• PATMI almost doubled to S$1.68mn, while revenue increased 23% YoY, mainly driven by higher revenue contribution from mobile and digital healthcare services.
• Strong operating cash flow of S$4.7mn, underpinning robust cash position of S$18.4mn and higher net cash of S$12.3mn.

The Positives

+ Huge growth in mobile and digital health services. Revenue more than tripled, while pretax profit increased from S$24k in 1H21 to US$1.2mn in 1H22. Higher revenue was due to Jaga-Me’s involvement in provision of Covid-19 related medical services, including home swabs, onsite vaccines and telemedicine consultations for home recovery programme.

+ GP clinics recorded steady growth. Revenue from GP clinics increased 27%, while pretax profit more than doubled.  The easing of Covid-19 restrictions resulted in more patient visits at GP clinics.

The Negatives

- Managed healthcare services recorded net loss. Net loss in 1H22 deepened to S$167k, from S$126.3k, as patient volume has yet to return to pre-Covid level.

- Decreased revenue and profit contribution from pharmaceutical services. There was reduced demand for medical supplies from certain hospitals, after the stocking in 1H21.

Outlook

Alliance Healthcare is committed to strengthening its digital technology capabilities to remain in the forefront of an increasingly digitalised healthcare sector, especially in a post-Covid world. Digitalisation in healthcare provides cost-effective, time-saving and quality healthcare.

• Revenue grew at CAGR of 11.1% from FY18 to FY21. The new business segment, mobile and digital healthcare services, contributed a full year’s revenue in FY21.
• Number of companies covered under Managed Healthcare Solutions grew at CAGR of 22.3% from 2016 to 2020.
• Alliance Healthcare has been maintaining its dividend payout ratio of 30% since listing in 2019

Company Background

Established in 1994, Alliance Healthcare is a reliable medical brand with both in-house and GP specialist clinics, and specialises in corporate health solutions. They are also a wholesale pharmaceutical company facilitating timely access of medications to the region, and a progressive healthcare company making quality medical care within reach through mobile and home care service.

Key Highlights

1. Revenue grew at CAGR of 11.1% from FY18 to FY21. AHG derives most of its revenue from rendering of services, including GP clinic and specialist care services and sale of pharmaceutical products. With 17 GP clinics and five specialist clinics across Singapore, AHG is able to serve customers island wide. The new business segment, mobile and digital healthcare services contributed a full year’s revenue in FY21.
2. Companies covered under Managed Healthcare Solutions growing. The number of companies covered grew from 1,478 in 2016 to 3,309 in 2020, as at 31 December 2020, at CAGR of 22.3%. With the Alliance Healthcare Network which covers more than 1,000 medical services providers, including GP, specialist, dental, physiotherapy, companies are able to benefit from its wide range of services for their employees.
3. Expand product offerings. Since April 2020, AHG launched HeyAlly, its digital and telemedicine platform. The app provides users access to services such as telemedicine, second opinion and comes with an online store offering a range of healthcare and wellness solutions, like health screening and vaccination. In January 2020, AHG acquired a 55% stake in Jaga-Me, a mobile healthcare company. The app allows users to schedule and pay for clinical services, medical equipment and consumables delivered to them. Jaga-Me deploys a network of over five hundred licensed healthcare professionals. The app was also one of the medical providers appointed by the Ministry of Health to administer home vaccinations and home Covid-19 swab tests.
4. First distribution of dividends in FY20. Newly listed on SGX Catalist since 2019, AHG recommended a dividend payout ratio of 30%. Since then, AHG has declared dividends of 0.34 and 0.23 Scts for FY20 and FY21 respectively, representing payout ratios of 30% and 31% respectively. This reflects AHG’s confidence in the strength and quality of the businesses.
5. Anticipated re-opening of borders should benefit. As Singapore’s borders are expected to gradually reopen, AHG is cautiously optimistic that it will positively impact its businesses, particularly the managed healthcare solutions and GP clinics services segments, with more clinic visits.
6. Net cash position. AHG has maintained its net cash position since FY19, at S$9.9mn in FY21. At 28% of its market cap, its balance sheet remains healthy.

REVENUE

Managed healthcare solutions. Under Alliance MediNet, AHG offers medical services to employees of corporations and insured members of policy holders. Through arrangements with 8 insurers, AHG serves almost 3,700 corporations through their network of over 1,000 medical services providers within the Alliance Healthcare network. This includes GP and specialist clinics, private and public hospitals, etc. AHG collects an admin fee for every claim.

GP clinic services. AHG operates GP clinics under the name of “My Family Clinic”, providing medical services to individuals, with 16 clinics situated all around Singapore.

Specialist care services. AHG provides medical diagnosis and medical or surgical treatments of colorectal, ENT and orthopaedic conditions. With the newest addition of the orthopaedic clinic which commenced operations in December 2018, there are a total of five specialist clinics under AHG’s belt.

Pharmaceutical services. AHG engages in wholesale distribution of pharmaceutical products to hospitals, pharmacies and clinics in Singapore and other overseas markets.

Mobile and Digital Health Services. AHG provides quality medical care within reach through mobile and home care services. In April 2020, AHG launched HeyAlly, which is a digital health and telemedicine platform, revenue is earned from the provision of on-demand medical advice through tele-consultation. Jaga-Me Pte Ltd is a mobile health company, which AHG acquired 55% interest in January 2020. Through this app, patients could get access to healthcare services at the comfort of their homes or workplace, through the digital platform. Revenue is derived from the provision of home care nursing services, rental of medical equipment, provision of telemedicine consultations and onsite vaccination.

Revenue from Managed Healthcare Solutions and GP Clinic Services recorded decline or similar levels of revenue due to lower patient volumes since the onset of the Covid-19 pandemic.

Revenue from Pharmaceutical services was on an uptrend since FY19 due to an increase in demand for medical supplies from local hospitals stocking up to anticipate any supply chain disruption (Figure 2).