IHH Healthcare Q3 2025 Results: Still Growing, But Margins Feeling the Pressure

IHH Healthcare Q3 2025 Results — Growth Intact, But Margins Feeling the Strain

How I read IHH’s latest quarterly numbers as an accountant-investor: where revenue is still growing, how inflation and staff costs are biting, and what defensive investors should watch next.

Based on: IHH Healthcare Berhad Q3 2025 Quarterly Report  |  Listing: SGX:Q0F · Bursa Malaysia: IHH

Key Takeaways (At a Glance)

• Revenue: Up 16% year-on-year to RM6.57 billion; core revenue growth still healthy at around 9% after adjusting for hyperinflation effects.
• EBITDA: Up 16% to RM1.51 billion; underlying EBITDA +10% excluding hyperinflation adjustments.
• PATMI: Reported RM616 million (+15%), but PATMI excluding exceptional items fell 13% to RM462 million.
• Regional performance: Malaysia (+18%), Turkiye & Europe (+19%), India (+5%), Greater China (+7%), Singapore down 4%.
• Key pressure point: Staff costs up 19%, plus depreciation and new-hospital start-up losses eating into margins.
• Balance sheet: Net assets per share rose to RM3.45; borrowings at RM13.6 billion with strong operating cash flow support.
• Dividends: 5 sen interim in Oct 2025; total year-to-date dividends 10.5 sen, consistent with moderate payout policy.
• Overall view: A defensive regional hospital group still growing, but with margin pressure and Turkiye hyperinflation as important watchpoints.

IHH Healthcare is one of Asia’s largest private hospital groups, spanning Singapore, Malaysia, India, Turkiye, Europe and Greater China. Q3 2025 shows a business that is still growing at the top line and generating strong EBITDA, but where staff cost inflation, hyperinflation accounting and start-up losses are now more visible in the bottom line.

For Singapore investors who like defensive sectors, IHH remains a core healthcare name — but it’s not risk-free. Understanding where the numbers are structurally strong and where they are flattered/distorted by accounting rules is key.

Explaining it like you’re 11:

Imagine a group of hospitals that are mostly full and still charging slightly higher fees each year. They’re earning more money, but their doctors, nurses and equipment also cost more. In some countries (like Turkiye), prices are changing so quickly that accountants have to use special rules to “re-measure” the numbers. So IHH looks strong, but you need to read the fine print.

1. Revenue & Margin Trends — Growth Still Broad-Based

1.1 Revenue — Strong, Especially in Malaysia and Turkiye/Europe

Group revenue rose to RM6.57 billion, a 16% year-on-year increase. On a core basis (adjusting for hyperinflation accounting), revenue still grew a solid 9%.

Main drivers:

• Higher acuity case mix (more complex, higher-value procedures),
• Price adjustments to offset cost inflation,
• Contributions from acquisitions such as Island Hospital and Bayindir Healthcare.

Regional revenue performance (YoY):

• Singapore: –4% — weaker volumes and competition.
• Malaysia: +18% — strong domestic demand and recovering medical tourism.
• India: +5% — steady volume growth, modest pricing uplift.
• Greater China: +7% — gradual recovery.
• Turkiye & Europe: +19% — strong price uplift, partly driven by inflation dynamics.

Analyst insight:

From a business-quality perspective, it is encouraging that growth is not concentrated in just one geography. Malaysia and Turkiye/Europe are doing the heavy lifting, but India and Greater China are quietly compounding in the background.

1.2 EBITDA — Solid, but Cost Inflation is Showing

EBITDA increased to RM1.51 billion (+16%), with core EBITDA up 10% after stripping hyperinflation effects. However, the cost side tells an important story:

• Staff costs up 19% year-on-year — the single biggest margin drag, reflecting wage inflation and talent retention.
• Higher depreciation from ongoing expansions and acquisitions.
• Increased utilities and operating expenses across the network.
• Start-up losses from new facilities such as Acibadem Kartal and Vitosha Hospital.

In short: EBITDA growth is still respectable, but the cost base is structurally higher than a few years ago, especially in people-related expenses.

2. Profitability & PATMI — Reported vs “Clean” Earnings

At headline level, IHH reported:

• PATMI: RM616 million (+15% YoY)
• PATMI excluding exceptional items (ex-EI): RM462 million (–13% YoY)

The gap between these two numbers matters. The higher reported PATMI was supported by:

• Deferred tax reversals,
• Foreign exchange and hyperinflation-related adjustments in Turkiye,
• Other non-operating or non-recurring items.

As an accounting-focused investor, I pay more attention to PATMI ex-EI. On that measure, underlying profitability actually fell, reflecting higher staff costs, depreciation and weaker Singapore contribution.

