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Alliance Healthcare Group FY2025 Financial Results · Investor Exchange

• 0:02
  Time for another Investor Exchange podcast. Here are your hosts, Matt and Sally.
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  Welcome back to the Deep Dive. Today, we're jumping into Alliance Healthcare Group Limited, or AHG.
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  They just put out their full year financials for June 30, 2025.
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  And our goal today really is to unpack those numbers, figure out what's driving
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  them, and maybe get a sense of where they're headed.
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  And honestly, at the first glance, it shows some pretty impressive of growth,
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  even with, you know, some market challenges.
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  Yeah. And, you know, these reports, even though they're interim and unaudited,
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  as the notes say, they're still super important.
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  Think of it like a, well, a quick checkup for the company's health, right?
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  Gives you a snapshot, tells you something about the wider industry, too. It's a pulse check.
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  Absolutely a pulse check. And AHG's pulse looks quite strong this year.
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  Let's hit those headline figures for the full year.
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  Revenue climbed pretty robustly, 13.4 percent, hitting S77.1 million That's
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  up $9.1 million from FY 2024.
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  But the real eye-opener, I think, is the bottom line. Profit before tax.
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  It just surged. It jumped from, get this, around $24,000 last year to $1.2 million in FY 2025.
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  That's, well, that's quite a swing. It really is. I mean, going from $24,000
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  to $1.2 million, that's not just, you know, trimming costs here and there.
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  That suggests something significant operationally. Either they found some serious
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  efficiencies or maybe a new service line really took off.
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  You know, it points to some real strategic moves paying off.
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  So the big question is, where did that momentum actually come from?
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  Exactly. That's what we need to figure out. And for shareholders,
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  this translated directly.
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  Net profit attributable to the owners more than doubled, up 0.8 million dollars
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  to hit S1.5 million dollars.
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  That's a 111.7 percent increase from the 0.7 million dollars last year.
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  And basic earnings per share EPS, that also almost doubled 0.35 cents up to 0.74 cents.
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  So yeah, shareholders definitely saw the benefit.
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  Okay, so we've seen those big headline numbers, that incredible profit surge.
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  But, you know, a company's success is really built segment by segment,
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  service by service. Let's dig into the engine room, so to speak.
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  Which parts of AHG really powered this revenue growth? Well,
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  when you look at the breakdown, you see a clear pattern.
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  It seems like their strategic focus areas are really starting to deliver,
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  especially those aligned with sort of modern health care needs.
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  Right. Let's start with managed health care solutions.
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  Revenue there jumped S3.2 million dollars. That's 21.1% up, hitting S18.4 million dollars.
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  And the report says this was down to more programs with business partners,
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  higher patient numbers, and more corporate clients signing up.
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  And that's interesting, the corporate client piece.
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  Scaling managed care programs can be tough. The fact they're growing their client
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  base suggests their model is, well, working. It's resonating with businesses and their employees.
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  Okay, next up, mobile and digital health services.
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  Revenue climbed S1.2 million dollars here. That's a really healthy 26.1% increase,
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  bringing it to S5.8 million dollars drivers.
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  Increased demand for telemedicine, which, you know, often links back to those
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  managed care plans and also the expansion of their mobile inpatient care at home program.
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  And I see it on there, rolling it out to more hospitals. It's becoming more mainstream.
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  Yeah. And this is huge. It really signals that shift we're seeing everywhere in health care, right?
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  Moving care towards the home, using digital tools. It's not just a nice to have anymore. Yeah.
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  AHG seems to be right in the thick of it, MIC at home specifically,
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  delivering hospital-level care at home. That's transformative.
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  It really is. And even their traditional core GP clinic services showed solid
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  growth, revenue up $2.0 million.
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  That's 11.9%, landing at S18.8 million dollars.
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  This came from a new medical center they opened, plus significantly higher demand
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  because they're supporting Singapore's healthier SG initiative. Right.
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  So being part of that national program is clearly boosting patient flow.
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  It shows they have the capacity and I guess the trust to be a key partner in
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  these public health efforts. It speaks to their integration. Definitely.
