Q2 2026 Pure Health Holding PJSC Earnings Call
Speaker #1: Next.
Speaker #2: Hello everyone, this is Ahmed Motoz from EFGMS, and welcome to Pure Health's first half 2026 results conference call. I'm pleased to be joined by our Group Chief Executive Officer, Shaista Asif, and Group Chief Planning and Performance Officer, Mohammad Junaid Khan.
Speaker #2: The company, as usual, will start with the presentation, and then we'll move on to Q&A. Chaista, please go ahead.
Speaker #3: Thank you for the introduction. Good afternoon, everyone, and a very warm welcome. Thank you for joining us today and for your continued interest in Pure Health.
Speaker #3: Now, of course, as always, before we begin, I would like to recognize my team—the commitment of my team across the group—and their continued focus on patients, on excellence, on operational delivery, and on service quality. That has been central to the progress that we have achieved in the first half.
Speaker #3: And it will be central to how we perform for the rest of the year as well. So, Pure Health, we delivered strong growth in H1, with performance strengthening materially during the second quarter.
Speaker #3: And this reflected continued momentum in care and cover: the increasing contribution from our international operations, and, of course, improved patient activity in UAE care.
Speaker #3: Now, let me begin by briefly putting the scale of the group into context. Pure Health has built a differentiated healthcare and insurance group with leading positions across the UAE, the UK, Greece, and Cyprus.
Speaker #3: Our care vertical, that brings together hospitals, diagnostics, procurement, technology, and cover, is anchored by the MON, which is the UAE's largest health insurer. And it's also, by the way, the UAE's second most profitable insurance company, with a growing multi-line insurance business.
Speaker #3: And together, these capabilities create an integrated model with meaningful scale. It has broad geographic reach and multiple avenues for revenue growth and value creation.
Speaker #3: I will now turn to our first half performance. Pure Health delivered broad-based growth and very strong profitability in the first half. Our patient interactions increased 21% to 6.1 million, reflecting continued demand for our services.
Speaker #3: Capacity expansion and the contribution from our growing international operations. In Q2, our GWP—gross written premium—increased 13% to AED 5.5 billion, and that was supported by strong renewals, disciplined pricing, and, of course, continued new business growth.
Speaker #3: And at a group level, our revenue increased 9% to AED 14.9 billion, while our EBITDA grew 24% to AED 2.9 billion. Our group EBITDA margins expanded to 19.3%, reflecting the increasing contribution from higher-margin international operations.
Speaker #3: And, of course, improved profitability across the portfolio. The care segment's EBITDA margin stood at 21.6%. Our group net profit increased 20% to AED 1.2 billion, despite the regulatory and revenue compatibility effects in UAE care.
Speaker #3: And of course, the short-term headwinds, which happened earlier in the year. With that overview of our financial performance, I'm now going to walk you through some of the key operational and strategic highlights from this period.
Speaker #3: So, during the first half, we continued to advance our main operational and strategic priorities. Hands down, in the UAE, Saha and SSMC expanded advanced diagnostic and specialist care to new clinical services, strengthening high-acuity and trauma coverage, as well as deepening physician capabilities to support more complex cases, and to establish and improve upon excellent referral flows.
Speaker #3: Internationally, HHG advanced the integration of our bolt-on acquisitions of Evangelismos Hospital, which added 69 beds, and that strengthens its presence in Cyprus.
Speaker #3: With that, it's now got greater scale and network efficiencies. At Circle, we continued to lead in complex and technology-enabled care, and we completed the world's first autoplanner-enabled total knee replacement using the Velis robotic system, alongside further innovation in women's health and cardiac services.
Speaker #3: We also continued to progress on our digital and AI agenda, with initiatives across clinical workflows, procurement, supply chain management, and enterprise operations. Now, building on this, we continued to expand advanced clinical capabilities across both our UAE and international operations.
Speaker #3: Across Greece and Cyprus, HHG added advanced imaging and expanded pulmonary data centers, as well as IVF capabilities, supporting higher-complexity, referral-driven care. In the UAE, Saha introduced Alense Region's first photon-counting CT.
Speaker #3: While Shapur, which is SSMC, became the first hospital in the country to offer VEFT—that's pediatric vascular malformations—in the UK, Circle has been focusing on specialty care and has expanded its robotic surgery alongside outpatient and diagnostic capacity.
