Q2 2026 Specialized Medical Company SCJSC Earnings Call

August 6, 2026

Operator: Management, we have with us Dr. Bassam Chahine, CEO, Dr. Hani Charani, CFO, and Mr. Faisal Altimyat, Director of Investor Relations. As usual, management will begin by presenting the company's performance, and then we'll open the floor for questions. Management, the floor is yours.

Speaker #1: Management, we have lost October Sam Shahin, CEO; Dr. Hani Shaarani, CFO; and Mr. Faisal Al-Samiat, Director of Investor Relations. As usual, management will begin by presenting the company's performance and then we'll open the floor for questions.

Speaker #1: Management, the floor is yours.

Speaker #2: thank you, Marina. Good day, and thank you, everyone, for joining us. Welcome to SMC Healthcare Q2 earnings call. I'm Faisal Al-Samiat, Director of Investor Relation.

Faisal Altimyat: Thank you, Marina. Good day, and thank you everyone for joining us. Welcome to SMC Healthcare Q2 earnings call. I'm Faisal Altimyat, Director of Investor Relations. I'm joined today by our Chief Executive Officer, Mr. Bassam Chahine, and our Chief Financial Officer, Mr. Hani Charani. Following the call, all the presentation and relevant materials will be available in our investor relations section of the website. Please refer to the disclaimer, which applies to all disclosures made during today's presentation. Kindly note that all the figures discussed during the call are in Saudi Riyal, unless otherwise stated. I will begin today's presentation with a concise overview of SMC Healthcare overview. Mr. Bassam will cover key milestones achieved during the quarter, including the new public-private partnership project, hospital expansion pipeline, and focal clinical and institutional achievements.

Speaker #2: I'm joined today by our Chief Executive Officer, Mr. Albasam Shahin, and our Chief Financial Officer, Mr. Hani Shaarani. Following the call, all the presentation and relevant materials will be available in our Investor Relations section of the website.

Speaker #2: Please refer to the disclaimer, which applies to all Kindly note that all the figures discussed during the call are in Saudi real, unless otherwise stated.

Speaker #2: I will begin today's presentation with a concise overview of SMC Healthcare overview. Then Mr. Bassam will cover key milestones achieved during the quarter, including the new public-private partnership project, hospital expansion pipeline, and focal clinical and institutional achievements.

Speaker #2: Then Mr. Hani, our CFO, as usual, will take us through the Q2 financial highlights and then we'll end with the full-year guidance. Then we will open the floor for Q&A.

Faisal Altimyat: Mr. Hani, our CFO, as usual, will take us through the Q2 financial highlights, and then we'll end with the full year guidance. We will open the floor for Q&A. SMC operates an integrated healthcare platform across two full-service hospitals in Riyadh, supported by more than 340 clinics. Our clinical workforce now includes 553 doctors and 1,121 nurses. During Q2, the network served approximately 41,000 inpatient visits and more than 382,000 outpatient visits. Our platform spans the full healthcare value chain, including general and specialized surgery, cardiology, oncology, and broad range of supporting services that I cannot really pronounce. The scale, breadth of specialties, and establishing accreditations, both local and global, underpin our ability to deliver coordinated care across the network. Next, this is a new slide we are introducing, our investment case.

Speaker #2: SMC operates an integrated healthcare platform across two full-service hospitals in Riyadh. Supported by more than 340 clinics, our clinical workforce now includes 553 doctors, and 1,121 nurses.

Speaker #2: During Q2, the network served approximately 41,000 inpatient visits, and more than 382,000 outpatient visits. Our platform spans the full healthcare value chain, including general and specialized surgery, cardiology, oncology, and broad-range supporting services that I cannot really pronounce.

Speaker #2: The scale spread of specialties and establishing accreditations both local and global underpin our ability to deliver coordinated care across the network. Next, this is a new slide we are introducing our investment case.

Speaker #2: Our investment thesis is supported by a trusted operating track record of more than 25 years of experience. From a macro level, an estimated shortage of more than 1,300 hospital beds by 2030, as the population continues to grow.

Faisal Altimyat: Our investment thesis is supported by a trusted operating track record of more than 25 years of experience. From a macro level, an estimated shortage of more than 1,300 hospital beds by 2030 as the population continues to grow. Our capacity pipeline includes three new hospitals that are expected to double our capacity by 2029, providing a clear runway for a long-term growth and expansion. Operational excellence and clinical quality remain central to our values, resulting to a position as one of the top three organ transplant centers in the kingdom. Our digital-first platform and in-house developed AI capabilities are strengthening our patient experience and operating efficiencies, while global partnerships across equipment, technologies further support execution. In terms of our financial track record, it remains very strong with a 15-year net profit CAGR of 13%, and 2025 ROE of 26.4%.

Speaker #2: Our capacity pipeline includes 3 new hospitals that are expected to double our capacity by 2029, providing a clear runway for a long-term growth and expansion.

Speaker #2: Operation excellence and clinical quality remain central to our values. Resulting to a position as one of the top 3 organ transplant centers in the kingdom.

Speaker #2: Our digital-first platform and in-house developed AI capabilities are strengthening our patient experience and operating efficiencies, while global partnerships across equipment and technologies further support execution.

Speaker #2: In terms of our financial track record, it remains very strong, with a 15-year net profit CAGR of 13% and 2025 ROE of 26.4%. Those figures are including the 60.6 million Saudi riyal gain of the sale of land that happened in Q4 of 2025.

Faisal Altimyat: Those figures are including the SAR 60.6 million gain of the sale of land that happened in Q4 2025. Our medical services segment, it makes the majority of our revenue, where it combines both inpatient and outpatient services. The strategic shift toward high margin acute services is now fully embedded into our operating model. Since the transition began, 217 long-term care beds were transitioned away from the mix, while only 81 acute beds and 80 outpatient clinics were added. Long-term capacity remains stable at 84 beds as in Q2 2026. Medical services net revenue reached SAR 321.5 million in Q2 and SAR 631.6 million in H1 in general. This is a slide you guys are familiar with, so I will just cover the new numbers in it. Currently or in Q2, SMC 1 recorded 227,000 clinic visits and 27,000 inpatient visits. For SMC 2. Same thing.

Speaker #2: Our medical service services segment, it makes the majority of our revenue, where it combines both inpatient and outpatient services. The strategic shift toward high-margin acute services is now fully embedded into our operating model.

Speaker #2: Since the transition began, 217 long-term care beds were transitioned away from the mix, while only 81 acute beds and 80 outpatient clinics were added.

Speaker #2: Long-term capacity remains stable at 84 beds as in Q2 of 2026. Medical services net revenue reached 321.5 million in Q2, and 631.6 million in H1 in general.

Speaker #2: This is a slide you guys are familiar with, so I will just cover the new numbers in it. So currently, or in Q2, SMC1 recorded 227,000 clinic visits, and 20,000, 27,000 inpatient visits.

Speaker #2: For SMC2, same thing, you guys have seen this slide before. The key highlight here is in Q2, SMC2 recorded 1,000 or 154,000 clinic visits, and 14,000 inpatient visits.

Faisal Altimyat: You guys have seen this slide before. The key highlight here is in Q2, SMC 2 recorded 154,000 clinic visits, and 14,000 inpatient visits. With that, now I will hand over to our CEO to take you through Q2 highlights and key achievements. Bukarim, over to you.

Speaker #2: With that, now I will hand over to our CEO to take you through Q2 highlights and key achievements. Abu Karim, over to you.

Speaker #3: Thank you, Faisal. Good afternoon, everyone. It's a pleasure to see you all again. Q2, as you can see, delivered stronger patient activity, earnings, and growth in margin, expanded across the board.

Bassam Chahine: Thank you, Faisal, and good afternoon, everyone. It's a pleasure to see you all again. Q2, as you can see, delivered stronger patient activity, earnings growth, and margin expanded across the board. Net revenue increased by 5.7% year-on-year to SAR 401.3 million. Inpatient services gross revenue rose by 13.5%, while outpatient services gross revenue increased by 7.8%. The EBITDA margin expanded to 20.6%, and the net profit margin increased to 11.3%. The improvement was supported by enhanced operating efficiency, including lower general and administrative expenses together with reduced finance costs. During the quarter, SMC also distributed SAR 80 million as ordinary cash dividend for the fiscal year 2025, and this took place on 4 June. Switching to our technology capabilities, digital adoption continues to scale across the patient journey at SMC.

Speaker #3: Net revenue increased by 5.7% year on year, to 401.3 million Saudi riyal, inpatient services gross revenue rose by 13.5%, while outpatient services gross revenue increased by 7.8%.

Speaker #3: The EBITDA margin expanded to 20.6%, and the net profit margin increased to 11.3%. The improvement was supported by enhanced operating efficiency, including lower and general administrative expenses, together with reduced finance costs.

Speaker #3: During the quarter, SMC also distributed SAR 80 million as an ordinary cash dividend for the fiscal year 2025, and this took place on June 4.

Speaker #3: Switching to our technology capabilities, digital adoption continues to scale across the patient journey at SMC. Our application offers online booking, check-in, and payments through a seamless interface, and currently holds a 4.6 rating on application stores with more than 300,000 downloads and 6,000 positive reviews, making it one of the most highly rated healthcare applications in the region.

Bassam Chahine: Our application offers online booking, check-in, and payments through a seamless interface, currently holds a 4.6 rating on application stores with more than 300,000 downloads, 6,000 positive reviews, making it one of the most highly rated healthcare applications in the region. More than 70% of our appointments are now booked through the application. This is almost 1 million appointments a year, demonstrating strong patient adoption of the platform. Three in-house developed AI tools have been deployed across the application, which are smart AI interpretation of radiology images, laboratory results, and clinical recommendations with three additional AI initiatives planned for implementation before the end of the year. These capabilities are designed to enhance the patient experience while improving the speed and efficiency of service delivery.

Speaker #3: More than 70% of our appointments are now booked through the application. This is almost 1 million appointments a year, demonstrating strong patient adoption of the platform.

Speaker #3: 3 in-house developed AI tools have been deployed across the application, which are smart AI interpretation of radiology images, laboratory results, and clinical recommendations. With 3 additional AI initiatives planned for implementation before the end of the year.

Speaker #3: These capabilities are designed to enhance the patient experience while improving the speed and efficiency of service delivery. Moving on with our current operation and upcoming expansion, major strategic milestone was achieved during the quarter, which is the announcement of awarding SEH Consortium led by SMC as the managing partner this was announced as the winner for the first private-public partnership with the Ministry of Health for managing a governmental hospital.

