Hospital operator Mediclinic had its best day on record on Thursday after Abu Dhabi scrapped cost-sharing on private medical treatment.
Effective immediately, United Arab Emirates residents with Thiqa medical insurance cover will no longer have to pay 20 per cent of the bill for private treatment, Abu Dhabi crown prince Sheikh Mohammed bin Zayed al-Nahya announced during a hospital visit aimed at promoting medical tourism.
The UAE had introduced the co-pay rule in July 2016, which triggered a 40 per cent slump in Mediclinic’s local patient volumes and led to staff shortages.
Investors had written off Mediclinic’s UAE-focused division, Al Noor Hospitals, which it bought last year for £1.4bn, said JPMorgan Cazenove. “In our view, Mediclinic probably overpaid by around 50 per cent but if you got half the acquisition value back, that is 100p per share,” said the broker.
However, while sentiment for the long term has improved, a profit rebound will probably have to wait until 2018 as Mediclinic needs time to recruit new doctors and rebuild patient volumes, cautioned Jefferies analysts. Mediclinic closed 17.5 per cent higher at 859p.
UK hospital operator Spire Healthcare, in which South Africa-listed Mediclinic owns a near 30 per cent stake, rose 4.8 per cent to 337.1p.
Speculation has been persistent that Mediclinic could buy the rest of Spire to take advantage of recent strength of the rand versus sterling and after Remgro, its controlling shareholder, successfully raised cash via a rights issue.
The wider market was sunk by sterling strength and a one-month low for oil. The FTSE 100 ended 0.7 per cent lower, down 51.55 points to 7,237.17, as BP lost 2.4 per cent to 442.7p and BHP Billiton faded 4.7 per cent to £11.54.
Diageo crept 0.2 per cent lower to £22.56 after Exane BNP Paribas played down the chances of a takeover offer in the short to medium term from AB InBev or 3G Capital, the Brazilian private equity group.
While there is strategic merit in either company buying Diageo, the price required for a leveraged buyout looks too high for 3G, said Exane.
AB InBev is a more credible buyer but it needs several years of cutting debt before it attempts another big acquisition, the broker said.
A day after well-received results, Standard Chartered slipped 2.1 per cent to 741p on word that Nomura was selling a 1.6 per cent stake.
Housebuilders gained on reassuring trading updates from Persimmon, up 2.4 per cent to £23.40, and Taylor Wimpey, ahead 1.6 per cent to 201.6p. Builders’ merchants were helped by an in-line update from Travis Perkins, up 0.4 per cent to £16.15.
Fidessa lost 8.1 per cent to £24 after the trading software maker said customers were taking longer to make decisions.
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