Healthway Medical Corporation Limited Harvard Case Solution & Analysis

Introduction

Alan Wong is an intern at Gem Asset Management Limited which is a mutual fund that focuses on Asia. He was told to perform an analysis of the financial and operating performance of Healthway Medical Corporation and using the analysis to conclude whether Healthway’s stock is undervalued or not.

Healthway Medical Corporation was founded in 1990 as a Primary Care Clinic, it then continued to expand its operations, growing to 15 clinics in 1997.Healthway acquired a listing in 2008 and prior to listing, it had expanded heavily through mergers and acquisitions. The company is recognized in Singapore for transparency and is favored by investors. By 2015, the company had expanded to China, culminating in 100 medical centers. Despite growing to China, Healthway remained focused on Singapore.

Singapore’s healthcare industry is thriving and it is being recognized as the second most efficient country when it comes to healthcare, it is considered a premium destination for medical travelling. Singapore has emerged as a hub of biotechnological progress. This promotion as an international medical hub relies heavily on government assistance. The healthcare industry in Singapore has adapted itself to the Singaporean demographics and needs. In addition to this, Singaporean companies have partnered with overseas concerns to improve growth.

Healthway Medical Corporation Limited Harvard Case Solution & Analysis

Problems

When asked to perform an analysis of the operating and financial performance of Healthway by his supervisor, Cindy, who believes that Healthway’s stock is undervalued, Alan Wong identified five more companies in the sector and downloaded the evaluation metrics in order to compare Healthway’s performance with that of the other companies and to analyze Healthway’s performance in the industrial context.

Alan Wong was shocked to see that the valuation metrics for the six companies varied significantly while he believed that even though the market capitalization and share prices of the companies within a sector could vary due to numerous internal and external factors but he failed to understand how valuation metrics of companies within a sector could differ so greatly when instead, they should be within a narrow range, this went against his academic training.

Therefore, he decided to conduct an industry and strategy analysis and a financial statements analysis inorder to obtain an understanding of the causes underlying the variations in the performance of companies operating in the healthcare sector.

SWOT Analysis

Strengths:

HealthwayMedical Corporation is recognized in Singapore for its transparency. The investors favor the company and it was given the 10th investor’s choice award in 2009 by the Securities Investors Association of Singapore. As of 2013, Healthway has 60 general practitioners and provides a comprehensive range of specialist services that include pediatrics, child development, gynecology, orthopedics, sports medicine, general surgery, ophthalmology, plastic surgery, ear, nose & throat, cardiology, medical aesthetics, psychiatry and obstetrics. It also has a chain of medical centers in China which allows it access to a bigger customer base as Singapore is geographically a small place and the customers in Singapore already have access to multiple healthcare providers including Healthway..................

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