Speaker #3: Within Cover, the MON's property and casualty business, which is already generating AED 83 million of gross written premium in the first month, is way ahead of our initial PNC projections.
Speaker #3: Now, together, these developments demonstrate the breadth of progress present across the group. I'm going to now highlight just one example of the complex care that we deliver within our facilities, the clinical outcomes that this enables, and the trust that it develops in the population.
Speaker #3: Saha successfully completed one of the rarest and most complex pediatric procedures done globally. This was quite an emotional journey for all of us because we firsthand saw the impact that we had on the lives that walked through our doors.
Speaker #3: This is the separation of craniopagus conjoined twins who were connected at the top of their heads. Now, the girls shared critical blood vessels in their heads. Separating those vessels and reconstructing their skulls protected the children from any long-term disability.
Speaker #3: This push, this case, to the highest levels of medical complexity—this and the entire end-to-end treatment journey—was managed by SKMC and Abu Dhabi under Saha.
Speaker #3: It spanned six months. It involved four highly complex surgical procedures, and the care ultimately saved the twins from near-certain death and enabled them to live independently and interact face-to-face for the first time.
Speaker #3: And this landmark outcome—this was a first for the entire region. This demonstrates Saha's multidisciplinary expertise, our advanced surgical capabilities, and our leadership in highly complex care.
Speaker #3: This has been recognized widely, globally, by numerous media and medical bodies. And while this demonstrates excellence within our hospital settings, we're also extending Pure Health's impact beyond traditional care delivery.
Speaker #3: So this year, PureHealth entered into a strategic partnership with one of the UAE's largest real estate developers, Aldar Properties, to advance healthier, longevity-focused communities across the UAE.
Speaker #3: The partnership will integrate healthcare, preventive wellness, and community design across Al Dar's residential developments. It combines Pure Health's clinical expertise and innovation with Al Dar's community development capabilities to support healthier, longer, more connected lives.
Speaker #3: Now, we're taking longevity out of the clinic and into people's homes. Through science-backed design, each home will be connected to a personalized longevity plan.
Speaker #3: We're going to be integrating smart systems, clean air in-home therapies, innovations such as smart beds, mirrors, toilets, and state-of-the-art filtration systems. These are going to become commonplace across this development.
Speaker #3: This model connects homes directly to community centers and our hospital network across Abu Dhabi, and it allows us, at scale, to bring longevity into everyday life.
Speaker #3: Supporting healthier communities also requires a sustainable pipeline of skilled healthcare professionals. That brings me to our investment in medical education and training. Our commitment to medical education continues to support our long-term growth strategy by building a sustainable healthcare talent pipeline.
Speaker #3: And it strengthens our integral care, it strengthens our education, and it strengthens our research ecosystem. Hellenic Group (HHG) launched the University of Nicosia campus in Athens.
Speaker #3: This is the world’s first AI-focused medical delivery campus, and that supports our integrated strategy across care, education, and research. Never mind the fact that we fundamentally invest in and recognize technology as the root—as the spinal cord—of our group.
Speaker #3: So, we can collectively agree that we all recognize the transformative power of AI in healthcare—not just today, but in shaping the future. By taking a leading role in this space, the university will create a strong workforce pipeline for our platform, and we ensure that we develop the most AI-ready healthcare talent in the market.
Speaker #3: Now, the campus connects academic training with clinical practice across Greece and Cyprus. It supports talent development and our growing regional footprint. We also expanded international clinical training through the Saha Resident Exchange Program, which provides residents with global learning and research opportunities.
Speaker #3: Now, together with the UAE's largest medical residency program, these initiatives reinforce our commitment to developing future clinical leaders. So, beyond developing talent, we're also equipping our workforce with the technology and digital capabilities needed to transform how the group operates.
Speaker #3: Our AI and digital transformation remain central to improving clinical outcomes, operational efficiency, and customer engagement across Pure Health. We've got our in-house GPUs—they power our AI factory. Our enterprise data platform provides the foundation to develop and deploy AI at scale.
Speaker #3: And while the integration of the group ERPs is improving enterprise-wide visibility, we are now going into very advanced decision-making. We're not only early adopters of AI tools developed by others, well ahead of the broader market, but we're also building our own proprietary AI intellectual property, powered by our own infrastructure, our own GPUs, and enriched by the data lakes we've created.
