Dubai: The UAE’s biggest private healthcare operator NMC is showing signs of a clear revival, with revenues now back to pre-COVID-19 levels. If this trend continues, NMC is looking at revenues of Dh5 billion plus this year.
The gains are led by its specialty clinics for IVF, cosmetics and long-term home care services. More important, NMC’s network of multi-specialty hospitals are now recording revenues that are “in line” with last year. This in itself is the biggest positive for the Abu Dhabi company after a harrowing 10 months that saw it being placed under administration by the courts and most of its previous management being replaced.
Plus, there was, of course, the missing billions of dollars from the NMC accounts.
Faster than planned
“Due to the faster than anticipated revenue recovery from COVID-19, revenue year-to-date is 10 per cent versus the business plan,” a statement from the administrators issued to NMC’s creditors confirms. “Tighter cost control and the acceleration of performance improvement initiatives has resulted in EBITDA being well ahead of the business plan.” (EBITDA is earnings before interest, tax, depreciation and amortisation)
“The company, joint administrators and advisors are progressing the action and steps required to complete the restructuring and deliver value to all stakeholders.”
NMC creditors are taking note – they have committed Dh550 million in fresh funds as against the Dh238 million the administrators had asked for as part of the turnaround plan. Final allocations will be communicated to the “interested parties” by November 16.
“As an organisation, NMC has a central role in the UAE’s healthcare sector, and that was once again proved during the COVID-19 peak phase,” said a senior official at a bank with sizeable exposures to the company. “The latest revenue position and forecasts gives NMC administrators ample time to come up with a plan that should satisfy most creditors.”
* Appointment of an investment bank by the new Board of Directors to pursue "review of alternatives and present conclusion and recommendation in the interests of shareholders".
With creditors pumping in more funds, a ‘Committee of Creditors’ will be formed to plot the next steps to be taken to bring back NMC to full health. “Creditors will own the equity and can nominate board directors to implement the strategy and decide on timing of an exit,” the statement from the administrators confirm.
“A sale in the future will dilute any stigma attached to the company from the fraud, or the impact of COVID-19 on valuations.”
For now, there can be no cashing out on debt repayment as long as NMC remains under administration under ADGM (Abu Dhabi Global Market) rules.
A new Board of Directors – of up to nine members – will be formed to lead the ‘new NMC llc”. The directors will be nominated by key shareholders and a chairman elected.
Raising the heat
Meanwhile, the pressure on the previous management/shareholders - as well as on Ernst & Young, NMC’s auditor during this period – will be unceasing. In the statement, the administrators said: "Evidence compiled to date shows -
• Published financial statements were misstated dating back to at least 31 December 2012;
• Money and property were misappropriated from NMC;
• The perpetrators sought to make NMC liable for debt of which it never received the benefit, or sufficient benefit; and
• NMC’s losses are likely to amount to billions of dollars.
The administrators have identified a number of potential claims and are now in the process of seeking advice on the merits of those claims and the appropriate forum in which to pursue them
Spotlight on the auditor
The administrators have “formally indicated” plans to bring a claim against Ernst & Young for “negligence – and will initiate such proceedings in due course. “NMC Healthcare LTD (in administration), and other subsidiaries, are investigating whether claims are available against their auditors,” the statement added.