Bassam Chahine: Moving on with our current operation and upcoming expansion, a major strategic milestone was achieved during the quarter, which is the announcement of awarding SEH Consortium, led by SMC as the managing partner. This was announced as the winner for the first private-public partnership with the Ministry of Health for managing a governmental hospital. This project covers the operation of a 150-bed hospital, mental health. This hospital is called SABIC Behavioral Care Specialist Hospital. This will establish a new recurring revenue stream to SMC. This award was announced by the National Center of Privatization and the Ministry of Health on 17 June, and the project agreement was signed only 10 days ago. The service availability date is targeted to be Q1 2027, and the impact in terms of revenue is expected to start in Q2 2027.

Speaker #3: This project covers the operation of a 150-bed hospital mental health. This hospital is called Savic Behavioral Care Specialist Hospital. This will establish a new recurring revenue stream to SMC.

Speaker #3: This award was announced by the National Center of Privatization and the Ministry of Health on June 17, and the project agreement was signed only 10 days ago.

Speaker #3: The service availability date is targeted to be quarter 1 of 2027, and the impact in terms of revenue is expected to start in the second quarter of 2027.

Speaker #3: Alongside the PPP project, we continue to advance all three major hospital developments in Northern Riyadh, which we announced earlier. At SMC3, which is on North Ring Road, foundation and early construction activities progressed during the quarter, supporting the project's continued development toward targeted completion in Q4 2028.

Bassam Chahine: Alongside the PPP project, we continue to advance all three major hospital developments in Northern Riyadh, which we announced earlier. At SMC3, which is on North Ring Road, foundation and early construction activities progressed during the quarter, supporting the project continued development, our targeted completion in Q4 2028. The kickoff of the hospital structural skeleton is expected to take place in Q3. At SMC4, at Khuzam suburb, this is northeast of Riyadh, the concept design phase and site hoarding were completed. After obtaining the necessary permits from NHC, the National Housing Company, we will be kicking off the site preparation and the excavation as early as next week. For SMC5 in Al Malqa district, we are still targeting the acquisition of the land before the end of 2026, with the hospital targeted for launch in 2029.

Speaker #3: The kickoff of the hospital structural skeleton is expected to take place in quarter 3. At SMC4, at Khuzam Suburb, this is North East of Riyadh, the concept design phase and site hoarding were completed, after obtaining the necessary permits from NHC, the National Housing Company, we will be kicking off the site preparation and the excavation as early as next week.

Speaker #3: For SMC5 in Al Malga District, we are still targeting the acquisition of the land before the end of 2026, with the hospital targeted for launch in 2029.

Speaker #3: Regarding the clinical and academical achievement during the quarter, we had important ones our team performed a complex, minimally invasive procedure using an advanced endoscopic technology as a treatment for prostate cancer, and the procedures was uneventful.

Bassam Chahine: Regarding the clinical and academical achievement during the quarter, we have important ones. Our team performed a complex, minimally invasive procedure using an advanced endoscopic technology as a treatment for prostate cancer, and the procedure was uneventful. We launched an accredited medical coding training program in coordination with the Saudi Commission for Health Specialties, and this is supporting our readiness for the official kickoff of DRG in Saudi Arabia. As an example also of our distinguished workforce capabilities, and in a rare and complex case, our clinicians saved a 2 years old child from complete respiratory failure using inhaled anesthesia after conventional therapies like ECMO have failed in another hospital in Riyadh. Also in another complex pediatric surgical case, a rare intraventricular brain tumor was successfully resected from a 5-month-old infant who made full recovery, alhamdulillah.

Speaker #3: We launched an accredited medical coding training program in coordination with the Saudi Commission for Health Specialties, and this is supporting our readiness for the official kickoff of DRG in Saudi Arabia.

Speaker #3: As an example also of our distinguished workforce capabilities, an in-rare and complex case, our clinicians saved a 2-year-old child from complete respiratory failure using inhaled anesthesia.

Speaker #3: After conventional therapies, like ECMO, had failed in another hospital in Riyadh. Also, in another complex pediatric surgical case, a rare intraventricular brain tumor was successfully resected from a 5-month-old infant.

Speaker #3: Who made full recovery Alhamdulillah. During this quarter also, we continued actively in our kidney transplant program, with many cases done without complication and with 100% success rate Walillahi Alhamdulillah.

Bassam Chahine: During this quarter also, we continued actively in our kidney transplant program with many cases done without complication and with 100% success rate, alhamdulillah. As a testament to our commitment, SMC continued to receive regional and international recognition. At the 7th edition of the Arab Hospitals Federation Gold Initiative Certificate, SMC 1 received the Platinum Award for digital health and technology innovation, while SMC 2 received the Gold Award for patient-centered care and experience. Also, SMC was included in Statista 2026 World Best Hospital in Saudi Arabia and listed among the best specialized hospital in the Middle East. Global Brands Magazine recognized SMC twice with the Best Healthcare Branding Transformation and Most Innovative Patient-Centric Healthcare Provider awards. SMC also received the Most Innovative AI-Powered Patient Engagement in Healthcare by the International Finance Magazine.

Speaker #3: As a testament to our commitment, SMC continued to receive regional and international recognition. At the 7th edition of the Arab Hospital Federation Gold Initiative, SMC1 received the Platinum Award for Digital Health and Technology Innovation, while SMC2 received the Gold Award for Patient-Centered Care and Experience.

Speaker #3: Also SMC was included in Statista 2026 World Best Hospital in Saudi Arabia and listed among the best specialized hospitals in the Middle East. Global Brands Magazine recognized SMC twice with the Best Healthcare Branding Transformation and Most Innovative Patient-Centered Healthcare Provider Awards.

Speaker #3: SMC also received the Most Innovative AI-Powered Patient Engagement in Healthcare award by the International Finance Magazine. With that, I'll hand over to our CFO, Mr. Hany Shahrani, who will take us through the next section of the presentation, covering our financial performance in the quarter and a half.

Bassam Chahine: With that, I'll hand over to our CFO, Mr. Hani Charani, who will take us through the next section of the presentation, covering our financial performance in the quarter and the H1. Hani?

Speaker #3: Hany?

Speaker #2: Thank you, Bassam. Good afternoon, and welcome, everyone. I'll now take you through the financial and operating performance of SMC Healthcare. We are pleased to announce that SMC experienced a bounce-back in Q2 following less-than-desired results in Q1. The continued ramp-up of our outpatient platform, following the addition of the new clinics that we added in 2025, is now generating solid results and supporting higher inpatient activity.

Hani Charani: Thank you, Bassam Chahine. Good afternoon and welcome everyone. I'll now take you through the financial and operating performance of SMC Healthcare. We are pleased to announce that SMC experienced a bounce back in Q2 following the less than desired results in Q1. The continued ramp-up of our outpatient platform following the addition of the new clinics that we added in 2025 are now generating solid results and supporting a higher inpatient activity. Looking at the chart on the right, you'll notice that our outpatient clinic visits increased by 10.9% year on year to 381,500 visits, representing an additional 37,500 visits year on year. Moving back to the chart on the left, you'll notice that the increased outpatient activity obviously helped and drive the increase in the inpatient visits by 12.8% or 47,000 visits, reaching a total number of inpatient visits of 414,000 for the Q2.

Speaker #2: Looking at the chart on the right, you'll notice that our outpatient clinic visits increased by 10.9% year on year. The 381.5,000 visits representing an additional 37.5,000 visits year on year.

Speaker #2: Moving back to the chart on the left, you'll notice that the increased outpatient activity obviously helped and drive the increase in the inpatient visits by 12.8%, or 4.7,000 visits reaching a total number of inpatient visits of 41.4,000 for the quarter.

Speaker #2: Looking at the chart down in the lower right corner, you'll see that the gross revenue mix for Q2 of 2026 remained diversified, with inpatient services accounting for 41.5% of the gross revenue, outpatient services representing 35.2%, pharmacy at 14%, emergency at 6.3%, and other services representing 2.9%.

Hani Charani: Looking at the chart down in the lower right corner, you'll see that the gross revenue mix for Q2 of 2026 remained diversified, with the inpatient services accounting for 41.5% of gross revenue. Outpatient services represented 35.2%, pharmacy at 14%, emergency at 6.3%, and the other services representing 2.9%. Again, these results demonstrate the increasing contribution of the new clinics that were added and the completed shift towards the acute inpatient care. Looking at this next slide, you'll notice that the net revenue increased by 5.7% year on year to SAR 401.3 million in Q2, with an increase of 4.5% to SAR 782 million in H1 of 2026. Looking at the medical services in Q2, revenue reached SAR 321.5 million. That's up 3.2%. Pharmacy revenue reached SAR 72.1 million, up to 13.4%, and food and catering revenue reached SAR 7.8 million. That's up 69.2%.

Speaker #2: Again, these results demonstrate the increasing contribution of the new clinics that were added and the completed shift towards the acute inpatient care. So looking at this next slide, you'll notice that the net revenue increased by 5.7% year on year, to 401.3 million, in Q2, with an increase of 4.5% to 782 million SAR in H1 of 2026.

Speaker #2: Looking at the medical services in Q2, revenue reached $321.5 million, that's up 3.2%. Pharmacy revenue reached $72.1 million, up 13.4%, and food and catering revenue reached $7.8 million, that's up 69.2%.

Speaker #2: Looking at the H1, medical services revenue increased by 3.5% to 631.6 million SAR, pharmacy revenue was up by 5.8% to 136 million, and food and catering revenue increased by 53.8%, reaching 14.4 million for H1.

Hani Charani: Looking at the H1, medical services revenue increased by 3.5% to SAR 631.6 million. Pharmacy revenue was up by 5.8% to SAR 136 million, and food and catering revenue increased by 53.8%, reaching SAR 14.4 million for H1. EBITDA increased by 11.4% year on year to SAR 82.8 million in Q2, with a margin expanding by 1.1 percentage points to reach 20.6%. The H1 EBITDA rose by 8.7% to SAR 152.1 million, with margins increasing by 0.7 percentage points to 19.4%. Looking at the net profit for Q2, it increased by 24.2% year on year to SAR 45.2 million, with a margin of 11.3%, while the H1 net profit rose by 17.8% year on year to SAR 77.7 million, representing a net profit margin of 9.9%.

Speaker #2: EBITDA increased by 11.4% year on year, to $82.8 million in Q2, with margin expanding by 1.1 percentage points to reach 20.6%. The H1 EBITDA rose by 8.7% to $152.1 million, with margins increasing by 0.17 percentage points to 19.4%.

Speaker #2: Looking at the net profit for Q2, it increased by 24.2% year on year to 45.2 million, with a margin of 11.3%, while the H1 net profit rose by 17.8% year on year to 77.7 million SAR, representing a net profit margin of 9.9%.

Speaker #2: As you can see, earnings growth reflects the continued ramp-up momentum of the new outpatient clinics that we added in 2025. The higher margin acute care inpatient care contribution and the lower GNA marketing and finance costs during the period.

