting that its share is available on the stock market for trading. This following part of the paper highlights the financial strong points and weak points of the company, in a bid to determine whether it is valuable trading area for potential investors.

Part A

Financial information

With regards to the profitability of the company, it is evident from the information given in the financial reports of the Group, that there has been steady improvement of the financial situation for the group in the period of 10 years (2005-2015). During this period, there has been an improvement in almost every aspect of the companys growth and profitability, noting a steady increase in the revenues that the group has been earning (Lang, et al., 1993). If, for example, we consider the following graph that shows the overall information presented by the indicators of the company, then we would get a proper overview of this situation:

The information above represents the graphical information for key indicators namely the net income of the company, revenues that it obtains, gross margins and earnings per share. In the representation above, the company has obtained a large growth in revenues obtained the course of conducting business over the 10 year period, proving to the potential investor that the company is one whose agenda is on improvement of the financial position of the stakeholder (Bodie, et al., 2008). The insistence on quality that the Group puts on medical services has offered good fruits and this can be seen in terms of the financial outcomes that the group is achieving.

The profitability is further on a rising ladder as we consider the overall liability versus the stockholders equity in a bid to determine the safety of the investment of the shareholder. As the potential stakeholder considers the current liability of the company, which is on a decreasing ratio as it stands, there is increasing equity for the stakeholder, giving them increased confidence in the company (Chew, 1996). This can be illustrated by the below demonstration of the figures obtained over the last ten years from the company (Morning Star, 2015). This brings to the attention of the investor the potential that the company has in ensuring that there investment is secured.

Fig: comparison of stakeholder equity and the Groups current liability over the last ten years

Furthermore, a consideration of the earnings of the shareholder in the company shows that this has been on a steady increase in the last ten years, so that with more investment in the company, the shareholder is likely to make better out of their investment (Li & Hendersen, 1991). For example, consideration of the earnings per share and the dividend returns for each investment in the group has shown that there has been significant rise in the recent past with a steady rise in value following the high profitability of the company in that period (Morning Star, 2015).

Fig 2: analysis of shareholder interests

This means that every other person who has invested in the group over the last ten years has had significant profits in their investment, especially with the expansion plans that the group has undertaken to do in the Asian region. Higher profitability of these outlets, and the overall good management practice that has been engaged in the course of running these installations has made the group quite a good place for investment.

An analysis at the five year period of the dividend share analysis for the client would show that there has been a small change in the profitability of the shareholder because of the continued investment for the company in ensuring that there is expansion (Morning Star, 2016). As such, the value of the earnings per share had been on a rise between the first 3 years of analysis (2010-13) and dropped to a steady 0.12 in the two following years following the rise in the capital expenditure of the company in opening new branches in other areas. The available data thus points to the availability of long-term investment that the group is making that may have been the cause of the redundancy in the remuneration for the stocks in the company. Nonetheless, it is more evident that the share price continues to rise, thus proving that the effect of having lower incomes for the shareholder was a result of expansion activities of the group.

Nonetheless, important considerations need to be made in the course of investing in this group. While everything is looking good in its financial performance, an increase in its capital expenditure in the course of expansion may mean that the short-term investment in the company may not yield much fruit. This can be seen in the effects it has had on the shareholder dividend values. Nonetheless, the performance on the financial market with steady increase the price per share means that the loss in dividend can be covered through this increase. As such, the positivity of the company performance in the market will continually cushion the shareholder against adverse effects that may come about as a result of reduction in the dividend ration.

Financial stability

With regards to the stability of the company, a consideration of the major indicators is considered. The following graphical presentation gives an overview of the overall stability and health of the company. From the onset, it becomes very clear that the income of the company is not going much into covering debt. This means that the company has become well-able to provide capital for its programs, so as to minimize the risk of bankruptcy and inability to pay debts (Ghosh & Sherman, 1993). This boosts the credibility of the group in its operations, especially as a participant in the financial market. The financial leverage of the company has been able to maintain a steady stride of decline in the course of the ten years of analysis, rising slightly between 2005-10, then moving on to maintain at a steady drop for the recent past. The financial leverage of the company refers to the ability of the company to acquire assets on debt, which the Group had a high in the course of the mentioned years (2005-10), but later on went on to use internal funding to ensure that there was acquisition of assets. Since then, there has been no debt acquisition for the company, increasing the confidence of the investor.

Fig: financial stability indicators for Raffles Group

Part B

Company performance

With regards to the news that the company posts concerning its performance, there are numerous posts about it. In fact, the company has created a dedicated news channel online that gives the public the latest news and information on the happenings in the group. This gives the group a competitive edge with regards to communication in case of any emergency responses required such as in the course of accidents. As such, the information desk of the company is able to amply communicate to the public concerning the intentions of the group, its efforts towards issues such as corporate social responsibility and expansion efforts. This has created an airtight system of communication, where the group largely uses official self-created channels for the purpose of communication. News and information from other sources are thus limited to what the official statement of the company has to say on the matter.

As such, the external sources of information normally dont have too much to say on projects regarding the group, except to appraise ongoing efforts that have led to the event being reported. Taking, for example, the opening of the health center on Orchard Road that was captured by Channel News Asia (Lim, 2015). In the article, the external source could only give details of the opening of the branch in Orchard Road by giving reference to what the group had already communicated, especially concerning its growth in net profits and division revenues. Another post by the same newsgroup captured the joining of the group to the Mayo Clinic Care Network in a similarly article that largely relied on what the group communicated via official sources (Giridharadas, 2015).

Despite the lack of information on the particulars of the company, the larger number of external sources seem to laud the efforts of the group in ensuring that there are quality services being provided within their chain of healthcare service provider facilities. For example, the importance of the Mayo Clinic Care Network has been noted, and the fact that the group has been found to be the first in Asia to join this network, it is a positive mark on their track record (Giridharadas, 2015). Furthermore, the portrayal of the group by external reporting sources show that the group is largely consistent with its pr...

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