Shifa International Hospital

The Islamabad-based Shifa International Hospital (KSE: SHFA) must be doing something right, which is why its performance at Karachi Stock Exchange has stayed upbeat. The only listed healthcare provider in Pakistan has outperformed the benchmark index by a very wide margin in the last one year.

The hospital closed FY15 with 16 percent year-on-year expansion in net revenue. According to hospital sources, the growth was broad based; from increased number of patient visits, higher number of surgeries and procedures to improved external pharmacies and lab pick-up points all contributed to top line growth.

However, the hospital’s revenue growth didn’t come along with cost efficiency as it witnessed higher operating costs during the period. Operating costs have been increasing (as percentage of sales) for the past three years, which sources say comes on account of increase in the costs pertaining to salaries, wages & benefits, utilities, supplies, medicines, and repair & maintenance. Higher operating expenses have left enough significant marks on the profits; which is why Shifa’s bottom line was unable to utilize the full benefits of higher revenue.

Having diversified their business, Shifa has come a long way from following a standard hospital model. By establishing Shifa medical consultancy company, they are trying to diversify their portfolio further into hospital quality, medical human resource and providing healthcare facilities to other hospitals in and out of the country.

At the same time, in FY16 the hospital is planning to open shop in Lahore as well. Even if Shifa’s margins stay put at current levels, the sheer revenue growth might continue to drive its stock north.