Hani Charani: As you can see, earnings growth reflects the continued ramp-up momentum of the new outpatient clinics that we added in 2025, the higher margin acute care, inpatient care contribution, and the lower G&A, marketing, and finance costs during the period. Looking at the net operating cash flow, it reached SAR 68.2 million in Q2 and SAR 151.6 million for H1. Taking into account our growth investments, we generated a healthy cash flow of SAR 46.1 million in Q2 and SAR 115.8 million in H1. Our net leverage ratio was strong and robust at 1.8 times, compared to 2.3 times a year earlier. This leverage ratio is based on an LTM EBITDA and includes that SAR 60.6 million gain from the sale of land that we recorded in Q4 of 2025. Next slide. On a year-to-date sequential basis, Q2 reflected a clear recovery from the Q1 seasonal impact.

Speaker #2: Looking at the net operating cash flow, it reached SAR 68.2 million in Q2 and SAR 151.6 million for H1. Taking into account our growth investments, we generated a healthy cash flow of SAR 46.1 million in Q2 and SAR 115.8 million in H1.

Speaker #2: Our net leverage ratio was strong and robust at 1.8 times, compared to 2.3 times a year earlier. This leverage ratio is based on LTM EBITDA and includes that $60.6 million gain from the sale of land that we recorded in Q4 of 2025.

Speaker #2: Going on. Next slide. Yeah. On a year-to-date sequential basis, Q2 reflected a clear recovery from the Q1 seasonal impact. Net revenue in Q2 increased by 5.4% compared to Q1 of '26, reaching SAR 401.3 million.

Hani Charani: Net revenue in Q2 increased by 5.4% compared to Q1 of 2026, reaching SAR 401.3 million. This performance was supported by the continued ramp-up momentum of the new clinics that were added in 2025 and the growing contribution from the acute inpatient care mix. EBITDA increased by 19.4% from Q1 to SAR 82.8 million, with margins expanding by 2.4 percentage points to 20.6%. Net profits also increased by 38.8% to SAR 45.2 million, resulting in an increase in the net profit margin by 2.7 percentage points, reaching 11.3%. The margin expansion further driven by improved and sustainable operating efficiencies and cost management. Now, looking at our balance sheet, you'll notice that the cash generation continued to strengthen our liquidity during the quarter. The free cash flow reached SAR 46.1 million, compared with an outflow of SAR 71.4 million in Q2 of 2025. While cash and cash equivalents stood at SAR 130.7 million.

Speaker #2: This performance was supported by the continued ramp-up momentum of the new clinics that were added in '25, and the growing contribution from the acute inpatient care mix.

Speaker #2: EBITDA increased by 19.4% from Q1 to SAR 82.8 million, with margins expanding by 2.4 percentage points to 20.6%. Net profit also increased by 38.8% to SAR 45.2 million, resulting in an increase in the net profit margin by 2.7 percentage points, reaching 11.3%.

Speaker #2: The margin expansion was further driven by improved and sustainable operating efficiencies and cost management. Now, looking at our balance sheet, you'll notice that cash generation continued to strengthen our liquidity during the quarter.

Speaker #2: The free cash flow reached 46.1 million, compared with an outflow of 71.4 million in Q2 of '25, while cash and cash equivalents stood at 130.7 million.

Speaker #2: Net debt to EBITDA decreased by 0.5 times year on year to 1.8 times, supported by a 13% reduction in outstanding debt year on year.

Hani Charani: Net debt to EBITDA decreased by 0.5 times year-on-year to 1.8 times, supported by a 13% reduction in outstanding debt year-on-year. While our capital expenditures totaled SAR 22 million during the quarter. This debt reduction is related to settlement of some ST and LT loans. Our receivable days was slightly shortened to 101.8 days from 103 days in 2025, while the payable days were broadly stable at 94.7 days compared with 94.5 days in 2025. Looking at the working capital amount of SAR 4.3 million, while the debt to equity ratio stood at a healthy 62.3%, which was 8.6 percentage points lower than Q2 2025. Next slide. Now looking at our outlook and guidance for the remainder of the year, we are maintaining our FY 2026 guidance for beds, clinics, and net revenue.

Speaker #2: While our capital expenditures totaled 22 million SAR during the quarter, this debt reduction is related to settlement of some SDL and LTL loans. Our receivable days was slightly shortened to 101.8 days from 103 days in '25, while the payable days were broadly stable at 94.7 days compared with 94.5 days in 2025.

Speaker #2: Looking at the working capital amount of 4.3 million SAR, while the debt to equity ratio stood at a healthy 62.3%, which was 8.6 percentage points lower than Q2 2025.

Speaker #2: Next slide. Next. Now, looking at our outlook and guidance for the remainder of the year, we are maintaining our FY 2026 guidance for beds, clinics, and net revenue.

Speaker #2: We expect to close the year with around 581 beds and between 350 and 360 clinics, while net revenue guidance remains between the 1.6 to 1.7 billion SAR range.

Hani Charani: We expect to close the year with around 581 beds and between 350 and 360 clinics, while net revenue guidance remains between the SAR 1.6 to 1.7 billion range. To reflect the current volatile operating environment, we have widened both the minimum and maximum margin guidance for the EBITDA margin to approximately 22% to 26%, and the net income margin guidance to approximately 13.5% to 16.5%. Just as a reference, 2025 closed with 581 beds, 323 clinics, and SAR 1.5 billion in net revenue. The EBITDA margin in 2025 was 27.1%, and the net income margin hit 17.3%, which again included that SAR 16.6 million gain on the sale contribution to the Wadi Fund. This concludes the financial section of our earnings call, and I'll hand it back to Faisal. Thank you very much.

Speaker #2: To reflect the current volatile operating environment, we have widened both the minimum and maximum margin guidance for the EBITDA margin, to approximately 22 to 26 percent, and the net income margin guidance to approximately 13.5 to 16.5 percent.

Speaker #2: Just as a reference, '25 closed with 581 beds, 323 clinics, and 1.5 billion in net revenue. The EBITDA margin '25 was 27.1% and a net income margin hit 17.3%, which again included that 16.6 million gain on the sale contribution to the wider fund.

Speaker #2: This concludes the financial section of our earnings call, and I'll hand it back to Faisal. Thank you very much.

Speaker #1: Thank you, Honey. Sam. Now we're ready to take questions. Marina, I'll leave it to you to handle the questions.

Bassam Chahine: Thank you, Hani and Sam. Now we're ready to take questions. Marina, I'll leave it to you to handle the questions.

Speaker #3: Thank you, management team, for the detailed presentation. We'll now open the floor for questions. As usual, if you have any questions, you can type them in the Q&A box, or you can raise your hand to speak directly to management.

Operator: Thank you, management team for the detailed presentation. We'll now open the floor for questions. As usual, if you have any question, you can type it in the Q&A box, or you can raise your hand to speak directly to management. We have already a raised hand from Hekmat Salahi. You are now allowed to talk. Please go ahead.

Speaker #3: We already have a raised hand from Hikmat Salahi. You are now allowed to talk; please go ahead.

[Company Representative] (Ethica Capital): Assalamualaikum, am I audible?

Speaker #4: السلام عليكم. Am I audited?

Speaker #1: Yes, alaykum as-salam.

Bassam Chahine: Yes. Alaikumsalam.

Speaker #4: Okay. Thank you. Thank you, Mr. Thank you, management, for the presentation. Very helpful. One question from my side. Regarding the net profit margin guidance, basically, if I look at the H1 performance for the company, the net margin is around 10% for H1 '26.

[Company Representative] (Ethica Capital): Okay. Thank you. Thank you, Bassam. Thank you, management for the presentation. Very helpful. One question from my side regarding the net profit margin guidance. Basically, if I look at the H1 performance for the company, the net margin is around 10% for H1 2026. You achieved a net profit of SAR 78 million. Doing the math for the lower end of the guidance for the net margin of around 14% and SAR 1.6 billion revenues, this means you will grow almost 2x. You will achieve around SAR 140 to 150 million in H2 with a massive margin expansion. I just want to understand what are the main drivers behind this massive margin expansion in H2? If I look at the trend of the operating cost, the transition now is over. The LTC beds, you have transitioned away, you opened the clinics.

Speaker #4: And you chose a net profit of $78 million. So, doing the math for the lower end of the guidance for the net margin of around 14% and $1.6 billion in revenues, this means you will grow almost 2x.

Speaker #4: You'll achieve around 140 to 150 million in H2 with a massive margin expansion. I just want to understand what are the main drivers behind this massive margin expansion in H2.

Speaker #4: If I look at the trend of the operating cost, the transition now is over. The LTC beds, you have transitioned away. You opened the clinics.

Speaker #4: So what are you factoring in that will drive this massive expansion in H2?

[Company Representative] (Ethica Capital): What are you factoring in that will drive this massive expansion in H2?

Speaker #1: Thank you, Hikmat, for the question. I will answer the small part, and if Honey wants to add on that. First of all, and historically, and if you look at our performance last year, the second half is the strongest half.

Bassam Chahine: Thank you, Hekmat, for the question. I will answer the small part, and if Hani wants to add on that. First of all, and historically, and if you look at our performance last year, the H2 is the strongest half. This is the busiest half, in which we have maximum number of clinic utilization, visit, admission, where we have high occupancy rate, high utilization rate. It has been always historically normal to us that the six month at the end of the year perform much, much better than the first six month of the year. Anything you want to add on that point, Hani, on what to expect in the H2 based on these assumptions?

Speaker #1: This is the busiest half, in which we have the maximum number of clinic utilizations, visits, and admissions, where we have a high occupancy rate and high utilization rate.

Speaker #1: So it has always been historically normal for us that the last 6 months of the year perform much, much better than the first 6 months of the year.

Speaker #1: Anything you want to add on that point, Honey, on the what to expect in the second half based on these assumptions?

Speaker #2: Yeah. I think, like you said, that always H2 is much stronger than H1. In addition, don't forget we added 57 clinics, plus an additional 5 clinics in Q1 of '26.

Hani Charani: Yeah, I think like you said, that always H2 is much stronger than H1. In addition, don't forget we added 57 clinics, an additional five clinics in Q1 2026. These are just beginning to ramp up. Remember, these clinics, just because you add them, doesn't mean the next quarter or the third quarter will be fully occupied. It takes two to three years to really progress up. We are going to see these continued increases in outpatient activity in H2. We also have the Al Malqa clinic that opened. We are going to see the benefits of Al Malqa in H2 as well. We have a lot of cost-saving controls that is going to help improve the margins overall, both in the outpatient and inpatient.

Speaker #2: These are just beginning to ramp up. Remember, these clinics just because you add them doesn't mean the next quarter or the third quarter will be fully occupied.

