OUE Healthcare Limited FY2025 Financial Review: Navigating Headwinds and Strategic Realignment

OUE Healthcare Limited (“OUEH” or the “Group”) released its unaudited condensed interim consolidated financial statements for the six months and full year ended 31 December 2025. The Group operates across healthcare services and property investment, with significant assets in Singapore, Indonesia, China, and Japan. This review breaks down the company’s key financial metrics, operational segments, material transactions, and outlook.

Key Financial Metrics and Performance Table

Segmental Revenue and Profitability

The Group’s activities are divided into two core segments: Healthcare Operations and Healthcare Assets.

• Healthcare Operations: Revenue increased YoY due to higher contributions from the O2 Group (Singapore) and the Wuxi hospital (China). However, this was offset by startup losses in China joint ventures.
• Healthcare Assets: This includes rental income from First REIT, with assets in Indonesia, Japan, and Singapore. Segment revenue was slightly lower due to the impact of a weaker Indonesian Rupiah.

Historical Performance Trends

The Group’s revenue for FY2025 was \$152.4m, up 1% from \$150.3m in FY2024. However, net profit after tax fell sharply to \$8.6m (down 67% YoY), with the second half of 2025 posting a loss. Contributing factors include:

• Higher administrative expenses (+19% YoY)
• Net fair value losses on investment properties
• Startup losses and impairment charges in joint ventures
• Foreign exchange losses due to a weaker Indonesian Rupiah
• Disposal losses from asset divestments in Indonesia

Asset Revaluation, Exceptional Items, and Divestments

• Asset Revaluation: Investment properties were revalued, resulting in net fair value losses of \$3.5m. Wuxi land valuation led to a fair value loss of \$5.3m.
• Exceptional Items: The Group recorded a \$7.5m loss on the disposal of its Indonesian subsidiary PT Karya Sentra Sejahtera (PT KSS). There was also an impairment loss of \$1.1m on property, plant, and equipment.
• Divestments: PT KSS was sold for \$22.4m, with a realized foreign exchange gain of \$5.2m.

Legal Disputes and Litigation

• The Group remains involved in ongoing litigation with David Lin concerning shares in its China assets. Some recovery of funds has been achieved through enforcement in Shanghai, Taiwan, and Hong Kong.
• A legacy funding deed related to bankruptcy proceedings was terminated, resulting in a refund of \$501,000 and an additional recovery of \$1.3m for the Group.

Share Capital and Dilution

• No new shares were issued during the year. Total shares remain at 4,443,129,206.
• Convertible perpetual securities (not convertible until after August 2026) total \$79.6m and are classified as equity.
• OUE Limited increased its stake in the Group to 89.68%, indicating strong sponsor support.

Related-Party Transactions

• Significant transactions include loans to and from affiliated entities, secondment arrangements with ITOCHU, and management fee payments to First REIT Management Limited (FRML).
• No dividend was declared or paid during FY2025 or FY2024, with management citing cash flow considerations.

Macroeconomic and Industry Outlook

“In the next twelve months, the global economy continues to face a subdued growth forecast amidst prevailing headwinds in the market, marked by geopolitics and tariff concerns. The International Monetary Fund forecasts global growth at 3.3% in 2026, on par with the estimated 3.3% outturn in 2025. However, even as surging investment in sectors such as technology bolster the market, trade tensions are expected to continue experiencing flare-ups, which consequently introduce new layers of uncertainty and disrupt the global economy.”

“Amidst uncertainty in the global economic outlook, the Group believes that healthcare remains a resilient sector. In Asia, the growth of the healthcare sector is underpinned by various positive megatrends, such as ageing populations, increased health awareness, and the rising demand for quality healthcare services.”

The tone of the Board’s statement is cautiously optimistic on the healthcare sector but acknowledges ongoing operational headwinds, FX risks, and cost pressures.

Conclusion and Recommendations

The Group delivered modest revenue growth in FY2025 but saw a sharp decline in net profits, primarily due to higher costs, asset revaluation losses, and startup losses in new ventures. Legal risks remain present but are being actively managed. The Group’s sponsor, OUE Limited, has increased its stake, signaling continued support.

OUEH’s outlook is neutral to mildly negative in the near term due to working capital pressure from large short-term debt maturities (notably the Social term loan A), FX headwinds, and ongoing losses in new ventures. However, the long-term prospects for its healthcare assets remain supported by demographic trends and government policy in its core markets.

• If you are currently holding the stock: Consider holding but monitor closely. The Group is facing margin and cash flow pressures, but sponsor support and sector fundamentals remain positive. Watch for refinancing of near-term debt and turnaround in loss-making ventures before adding exposure.
• If you are not holding the stock: Consider waiting for a clearer sign of earnings recovery and progress on deleveraging/refinancing. Entry at this stage may expose investors to further downside if net losses persist or refinancing is delayed.

Disclaimer: This article is for informational purposes only and does not constitute investment advice. Please consult your financial advisor before making investment decisions. All analysis is based strictly on the company’s reported information and does not account for events or information subsequent to the report date.

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