Speaker #3: These tools are designed to generate meaningful value. They unlock significant long-term returns for our shareholders in the years ahead. We're already seeing this translate into execution.
Speaker #3: I mean, AI agents are live across the supply chain, our finance and capital management, and we've got more than 40 use cases prioritized for 2026.
Speaker #3: With Rafid's AI sourcing platform, for example, that's also supporting procurement decisions and greater supplier competitiveness. Across our technology stack, AI is also delivering measurable operational impact.
Speaker #3: PureNet, our pulse engine, has reduced cybersecurity response time by 90%. Meanwhile, our internally developed product, Raptor, has released approximately 5,000 analyst hours since its launch.
Speaker #3: On the customer side, our PureLab AI assistant is now handling more than 10,000 monthly inquiries across 65 clients, directly converting patient inquiries into booked tests.
Speaker #3: Alongside this, we're rolling out common technology operating practices across the group. That includes PureNet and HHG, PureHub standardization, and more than 200 health value management campaigns—supporting consistency, supporting scale, and, of course, enhancing performance.
Speaker #3: In the coming periods, we're going to begin taking our products and tools to market, and that's going to enable us to unlock meaningful value from the intellectual property that we're building.
Speaker #3: I mean, as the initiatives progress, we look forward to sharing more details over the next few quarters. These digital capabilities also support our broader ambition to advance medical research and innovation at scale.
Speaker #3: Pure Health has built the UAE's leading clinical research network. We're supporting more than 150 research projects with over 20,000 research participants in the first half of 2026.
Speaker #3: Our research capabilities are reinforced by more than 325 publications and relationships with over 55 pharmaceutical sponsors and contract research organizations. We collaborate with 14 of the 15 largest biopharma companies, reflecting the scale and credibility of our research network.
Speaker #3: Government programs include the use of predictive AI to detect Alzheimer's disease from retinal scans, stem cell therapy for aging frailty, neuromodulation technology, and AI-powered treatment for positional obstructive sleep apnea.
Speaker #3: We're also expanding national research capabilities through new centers of excellence in rare and neurodegenerative disease, alongside recognized research and academic medical center accreditations at SAHA and SSMC.
Speaker #3: Now, I have to say, this approach allows us not only to deliver the best possible solutions for our patients, but it also attracts top talent from all over the world.
Speaker #3: Now, clinicians who want to work across specialty and subspecialty fields in an environment that supports clinical excellence, research, and educational advancements—that's where Pure Health is truly differentiated from every other player in the UAE market.
Speaker #3: Together, these initiatives strengthen our clinical differentiation and support long-term value creation, and they complement the scale and diversification provided by our international strategy. On the international strategy that continues to strengthen the group through greater scale, diversification, and fosters attractive returns, we remain disciplined.
Speaker #3: We remain selective in our buy-and-build approach. We're targeting high-quality healthcare markets, where we're investing in clinical capability, capacity, and operational performance following the acquisitions. We're also focused on capturing synergies across procurement, technology, workforce, and governance to drive value creation post-acquisitions.
Speaker #3: Our international operations represented approximately 33% of group revenue in H1 and delivered an EBITDA margin of 22.2%. That supports overall group margin expansion.
Speaker #3: Now, this performance reflects the success of the value-creating transformations we have implemented across our acquisitions. As we continue to execute the strategy, we remain focused on increasing the international contribution towards approximately 50% of group revenue by 2029.
Speaker #3: And that's guided by our proven playbook of transformation, our operational scale efficiencies, and, of course, our technology deployment. Now, alongside international expansion, we continue to strengthen our leading position in insurance through the disciplined growth that we have demonstrated and demand.
Speaker #3: Our strategy within demand is focused on defending and growing market share while maintaining underwriting and capital discipline. Growth is always supported by strong renewals.
Speaker #3: By very selective, targeted acquisition. By competitive pricing and product distribution. And at the same time, we're expanding beyond health insurance through property and casualty, and as I mentioned, that generated about $83 million of gross written premium just in H1.
Speaker #3: We're already the number one health insurer in the UAE, and we are now clearly evolving beyond a monoline model into a diversified, multiline insurance provider.