Speaker #2: It takes two to three years to really progress up. So we're going to see these continued increases in outpatient activity in H2. We also have the Malga Clinic that opened, so we're going to see the benefits of Malga in H2 as well.

Speaker #2: And we have a lot of cost-saving controls that are going to help improve the margins overall, both in the outpatient and inpatient.

Speaker #1: Okay. So basically, you still stick

[Company Representative] (Ethica Capital): Okay. Basically, you still stick to a massive expansion in H2 2026?

Speaker #4: to a massive expansion in H2 '26?

Speaker #2: Yes, correct.

Hani Charani: Yes, correct.

Speaker #4: Okay. Very best of luck. Thank you.

[Company Representative] (Ethica Capital): Okay. Clear. Very best of luck.

Bassam Chahine: Thank you, Hikmat.

[Company Representative] (Ethica Capital): Thank you.

Speaker #1: Marina, don't forget the chat questions. I've seen two questions on the screen.

Bassam Chahine: Marina, don't forget the chat questions. I've seen two questions on the screen.

Operator: Yes, Bassam, we have another raised hand from Mohammed AlQahtani. You're now allowed to talk. Please go ahead.

Speaker #3: The same, but we have another raised hand from Mohammed Al Qahtani. You are now allowed to talk; please go ahead.

Speaker #1: Sure.

Bassam Chahine: Sure.

Mohammed AlQahtani: As-salamu alaykum. Can you hear me?

Speaker #4: السلام عليكم. Can you hear me?

Speaker #1: وعليكم السلام. Yes, we can hear you, Mohammed. أهلاً وسهلاً.

Bassam Chahine: Wa alaykum as-salam. Yes, we can hear you, Mohammed.

Mohammed AlQahtani: This is Mohammed AlQahtani from Meridian. Maybe I have two small questions from my end. In this Q, did you guys notice any uptick in rejections? Also on your new clinics and everything that has transitioned from long-term care, could you guys comment on the utilization of these incremental additions so we can understand the runway for the business, especially in the H2, since as per Hikmat said, you guys need to perform in the H2. Just for me to have an anchor on the runway that you guys can achieve.

Speaker #4: This is Mohammed Al Qahtani from Marjam. Maybe I have two small questions from my end. In this quarter, did you guys notice any uptick in rejections?

Speaker #4: And also, on your new clinics and everything that has transitioned from long-term care, could you guys comment on the utilization of these incremental additions so we can understand the runway for the business, especially in the second half since as per Hikmat says, you guys need to perform in the second half.

Speaker #4: So just for me to have an anchor on the runway that you guys can achieve.

Speaker #1: Yeah. Thank you, Mohammed. Those are not small questions. Those are big questions.

Bassam Chahine: Yeah. Thank you, Mohammed. Those are not small questions. Those are big questions.

Speaker #4: I'm sorry, Doctor.

Mohammed AlQahtani: I'm sorry, Bassam.

Speaker #1: Regarding the rejection, of course, the rejection anyone working in healthcare in the past 5 years, he will tell you about one of the challenges or whatever probably you can say unforeseen or unplanned pressure that you got from payers.

Bassam Chahine: Regarding the rejection, of course, the rejection, anyone working in healthcare in the past five years, he will tell you about one of the challenges or whatever problem you can say, unforeseen or unplanned pressure that you got from payers. This is a normal process. As SMC, probably we've seen more pressures recently than in previous years, and I think this is well known in the market. When you have pressure on the economy and when you have companies downgrading their policies, when you see margins of profit, certain insurance being pressured like we've seen in Tawuniya recently, it's only normal that this pressure will be conveyed to providers. Of course, the more you have your RCM process intact, the more you have a strategic agreement with the insurance, probably you'll be less affected by the pressure of payers.

Speaker #1: And this is the normal process. As SMC, probably we've seen more pressures recently than in previous years. And I think this is well known in the market.

Speaker #1: When you have pressure in the economy and when you have companies downgrading their policies, when you see margins of profit in certain insurance being pressured, like we've seen in Taunia recently, it's only normal that this pressure will be conveyed to providers.

Speaker #1: Of course, the more you have your RCM process intact, you have the more you have strategic agreement with your insurance, probably you'll be less affected by the pressure of payers.

Speaker #1: But yes, you can fairly say that we've seen recently more pressure from payers as we used to see before. Regarding the second question, you've seen Honey answered that we have a full ramp-up in half two, which was not the case in half two of 2025.

Bassam Chahine: Yes, you can fairly say that we've seen recently more pressure from payers as we used to see before. Regarding the second question, you've seen Hani answered that we have a full ramp-up in H2, which was not the case in H2 of 2025. We expect more utilization of the existing clinics that are fully operational now. Plus, there will be expected a lot of new patients and new clinics ramping up at Al Malqa that opened only a few months ago. This will also reflect on the performance of H2. Historical performance of H2 that has always been growth, always been bigger. The ramp-up of the existing clinics that were not fully utilized in the H2 of 2025, and they will be fully utilized in H2 of 2026, and the contribution that Al Malqa ramp-up will add to our revenue.

Speaker #1: So we expect more utilization of the existing clinics that are fully operational now, plus there will be expected a lot of new patients and new clinics ramping up if Malga that opened only a few months ago this will also reflect on the performance of half two.

Speaker #1: So historical performance of half two that has always been growth, always been bigger, the ramp-up of the existing clinic that were not fully utilized in the half two of 2025, and they will be fully utilized in half two of 2026, and the contribution that Malga ramp-up will add to our revenue.

Speaker #1: I hope I answered your question, Mohammed.

Bassam Chahine: I hope I answered your question, Mohammed.

Speaker #4: No, very clear. Thank you. Maybe one follow-up if I can. On the rejections part, was it more outpatient, inpatient, or was it a blend of both?

Mohammed AlQahtani: No, very clear. Thank you. Maybe one follow-up, if I can. On the rejections part, was it more outpatient, inpatient, or was it like a blend of both?

Speaker #1: Yeah. Usually, always if you're a payer, you will look at every possible way to control the cost. And controlling the cost is not only in outpatient.

Bassam Chahine: Yeah. Usually, always if you're a payer, you will look at every possible way to control the cost. Controlling the cost is not only in outpatient. In outpatient, it's volume, yes, so any decision you can take at the outpatient, it has an impact, but also in inpatient, which have a lower volume but higher impact in terms of financially. You see them across the board, on both inpatient and outpatient.

Speaker #1: In outpatient, it's a volume, yes. So any decision you can take at the outpatient, it has an impact. But also, in inpatient, which have a lower volume but higher impact in terms of financial.

Speaker #1: So inpatient and outpatient.

Speaker #4: Thank you very much. Very clear.

Mohammed AlQahtani: Thank you very much. Very clear.

Speaker #3: Thank you, Mohammed. And thank you, Bassem. We have another raised hand from Taha Javed. Your line is now unmuted. Please go ahead.

Operator: Thank you, Mohammed, and thank you, Bassam. We have another raised hand from Taha Javed. Your line is now unmuted. Please go ahead.

Hani Charani: Yes.

Speaker #5: All right, thank you so much, and congratulations on the results. But just on the revenue side, I was confused, because the volumetric growth both on the outpatient and inpatient sides year-on-year is very healthy—double digits.

Taha Javed: Thank you so much. Congratulations on both set of results. Just on the revenue side, I was confused that the volumetric growth, both on the outpatient and inpatient year-on-year is very healthy, double digits, but the net revenue numbers are actually in single digits, like 4%, 5%. If you can just address this, is this a factor of rejections, higher rejections, or patient underpinning is less, what has happened there? Thank you.

Speaker #5: But the net revenue numbers are actually in single digits, like 4 or 5 percent. If you can just translate for us this factor of rejections, higher rejections, or per patient billing is less, what has happened there?

Speaker #1: First of all, there is an echo or the back noise; second, the question was not very clear. Faisal, Honey, did you hear the question clearly?

Bassam Chahine: First of all, there is an echo or the back noise. Second, the question was not very clear. Faisal, Hani, do you hear the question clearly?

Speaker #2: No, I think there was people talking in the background. Sorry, Taha.

Hani Charani: No, I think there was people talking in the background. Sorry, Taha.

Speaker #5: No, no, no issue. Sorry. Yeah, I just tried to repeat it.

Taha Javed: No. Sorry. I'll just try to repeat it.

Speaker #1: So can you please, Taha, just repeat the question slowly, raise your voice, so we can easily get the point?

Bassam Chahine: Can you please, Taha, just repeat the question slowly, raise your voice so we can easily get the point.

Speaker #5: Sure. Thank you. So my question was that volumes on the volumes, right, outpatient and inpatient, both we see a very good double-digit growth. Above 10 percent.

Taha Javed: Sure. Thank you. My question was that on the volume front, outpatient and inpatient both, we see a very good double-digit growth. Above 10%. The revenue numbers, especially, are not up to that level, like the medical services revenue up by only 3.5% year-over-year in H1. Just what is leading to that? Because if the volume is up more than 10%, was there higher rejections in this H1, or what is the reason for patient billing is lower? What's happening?

Speaker #5: But the revenue numbers, especially are not up to that level, like the medical services revenue up by only 3.5 percent year-on-year in the first half.

Speaker #5: So just what is leading to that? Because if the volume is up more than 10 percent, was there a higher rejections in this first half, or what is the reason for per patient billing is lower?

Speaker #5: What's happening?

Speaker #1: So let me reword your question. You're talking about increase in revenue that is not reflecting on sorry, I'll just try to summarize your question.

Bassam Chahine: Let me reword your question. You're talking about increase in revenue that is not reflecting on- Sorry, I'll just try to summarize your question. What you're mentioning, Taha, that we have an increase in activities, that means in revenue, without being reflected the same on the net profit margin. Is that your question?

Speaker #1: What you're mentioning, Taha, that we have an increase in activities, that means in revenue, without being reflected the same on the net profit margin.

Speaker #1: Is that your question?

Speaker #2: No, I think what he's looking at, Bassam, he's seeing the increase in outpatient activity as visits, not reflecting in the net revenue.

Hani Charani: No, I think what he's looking at, Bassam, he's saying the increase in outpatient activity-

Bassam Chahine: Okay

Bassam Chahine: Okay.

Hani Charani: as visits not reflecting in the net revenue.

Speaker #1: Okay, so his question is about outpatient activity.

Bassam Chahine: Oh, okay. His question about outpatient activity.

Speaker #2: Correct, Taha. Is that your question?

Hani Charani: Correct, Taha, is that your question?

Speaker #5: Yes, correct. Both outpatient and inpatient volumes are up, double digits, year-on-year. But the revenue is up, single digit.

