After Covid slump, Shifa International continues on its path of expansion

KARACHI: On 13 April 2023, Company Secretary of Shifa International Hospitals Limited Muhammad Naeem announced that they will acquire 50% stakes of SIHT (Pvt.) Limited, a wholly owned subsidiary of Shifa Foundation, according to Sections 96 and 131 of the Securities Act, 2015 and Clause 5.6.1 of the Rule Book of the Pakistan Stock Exchange Limited (PSX). It was informed that the decision was made during a Board of Directors meeting held on 12 April 2023.

In addition, the company has decided to convene an Extraordinary General Meeting on 18 May 2023, at 11:00 AM at its registered office in Sector H-8/4, Islamabad. The purpose of the meeting is to obtain shareholder approval for the disposal of its entire shareholding in its subsidiary, Shifa Medical Center Islamabad (Pvt.) Limited (“SMCI”), and to make additional equity investment in the hospital project of its other subsidiary, Shifa National Hospital Faisalabad (P t . ) Limited (“SNHF”).

The recent announcement marks an interesting turn in the history of Shifa, which in 2019 had embarked upon an ambitious expansionary plan that had initially been disrupted by the onset of the Covid-19 pandemic. But where is the hospital headed? 

Shifa International Hospital Ltd- A concept materialised

In 1985, a group of talented healthcare professionals dwelling in New York City conceived an idea that was to revolutionise medical care in Pakistan. Spearheaded by the visionary Dr. Zaheer Ahmad, the team set out to establish Shifa International Hospital – a state-of-the-art facility that would provide top-notch medical services to people across the country.

Accompanied by Dr. Manzoor H. Qazi, Mr. Muhammad Zahid, Mr. Samiullah Sharief, and Dr. Sabir Ali, the team wasted no time in getting to work. 

Fast forward to the present day, Shifa International Hospital has become a shining example of excellence in healthcare. With hospitals in Islamabad, Faisalabad, and G-10/4 Islamabad, as well as medical centres, pharmacies, and lab collection points in different cities across the country, the company is dedicated to improving the lives of people in Pakistan and beyond.

Shifa International Hospital Ltd expansion plans have been long underway 

In 2019, Shifa International Hospital Ltd announced their plans to expand outside of their home base in the Islamabad-Rawalpindi metropolitan area by constructing a new hospital in Faisalabad and a new ambulatory and diagnostic centre in Islamabad. 

The hospital in Faisalabad was to be operational within three to five years from October 2019. Meanwhile, the diagnostic centre was supposed to extend outpatient care, diagnostic and laboratory services, and minor surgeries that can be done in an ambulatory setting. 

The company had planned to finance both projects through raising Rs2.6 billion over the course of three years from the directors’ and owners’ personal pockets, and its own free cash flows. The two projects were managed by Shifa’s newly-named subsidiary, Shifa Development Service Ltd (SDS). The company’s management expressed interest in Faisalabad as a growing urban centre of Pakistan, with three times the population of Islamabad and an estimated metropolitan gross domestic product (GDP) of $20.5 billion in 2019.

The pandemic had other plans…

When the pandemic hit, it hit hard and Shifa was not spared. In November 2022 the hospital reported a significant decline in revenue as a result of the Covid-19 pandemic. The company estimated a loss of approximately Rs1,370 million in revenues in the FY 2020 due to cancelled or postponed medical services, including liver transplants. 

Moreover, the number of visits to its outpatient department dropped by 17% compared to FY 2019, whereas inpatient visits dropped by 9%. Radiology and oncology departments were the ones to come out of the pandemic unscathed. 

Shifa’s net income dropped by 35% to Rs 505 million, however, the average revenue per occupied bed grew by 12% to Rs 43,514 million. 

However, the company did not let the pandemic completely derail their expansion plans and persevered by continuing to invest in hospital infrastructure and plans to open a hospital in Tanzania.

Post-Pandemic restructuring 

Late last year, in December 2022 Shifa International Hospitals announced that they will be making changes in the company’s top management as the former CEO Dr. Manzoor H Qazi was set to retire in March this year. 

It was communicated that Dr. Qazi, who was a part of the original team that founded Shifa in 1985 will be retiring during a difficult financial time for the hospital. Earlier this month, the former Chief Medical Officer, Dr. Zeeshan bin Inshtiaque took office as the new CEO of the company. 

In the most recent development in Shifa International Ltd’s long-in-motion expansion plans, the company has now announced that it will acquire 50% stakes of Shifa Foundations’s subsidiary SIHT (Pvt.) Limited.