Speaker #3: This diversification is focused on high-value business segments. As we continue to execute the strategy, we expect to expand further in the near term.
Speaker #3: We continue to invest in service quality, our claims management, our technology, and, of course, the AI capabilities that we have nurtured and grown to support customer growth and long-term efficiency.
Speaker #3: Not only do we want to be the most profitable insurance company in the UAE, Samsung, we're focused on a path that ensures we become the most tech-enabled insurance company in the UAE.
Speaker #3: Now, these investments are being made with clear guardrails. They're made around pricing, around loss ratio, solvency, capital efficiency, and this disciplined approach. This is further reinforced by external validation, and I'm very pleased to announce that Moody's has awarded demand a financial strength rating of A1.
Speaker #3: That reflects our very strong balance sheet, our prudent risk management, and resilient operating performance. With that strategic context, I will now turn to the segmental performance.
Speaker #3: Here, we delivered broad-based volume growth across all major activity indicators during the first half. Outpatient volumes increased 23% year-on-year in H1, and that reflected continued demand across our network and higher patient throughput.
Speaker #3: Our inpatient volumes increased 51% year-on-year, supported by increased utilization and a strong mix of higher acuity services. Our radiology volumes increased 33% year-on-year.
Speaker #3: That's our success in turning around our radiology service, where we created a dedicated CEO and a management team with a clear focus and a go-to-market strategy.
Speaker #3: Overall, these trends reflect the strength of our integrated healthcare model. It's supported by continued operational execution and the contribution from our international platform. I'm going to now specifically speak about UAE Care, where patient activities have been strengthened meaningfully during the second quarter.
Speaker #3: We saw very heightened patient activity, which reflects a sustained demand across our UAE Care platform and continued growth in utilization.
Speaker #3: Our outpatient volumes accelerated in the second quarter. They grew 12% year-over-year, to close to 2 million visits, compared with 3% growth in the first quarter.
Speaker #3: And that's supported by the higher utilization and expanded clinical capacity. Our inpatient volumes remain resilient, increasing 9% year-on-year in Q2, following 10% growth in the first quarter.
Speaker #3: As our utilization continues to increase, we remain well-positioned to support further growth while maintaining excellent standards of clinical quality and patient care. We have maintained resilient operational momentum across our core activity metrics.
Speaker #3: And that's supported by sustained demand, our capacity expansion, and, of course, continued operational improvements. Prescriptions dispensed increased by 10%, again driven by higher outpatient activity and the broader service reach.
Speaker #3: Our bed occupancy increased to approximately 75%. Despite an increase in operational leads, and that highlights improving utilization across the network. This reflects the continued momentum across UAE Care.
Speaker #3: As volumes continue to grow on an expanded capacity base, our activity trends across our supporting clinical indicators were mixed, reflecting both sustained demand and strategic operational changes.
Speaker #3: Radiology volumes increased 9%, driven by a sustained demand for advanced diagnostic services across the network. Our lab volumes moderated, primarily due to lower visa screening activity and reduced volumes from assets under the capitation model.
Speaker #3: And overall, these trends reflected higher patient activity, more efficient service delivery, and our continued—now, I'm going to talk a little bit about how these operational trends translated into our UAE Care's financial performance.
Speaker #3: We reported first-half revenue of $5.8 billion, which is down 13% year-on-year. The comparison continues to reflect the impact of UPP, which is the Unified Procurement Platform, on revenue recognition, the internal revenue elimination adjustment, and the short-term headwinds affecting Q1 activity.
Speaker #3: On a normalized basis, our first-half revenue would have increased by 5% to approximately $7 billion. Our underlying activity improved through Q2, although this was not fully reflected in reported revenue due to continuing comparability effects.
Speaker #3: Profitability strengthened materially. Our EBITDA was up 42% in Q2 and 7% in H1. This result was supported by increasing activity, improved patient mix, operational delivery, and favorable expected credit loss movements.
Speaker #3: And alongside improving current performance, we've continued to expand capacity to support long-term demand across Abu Dhabi. We've expanded inpatient capacity across Abu Dhabi with operational beds.
Speaker #3: We've increased from 2,023 to almost 3,000 in H1 of 2026. And this represents a compound annual growth rate of more than 4%. Importantly, occupancy remains above 76% in H1.