Explaining it like you’re 11: The “headline profit” number looks bigger, but that’s partly because of accounting adjustments. If you remove those one-off or special items, the “everyday profit” is actually lower than last year.

3. Segment Performance — Where the Growth (and Pressure) Is

🇸🇬 Singapore

Admissions fell around 10%, while revenue per admission rose about 4%. The net effect: lower overall revenue and weaker contribution. Competition, patient mix shifts and cost pressures remain key issues.

🇲🇾 Malaysia

Admissions grew about 2%, with revenue per admission up roughly 9%. This reflects strong domestic demand and improving medical tourism. Malaysia continues to be one of IHH’s brightest spots.

🇮🇳 India

Volumes are still growing, with pricing improving more slowly. Structurally, India remains a key long-term growth engine given demographics and rising incomes.

🇹🇷 Turkiye & 🇪🇺 Europe

Revenue per admission rose around 20%. Price uplift and mix improvements are offsetting hyperinflation, but the environment remains volatile. Translating local growth into stable, reported earnings is the main challenge here.

4. Balance Sheet & Cash Flow — Scale and Leverage

Net assets per share increased to RM3.45, supported by strong retained earnings and asset growth.

Key balance sheet and cash-flow points:

• Borrowings of about RM13.6 billion, used to fund expansions and acquisitions.
• Operating cash flow year-to-date: around RM4.39 billion — robust for a capital-intensive business.
• Leverage is not trivial, but interest is well covered by EBITDA and cash generation.

For a hospital group of this scale, some leverage is expected. The key is that cash generation remains strong and largely recurring, which is still the case for IHH.

5. Dividends — Moderate and Sustainable

IHH has paid in the current period:

• 5.5 sen — FY2024 final dividend,
• 5.0 sen — FY2025 interim dividend.

That makes a total of 10.5 sen year-to-date, consistent with its long-standing moderate payout policy. The combination of stable hospital demand and strong operating cash flow supports ongoing dividends, even during inflationary periods.

6. Key Risks Investors Should Not Ignore

• Hyperinflation distortions in Turkiye: MFRS 129 makes reported revenue and profit harder to interpret; local volatility can swing earnings.
• Structural staff cost inflation: Wage and talent pressures are likely structural, not temporary, reducing margin headroom.
• Start-up losses: New hospitals need time to reach optimal utilisation; early years can drag group margins.
• Payor pressure: Governments and insurers may push back on price increases, especially in cost-of-living sensitive markets.
• High capex needs: Ongoing expansions and upgrades consume capital and can affect free cash flow after capex.

7. My View as The Accounting Investor — Who Is IHH Suitable For?

Investment positives:

• Hospitals provide defensive, recession-resistant demand.
• Regional diversification across Malaysia, Singapore, India, Turkiye, Europe and Greater China.
• Strong operating cash flow and a history of steady expansion/acquisitions.

Key watchpoints:

• Margin pressure from rising staff costs and start-up losses.
• Hyperinflation and FX volatility in Turkiye.
• Declining PATMI ex-EI in the latest quarter.

In my view, IHH remains a steady compounder rather than a high-growth rocket. It fits investors who value:

• Defensive earnings quality,
• Predictable cash generation,
• Moderate, sustainable dividends.

If short-term concerns around margins or Turkiye lead to a meaningful pullback in valuation, I would treat that more as a portfolio-building opportunity than a structural red flag — provided core cash flows remain intact.

8. FAQs — IHH Healthcare for Singapore Investors

Q1. Is IHH Healthcare a defensive stock?

Yes. Hospital demand tends to be recession-resistant, and IHH’s diversified footprint helps smooth out country-specific shocks.

Q2. Why did PATMI excluding exceptional items fall?

Mainly due to higher staff costs, increased depreciation from new assets and weaker contribution from Singapore operations.

Q3. Is Turkiye a major risk?

Yes. Hyperinflation and FX volatility make earnings more volatile and harder to interpret. That said, Turkiye & Europe also contribute meaningfully to revenue growth.

Q4. Does IHH generate strong cash flow?

Yes. Operating cash flow remains robust at the group level, which is crucial for funding capex, servicing debt and sustaining dividends.

Written by The Accounting Investor — fundamentals-first breakdowns for Singapore and regional investors.

About the author

The Accounting Investor (HenryT) is a Singapore-based Fellow Chartered Accountant (FCA) who writes deep-dive, fundamentals-first analysis on SGX and regional stocks, blending professional accounting insight with practical investor frameworks.

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Disclaimer

This article is for education and general information only. It does not constitute investment, legal, tax or any other form of professional advice, and it is not a recommendation to buy, sell or hold any securities mentioned.

All views are personal, based on publicly available information at the time of writing. Please do your own research or consult a licensed financial adviser before making any investment decisions. I may or may not hold positions in the securities discussed and am under no obligation to update this article.