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  And then there's specialist care services. Revenue here increased by S1.2 million
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  dollars or 8.1 percent to 16.0 million dollars, mostly driven by their orthopedic
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  clinics doing well and contributions from a brand new medical aesthetic clinic.
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  Though, worth noting, they did see a bit of a decrease from their colorectal
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  clinic, so it wasn't all up in that segment. Hmm.
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  Yeah. Growth in new areas like aesthetics and ortho is good diversification,
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  though, tapping into high demand specialties.
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  Even if other areas see, you know, minor fluctuations, it builds resilience.
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  And one that kind of jumped out was the other segment, usually pretty small, right?
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  But it saw a big increase of S1.6 million dollars, reaching S1.9 million dollars
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  in revenue. The main thing here was $1.7 million recognized just in FY 2025
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  from a single contract with the Health Promotion Board, HPB.
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  It was for a clinic management system for the Youth Preventive Service Division,
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  YHCMS, and finally pharmaceutical services.
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  Revenues stood pretty flat, around $16.3 million.
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  But crucially, the profit from this segment actually increased.
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  They mentioned selling higher margin products and logistics services.
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  Okay, so if you pull all that together...
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  You really see that push towards integrated and digital solutions paying off, don't you?
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  MIC at home, telemedicine. It's about moving care beyond the clinic walls,
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  more flexible, more patient focused.
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  And that HPB contract, that's significant. It shows the public sector is really
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  leaning on private partners like AHG for critical digital health infrastructure.
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  It's interesting how that other segment became such a big contributor this year off one contract.
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  Shows their ability to land these larger deals. Okay, so revenue is clearly
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  up across most areas, but growth
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  costs money, right? No story is complete without looking at expenses.
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  So what drove the increases on the cost side? Let's start with employee benefit
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  expense. This jumped by $5.6 million.
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  That's a 14.4% increase, bringing it to $44.0 million.
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  Why such a big jump? Well, it's pretty much a direct mirror of the growth we just talked about.
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  They needed staff for the new medical center, the new aesthetic clinic,
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  people to work on that YHCMS contract.
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  Plus, just generally more people need to cross-managed health care,
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  mobile health, specialist care, even pharma services to handle increased business.
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  And, you know, general wage inflation plays a role, too.
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  It's basically the cost of fueling that expansion, a necessary investment.
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  That makes sense. You need people to deliver the services.
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  Okay, what about depreciation and amortization expense?
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  That increased by $17.7 million or 17.3% reaching $4.7 million. dollars.
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  Right. And again, this ties back to investment. You've got depreciation on the
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  leases for the new clinics, those right of use assets, maybe higher rents when
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  leases were renewed, costs for renovating and equipping those new clinics, and also importantly.
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  Amortization of the costs for developing their own IT systems,
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  their in-house platforms.
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  Investing in tech has these downstream costs.
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  And then other expenses. These rose by S1.0 million dollars,
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  another 17.3% increase to S6.9 million dollars.
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  What's in here? It's a bit of a mix tied to the growth again.
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  Higher sales commissions and marketing, especially for managed health care and specialist care.
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  More spending on servers and computer systems, likely supporting those digital health services.
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  Higher distribution costs for mobile health, maybe getting equipment or supplies
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  out to patients at home. And they also specifically called out an increase in
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  Malaysia's sales and services tax impacting things. So, external factors, too.
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  Interesting, that tax point. And there were also some other losses mentioned
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  for FY 2025, mainly bad debts written off because some overseas customers stopped operating.
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  On the flip side, income streams.
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  Interest income dropped quite dramatically.
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  S, $82,000 last year, down to just $5,000 this year.
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  Mainly less cash and fixed deposits, it seems. Less idle cash means less interest earned.
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  And other income and gains also decreased by $2.4 million, mostly because certain
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  government grants they got in previous years were fully claimed and didn't repeat.
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  So putting the cost side together, it really highlights the investment phase AHGs in.
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  Higher staff costs, depreciation on new assets, marketing spend.
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  It all makes sense alongside the revenue growth. It's the cost of scaling up.
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  But the drop in things like interest income and grant income,
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  while not core operational costs, it just reinforces why that core business growth is so crucial.