Speaker #3: That's an improvement of more than 9 percentage points from 2023, despite the additional capacity, by the way. This demonstrates sustained demand. It demonstrates successful utilization of our investment in beds, in physicians, and in specialist services.
Speaker #3: Let's talk a little bit about our international care, which continues to add scale and strengthen the group's earning profile. We collectively delivered strong growth during the first half, primarily reflecting HHE consolidation, together with continued underlying momentum at Circle.
Speaker #3: Patient interactions increased 76% to 1.9 million, and our revenue grew 56% to $5 billion. Circle delivered revenue growth of 6.3%, supported by sustained demand and a continued shift towards higher acuity and more complex inpatient care.
Speaker #3: They also maintained positive momentum, with patient volumes increasing 6%, led by outpatient facilities. Our EBITDA increased 65% to $1.1 billion.
Speaker #3: With margins expanding to 22.2%, this demonstrates the attractive earnings profile of our international assets. Now, taking a closer look at Circle, where the transformation since acquisition is clearly reflected in its financial performance.
Speaker #3: Circle delivered significant operational and financial turnaround since its acquisition in January 2024. Revenue increased 9% in '24 and a further 8% in '25, reaching $3.4 billion in the first half of '26.
Speaker #3: Our net profit improved from a loss of $480 million in '23 to a profit of $166 million in '25. In H1, Circle generated a net profit of $127 million before the $29 million impact from changes to UK national insurance contributions.
Speaker #3: These results—these numbers—reflect the benefit of not only stronger utilization and operational improvement, but also a continued shift towards higher equity care. Now, having covered care, I'm going to focus on cover, which continued to deliver balanced growth and maintained a strong capital position.
Speaker #3: So, let's talk about cover. Cover delivered resilience and balanced performance across key operating metrics during the first half. Our GWP increased 13% year-on-year to $5.5 billion. That reflects continued business growth.
Speaker #3: It reflects strong commercial momentum. We processed 28 million claims during H1, expanded our insured member base to 3.4 million, and demonstrated the scale and resilience of our platform.
Speaker #3: Our solvency ratio strengthened to 189%, which reinforced our strong capital position and our underwriting discipline. Our investment income was lower year-on-year, but overall operating performance remained strong.
Speaker #3: Supported by disciplined underwriting and continued momentum across both Health and Property and Casualty. With that overview of segment performance, I am now going to hand over to Mohammed to take you through the Group's financial results in more detail.
Speaker #3: Over to you, Mohammed.
Speaker #1: Thank you, Shaisa. And good afternoon, everyone. It's a pleasure to be on the call today and to walk you through our financial performance for the first half of 2026.
Speaker #1: Starting with the Group's consolidated performance, Pure Health delivered a strong first half with sustained momentum across both Care and Cover. Our revenues increased 9.4% year-on-year to AED 14.9 billion.
Speaker #1: Supported by growth across both segments and the addition of HHE, which contributed 1.6 billion dirhams during the period, our EBITDA increased 23.9% to 2.9 billion dirhams.
Speaker #1: With margins expanding by 2.2 percentage points to 19.3%, driven by a growing contribution from higher-margin international operations, strong profitability in the UAE care, and continued cost discipline across the group.
Speaker #1: Our profit before tax increased by 19.4% to AED 1.4 billion, while net profit rose 20.1% to AED 1.2 billion. The Q2 performance improved significantly, with EBITDA increasing 42.2% and net profit rising 56.8%.
Speaker #1: This improvement was driven by continued momentum in Cover, a growing contribution from HHE, and rising volumes across UAE Care. Turning to our segmental financial performance, let me begin with Care.
Speaker #1: Our care segment delivered strong earnings growth and margin expansion. Reinforced by international scale and improving UAE care activity. Our revenue grew 9.2% to 10.7 billion dirhams, driven by continued growth across our international operations and higher volume in the UAE.
Speaker #1: EBITDA increased 28.2% to AED 2.3 billion, with margin expanding to 21.6%. This reflects the contribution from higher-margin international assets, an improved patient mix, and operating efficiencies.
Speaker #1: Q2 performance strengthened materially, with EBITDA increasing 52.7% and margins expanding to 24.7%. This reflected a strong contribution from HHE, improving activity across UAE care, and better utilization of newly added bed and clinical capacity.
