Massachusetts General Brigham And Siemens CT Will Improve Patient Access

Key Takeaways

• Strategic partnerships and advanced technology are enhancing service offerings, potentially driving revenue growth through increased patient admissions and advanced diagnostic services.
  
• International outreach and improved e-visa processes are likely to expand the patient base and increase revenue from medical tourists and expatriates.
  
• Declines in international patient revenue due to geopolitical issues and competition pose risks to Bumrungrad Hospital's revenue growth and financial stability.

Catalysts

Owns and operates hospitals in Thailand and internationally.

• The strategic partnership with Massachusetts General Brigham for the development of the Bumrungrad Cancer Institute is likely to enhance Bumrungrad Hospital's service offerings, potentially increasing patient admissions and driving revenue growth.
  
• The implementation of cutting-edge Siemens Photon Counting CT technology is expected to enhance diagnostic capabilities, potentially attracting more patients and increasing revenue from advanced imaging services.
  
• The hospital’s consistent ranking as one of the best in Thailand and its global reputation may attract more international patients, positively impacting revenue and patient volume, especially from expatriates and medical tourists.
  
• Engagements like the Thai Festival in Riyadh and other international outreach efforts could expand the hospital’s patient base in the Middle East, potentially offsetting current declines and boosting future revenue.
  
• The adjustment of e-visa payment processes for Bangladeshi patients is expected to increase ease of access for medical tourists from this region, potentially increasing patient volumes and contributing to revenue recovery.

Bumrungrad Hospital Future Earnings and Revenue Growth

Assumptions

• Analysts are assuming Bumrungrad Hospital's revenue will grow by 5.0% annually over the next 3 years.
• Analysts assume that profit margins will shrink from 29.5% today to 27.3% in 3 years time.
• Analysts expect earnings to reach THB 8.0 billion (and earnings per share of THB 9.51) by about August 2028, up from THB 7.4 billion today. However, there is a considerable amount of disagreement amongst the analysts with the most bullish expecting THB8.9 billion in earnings, and the most bearish expecting THB7.0 billion.
• In order for the above numbers to justify the analysts price target, the company would need to trade at a PE ratio of 25.7x on those 2028 earnings, up from 20.2x today. This future PE is greater than the current PE for the TH Healthcare industry at 17.8x.
• Analysts expect the number of shares outstanding to remain consistent over the next 3 years.
• To value all of this in today's terms, we will use a discount rate of 7.42%, as per the Simply Wall St company report.

Bumrungrad Hospital Future Earnings Per Share Growth

Risks

• Revenue from Middle Eastern patients, a significant contributor to the hospital's income, declined by 30% primarily due to reduced length of stay and lower revenue intensity during Ramadan. This trend may negatively impact overall revenue.
  
• The hospital experienced a 9.7% decrease in revenue from non-Thai patients, influenced by factors like Ramadan and geopolitical issues such as visa challenges and decreased international travel. These issues could further affect net margins if they persist.
  
• Revenue from Chinese tourists, a potential growth market, declined due to safety concerns and geopolitical tensions, leading to a 24% drop in tourists, affecting the hospital's earnings from this region.
  
• Competition in the region, such as Saudi Arabia increasingly providing healthcare in-country and Kuwait remaining silent on its patient-sending plans, could reduce Bumrungrad Hospital's international patient base and consequently impact revenue growth.
  
• Declines in EBITDA and net profit by 12.6%, attributed to lower international patient revenue, indicate potential risks in sustaining profitability if similar trends continue, affecting financial stability.

Valuation

• The analysts have a consensus price target of THB208.476 for Bumrungrad Hospital based on their expectations of its future earnings growth, profit margins and other risk factors. However, there is a degree of disagreement amongst analysts, with the most bullish reporting a price target of THB300.0, and the most bearish reporting a price target of just THB152.0.
• In order for you to agree with the analyst's consensus, you'd need to believe that by 2028, revenues will be THB29.3 billion, earnings will come to THB8.0 billion, and it would be trading on a PE ratio of 25.7x, assuming you use a discount rate of 7.4%.
• Given the current share price of THB189.5, the analyst price target of THB208.48 is 9.1% higher.
• We always encourage you to reach your own conclusions though. So sense check these analyst numbers against your own assumptions and expectations based on your understanding of the business and what you believe is probable.