The Motley Fool

Should you buy this healthcare giant as FY earnings jump 60%?

Acquisitions and solid organic growth were a boon for Middle Eastern hospital provider NMC Health (LSE: NMC) in 2016 as revenue rose 38.6% year-on-year and EBITDA jumped 63.7%. This continues a solid run of success for the group and its shares have nearly doubled in the past year alone. But for those who have missed out on this rally, is now the time to begin a position?

The good news is that NMC, as the UAE’s largest private healthcare provider, is showing it can still grow despite the weak oil prices that have roiled the region. Offering top-notch care has been popular with customers in the country and total patient numbers rose 34.5% during the year while occupancy rates rose 80 basis points to 74.3%.

5G is here – and shares of this ‘sleeping giant’ could be a great way for you to potentially profit!

According to one leading industry firm, the 5G boom could create a global industry worth US$12.3 TRILLION out of thin air…

And if you click here we’ll show you something that could be key to unlocking 5G’s full potential...

And these customers are highly profitable. Average revenue per patient rose 28.3% year-on-year and together with higher occupancy rates pushed EBITDA margins from the healthcare division up from 26.5% to 29.3%. This level of growth looks entirely sustainable as government health insurance requirements increase the potential pool of patients and the UAE’s economy continues to grow a solid 2%-3% per annum, despite low crude prices.

Would-be investors should also like that management has a laser-like focus on profitability and increased cash flow from $84.1m to $176.4m during the year. This helped push net debt down to 1.75 times EBITDA at $431m. With the balance sheet improving and small acquisitions in Saudi Arabia performing well, investors can also expect further expansion into similarly wealthy Gulf countries in the future.

The downside is that all this growth means lots of other investors have rushed to buy shares of the company, which now trade at 31 times forward earnings. This is a hefty premium, but if NMC can continue to post double-digit revenue and earnings growth, investors may find it a bargain.

A growth star closer to home

A similarly fast growing healthcare stock with broader appeal is healthcare specialist Advanced Medical Solutions (LSE: AMS). Shares of this tiny £480m market cap company have risen over 140% in the past five years as its wound care products have struck a cord with NHS doctors and their cost-conscious budget directors alike.

After finding success selling its wound closure and adhesive products at home and in Europe the company has recently made a major move into the massive American healthcare market. So far this is working out stupendously and an 83% leap in sales of its Liquiband product in the US in H1 helped boost overall group revenue 20% to £39.2m.

Liquiband has been an immense hit in the US and is already nearing management’s target of 20% market share. The company is now focused on increasing the range of products it offers in the US and if they’re as successful as Liquiband investors will be in for a treat.

With £41.1m in net cash, impressive operating margins of 24.3% and plenty of growth opportunities, AMS is a share to follow closely despite trading at a pricey 30.6 times forward earnings.

But is AMS the best growth stock you can buy today?

5G is here – and shares of this ‘sleeping giant’ could be a great way for you to potentially profit!

According to one leading industry firm, the 5G boom could create a global industry worth US $12.3 TRILLION out of thin air…

And if you click here, we’ll show you something that could be key to unlocking 5G’s full potential...

It’s just ONE innovation from a little-known US company that has quietly spent years preparing for this exact moment…

But you need to get in before the crowd catches onto this ‘sleeping giant’.

Click here to learn more.

Ian Pierce has no position in any shares mentioned. The Motley Fool UK has recommended Advanced Medical Solutions. We Fools don't all hold the same opinions, but we all believe that considering a diverse range of insights makes us better investors.

Our 6 'Best Buys Now' Shares

The renowned analyst team at The Motley Fool UK have named 6 shares that they believe UK investors should consider buying NOW.

So if you’re looking for more stock ideas to try and best position your portfolio today, then it might be a good day for you. Because we're offering a full 33% off your first year of membership to our flagship share-tipping service, backed by our 'no quibbles' 30-day subscription fee refund guarantee.

Simply enter your email address below to discover how you can take advantage of this.

I would like to receive emails from you about product information and offers from The Fool and its business partners. Each of these emails will provide a link to unsubscribe from future emails. More information about how The Fool collects, stores, and handles personal data is available in its Privacy Statement.