Healthway currently has one of the largest network of over 80 clinics in Singapore catering to both Primary Healthcare and Specialist & Wellness Healthcare. The Primary Healthcare segment includes 48 General Practice clinics (Healthway and Silver Cross) and 9 Dentistry clinics (Universal Aaron and Popular), while the Specialist & Wellness segment includes 11 Paediatric clinics, 6 Orthopaedic clinics (Island Orthopaedic) and 3 Aesthetics clinics (Neuglow).

In comparison to some of its healthcare peers in Singapore, Healthway has taken an asset-light approach to growth. We believe this is also a function of its smaller balance sheet at the moment. Most of its specialist clinics under its umbrella are located within other hospitals such Gleneagles Hospital and Thomson Hospital. Management is unlikely to veer away from this approach at the moment unless there are compelling opportunities to invest in physical assets.

Management has plans to increase the number of primary healthcare clinics from 66 currently to 120 over the next few years, while it targets to expand its corporate customer base. A milestone development was its recent 3 year $5.7m contract with the Singapore Police Force. It will also look to extend its specialist medical services beyond the current focus on Paediatrics/ Orthopaedics. On this front, Healthway will launch its first Eye Nose Throat (ENT) Specialist Centre and Nobel Eye & Vision Centre in July, with both located within Mt Alvernia Hospital.

In the longer-term, the Group’s central philosophy is to provide more accessible and affordable healthcare without necessarily being detrimental to corporate profitability. This will be done through a gradual introduction of more standardized procedures and taking the load away from doctors whenever possible. A good example of such a global trend would be the popular lasik surgery where technology and standard procedures have alleviated the work load of specialists.

With the healthy prospects of the Singapore private healthcare sector, driven by factors such as an aging population, increasing population and continued influx of foreign immigrants, Healthway represents possibly another way to play this theme. 1Q2009 revenue was up 46% from $16.2m to $23.7m due to new clinics and better general performance, while net profit was up 154% from $1.5m to $3.8m. Healthway is trading at 11X historical PER.