Taha Javed: Yes, correct. Both outpatient and inpatient volumes are up double digits year on year, the revenue is up single digit.

Speaker #2: Yeah. You want me to answer that?

Hani Charani: Yeah. You want me to answer that?

Speaker #1: Yeah, go ahead. Go ahead.

Bassam Chahine: Yeah, go ahead.

Speaker #2: Yeah, Taha, look, after the Q1 issues that I think all the hospitals faced, we saw the uptick in visits in Q2. And I think a lot of them were going to see visits but scheduled inpatient procedures are going to increase in Q3 and Q4.

Hani Charani: Yeah, Taha, look, after the Q1 issues that I think all the hospitals faced, we saw the uptick in visits in Q2. I think a lot of them we're going to see visits, but scheduled inpatient procedures are going to increase in Q3 and Q4. I think it'll reflect more in Q3 and Q4 on the revenue side. It's not that the big rejections were impacted. It's just the type and mix of the service that occurred in Q2.

Speaker #2: So I think it'll reflect more in Q3 and Q4 on the revenue side. So it's not that a big rejections were impacted. It's just the type and mix of the service that occurred in Q2.

Speaker #5: Understood. Thank you so much.

Taha Javed: I understand. Thank you so much.

Speaker #3: Thank you, Taha, and thank you, Honey. We have another raised hand from Ahmad Eshoki. You're allowed to talk. Please go ahead.

Operator: Thank you, Taha, and thank you, Hani. We have another raised hand from Ahmad Al Shoki. You're allowed to talk. Please go ahead.

Speaker #6: Assalamualaikum. Am I audible?

Ahmad Al Shoki: As-salamu alaykum. Am I audible?

Speaker #1: Aleikum assalam, Ahmad. Yes.

Bassam Chahine: Wa alaykum as-salam, Ahmad. Yes.

Speaker #6: Thank you for having us today, and congratulations on the great set of results. I have a couple of questions. Firstly, about the second half of the year.

Ahmad Al Shoki: Thank you for having us today, congrats on the great set of results. I have a couple of questions. Firstly, about the H2 of the year. You've mentioned that seasonality is in your favor. In what sense is seasonality in your favor in order for, like Hikmat said in his previous question, the H2 net profits has to double compared to the H1. What kind of seasonality would drive this growth? Is it more of inpatients or outpatients? Maybe one question about the utilization of the clinics you've started opening since the H2 of last year, and what kind of contribution did the Al Malqa clinic have in the Q2?

Speaker #6: You've mentioned that seasonality is in your favor. So in what senses seasonality in your favor in order for like Hikmat said in his previous question, the second half net profits has to double compared to the first half.

Speaker #6: So what kind of seasonality would drive this growth? And is it more of inpatients or outpatients? And maybe one question about the utilization of the clinics you've just you've started opening since the second half of last year.

Speaker #6: And what kind of contribution did Malga Clinic have in the second quarter?

Speaker #1: Okay. I will take the first part related to the seasonality. And Honey, you can add anything on the point, plus mention on contribution of Malga.

Bassam Chahine: Okay, I will take the first part related to the seasonality, Hani, you can add anything on the point, plus mention on contribution of Al Malqa. When we say seasonality, we are referring to few conditions. First condition, Ramadan. Probably you know the month of Ramadan. Ramadan, usually you have at least 20% less working hours. 20% less working hours usually reflect in less revenue because your capacity and working hours are less. This is normal. It's not something unknown. Everyone knows that, I'm sure all companies, they went into this process. When you have a complete month, less 20% of your activity and capacity, and you have the Fitr vacation, which is around 1 week of no productivity except emergency and urgent admissions. You have Al-Hajj, which is around 1 week of non-productivity, restricted to only emergency and urgent admissions.

Speaker #1: When we say seasonality, we are referring to a few conditions. First condition, Ramadan. Probably you know the month of Ramadan. Ramadan usually you have at least 20 percent less working hours.

Speaker #1: So 20 percent less working hours usually reflect in less revenue because your capacity and working hours are less. And this is normal. It's not something unknown.

Speaker #1: Everyone knows that. And I'm sure all companies, they went into this process. So when you have a complete month, less 20 percent of your activity and capacity, and you have to footer vacation, which is around one week of no productivity except emergency and urgent admissions, and you have Al-Hajj, which is around one week of non-productivity restricted to only emergency and urgent admissions.

Speaker #1: So all of a sudden, you don't have these in the second half. That's one. Second, this first half, in particular, was unusual. There were a lot of political uncertainty in the region.

Bassam Chahine: All of a sudden, you don't have these in H2. Second, this H1, in particular, was unusual. There was a lot of political uncertainty in the region. Many people, I'm sure we know both, have canceled their elective procedures and surgeries, and did not go into a procedure waiting for more stability in the region. Of course, we've seen them back to those elective procedures in Q2, and this will continue in Q3 and Q4. Historically known, Q4 of any healthcare provider in Saudi Arabia is the strongest quarter. Every business is back. Schools are back. Riyadh population is eight million, maybe nine million. You can see from the traffic. It's only normal to go and seek medical attention and medical care after long vacation and after going back to normal life.

Speaker #1: Many people, I'm sure we know both, they have canceled their elective procedures, and surgeries, and they did not go into procedure waiting for more stability in the region.

Speaker #1: And of course, we've seen them back to those elective procedures in the quarter two. And this will continue in quarter three and quarter four.

Speaker #1: Plus, historically known, quarter four of any healthcare provider in Saudi Arabia is the strongest quarter. You have every business is back. Schools are back.

Speaker #1: Riyadh population is 8 million, maybe 9 million. You can see from the traffic. And it's only normal to go and seek medical attention and medical care after long vacation and after going back to normal life.

Speaker #1: Plus, in quarter three, it's not affected by school breaks. That's true. It's affected partially by travel, but they are always four, five millions in Riyadh without school breaks and without Ramadan and without Adha Eid, and they go and utilize the service and we've seen that during the quarter.

Bassam Chahine: In Q3, it's not affected by school breaks. That's true, it's affected partially by travel, but there are always four, five million in Riyadh without school breaks and without Ramadan and without Fitr, they go and utilize the service, we're seeing that during the quarter. This is as far as the seasonality. I hope I was able to cover that point. Hani would like to comment on the issue of the contribution of Al Malqa once it becomes fully operational as we are anticipating.

Speaker #1: So this is as far as the seasonality. I hope I were able to cover that point. Honey, would like to comment on the issue of the contribution of Malga once it becomes fully operational as we are anticipating.

Speaker #2: Yeah. And I'd just like to add before I get to that, the Q3, I think we're going to see a very strong Q3 as well.

Hani Charani: Yeah, I'd just like to add, before I get to that, Q3, I think we're going to see a very strong Q3 as well. Remember, a lot of people didn't travel because of the geopolitical situation. Also, the very hot weather in Europe, people preferred to stay here where there's air conditioning. We're seeing a big increase in activity even in July. This will definitely continue throughout Q3, obviously Q4 historically has always been this double-digit jump. With regards to Al Malqa, we will see the contribution of Al Malqa in Q3 and Q4. Now we have most of the insurance, the large ones signed. Now we're seeing activity just in the last two weeks. The contribution, we did not realize any contribution from Al Malqa in H1. That's why we're going to see that in H2 moving forward.

Speaker #2: Remember, a lot of people didn't travel because of the geopolitical situation. Also, the very hot weather in Europe, people preferred to stay here where there's air conditioning.

Speaker #2: So we're seeing a big increase in activity even in July. So this will definitely continue throughout Q3 and obviously Q4 historically is always been this double-digit jump.

Speaker #2: With regards to Malga, we will see the contribution of Malga in Q3 and 4. Now we have most of the insurance, the large ones signed.

Speaker #2: Now we're seeing activity just in the last two weeks. So the contribution we did not realize any contribution from Malga in H1. That's why we're going to see that in H2 moving forward.

Speaker #6: So sorry to interrupt to just a question about that. So you said no contribution in Q2, but there is cost. The cost, fixed cost side of it, right?

Ahmad Al Shoki: Sorry to interrupt. Just a question about that. You said no contribution in Q2, but there is the fixed cost side of it, right?

Speaker #2: Yes, of course. We have a team there, but they have to get things ready. The wrapping up. We had cash patients, but it's immaterial, the revenue.

Hani Charani: Yes, of course. We have a team there, but they have to get things ready. They're ramping up. We had the cash patients, but it's immaterial, the revenue. Now we're going to start seeing the real revenues effective mid-July and onwards.

Speaker #2: Now we're going to start seeing the real revenues. Effective mid-July and onwards.

Speaker #6: I mean, can we know excluding the cost with margins of the SMC 1 and 2 be higher? If we exclude the cost of Malga.

Ahmad Al Shoki: Can we know, excluding the cost, would margins of the SMC 1 and 2 be higher, if we exclude the cost of Al Malqa?

Speaker #2: With the cost be higher or lower, you mean?

Hani Charani: Would the cost be higher or lower, you mean?

Speaker #6: No, no, no. I mean, how much would I mean, margins be if we exclude the cost of Malga? In the second quarter.

Ahmad Al Shoki: No. How much would margins be if we exclude the cost of Al Malqa in the Q2?

Speaker #2: In the second half or second quarter?

Hani Charani: In the H2 or Q2?

Speaker #6: Second quarter.

Ahmad Al Shoki: Q2.

Speaker #2: Okay. I have to get back with you as a percentage. I don't have it in front of me. But I'll also I mean, you have to understand that Malga was not a planned project.

Hani Charani: Okay. I have to get back with you as a percentage. I don't have it in front of me. Also, you have to understand that Al Malqa was not a planned project, all those additional costs, the physicians, nurses, the rent, is all additional costs that are factored in. I'm sure somebody's going to ask about the gross margin declining, and I'll get to that if anyone asks that question. If you need other information, I'll be happy offline to answer those questions in detail.

Speaker #2: So all those additional costs, the positions, nurses, the rent is all additional costs that are factored in. And I'm sure somebody is going to ask about the gross margin declining.

Speaker #2: And I'll get to that if anyone asks that question. But if you need other information, I'll be happy offline to answer those questions in detail.

Speaker #6: Okay. Sure. Okay. Thank you very much. All the best.

Ahmad Al Shoki: Okay. Sure.

Bassam Chahine: Thank you, Ahmad.

Ahmad Al Shoki: Okay. Thank you very much.

Bassam Chahine: Thanks very much. Next question, please.

Speaker #1: Thank you very much. Next question, please.

Speaker #2: I think there's some Q&A. On the.

Hani Charani: I think there's some Q&A as well.

Speaker #3: The last three sentences from share, and then we can start the Q&A. Michelle, you're allowed to talk now. Please go ahead.