Speaker #1: Alongside favorable movements in expected credit losses, net profit for the group increased 28.2% to 778 million dirhams, reflecting the strong Q2 EBITDA performance in UAE care and increased international contribution.
Speaker #1: With this, I will now turn to Cover, which continued to deliver balanced revenue and earnings growth. Revenue for the Cover segment increased 9.9% year-on-year to AED 4.1 billion.
Speaker #1: Supported by 13% growth in gross written premium, this GWP steady new business growth. Our newly added property and casualty line of business continues to gain traction.
Speaker #1: It's ahead of its business plan and has generated 83 million dirhams of gross return premium in H1 of 2026. Our EBITDA increased renewals, disciplined pricing, and 8.5% to 552 million dirhams with at 13.4%.
Speaker #1: Supported by continued underwriting discipline effective cost growth was driven by strong margins remaining broadly stable to Overall, our cover segment delivered a strong bottom line performance.
Speaker #1: With net profit increasing 8.6% to 458 million dirhams. I will now walk you through our cash flow position. First half cash flow was primarily impacted by the timing of receivables collections, particularly across government funded programs alongside continued investment in our strategic priorities.
Speaker #1: We expect cash collections to improve meaningfully in the second half of the year as these timing effects unwind. At the same time, we continue to invest in future growth with growth capex increasing to 288 million dirhams.
Speaker #1: Up 122% year-on-year. Looking ahead, we remain focused on strengthening cash conversion while maintaining disciplined investment. I will now turn to the balance sheet which continues to support our operational and strategic priorities.
Speaker #1: The group maintains a solid financial position and sufficient capacity to support its strategic priorities. Total assets stood at 57.2 billion dirhams. With cash and bank balances of 4.7 billion dirhams, despite a temporary increase in working capital, primarily due to government receivables.
Speaker #1: Bank debt remained broadly stable at 3.2 billion dirhams while net debt increased to 14.2 billion dirhams due to the lower cash balance. Net debt to EBITDA stood at 2.7 times on post-IFRS 16 basis remaining within our stated medium-term parameters following recent acquisition and capital deployment.
Speaker #1: Overall, the group remains well positioned to fund growth and pursue value-accretive opportunities. While maintaining disciplined capital management, this financial position underpins our balanced approach to capital allocation.
Speaker #1: Talking about capital allocation, our capital allocation approach is designed to balance three priorities: investing in growth, maintaining financial flexibility, and delivering sustainable shareholder returns.
Speaker #1: We target an annual cash payout of around 30% of distributable net profit while retaining the flexibility to fund strategic priorities and value-accretive opportunities. At the 2026 AGM, our shareholders approved FY 2025 cash dividends of 600.6 million dirhams.
Speaker #1: Payable in two equal installments. With the second installment due to be paid by end of August 2026. At the same time, we remain focused on disciplined value-accretive M&As with selective international expansion and a clear emphasis on sustaining value creation.
Speaker #1: Organically, we continue to invest in high margins, complex medical capabilities, technology and operational efficiencies, while maintaining capital discipline. Taken together, this balanced approach supports sustainable growth and long-term shareholder value.
Speaker #1: With that, I will hand back to Shaisa to close with our medium-term outlook and targets.
Speaker #2: Thank you for walking us through this, Mohammed. Now, as we conclude, so I would like to reiterate that our medium-term strategic and financial targets, they remain unchanged.
Speaker #2: The first half results clearly demonstrate continued progress against all our priorities. We're growing the international contribution. We're maintaining attractive care margins. And we're investing within our capital framework.
Speaker #2: And we're managing leverage prudently. Looking ahead, our focus remains on sustaining momentum, not just in UAE care, but also integrating and scaling our international operations.
Speaker #2: We also remain focused on capturing synergies, we're investing selectively in capacity and clinical expertise, technology, and of course, our people. So we remain confident in the quality of our assets, the diversification of our earnings space, and our ability to continue delivering sustainable and profitable growth over the medium term.
Speaker #2: Thank you for your time. Thank you for your continued support. And now I will be opening the floor to your questions.
Speaker #3: Thank you very much, to all participants in the call. If you wish to ask questions, please send them through the chat system, which you'll find on the right-hand sides of your screens, bottom right.
Speaker #2: Thank you. We've also had a few questions ahead of the call, which will be answering today as well. So taking our first question, please can you outline the drivers of the year-on-year improvement in hospital margins between the UAE, UK, and Greece?