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  And it's also really important to note what you mentioned earlier.
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  Some segments like GP clinics and specialist care actually saw profit decrease
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  or even went into loss despite growing revenue.
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  That's entirely down to the startup costs, the operating expenses and depreciation
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  for those new centers. They're not profitable yet.
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  Takes time. That's the upfront price for future profit.
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  Right. That's a key point about profitability timelines for new ventures.
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  OK, let's shift gears slightly to the balance sheet, the financial structure.
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  Beyond just profit and loss, what does the balance sheet tell us about AHG's
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  overall financial health and how they're operating?
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  Total assets increased, up by Mardal H $8.2 million to S $91.1 million.
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  And within that, current assets saw a pretty big jump, up S $9.2 million to $66.6 million.
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  That's a decent rise in current assets. Usually means more resources tied up
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  in the day-to-day running of the business could be good, suggests activity.
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  And digging into that, the big mover was trade and other receivables.
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  This shot up by S $11.0 million.
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  Can you just quickly remind us what receivables are and why such a big increase? Sure.
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  Receivables are basically money owed to AHG that they haven't collected yet.
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  So this S-11 million dollar increase means they're waiting on more payments.
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  Things like medical claims they've submitted to insurers but haven't been paid
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  for yet, money owed from pharmaceutical sales, payments related to that big
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  YHCMS contract, even a loan to an associate company.
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  Now, a big jump shows lots of business activity, which is good,
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  but also means more cash is tied up, waiting to come in.
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  Something to watch, but pretty normal for a fast-growing company. Got it. Okay.
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  Also, under current assets, inventories were up slightly by $6 and $5 million.
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  They said that was to support upcoming sales. But on the other hand,
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  cash and cash equivalents actually decreased, down S2.2 million dollars to S16.4 million dollars.
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  Right. So you see the dynamic. More money tied up in receivables,
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  more stock on hand, and less cash in the bank.
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  It shows they're actively using their capital, investing it back into operations
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  and growth rather than just holding onto cash, typical for an expansion phase.
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  Okay, looking at the longer-term assets now, non-current assets decreased slightly
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  by S1.1 million dollars.
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  This was a net effect, really. Property, plant, equipment, and those leased
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  assets decreased overall, mainly due to depreciation outpacing new purchases.
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  But intangible assets actually increased by S.7 million dollars.
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  That was mostly software and system development costs being capitalized.
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  And pulling it all together on the other side, total equity increased by S1.7
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  million dollars to S24.4 million dollars, mainly reflecting that S1.5 million
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  dollar profit attributable to the owners. Yeah, that equity growth is fundamental.
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  It shows the business is becoming intrinsically more valuable as it retains
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  profits, a positive sign of financial strength building up.
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  Okay, let's talk cash flow. How did the actual cash move?
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  Cash flow from operating activities was positive. they generated $5.7 million
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  in net cash from operations in FY 2025.
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  That's actually up from S4.5 million dollars the year before,
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  which is interesting because they also mentioned S.9 million dollars in net
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  working capital outflows.
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  What does that mean? So even though the core operations made more cash profit,
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  they actually had to put more cash into funding the day-to-day stuff.
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  That working capital outflow is basically the cash getting tied up in those
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  higher receivables and inventory levels we just discussed.
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  So core business is generating cash, but some of it immediately goes back into
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  funding the growth and operations.
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  Again, very common when you're expanding rapidly. Right, that makes sense now.
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  Okay, cash flow from investing activities, they used S1.8 million dollars here,
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  mostly buying property, plant, equipment, and paying for that software and system
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  development. Standard investment spending. Building capacity.
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  And finally, cash flow from financing activities.
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  They used quite a bit more here, S6.2 million dollars.
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  This was mainly paying down lease liabilities, repaying some bank borrowings,
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  and also paying dividends to non-controlling interests in their subsidiaries.
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  Okay, so if you look at the whole cash flow picture, operations are generating
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  more cash, which is great, but they are heavily investing that cash,
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  plus some extra, back into the business,
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  buying assets, developing systems, managing leases, and debt.
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  The positive operating cash flow is key, though. It suggests the core business
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  is fundamentally healthy enough to support this investment cycle.