Operator: The last three questions from Mashael, and then we can start the Q&A. Mashael, you're allowed to talk now. Please go ahead.

Speaker #4: Assalamualaikum. Thank you, Bassam. Thank you, Honey, for the presentation. So maybe just a follow-up on Allah's question. I mean, the change in revenue per patient is quite significant, right?

[Analyst]: Salaam alaikum. Thank you, Bassam. Thank you, Hani, for the presentation. Maybe just a follow-up on Taha's question. The change in revenue per patient is quite significant, right? Seeing such growth in the volume with minimal revenue growth. If you can elaborate more there, given that your strategy was to transform LTC beds to clinic in order to gain higher margins, higher revenue, and so on. So far, none are achieved to the magnitude expected. How structural is this change, and how can you see it evolving toward the H2?

Speaker #4: Seeing such growth in the volume with minimal revenue growth. If you can elaborate more there, given that your strategy was to transform LTC beds to clinic in order to gain higher margins, higher revenue, and so on.

Speaker #4: And so far, none are achieved to the magnitude expected. So how structural is this change? And how can you see it evolving toward the second half?

Speaker #1: Do you want to take that answer? Honey?

Bassam Chahine: Do you want to take that answer, Hani?

Speaker #2: It's up to you. Do you want to and then I can add to that.

Hani Charani: It's up to you. Do you want to-- Then I can add.

Speaker #1: Go ahead. Go ahead. Go ahead.

Bassam Chahine: Go ahead.

Speaker #2: Again, as we mentioned, the mix of cases that we're seeing right now is lower. So we expect that to hit in Q3 and Q4.

Hani Charani: Again, as we mentioned, the mix of cases that we're seeing right now is lower. We expect that to hit in Q3 and Q4. The visits are up. They're scheduling these procedures. Some people are traveling, so they'd rather do it in August and September. All of this influx of inpatients and obviously the higher revenues per bed will be realized in Q3 and Q4.

Speaker #2: The visits are up. They're scheduling these procedures. Some people are traveling, so they'd rather do it in August and September. So all of this influx of inpatient and obviously the higher revenues per bed will be realized in Q3 and Q4.

Speaker #1: Plus, addition to this, Michelle, it's very important also to know I understand when you look and you see that big double-digit increase in activities in the clinics, not reflecting directly on revenue.

Bassam Chahine: Plus, addition to this, Mashael, it's very important also to know, I understand when you look and you see that big double-digit increase in activities in the clinics, not reflecting directly on revenue. Not because this will have a direct effect on the revenue only, but because a big part of the patients, especially that we've seen in Q2, were related to primary care. Primary care, medication refill, not coming a lot for procedures like Hani mentioned, whether complex procedure or admission. Sometimes you can have a big increase, let's say, in pediatrics and in other medical specialties that we've seen, and usually those specialties, they do not contribute a lot in terms of revenue. They are a count, yes. If you see a big increase, let's say, in surgical specialties or orthopedics, then it will reflect more on the revenue than other medical specialties.

Speaker #1: Not because this will have a direct effect on the revenue only, but because a big part of the patients, especially that we've seen in quarter two, were related to primary care.

Speaker #1: Primary care, medication refill, not coming a lot for procedures like Honey mentioned, whether complex procedure or admission. So sometimes you can have a big increase, let's say, in pediatrics and in other medical specialty that we've seen.

Speaker #1: And usually, those specialties, they do not contribute a lot in terms of revenue; they are account, yes, but if you see a big increase, let's say, in surgical specialties or orthopedics, then it will reflect more on the revenue than other medical specialties.

Speaker #1: I hope we try to summarize why you're seeing that discrepancy.

Bassam Chahine: I hope, Hani, we try to summarize why you're seeing that discrepancy.

[Analyst]: Yeah. It is clear, Bassam and Hani, maybe just a follow-up, Hani. Given that we're starting August now, did you see a change in the patient yield? In terms of procedures and so on. Is there a pickup there?

Speaker #4: It is clear, Bassam and Honey. But maybe just a follow-up, given that we're started August now. Did you see a change in the patient yield?

Speaker #4: I mean, in terms of procedures and so on. Is there a pickup there?

Speaker #1: In? I did not get the point.

Bassam Chahine: In? I did not get the point.

Speaker #4: In the procedures, surgeries, and so on, in a way that would increase the average bill per patient.

[Analyst]: In the procedures, surgeries, and so on, in a way that would increase the average bill per patient.

Speaker #1: Yeah. Now, of course, you know, I don’t know—one of my colleagues in the publicly listed company, they say they had a rebound. This rebound was first in utilization of clinics just for primary—for medication refill, for checking—and we've seen that in Q2.

Bassam Chahine: Yeah. Now, of course, I don't know, one of my colleagues in the publicly listed company, they say they had a revenge. This revenge was first in utilization of clinics just for primary, for medication refill, for checking, and we've seen that in Q2. Of course, that does not reflect in the same conversion ratio that we used to see. Plus, the timing, Q2 is middle of the school season. Many electively decide to do procedures after the season is over, and we've seen that. We've seen that in the beginning of Q3, that we have a lot of elective procedures that for a big number of patients that were seen in Q2 and decided to do these procedures in Q3.

Speaker #1: Of course, that does not reflect in the same conversion ratio that we used to see. Plus, the timing quarter two is middle of the school season.

Speaker #1: So many electively decide to do procedures after the season is over. And we've seen that. We've seen that in the beginning of quarter three, that we have a lot of elective procedure that for a big number of patients that were seen in quarter two, and decided to do these procedures in quarter three.

Speaker #1: So this is, in fact, related to a big number of outpatient and primary care and in certain specialties that they have opted to have their procedures or inpatient at quarter three.

Bassam Chahine: This is in fact related to a big number of outpatient and primary care and in certain specialties that they have opted to have their procedures or inpatient at Q3. This, in addition to what we have mentioned, might a little bit clarify why you see the revenue not going along with the activity and outpatient.

Speaker #1: This in addition to what we have mentioned, might a little bit clarify why you see the revenue not going along with the activity in outpatient.

Speaker #4: Sure. Thank you.

[Analyst]: Sure. Thank you.

Speaker #1: Thank you, Michelle. Nice always to see you in the call.

Bassam Chahine: Thank you, Mashael. Nice always to see you on the call.

Speaker #4: My pleasure.

[Analyst]: My pleasure.

Speaker #1: Next call, please. Next question.

Bassam Chahine: Next call, please. Next question.

Speaker #3: Thank you, Michelle, and thank you, Bassam and Honey. We can now take a few questions from the Q&A. We have a question from Badri.

Operator: Thank you, Mashael, and thank you, Bassam and Hani. We can now take few questions from the Q&A. We have a question from Badir, he is asking about the progress of SMC3 and SMC4, and has the EPC contract signed off?

Speaker #3: He's asking about the progress of SMC 3 and SMC 4 and has the EPC contract signed off.

Speaker #1: Okay. Thank you, Badir. Regarding SMC 3, if you notice, in quarter one, earning call, we mentioned that they were a delay of three months related to revising the traffic impact study of the hospital to include the wadi fund project.

Bassam Chahine: Okay. Thank you, Badir. Regarding SMC3, if you notice in the Q1 earnings call, we mentioned that there were a delay of 3 months related to revising the traffic impact study of the hospital to include the Wadi Fund project. Now, the Riyadh Municipality and Riyadh Commission in particular, are taking a lot of emphasis on the issue of traffic impact study. When you see such a big project, they want to ensure that there will be no impact on the traffic, there will be no impact on the demand for parking. The whole study was revised, and we have finished approving that study from the Riyadh Commission, from the municipality. Based on that, the condition for the construction permit was removed, and the construction permit now is live. Already we kick off the earthing. This is the last step you do before you do the foundation.

Speaker #1: Now, the municipality of Riyadh and Riyadh Commission in particular are taking a lot of emphasis on the issue of traffic impact study and when you see such a big project, they want to ensure that this will there will be no impact on the traffic.

Speaker #1: There will be no impact on the demand for parking. So the whole study was revised. And we have finished approving that study from the Riyadh Commission, from the municipality, based on that, the condition for the construction permit was removed and the construction permit now is live.

Speaker #1: Already, we kicked off the earthing. This is the last step you do before you do the foundation. The foundation is expected to start, which with the skeleton structural skeleton work, this will take place in September.

Bassam Chahine: The foundation is expected to start with the structural skeleton work. This will take place in September. We expect by the end of this month to announce the structural contractor. We will have packages. We will not be giving this project to one contractor to do everything. We will follow now the best practice for time saving and for cost effectiveness. We're going to give the structural package to someone, and we're going to announce that very soon, and it's not going to be a related party. It's going to be one of the top structural company in Saudi Arabia. We're going to follow that early next year by announcing the MEP and the finishing package. This is for SMC3. Regarding SMC4, there were some logistic issue with the land, with NHC. They have changed the location of the land for us.

Speaker #1: We expect by the end of this month to announce the structural contractor. We will have packages. We will not be giving this project to one contractor to do everything.

Speaker #1: We will follow now the best practice for time saving and for cost effectiveness. We're going to give the structural package to someone and we're going to announce that very soon.

Speaker #1: And it's not going to be a related party. It's going to be one of the top structural companies in Saudi Arabia. And we're going to follow that early next year by announcing the MEP and the finishing package.

Speaker #1: Regarding this, it is for SMC 3. Regarding SMC 4, there were some logistic issues with the land, with NHC. They have changed the location of the land for us.

Speaker #1: Of course, we did not change the design because they gave us a bigger land. The concept design is completed. The hoarding of the final land is in place.

Bassam Chahine: Of course, we did not change the design because they gave us a bigger land. The concept design is completed. The hoarding of the final land is in place. If you are in Riyadh, you can go and see it. If you are in Riyadh also, you can go see next week. There will be a lot of dust there because we will be kicking off the excavation. Everything is on plan regarding SMC4, and excavation will start hopefully next week, and we will be kicking off the remaining activities in the coming months. I hope I answered your question, Badir.

Speaker #1: If you are in Riyadh, you can go and see it. And if you are in Riyadh also, you can go see next week. There will be a lot of dust there because we will be kicking off the excavation.

Speaker #1: So everything is on plan regarding SMC 4. And excavation will start hopefully next week. And we will be kicking off the remaining activities in the coming month.

Speaker #1: I hope I answered your question, Badir.

Speaker #3: Thank you, Bassam. Very clear. We have another question from Salmana Roshi. You have already touched on this, but he's asking if you could repeat about the main reason of the gross profit margin decline.

Operator: Thank you, Bassam. Very clear. We have another question from Salman Al Rajhi. You have already touched on this. He's asking if you could repeat about the main reason of the gross profit margin decline year over year, and if there is any issue with the higher rejection rates.

