Hermitage Clinic sees profits rise, still struggling to pay off debt

The group that operates the Hermitage Medical Clinic in Lucan has said it continues to face a number of challenges in looking to generate the returns required to pay down the debt it owes.

The Hermitage is a 112-bed private hospital in west Dublin whose backers include beef baron Larry Goodman and developer Seán Mulryan. Established in 2006, it is saddled with about €80 million in debt.

Newly filed accounts for Torcross Limited, which operates the clinic, reported a €3.75 million pretax profit in 2016 on turnover of €69.8 million. This compares to a €1.28 million profit on revenues of €63 million a year earlier.

In a note accompanying the accounts, directors said the growth in revenues was due to a combination of volume growth across a number of specialities and some “very modest” prices increases agreed with health insurers.

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Refinancing

Last December, the group, which continues to rely on funding from its shareholders, completed a refinancing with its bank. As of the end of 2016, shareholders had invested close to €40 million in the clinic.

The company recorded a net profit for the year of €3.73 million, up from €1.28 million in 2015. Shareholders’ deficit reduced from €4.8 million to €1 million last year while the cash position of the group improved by €3.1 million to €1.1 million.

Torcross said it faced a number of challenges generating income including ongoing inflation costs linked to staff and the medical supply chain, pricing negotiations with insurers and a lack of customer understanding regarding excesses and co-payments.

The clinic employed 445 people last year, up from 406 in 2015. Staff costs rose to €23.3 million from €21.9 million.