Raffles Medical Group Faces Sluggish Growth on Mixed Results March 6, 2026
Company Overview
Raffles Medical Group Ltd operates as a healthcare provider with operations spanning Singapore and China. The company operates through multiple segments including healthcare services, hospital services, and investment holdings, positioning itself as a comprehensive medical services provider in the Asia-Pacific region.
Financial Performance and Results
The company delivered FY25 results that were broadly in line with expectations, with revenue and profit after tax and minority interests (PATMI) reaching 96% and 97% of estimates respectively. The second half of FY25 showed adjusted PATMI growth of 4% year-on-year to S$36.4 million. Shareholders benefited from a 20% increase in FY25 dividends to 3 cents, representing an 84% payout ratio.
Positive Developments in Hospital Services
Hospital services emerged as a bright spot, registering robust 9% growth in both revenue and profits during 2H25. This performance was driven by multiple factors including higher pricing, enhanced specialist offerings, increased patient channelling from insurance providers, and contributions from corporate accounts. The segment’s profit before tax reached S$23.4 million, demonstrating the effectiveness of the company’s pricing strategies and service expansion initiatives.
China Operations Present Challenges
The company’s Chinese operations faced significant headwinds, with revenue weakness accelerating to a 6.7% year-on-year decline in 2H25, compared to a more modest 1.9% decline in 1H25. The challenges stem from difficulties in attracting experienced specialists, who typically prefer government hospitals that offer teaching and research opportunities. Whilst Raffles is collaborating with government teaching hospitals to enable specialists to practice several times weekly, the required scale and regularity remain insufficient.
Outlook and Investment Recommendation
Phillip Securities Research maintains a NEUTRAL recommendation with an unchanged target price of S$1.02 based on DCF valuation. The outlook reflects expectations of lacklustre growth driven by soft patient volumes, reduced foreign patient numbers, competition from new public hospitals, and ongoing price pressure from insurers. China’s losses are expected to narrow gradually, though the lack of revenue momentum makes achieving break-even targets more challenging. The company maintains strong financial fundamentals with a net cash balance sheet of S$261 million and robust free cash flows of S$105 million in FY25.
Frequently Asked Questions
Q: What were Raffles Medical’s key financial results for FY25?
A: FY25 revenue and PATMI were within expectations at 96% and 97% of estimates respectively. Second half adjusted PATMI grew 4% year-on-year to S$36.4 million, and dividends increased 20% to 3 cents with an 84% payout ratio.
Q: Which business segment performed best in 2H25?
A: Hospital services was the standout performer, registering 9% growth in both revenue and profits in 2H25, reaching S$23.4 million in profit before tax.
Q: What drove the strong performance in hospital services?
A: The growth was driven by higher prices, new specialist offerings, insurance companies channelling more patients to Raffles, and contributions from corporate accounts.
Q: How are Raffles Medical’s China operations performing?
A: China operations faced challenges with revenue declining 6.7% year-on-year in 2H25, accelerating from a 1.9% decline in 1H25. The company struggles to attract experienced specialists who prefer government hospitals.
Q: What is Phillip Securities Research’s investment recommendation?
A: Phillip Securities Research maintains a NEUTRAL recommendation with an unchanged target price of S$1.02 based on DCF valuation.
Q: What are the main challenges facing Raffles Medical going forward?
A: Key challenges include soft patient volumes due to reduced foreign patients, new public hospitals, price pressure from insurers, and ongoing losses in China operations.
Q: What are Raffles Medical’s financial strengths?
A: The company maintains a strong net cash balance sheet of S$261 million and generated robust free cash flows of S$105 million in FY25, whilst effectively controlling expenses, particularly staff costs.
Q: What is the expected outlook for growth?
A: The company is expected to deliver lacklustre growth due to muted volumes in Singapore and ongoing challenges in China, though China losses are expected to narrow gradually.
This article has been auto-generated using PhillipGPT. It is based on a report by a Phillip Securities Research analyst.
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About the author
Paul Chew
Paul has more than 25 years of experience as a fund manager and sell-side analyst. He currently covers sectors such as healthcare, electronics, telecommunications, conglomerates, small caps, and strategy.
He graduated from Monash University and has completed both his Chartered Financial Analyst and Australian CPA programme.
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