Speaker #3: And if there is any issue with the higher rejection rates.

Speaker #2: Yeah. I'll take this one. I think we need to clarify that last year, when we opened the new clinics, most of them were opened during the second half of the year.

Hani Charani: Yeah, I'll take this one. I think we need to clarify that last year when we opened the new clinics, most of them were opened during H2 of the year. Obviously, that's when all the additional staffing and physicians and things were added. When you're comparing H1 to H1 last year, those costs were not there. In addition, we have that Al Malqa Clinic. You have an additional 70, 80 staff that were hired for that. Those were not in H1 of last year, but are in H1 of this year, and that's what impacted the gross profit margin. As we ramp up Al Malqa and obviously the other clinics, as more and more patients are seen, those costs are spread across the physicians. The profitability will increase in H2. I hope I answered that question.

Speaker #2: Obviously, that's when all the additional staffing and physicians and things were added. So when you're comparing first half to first half last year, those costs were not there.

Speaker #2: In addition, we have that Malga clinic. You have an additional 70, 80 staff that were hired for that. So those were not in H1 of last year, but are in H1 of this year.

Speaker #2: And that's what impacted the gross profit margin. As we ramp up Malga, and obviously the other clinics, as more and more patients are seen, those costs are spread across the physicians.

Speaker #2: So the profitability will increase in H2. I hope I answered that question.

Operator: Hani, we have a question from Yasser Al-Qahtani. He's asking about SMC5 timeline and if there is any change of the strategic in the forecast.

Speaker #3: Johan, we have a question from Yaser Qahtoni. He's asking about SMC 5 timeline and if there is any change of the strategic changes in the

Operator: Hani, we have a question from Yasser Al-Qahtani. He's asking about SMC5 timeline and if there is any change of the strategic in the forecast.

Speaker #1: Hello, Yaser. Thank you for the question. Yes, we still committed to SMC 5. As you know, if you're following SMC, we delayed the decision because of the instability in the prices of the land.

Bassam Chahine: Hello, Yasser. Thank you for the question. Yes, we're still committed to SMC5. As you know, if you're following SMC Healthcare, we delayed the decision because of the instability and the prices of the land. The price of the land, especially in that part of Riyadh, was declining in the past six months, and the decline was in certain areas and districts in Al Malqa, 20% and 30%. We're still committed. We are planning to acquire the land by the end of this year, and we have two or three lands that we are negotiating, and hopefully we will be able to conclude that. Our support and commitment for Al Malqa Clinic comes into that perspective. We won't be supporting that clinic unless we know we're going to have a hospital there that will serve the area and the community.

Speaker #1: And the price of the land, especially in that part of Riyadh, was declining in the past six months. And the decline was in certain areas and districts in Malga, 20 and 30 percent.

Speaker #1: So we're still committed. We are planning to acquire the land by the end of this year. And we have two or three lands that we are negotiating.

Speaker #1: And hopefully, we will be able to conclude that. And our support and commitment for Malga clinic comes into that perspective. We won't be supporting that clinics unless we know we're going to have a hospital there that will serve the area and the community.

Speaker #3: Thank you, Bassam. We have a question about the cost savings done in 2Q. Is it a one-off or we should still expect it to continue for the second half of the year?

Operator: Thank you, Bassam. We have a question about the cost savings done in Q2. Is it a one-off, or we should still expect it to continue for the H2?

Speaker #3: The question is also asking how to ensure that cost savings do not affect the quality and the patient satisfaction.

Bassam Chahine: Yeah.

Operator: The question is also asking how to ensure that cost saving does not affect the quality and the patient satisfaction.

Speaker #1: Yeah. Thank you, Young, for the question. I will answer in general terms. And Hani, if you want to add something or Faisal. First, regarding the cost control, few are one-time off, like the rebranding cost, which is included in our earning.

Bassam Chahine: Yeah. Thank you, Yong, for the question. I will answer in general terms, and Hani, if you want to add something, or Faisal. First, regarding the cost control, few are one-time off, like the rebranding cost, which is included in our earnings release. However, most of the cost control initiatives are continuous, sustainable, and we continue to do that across the board. It won't be a one-time off for most of the cost-saving initiatives. I think. Let me check. You removed the question, Marina.

Speaker #1: Release. However, most of the cost initiatives are the cost control initiatives are continuous. Sustainable. And we continue to do that across the board. So it wants to be a one-time off for most of the cost saving initiatives.

Speaker #1: So I think because let me check you removed the question, Marina, I'll go to the.

Speaker #2: Well, it affects patient safety and.

Hani Charani: Will it affect patient safety?

Speaker #1: Yeah, yeah. Definitely. Definitely. All the cost saving measures do not touch patient safety or patient experience. In fact, this is where we invest more.

Bassam Chahine: Yeah. Definitely. All the cost-saving measures do not touch patient safety or patient experience. In fact, this is where we invest more. We don't control on the cost. Usually, most of the cost is related to the overhead, is related to the back office services and activities, cost of medical equipment, cost of supplies, but never can compromise patient safety or patient satisfaction.

Speaker #1: We don't control on the cost. Usually, most of the cost is related to the overhead, is related to the back office services and activities.

Speaker #1: Cost of medical equipment, cost of supplies. But never can compromise patient safety or patient satisfaction.

Speaker #2: Yeah. Just to add to that, a lot of savings we've been seeing now with renegotiating prices with suppliers on consumable supplies, materials, operating supplies.

Hani Charani: Yeah, just to add to that, a lot of savings we've been seeing now with renegotiating prices with suppliers on consumable supplies, materials, operating supplies. Those have been really renegotiated over the last few months, several months, and we're going to see the benefit of that moving forward as well. These cost savings are going to be sustainable moving forward.

Speaker #2: So those have been really renegotiated over the last few months, several months. And we're going to see the benefit of that moving forward as well.

Speaker #2: So these cost savings are going to be sustainable moving forward.

Speaker #3: Thank you, Hani. And thank you, Bassam. We have two questions from our side. The first, if you can update us with the 2026 and 2027 CAPEX guidance.

Operator: Thank you, Hani, and thank you, Bassam. We have two questions from our side. The first, if you can update us with the 2026 and 2027 CapEx guidance. The second is, how do you expect the SABIC new PPP project will be recognized in the financials? Will it be fully consolidated, or do you expect it will become as income from associates?

Speaker #3: And the second is how do you expect the SABIC new PPP project will be recognized in the financial? Will it be fully consolidated or do you expect it will become as income from associate?

Speaker #1: Okay. I will take the answer, Hani, for the SABIC. And go ahead, answer the question on the contribution for the project. For SABIC, the contract has been signed for 10 days as I mentioned in the presentation.

Bassam Chahine: Okay, I will take the answer, Hani, for the SABIC and go ahead, answer the question on the contribution for the project. For SABIC, the contract has been signed since 10 days, as I mentioned in the presentation. Now we have a discussion with the board about the consolidation type. We're going to do it whether fully consolidated or on equity base. We will be taking the decision in Q3 and start implementing this and announcing this during Q3 call, Inshallah. Hani, question about the contribution for the project?

Speaker #1: Now we have discussion with the board. About the consolidation type, we're going to do it whether fully consolidated or on equity base. We will be taking the decision in quarter three and start implementing this.

Speaker #1: And announcing this during quarter three call, inshallah. Hani, question about the contribution for the project.

Speaker #2: Yeah, I think you asked Marina about the CAPEX. Is that correct?

Hani Charani: Yeah, I think you asked Marina about the CapEx, is that correct?

Speaker #3: Yeah. About the CAPEX for this year and next year, but it would be good if you have any outlook about the contribution of the SABIC project.

Operator: Yeah, about the CapEx for this year and next year, but it would be good if you have any outlook about the contribution of the SABIC project.

Speaker #2: At this point, I cannot comment on the contribution. It just depends on how we're going to treat the overall—if we're going to consolidate or keep it as a line item.

Hani Charani: At this point, I cannot comment on the contribution. It just depends on how we're going to treat the overall, if we're going to consolidate or to keep it as a line item, as an equity method. With regards to CapEx, we're looking at around SAR 65 to 70 million by the end of the year. Obviously, with the SMC3 and SMC4 projects kicking off, Q3 will see a slow uptick, but the massive increase in expenditures will happen probably towards Q4 as all those contractors are on board, and we have to start paying them.

Speaker #2: It's an equity method. With regards to CAPEX, we're looking at around 65 to 70 million. By the end of the year, obviously with the SMC 3 and SMC 4 projects kicking off, Q3, we'll see us slow uptick, but the massive increase in expenditures will happen probably towards Q4.

Speaker #2: As all those contractors are on board. And we have to start paying them.

Speaker #3: Hani. And thank you, Bassam. I think we have two follow-up questions from Hikmat and from Ahmad Shoki. We will take the line of Hikmat first.

Operator: Thank you, Hani, thank you, Bassam. I think we have two follow-up questions from Hikmat and from Ahmad Al Shoki. We will take the line of Hikmat first. You are now allowed to talk. Please go ahead.

Speaker #3: You are now allowed to talk. Please go ahead.

Speaker #4: Thank you. Thank you, Marina. Just a follow-up, gentlemen. Bassam, especially following up on, as you mentioned, in H2, the strong performance. I think in Q3 2025, the very strong performance was around 66 million in profits, which was mainly coming from cost savings.

[Company Representative] (Ethica Capital): Thank you, Marina. Just a follow-up, gentlemen. Bassam, especially following up on the, as you mentioned in H2, the strong performance. I think in Q3 2025, the very strong performance was around SAR 66 million in profits, was mainly coming from cost savings. Which is not the case anymore. If I look at the total operating cost between cost of revenue and SG&A, it went down to around SAR 310 million in Q3 2025. While the revenues did not increase much on a quarter-over-quarter or even on a year-over-year basis. Now you're already at a higher operating cost level of around SAR 346 million, especially also this quarter in Q2 2026. Given the expansionary phase, it doesn't seem that cost reductions can much improve the margins. You're factoring more massive volume growth towards H2, or where is the margin expansion?

Speaker #4: Which is not the case anymore. And if I look at the total operating cost between cost of revenue and SG&A, it went down to around 310 million in Q3, 2025.

Speaker #4: While revenues did not increase much on a quarter over quarter or even on a year over year basis. So now you're already at a higher operating cost level of around 346 million especially also this quarter in Q2, 2026.

Speaker #4: So given the expansionary phase, it doesn't seem that cost reductions can much improve the margins. So is it you're factoring more massive volume growth towards H2?

Speaker #4: Or where is the margin expansion? Is it more coming from revenues, or do you still expect to further reduce your SG&A going forward? Just to understand.