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  That's what you want to see. Absolutely.
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  OK, so that's the performance and the financial position. Now,
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  the big question, what's the outlook?
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  Every company operates in a bigger context, right? What are the key trends,
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  the challenges shaping AHD's future path?
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  The report mentions Singapore facing rising health care costs,
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  especially in private hospitals, which pushes up insurance premiums.
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  That sounds like a major headwind.
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  Plus, you know, the usual macroeconomic uncertainties, global trade issues,
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  geopolitics could dampen demand. Yeah, those are definitely significant pressures.
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  Rising costs put pressure on everyone, patients, insurers, providers.
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  It forces companies like AHG to be, well, really innovative about efficiency
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  and how they deliver care.
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  You can't just keep doing things the old way. And it looks like AHG is trying to do just that.
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  They highlight some strategic responses, like Alliance Medinet, their TPA subsidiary.
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  It partners with insurers and hospitals, like Farrah Park Hospital, to manage costs.
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  They use things like pre-agreed rates to make facility fees more predictable.
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  That tackles the cost issue head on. That's a smart move. Instead of just being
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  squeezed by rising costs, they're trying to be part of the solution.
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  Offering predictability and pricing is really valuable in today's market.
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  And then there's Jagami, their mobile care arm.
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  Also working with Farrah Park on a home recovery program to get patients home sooner.
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  And crucially, supporting five government hospitals with that MIC at home program
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  delivering hospital level care at home for suitable patients.
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  The company sees these areas cost management, home-based care as major growth
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  opportunities. And you can see why.
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  They directly address those big market pressures we talked about,
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  cost and accessibility.
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  Alliance Medit tackles a cost predictability issue. Jagami offers an alternative,
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  often more cost-effective and patient-preferred, setting for care.
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  It really feels like they're positioning themselves well by adapting to where
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  health care seems to be heading. It's classic strategic adaptation.
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  But again, that important caveat they included.
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  These new investments, the new clinics, the expanded services,
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  they take time to reach profitability.
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  So you might see some impact on near-term financials as they build for that
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  longer-term potential.
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  It's that growth investment tradeoff again. Right. Managing expectations there.
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  Okay, one last piece of news for investors tracking the company. Dividends.
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  They've proposed a first and final dividend of 0.1 cents per ordinary share for FY 2025.
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  Now, this needs shareholder approval at the AGM, which is set for October 28th, 2025.
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  They've approved, it gets paid out around November 14th. And importantly,
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  they didn't declare a dividend for FY 2024, so this marks a return to payouts.
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  Reinstating the dividend, even if it's relatively modest to start,
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  is usually a positive signal for management. It suggests confidence.
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  Confidence not just to the profits they just booked, but in their ability to
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  sustain performance and generate cash going forward.
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  It's a nod to shareholders about future stability. So quite a journey through
• 15:23
  Alliance Healthcare Group's latest results.
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  We've seen really impressive revenue growth, haven't we?
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  Driven by those new initiatives, especially in digital and mobile health.
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  But also we saw the costs associated with that growth, the strategic investments
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  in clinics, tech, and people.
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  It paints a picture of a company actively trying to shape its future in what's
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  definitely a challenging but also opportunity-rich healthcare sector here.
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  They're clearly evolving. Absolutely.
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  What really stands out is how they seem to be navigating those twin pressures.
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  Rising costs on one side and the demand for more accessible,
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  efficient care on the other.
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  The strong showing in mobile health, the MIC at Home program,
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  the cost management focus. it really feels like they understand that the shift
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  towards home-based and digital solutions isn't just, you know, a temporary thing.
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  It's becoming pretty fundamental to how healthcare gets delivered,
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  which leads to, I think, a really interesting question for you listening.
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  As technology keeps advancing and as our societal needs change,
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  how might the very definition of healthcare itself continue to expand or transform in the coming years?
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  How much further can it move beyond the hospital or clinic walls? Hmm.
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  That's a fascinating thought to leave everyone with. Where does healthcare delivery
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  go next? Okay, that's all we have time for on this deep dive.
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  Thanks so much for joining us.
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  Music.