The Cleopatra Hospital Group has signed a Memorandum of Understanding (MoU) to invest EGP 580m of the finance obtained from its capital increase in the acquisition of a 150-bed hospital. The MoU was signed with the owners of the hospital to start the acquisition process, with Cleopatra Group currently conducting due diligence related to the acquisition. Meanwhile the potential merger with Alameda, if it goes through, will make CLHO the biggest private healthcare provider in the Egyptian market. Cleopatra Group has assigned the El-Katib and Queens Royal Hospitals to treat cases of the novel coronavirus (COVID-19), which will help offset some of the lost underlying business in 2020. The company is well diversified, with businesses across more than 50 specialities, and continues adding more lines of businesses. Adding to its ownership through the medical platform will increase referral rates between specialities and departments, as well as improve patient utilisation rate. It will also ensure case mix, and the average charge per patient (OPD & IPD). With net cash of EGP 537m, Cleopatra Group's expansion plans are well funded. The universal medical insurance system in Egypt will enable Cleopatra Group to engage in serving citizens under the new healthcare system's umbrella. Naeem Research expects Cleopatra Group's sales to grow at a CAGR of 31% year-on-year (y-o-y) in 2020-2023, as it successfully acquired the El-Katib Hospital, and had already acquired the Bedaya Hospital, specialising in in-vitro fertilisation (IVF). Additionally, Cleopatra Group signed a venture capital agreement with El-Nahda University to establish the Beni Suef Hospital, and took over the Queens Royal Hospital. The company commenced operations at the East and West Cairo Polyclinics, and is expected to add two further polyclinics. This aims to increase outpatient centres and the inpatient feed network, whilst ensuring a strong expansion plan. Put together, Cleopatra Group's expansion is likely to boost its financial performance in 2021 and going forward. Cleopatra Group reported good results in the fourth quarter (Q4) of 2020, backed by a favourable case mix and demand recovery throughout all business units. The company's top-line surge was reflective mainly of reasonable pricing, as the consolidated charge per case rose 28% y-o-y, despite the 7% dip in the total number of cases y-o-y. The bottom-line performance was boosted further by cost control measures For Q1 of 2021, Naeem Research expects Cleopatra Group's strong financial performance to continue, supported by both increased case volumes and favourable pricing. It is worth mentioning that the company successfully consolidated the Bedaya hospital with a revenue contribution of EGP 10m in Q4 of 2020.
