Periodic/Sector reports
Healthcare: Intensity Cushions Softer Volumes; Awaiting A 2H26 Recovery
OVERWEIGHT (Maintained)
Analyst
Highlights
Intensity offsets softer utilisation. Both MIKA and HEAL posted higher revenue intensity despite softer patient volume. Companies expect volume improvement in 2H26 after the school holidays end.
Diverging financial positions. MIKA maintained a 38.4% EBITDA margin and Rp3.0t net cash, providing expansion flexibility. HEAL’s EBITDA margin fell 1.6ppt to 26.0%, while net debt/EBITDA rose to 1.49x as new capacity remained underutilised.
Maintain OVERWEIGHT; 2H26 volume recovery is key. Maintain BUY on MIKA for its earnings resilience and balance sheet. Maintain BUY on HEAL but cut our target price to Rp1,120 after making significant earnings cuts and lowering our target multiple to 10x.
Analysis
Resilient results despite softer volumes. Mitra Keluarga (MIKA) and Medikaloka Hermina (HEAL) posted 1H26 revenue growth of 8.0% and 6.5% yoy respectively, but overall patient volumes were relatively soft due to: a) fewer effective operating days, b) stricter private and national health Insurance (JKN) referral and reimbursement mechanisms, and c) weaker demand amid softer economic conditions. MIKA’s patient activity declined by low single digits, largely due to weaker JKN traffic, while HEAL’s inpatient admissions and outpatient visits grew 6.5%/9.2% respectively. Nevertheless, HEAL’s beds grew faster at 8.8% (total operational beds: 9,019 beds), reducing bed occupancy rate (BOR) to 68% from 70%. Both hospitals are maintaining revenue guidance on patient volume improvement in 2H26 after the school holiday end, although tighter payer controls and weak purchasing power may keep the recovery gradual.
Higher revenue intensity driving growth. Amid weaker volume, both hospitals reported higher revenue intensity largely due to: a) higher ASP, and b) increase in high complexity revenue. MIKA’s average revenue per inpatient day (ARPID) and outpatient visit (ARPOP) increased 12.2% and 12.6% yoy respectively, supported by a 28.6% increase in high-complexity revenue while HEAL’s revenue per inpatient days for both JKN and private patients grew 6.5% and 7.09% respectively. This indicates that investments in cardiology, oncology, orthopaedics, urology and advanced diagnostics are increasing the value generated per patient. Nevertheless, the improvement was uneven: HEAL’s outpatient revenue grew only 1.9% despite a 9.2% visit growth, with revenue per outpatient visit of non-JKN patient down 15% yoy, highlighting scope to improve conversion into diagnostics, procedures and inpatient admissions.
Margins and balance sheets reflect different stages of expansion. MIKA maintained a 38.4% EBITDA margin despite a 1.2% gross margin decline, as disciplined opex offset a higher contribution from lower-margin drugs and implants. HEAL’s EBITDA margin declined to 26.0% from 27.6% as new capacity raised staffing and depreciation costs before reaching efficient utilisation. MIKA’s negative two-day cash cycle and Rp3.0t net cash provide substantial expansion flexibility, while HEAL’s stable 66-day receivable cycle indicates manageable JKN collections, although net debt increased to Rp2.8t and net debt/EBITDA to 1.49x. Improving utilisation should therefore take priority over aggressive expansion at HEAL.
Highlights
Intensity offsets softer utilisation. Both MIKA and HEAL posted higher revenue intensity despite softer patient volume. Companies expect volume improvement in 2H26 after the school holidays end.
Diverging financial positions. MIKA maintained a 38.4% EBITDA margin and Rp3.0t net cash, providing expansion flexibility. HEAL’s EBITDA margin fell 1.6ppt to 26.0%, while net debt/EBITDA rose to 1.49x as new capacity remained underutilised.
Maintain OVERWEIGHT; 2H26 volume recovery is key. Maintain BUY on MIKA for its earnings resilience and balance sheet. Maintain BUY on HEAL but cut our target price to Rp1,120 after making significant earnings cuts and lowering our target multiple to 10x.
Analysis
Resilient results despite softer volumes. Mitra Keluarga (MIKA) and Medikaloka Hermina (HEAL) posted 1H26 revenue growth of 8.0% and 6.5% yoy respectively, but overall patient volumes were relatively soft due to: a) fewer effective operating days, b) stricter private and national health Insurance (JKN) referral and reimbursement mechanisms, and c) weaker demand amid softer economic conditions. MIKA’s patient activity declined by low single digits, largely due to weaker JKN traffic, while HEAL’s inpatient admissions and outpatient visits grew 6.5%/9.2% respectively. Nevertheless, HEAL’s beds grew faster at 8.8% (total operational beds: 9,019 beds), reducing bed occupancy rate (BOR) to 68% from 70%. Both hospitals are maintaining revenue guidance on patient volume improvement in 2H26 after the school holiday end, although tighter payer controls and weak purchasing power may keep the recovery gradual.
Higher revenue intensity driving growth. Amid weaker volume, both hospitals reported higher revenue intensity largely due to: a) higher ASP, and b) increase in high complexity revenue. MIKA’s average revenue per inpatient day (ARPID) and outpatient visit (ARPOP) increased 12.2% and 12.6% yoy respectively, supported by a 28.6% increase in high-complexity revenue while HEAL’s revenue per inpatient days for both JKN and private patients grew 6.5% and 7.09% respectively. This indicates that investments in cardiology, oncology, orthopaedics, urology and advanced diagnostics are increasing the value generated per patient. Nevertheless, the improvement was uneven: HEAL’s outpatient revenue grew only 1.9% despite a 9.2% visit growth, with revenue per outpatient visit of non-JKN patient down 15% yoy, highlighting scope to improve conversion into diagnostics, procedures and inpatient admissions.
Margins and balance sheets reflect different stages of expansion. MIKA maintained a 38.4% EBITDA margin despite a 1.2% gross margin decline, as disciplined opex offset a higher contribution from lower-margin drugs and implants. HEAL’s EBITDA margin declined to 26.0% from 27.6% as new capacity raised staffing and depreciation costs before reaching efficient utilisation. MIKA’s negative two-day cash cycle and Rp3.0t net cash provide substantial expansion flexibility, while HEAL’s stable 66-day receivable cycle indicates manageable JKN collections, although net debt increased to Rp2.8t and net debt/EBITDA to 1.49x. Improving utilisation should therefore take priority over aggressive expansion at HEAL.
OVERWEIGHT (Maintained)
Analyst
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