Speaker #2: Thank you, Maika. So you're asking on the drivers, the specific drivers on the year-on-year performance improvement in our international assets or all over. So UAE and UK and Greece.
Speaker #2: So yeah, yes. Okay. So look, in the UAE, margin improvements, that's been driven primarily by higher patient activity. We've got better utilization. We've been supported by a series of targeted, you know, operational initiatives.
Speaker #3: Oh, sorry. To interrupt you, but I don't know what changed.
Speaker #2: Pardon? I'm sorry.
Speaker #3: You, you yeah, your voice started to cut a lot. I'm not sure if something changed. Beforehand, it was okay.
Speaker #2: Can you hear me now?
Speaker #3: For now, yes, I can. Yeah, go ahead and yeah, yeah. Yeah.
Speaker #2: Okay. Okay. So Maika, maybe you could repeat the question so we could take it from the top. Yeah, sure. So the question was, please can you outline the drivers of the year-on-year improvement in hospital margins?
Speaker #2: And this was across all of our assets. So the UAE, the UK, and Greece. I'm going to break it down. I'll discuss UAE first, and then we'll go to international assets.
Speaker #2: So the UAE are improvement, margin improvement has been driven primarily by higher patient footfall. We've got better utilization. We've been supported by a series of very targeted operational efficiencies initiatives that we've implemented across the group.
Speaker #2: Our growth, it's been delivered through our expansions. Our service expansions, vertical as well and addition and addition of specialist physicians. We've rolled out new clinics.
Speaker #2: And we've extended clinical hours across existing clinics. And we've also introduced, you know, evenings, weekend clinics so we're capturing patients and footfall and market share through every avenue possible.
Speaker #2: We've also increased our focus on the higher acuity and more complex cases, which are more margin-drive cases. And which is supported our mix. And our overall asset utilization, it continues to improve our bed occupancy.
Speaker #2: We've seen with, you know, we open a few hundred beds and our occupancy kind of just, you know, it stays either stable or it actually improves.
Speaker #2: So we've seen that in the late 70s now. Our UK margin progress, that reflects that reflects a shift. Towards more higher equity care through robotics.
Speaker #2: We've seen an increase in net revenue per case. For both IP and DC. And we've seen a focus on increasing self-pay cases. We've focused primarily on those as well.
Speaker #2: We've got several internal initiatives that have also led to a tighter cost control and efficiencies. And lastly, I think increasing Cyprus, we've seen improvements, which have come from a broader business transformation resulting in an increased average revenue per IP and DC patient.
Speaker #2: Our tighter integration across the network. We've scaled benefits, service upgrades, and of course, we're doing bolt-on acquisitions as well. We're adding facilities, adding beds to the overall infrastructure.
Speaker #2: Thank you. We have a question specifically related to UAE care. So the question is, are there any one-time impacts to consider? Should we now be expecting gross margins in the same 27% range we saw in Q2 from here on out?
Speaker #2: That's a very good question. So our UAE care performance, it was supported by improved patient mix. And it had, of course, we had stronger operational execution like I had mentioned.
Speaker #2: We had non-recurring items such as favorable movements and expected credit losses. We had a true up of revenue for prior period services and a one-off volume discount waiver.
Speaker #2: So we expect our UAE margins to normalize and reverse closer to the 18 to 19% in line with historical levels. And connected to this question, just staying with our UAE care business, normalized revenue growth was 5%, yet reported revenues declined by 13%.
Speaker #2: Can you explain what is driving this gap?
Speaker #3: I believe we're talking about the UAE care business.
Speaker #2: Yes.
Speaker #3: Okay. The decline in reported revenue is not a reflection of weaker demand, by the way, or lower activity on the ground. What's driving the gap is a change in how certain revenues are recognized.
Speaker #3: The UPP, unified purchasing program, altered the timing and treatment of some pharmacy revenues. And that was across the industry. And there were also internal revenue elimination effects that impact the year-on-year comparison.
Speaker #3: If you strip out those accounting changes and some short-term headwinds, which happened earlier in the year, the underlying picture is much more constructive. Our UAE care delivery, it has normalized revenue growth is about 5% in the first half.