[Company Representative] (Ethica Capital): Is it more coming from revenues, or you still expect to further reduce your SG&A going forward? Just to understand.

Speaker #2: Yeah. Yeah. There's just it's going to be a combination. Obviously, G&A will be decreased. Cost of supplies are going to be decreased. We're streamlining the corporate overhead cost.

Hani Charani: Yeah. It's going to be a combination. Obviously, G&A will be decreased. Cost of supplies are going to be decreased. We're streamlining the corporate overhead cost. We're factoring in the increased load of patients from all these additional clinics as we continue to ramp up. Also, don't forget, we had price increases that took effect in Q1, Q2. A large company was signed, that impact started towards the middle of Q2. We have another large insurance company that's going to be recontracted, that'll be affected in the end of Q3. That'll take place. The price increases are also factored into this growth and increased margins. There's multiple facets of this.

Speaker #2: We're factoring in the increased load of patients from all these additional clinics as we continue to ramp up. And also don't forget, we had price increases that took effect in Q1, Q2, large company was signed.

Speaker #2: So that impact started towards the middle of Q2. We have another large insurance company that's going to be re-contracted. And that'll be affected in the end of Q3.

Speaker #2: That'll take a place so the price increases are also factored into this growth and increased margins. So there's multiple facets of this process.

Speaker #4: So that is still room for SG&A and cost of revenue improvement going forward.

[Company Representative] (Ethica Capital): There is still room for SG&A and cost of revenue improvement going forward?

Speaker #2: Yes. Yes.

Hani Charani: Yes.

Speaker #4: Okay. Okay. Great.

[Company Representative] (Ethica Capital): Okay. Great.

Speaker #1: Thank you, Hikmat. Marina, we have two questions in the chat. Thank you, Hikmat. You want me to take these questions?

Bassam Chahine: Thank you, Hikmat.

[Company Representative] (Ethica Capital): Thank you.

Bassam Chahine: Marina, we have two questions in the chat. Thank you, Hikmat. You want me to take these questions?

Speaker #3: Yes, sure. Please go ahead.

Operator: Yes, sure. Please go ahead.

Speaker #1: Okay. Mashael again. He's back. Thank you, Mashael. Question. How many clinics you expect to add in quarter three in specific? Malga Clinic is 35 clinics.

Bassam Chahine: Okay. Mashail again, she is back. Thank you, Mashail. Question: how many clinics you expect to add in Q3 in specific? Al Malqa Clinic is 35 clinics. Probably the operational clinic right now are less than 10. We expect at least to double the clinics, that means probably 5 to 10 clinics minimum in Q3. That's the question of how many clinics you expect to add in Q3, plus the ramp-up of the additional clinic or the clinic that already started at the beginning of the year. Second question by Salman. When was the last time SMC increased its prices, and are there any upcoming price increases? As you know, once inflation stop, we will not be asking for a price increase. Unfortunately, that's too good to be true.

Speaker #1: Probably the operational clinic right now are less than 10. So we expect at least to double the clinics. That means probably 5 to 10 clinics minimum in quarter three.

Speaker #1: That's the question of how many clinics you expect to add in Q3, plus the ramp-up of the additional clinic that already started at the beginning of the year.

Speaker #1: Second question by Salman. When was the last time SMC increased its prices and are there any upcoming price increases? As you know, once inflation stopped, we will not be asking for a price increase.

Speaker #1: Unfortunately, that's too good to be true. Inflation will always happen. The cost of care will go up. And all contracts with the insurers usually are one-year or two-year contracts.

Bassam Chahine: Inflation will always happen, cost of care will always go up, and all contracts with insurance usually are 1 year or 2 years contract, and every time you have a contract renewal, there will be a price increase. Of course, every organization will try to push the best that can reflect on the quality of service it provides. Hani mentioned about one major company, it's for due for Q3 or Q4, and this is an ongoing process. The answer is yes, there will be some price increase at the end of the year.

Speaker #1: And every time you have a contract renewal, there will be a price increase. Of course, every organization will try to push the best that can reflect on the quality of service it provides.

Speaker #1: Hani mentioned about one major company. It's for due for quarter three or quarter four. And this is an ongoing process. And the answer is yes, there increase at the end of the year.

Speaker #3: Thank you, Bassam. We can take the last question from the line of Ahmad Shoki. You are now allowed to talk.

Operator: Thank you, Bassam. We can take the last question from the line of Ahmad Al Shoki. You are now allowed to talk.

Speaker #4: Hi. Yeah. One more follow-up from my end. So you've mentioned that NHC have relocated your land for SMC 4. So since you've got a bigger land, are you increasing the capacity?

Ahmad Al Shoki: Hi, one more follow-up from my end. You've mentioned that NHC have relocated your land for SMC4. Since you've got a bigger land, are you increasing the capacity, and is the location much different to what was expected in the first place?

Speaker #4: And is it is the location much different to what was expected in the first place? So this is.

Speaker #1: No. It was we did not change the design. If you change the land and you want to change the design, this is a delay.

Bassam Chahine: We did not change the design. If you change the land and you want to change the design, this is a delay, lot of delay. The word delay is not on our agenda. They gave us the land because, the previous land, it took time to have the deed because the land was joined with the Ministry of Defense, and it was a complex thing. All at the Khuzam suburb. What happened, they have probably selected a better land for us on Faisal Bin Bandar Street. It's a little bit higher in terms of space as the previous one. We did not change the design. All what we did, the concept design, we implemented on the new land. Once we got the green light to proceed, we went ahead and finished the logistics, the details, the hoarding, the geotechnical study for the land.

Speaker #1: A lot of delay. The word delay is not on our agenda. They gave us the land because the previous land, it took time to have the deed because the land was joined with the Ministry of Defense and it was a complex thing.

Speaker #1: All at the Khuzam suburb. So what happened, they have probably selected a better land for us on Faisal Bin Bander Street. It's a little bit higher in terms of space as the previous one.

Speaker #1: We did not change the design. All what we did, the concept design, we implemented on the new land. And once we got the green light to proceed, we went ahead and finished the logistics, the details, the hoarding, the geotechnical study for the land.

Speaker #1: And as I mentioned, in one week, we'll be kicking off the construction in terms of start of the excavation.

Bassam Chahine: As I mentioned, in 1 week, we'll be kicking off the construction, in terms of start of the excavation.

Speaker #3: Yeah. Maybe one more question.

Ahmad Al Shoki: Yeah. Maybe one more question, if I may. If, let's say July is already over, how was the patient activity in July compared to, let's say quarter-on-quarter, compared to the second quarter?

Speaker #4: If I may. So if let's say July is already over, how was the patient activity in July compared to, let's say, quarter on quarter?

Speaker #4: Compared to the second quarter.

Speaker #1: Sure, Ahmad. I'll take the numbers of July. ما بيظبط كده.

Bassam Chahine: Hani, what statement you can mention about July without giving Ahmad numbers?

Speaker #4: والله I wish.

Speaker #1: Hani, what statement you can mention about July without giving Ahmad numbers?

Speaker #2: Oh. We're happy with July figures. How's that?

Hani Charani: We're happy with July figures. How's that?

Speaker #1: Okay. Happy in any bank. July is good. It's good. Surprisingly good. We expected a lot millions of go out of Riyadh. No. It's been busy.

Bassam Chahine: Okay. Hani will be super happy in any bank. July is good. It's surprisingly good. We expected a lot, millions of go out of Riyadh. It's been busy. Our inpatient has been unusually busy. Like Hani mentioned, we're happy and this July has been doing probably the best July we ever had, and hopefully this will continue in the quarter.

Speaker #1: Our impatient has been unusually busy. So like Hani mentioned, we're happy and this July has been doing probably the best July we ever had.

Speaker #1: And hopefully, this will continue in the quarter.

Speaker #4: Inshallah. Inshallah. All the best. Thank you.

Ahmad Al Shoki: Inshallah. All the best. Thank you.

Speaker #1: Thank you very much, Ahmad.

Bassam Chahine: Thank you very much, Ahmad.

Speaker #3: Thank you, Ahmad. We have a remaining question in the chat box from Kishani. He is asking about which segment you expect to perform better in the second half of the year.

Operator: Thank you, Ahmad. We have the remaining questions in the chat box from Kishan. He's asking about which segment do you expect to perform better in H2 of the year, inpatient or outpatient?

Speaker #3: In patient or outpatient?

Speaker #1: Okay, Kishani. Thank you for the question. Well, if you look at our numbers, our revenue has been contributed 55, 60 percent from outpatient. And around 40 or 45 percent from inpatient.

Bassam Chahine: Well, Kishan. Thank you for the question. Well, if you look at our numbers, our revenue has been contributed 55% to 60% from outpatient and around 40% or 45% from inpatient. The growth that we're seeing in both, it's not only outpatient contributing rather than inpatient. We're doing more complex procedures. We're doing neurosurgery, heart surgery, transplant surgery. We are having growth in revenue and activities in inpatient in the same way we are having that in outpatient.

Speaker #1: And the growth that we're seeing in both, it's not only outpatient contributing, rather than inpatient. We're doing more complex procedures. We're doing neurosurgery, heart surgery, transplant surgery.

Speaker #1: So we're having growth in revenue and activities in inpatient in the same way we are having that in outpatient.

Speaker #3: Thank you, Bassam. For the sake of time, if you have any additional questions, you can reach out to SMCIR team or to the CI Capital team and we'll be more than happy to reach out with the management.

Operator: Thank you, Bassam. For the sake of time, if you have any additional questions, you can reach out to SMC IR team or to CI Capital team, we'll be more than happy to reach out to the management. I will now hand the call back to the management if they have any concluding remarks.

Speaker #3: I will now handle the call back to the management if they have any concluding remarks.

Speaker #1: No. We thank a lot all who attended the call today. Thank you, CI Capital, Marina, for hosting the call. On behalf of my team, we thank you again.

Bassam Chahine: No, we thank a lot all who attended the call today. Thank you, CI Capital, Marina, for hosting the call. On behalf of my team, we thank you again, we hope we see you in the Q3 earning call. Have a good August.

Speaker #1: And we hope we'll see you in the quarter three earning call. And have a good August.

Speaker #3: Thank you, management team. And thank you for all attendees for dialing in today to SMC results conference call hosted by CI Capital. The recording of this call will be available shortly.

Operator: Thank you, management team, thank you for all attendees for dialing in today to SMC Results Conference Call hosted by CI Capital. A recording of this call will be available shortly. Have a nice day and a nice weekend, everyone. Thank you.

Speaker #3: Have a nice day and nice weekend, everyone. Thank you.

Speaker #1: Thank you.

Hani Charani: Thank you.

Bassam Chahine: Thank you.

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Q2 2026 Specialized Medical Company SCJSC Earnings Call

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