Healthy Revenue, Ailing Bottom Line: Hermina Struggles Under Rising Costs

JAKARTA, Investortrust.id — In the world of private healthcare, a crowded waiting room does not always translate to a healthy balance sheet. PT Medikaloka Hermina Tbk—a staple of the Indonesian hospital landscape and a key portfolio holding of the conglomerate Astra International—learned this lesson the hard way in 2025.

The company, trading under the ticker HEAL, saw its net profit for the year retreat by 20.34%, falling to Rp 548.96 millon ($34.7 million) from the Rp 689.12 million reported in 2024. The decline comes as a paradox, given that more patients through the doors pushed total revenue up to Rp 7.13 trillion ($451 million), a notable increase from the previous year's Rp 6.71 trillion.

Hermina’s current predicament serves as a microcosm for the broader Indonesian healthcare sector. As the nation's middle class expands and the universal health coverage system (JKN) matures, volume is no longer the primary hurdle for hospital operators. Instead, the hurdles are now internal: skyrocketing costs for medical supplies, a shortage of specialized labor, and the rising cost of servicing the debt used to build new facilities. For investors, the question is no longer whether Hermina can grow, but whether it can do so without eroding its fundamental value.

Margins in the Mangle

The discrepancy between rising revenue and falling profit lies in the narrowing gap of gross margins. Gross profit dipped slightly to Rp 2.41 trillion ($152 million) as the cost of services outpaced revenue gains.

Compounding these operational pressures was a sharp rise in financing costs. Interest expenses surged to Rp 238.44 billion ($15 million) in 2025, up from Rp 179.09 billion the year prior. This financial weight dragged operating income down to Rp 967.04 billion ($61 million), down from the previous year's billion-rupiah milestone. Consequently, profit attributable to the parent entity settled at Rp 429.54 million ($27 million), with earnings per share sliding to Rp 28.40 ($0.0018).

Asset Expansion Amidst the Squeeze

Despite the earnings contraction, Hermina continues to lean into its expansionist strategy. The company’s total assets reached Rp 11.88 trillion ($751 million) by year-end, a significant jump from Rp 10.57 trillion in 2024. This suggests that the board remains committed to increasing its bed capacity across the archipelago, betting that long-term scale will eventually offset current margin pressures.

InvestingPro Analysis: A Valuation Perspective

According to real-time data from InvestingPro, Medikaloka Hermina currently presents a nuanced case for value-oriented investors. As of March 26, 2026, the stock’s Fair Value is estimated at Rp 1,391.73, suggesting a potential 7.1% upside from its current trading price of Rp 1,300.00.

While the 2025 earnings report was tepid, InvestingPro’s models categorize the company’s "Financial Health" as a "Good Performance" (Score 3 out of 5). The stock’s "Relative Value" score remains a 2, reflecting the recent dip in profitability and a P/E ratio that has become less attractive following the earnings slide.

Despite the earnings miss, "Price Momentum" holds a steady score of 3, bolstered by a 5-year return of roughly 45%. The consensus among 12 tracked analysts remains optimistic, with a target price of Rp 1,684, significantly higher than the current market price.

The "Uncertainty" level for HEAL is currently rated as LOW, indicating that while growth has slowed, the company's position as a critical infrastructure provider in the Indonesian healthcare market provides a solid floor for its valuation.