Speaker #3: From an operational standpoint, activity levels continue to improve. We saw supported capacity expansion. We saw service upgrades that we did. And that momentum is reflected in both the normalized top line and the EBITDA performance of the segment.
Speaker #2: Okay. We have also got a question about HHG contribution to our H1 performance. So how much of the performance in the period was driven by inorganic growth, specifically HHG, versus the underlying performance of the group without HHG?
Speaker #3: Thank you for your question. HHG, the group delivered high single-digit net profit growth, supported by the, of course, the cost discipline margin improvement. To answer specifically, revenue would have marginally declined on the like-for-like basis.
Speaker #3: And of course, that's as mentioned before, reflecting, you know, on the UPP program. Internal revenue eliminations and short-term Q1 headwinds. But more broadly, our structural operating model is a key strength.
Speaker #3: You know, we provide greater earnings diversification, exposure to attractive healthcare markets, and a clear buy-in build platform, which creates value over time.
Speaker #2: Thank you, Shaisa. Moving on, a question about cash flow position. Cash flow both from operations and on a free cash flow basis moved into a negative position in the first half compared with last year.
Speaker #2: The question is, can you talk us through what's driving this and whether there is any cause for concern?
Speaker #3: So the first half cash outcome largely reflects time. I mean, rather than any underlying issue. If you look at our historical financials, it's a repeat, really.
Speaker #3: I mean, collections on government receivables come later. They came later. Then last year, they always usually tend to come in at the tail end of the year.
Speaker #3: That temporarily increases working capital. We've seen this pattern before. And but it's an improvement that's expected to come in the second half. Now, at the same time, our free cash flow was impacted by a step-up in growth capex across the group.
Speaker #3: Taken together, these are just timing and investment effects. It's not a change in the underlying cash-generating capacity or capability of the business.
Speaker #2: Thank you. We have a couple of questions about research, so I'll combine them for you. How does the research you discussed translate into revenue today?
Speaker #2: And the second part of the question, what does the monetization pathway for this area of the business?
Speaker #3: Look, research isn't something we run as a standalone profit center today. And we won't want to frame it that way. It's just far too important, not just for the group, but just for humanity, really.
Speaker #3: It's value is in clinical differentiation. It's value is in case mix complexity, talent attraction, biopharma partnerships. All of which feed the core business. Over time, there is a pathway, you know, to a more direct monetization through trials, sponsorships, and IP.
Speaker #3: But that's a longer-term story. It's not an H1 number. I think most importantly, we need to see that our research for us is a significant commitment from CareHealth to UAE.
Speaker #3: We are the largest research platform in the entire country. And we bring a lot of research to the UAE. So we're making sure that the country stands at the forefront of global research efforts.
Speaker #2: Thank you. The next question focuses on our acquisition strategy. So there's been an increased focus on bolt-ons in our Pure Health disclosures. Is this a new focus of our acquisition strategy?
Speaker #2: In place of large transformative acquisitions such as Circle and HHG?
Speaker #3: So we generally, we don't comment on specific transactions. But our approach it remains disciplined and value-driven. Anything that we do has to add value to the top or the bottom line of the business.
Speaker #3: It's a clear cut agenda. We view selective bolt-on acquisitions as integral to our strategy. They strengthen, they deepen our existing platforms. And particularly within international care.
Speaker #3: I mean, I would say at the same time, we continue to actively assess the broader landscape, where larger strategic opportunities arise. And if they align with our strategy, and meet our return thresholds, and enhance the group's long-term positioning, we would remain open to them.
Speaker #3: So overall, the emphasis is on capital discipline and strategic fit rather than the deal size.
Speaker #1: All right. I think we're out of time for the scheduled call. I'll just check quickly that we haven't missed anything. Yeah, I think that's totally fine.
Speaker #1: I'm not sure if you have any concluding remarks. I can pass it back to you, or else we can just conclude the call.
Speaker #3: No, I think we're the team will answer all of the I mean, if any questions have not been addressed, they will get back to all of them on email.
Speaker #1: All right. Sounds great. The email for IR is on the page, so everyone who did not get the question or has follow-ups, please send them and they'll get back to you.
Speaker #1: I'd like to thank Pure Health for such a presentation and also to attending to all questions and diligent matter. And yeah, thank you for participating.
Speaker #1: Have a good rest of the day, everyone.
