NMC.L Share News (NMC)

(Sharecast News) - UAE-based private healthcare operator NMC Health hailed another year of record revenue and profits on Thursday thanks in part to the successful integration of acquisitions, though its dividend disappointed.In the year to the end of December 2018, earnings before interest, tax depreciation and amortisation rose 38% to $487.4m on revenue of $2.06bn, up 28.3%. Meanwhile, net profit increased 20.4% to $251.9m.NMC said its healthcare division continues to drive growth, with revenue and EBITDA up 34.4% and 37.3%, respectively.Chief executive officer Prasanth Manghat said: "Strong operational performance of our existing assets, combined with smooth integration of previous and new acquisitions continue to translate into stellar financial performance. Both 2018 revenues and EBITDA came in ahead of our guidance at $2.1bn and $487.4m, respectively. Moreover, a strong start to the current year reinforces our confidence in the business and we remain confident that 2019 will prove to be another year of record top and bottom line."NMC said a strong start to the current year reinforces confidence in operational performance and the outlook for 2019 of 22% to 24% year-on-year revenue growth and 18% to 20% growth in EBITDA.The company said it remains committed to maintaining a 20% to 30% payout ratio, which it believes to be a progressive policy given its underlying growth rate in the business.NMC shares plunged more than 11% to 2,656p by the close on Thursday.Goldman Sachs said it viewed the results as positive given the strong operating performance across all the segments and see management's reiteration of 2019 guidance as a positive."In our view, the company has addressed major investor concerns: (i) organic growth was 15% in 2018 and guidance is now for 12%-13% in 2019, (ii) the completion of JV with Hassana improves its presence in the Saudi market, which is a key regional market for the company; (iii) the company is focused on improving working capital, primarily receivables, which increased in 1H18."However, we note that NMC's net income growth lagged EBITDA growth and this could weigh on the stock in the near term as financial costs were ahead of expectation."Citi analysts noted that diluted adjusted EPS of $1.33 may have been up 20% but was below consensus of $1.40 and the proposed DPS of $0.181 is below expectations of $0.25.Corporate action slowed in the second half, Citi pointed out, with NMC spending $553m on M&A in the period, most notably on stakes in CosmeSurge, Fakih IVF, and the newly announced Boston IVF."We think the market could be encouraged by a slowed pace of M&A in H2," the analysts said and added that while NMC bears "will point to the EPS/dividend miss, but we are encouraged by the results given sales/EBITDA beats, organic growth, a better cash flow performance, slower pace of M&A, and unchanged 2019 guidance".