The idea of Shifa International Hospital (SHFA) was first conceived in New York, in the middle of 1985. The principal object was to establish medical centers in Pakistan, and the first hospital was set up in Islamabad. The Shifa Hospital was incorporated on September 20, 1987 as a private limited company and converted into the public limited company on October 12, 1989. The hospital listed at the KSE in1995. Since that time, it has the unique position in the Pakistani corporate sector since it is the only healthcare enterprise in the corporate sector which is listed on the stock exchange of Pakistan.
The construction of the hospital was started in 1987 by acquiring over 11 acres of land in Islamabad without any borrowed money the hospital started with Rs 500 million in equity. Initially, the Shifa hospital offered the medical treatment related to Radiology, Radiation Oncology, Laboratories, Operating Rooms, Dialysis, and ICU/CCU. After, one and a half decade the Shifa International Hospital has expanded to different blocks with already finished covered area of 315000 square feet. Shifa International Hospital offers 150 IPD beds with quality care and OPD facility in 35 different specializations.
It is rather unfortunate in Pakistan that only one healthcare provider is registered at the stock market. Predominantly the health care sector in Pakistan consists of privately own units, and the hospitals run by the government. So, it is impossible to compare the result with any other health care provider.
FY12 PERFORMANCE It would be wrong to argue that the business of health care works like FMCG sector. Healthcare, basically, is a difficult business, but it is indeed a very profitable business globally. The initial days of Shifa International Hospitals did not go according to the plans. The hospital lost money for most of the years since listing. However, things changed since FY01, and the hospital has turned around its fortunes.
From the revenue of Rs 3,412.7 million in FY11, the hospital's top line clocked in at Rs 4,451.8 million in FY12, a 30 percent year-on-year growth over FY11. The gigantic growth in the revenue is mainly attributable to utilisation of hospital's Inpatient care department (IPD) which alone contributed to 43 percent of gross revenue of the hospital and then higher revenue at the external pharmacies and the external pickup points of Shifa hospital's medical lab contributed as well.
The other income during this period also fattened up to 14 percent. This increase was largely consisting of the sale of scrap, gain on foreign-currency translation and liabilities written back. During this period, the bottom line of the hospital saw an increase of only 1 percent. The reason behind the non eye-catching increase in net profit was largely due to the increase in operating costs due to higher utilisation of services. The operating cost in FY12 was 15 percent higher than the year before.
FY13: According to the corporate document, Shifa Hospital wanted to touch the lives of two million patients. In FY13 they did just that. During this year, Shifa became one of the few hospitals in Pakistan that has the capability to do the liver transplant. In terms of financial performance, the hospital stayed on its mark and gave a good performance. The revenues during this period saw an increase of 19 percent in the year-on-year comparison. The margins during the period under consideration have again climbed up for the hospital. The Operating profit margin and the total margins both climbed up by 202 bps and 144 bps in the year-on-year comparison.
FY14: FY14 was an interesting year for Shifa Hospital. The hospital established a subsidiary consulting company by the name of Shifa Consulting Services to take their business beyond the borders of healthcare services to the patients. The main aim of this company was to diversify the business into hospital quality, medical human resource and providing healthcare facilities to other hospitals in and out of the country.
During this financial year, the margins of the hospital dropped a little due to the nature of business, the cost of providing operation has again gone up during the period. However, the Shifa Hospital reported an earning of Rs 464.6 million for the financial year 2014 as compared to Rs 388.2 million in the financial year 2013.
The top line to Rs 6,393.1 million from Rs 5,315.6 million in last financial year, a 20 percent increase during the year-on-year comparison. Again, the major source of this higher revenue was increase in the number of patient visits, higher number of surgeries and procedure. Similarly, the revenue of external pharmacies, lab picks up points also contributed.
9MFY15 Shifa International Hospitals Limited gave a steady perforce during the third quarter and the first ninth month of the financial year 2015. The newly formed subsidy Shifa Consulting Services revenue also contributed. During the nine months, the top line saw an increase of 16 percent in the year-on-year analysis.
Performance at the Stock Exchange The performance of SHFA at Karachi Stock Exchange is phenomenal. It has outperformed the KSE 100 benchmark index by a very wide margin in both FY15 and CY15 basis. The experts are agreed to that it is one of the most desirable stocks on the exchange. It seems that the investors know the importance of investing in the healthcare sector due to its high profitability.
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Shifa International Hospitals Limited
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Rs (mn) 9MFY14 9MFY15 chg
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Net revenue 4,642 5,405 16%
Other operating income 43 35 -18%
Operating costs 4,109 4,777 16%
Finance cost 144 127 -12%
Profit before taxation 432 536 24%
Provision for taxation 131 176 34%
Profit for the year 301 361 20%
Operating profit margin 11% 12% up 100 bps
Net profit margin 6% 7% up 100 bps
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Source: Company accounts
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