Q2 2026 Middle East Healthcare Co Earnings Call

August 11, 2026

Speaker #1: Described, and summarized.

[Company Representative] (Middle East Healthcare Co.): Describe and summarize

Nizar Mohammed: Describe and summarize

[Company Representative] (Middle East Healthcare Co.): We believe that we are developing our services as we should be. Our model is doing very well as the biggest group in the kingdom to take care of patients. We will accept all insurance, and also we will buy the services as much as the government or the clusters need our services. We are doing a very good relationship with all the clusters to help them to achieve their goals. This is where now. The prices and the margins, do we believe that it will stay the same? I will tell you no. We have a very low chance in that this will stay the same as those prices. This is why we are moving ahead aggressively with making sure that we develop our insurance base. I hope I am clear.

Nizar Mohammed: We believe that we are developing our services as we should be. Our model is doing very well as the biggest group in the kingdom to take care of patients. We will accept all insurance, and also we will buy the services as much as the government or the clusters need our services. We are doing a very good relationship with all the clusters to help them to achieve their goals. This is where now. The prices and the margins, do we believe that it will stay the same? I will tell you no. We have a very low chance in that this will stay the same as those prices. This is why we are moving ahead aggressively with making sure that we develop our insurance base. I hope I am clear.

Speaker #2: That we are developing our services, and we should be a role model doing that. Everything has the biggest growth in the kingdom to take care of patients, but we will accept all insurance and also we will buy the services as much as the government or the clusters need our services.

Speaker #2: We are doing a very good relationship with all the clusters to help them to achieve their goals. This is why now the prices and the margins do they do we believe that it will stay the same?

Speaker #2: I will tell you, no. We have a very low chance that this will stay the same as those prices. This is why we are moving ahead aggressively with making sure that we develop our insurance business.

Speaker #2: I hope I'm clear.

Speaker #3: Okay. So just follow-up. So if I conclude this decline in MOH contribution, is it primarily because of the pricing thing or it's a mix of decrease in thoroughput of patients as well?

[Company Representative] (Middle East Healthcare Co.): Okay. Just follow up. If I conclude this decline in Ministry of Health contribution, is it primarily because of the pricing thing, or it is a mix of a decrease in throughput of patients as well?

[Analyst 1]: Okay. Just follow up. If I conclude this decline in Ministry of Health contribution, is it primarily because of the pricing thing, or it is a mix of a decrease in throughput of patients as well?

Speaker #2: Yes. It is decreasing it's decreasing in the number of patients that MOH is giving the service to the external non-MOH hospitals. So the number is dropped significantly, and they are committed to treating the patients that they are in charge of, not as previously.

[Company Representative] (Middle East Healthcare Co.): Yes. It is decreasing in the number of patients that Ministry of Health is giving the service to the external, non-Ministry of Health hospital. The number has dropped significantly, and they are committed to treat the patients that they are in charge of, not as previously. Not in our city. The places like the patients we are getting a difference from previously is Riyadh. Other places, I will tell you, we are still getting good business. We are so happy that drop of business of Ministry of Health in Medina was compensated, Alhamdulillah, very much well. We are seeing a really high interest in Dammam and in Mecca, and this is why, Inshallah, we are hoping that things will grow in the coming quarters.

Nizar Mohammed: Yes. It is decreasing in the number of patients that Ministry of Health is giving the service to the external, non-Ministry of Health hospital. The number has dropped significantly, and they are committed to treat the patients that they are in charge of, not as previously. Not in our city. The places like the patients we are getting a difference from previously is Riyadh. Other places, I will tell you, we are still getting good business. We are so happy that drop of business of Ministry of Health in Medina was compensated, Alhamdulillah, very much well. We are seeing a really high interest in Dammam and in Mecca, and this is why, Inshallah, we are hoping that things will grow in the coming quarters.

Speaker #2: Not in all cities. The biggest difference we are seeing in terms of patient numbers is in Riyadh. But in other places, I will tell you, we are still getting good business. We are happy that the drop in MOH business in Medina was compensated, Alhamdulillah, very well.

Speaker #2: And we are seeing an extremely high interest in the man and in Mecca and this is why inshallah we are hoping that things will grow in the coming few periods.

Speaker #3: Understood. Makes sense. Thank you for the explanation. We have raised hand from one of the participants. Mr. Ibrahim, your line is unmuted. You can go ahead with your question.

[Company Representative] (Middle East Healthcare Co.): Understood. Makes sense. Thank you for the explanation. We have a raised hand from one of the participants. Mr. Ibrahim, your line is unmuted. You can go ahead with your question.

Operator: Understood. Makes sense. Thank you for the explanation. We have a raised hand from one of the participants. Mr. Ibrahim, your line is unmuted. You can go ahead with your question.

Speaker #4: Hello.

[Analyst]: Hello.

[Analyst 1]: Hello.

Speaker #2: Yes, sir.

[Company Representative] (Middle East Healthcare Co.): Yes, hello.

Nizar Mohammed: Yes, hello.

Speaker #3: Hello. Yes, sir, you are audible, Ibrahim.

[Company Representative] (Middle East Healthcare Co.): Hello. Yes, you are audible, Ibrahim.

Nizar Mohammed: Hello. Yes, you are audible, Ibrahim.

Speaker #4: Yes, thank you for the presentation. Congratulations on the results. Probably one question from my side is on operating cash flow. It's hard to think that the company will generate operating cash flow while all years were restated lower.

[Analyst]: Yes. Thank you for the presentation. Congrats on the results. Probably one question from my side is on the operating cash flow. It is hard to think that the company will generate operating cash flow while all previous years were restated lower. I do not know if I take the cumulative restatement, SAR 400 million, this announcement, SAR 400 million, probably previous announcement. With the elevated CapEx, company cumulative free cash flow should have been negative. Yet, you are collecting good money. I have only the first quarter's cash flows, receivables are down. You are collecting money. If there has been a restatement of overstating revenue in the previous year, probably I would assume your operating cash flow should have been weak because your previous balances have been overstated. You get what I am trying to say? Yes.

[Analyst 1]: Yes. Thank you for the presentation. Congrats on the results. Probably one question from my side is on the operating cash flow. It is hard to think that the company will generate operating cash flow while all previous years were restated lower. I do not know if I take the cumulative restatement, SAR 400 million, this announcement, SAR 400 million, probably previous announcement. With the elevated CapEx, company cumulative free cash flow should have been negative. Yet, you are collecting good money. I have only the first quarter's cash flows, receivables are down. You are collecting money. If there has been a restatement of overstating revenue in the previous year, probably I would assume your operating cash flow should have been weak because your previous balances have been overstated. You get what I am trying to say? Yes.

Speaker #4: So I don't know if I take the cumulative restatement 400 million this announcement 400 million probably previous announcement and with the elevated capex I mean company cumulative free cash flow should have been negative yet you're collecting good money I have only the first quarter cash flows receivables are down you're collecting money so if there has been a restatement of overstating revenue in the previous year probably I would assume your operating cash flow should have been should have been weak because your previous balances have been overstated you get to trying to say here.

Speaker #2: Yeah. But I mean I will try to answer our digital fund but I will just give you one simple information. I hope it's going to be useful.

[Company Representative] (Middle East Healthcare Co.): Ibrahim, I would like to answer this for Pan. I would just give you one simple information. I hope it is going to be useful. If you ask me, do your collection from Ministry of Health in the same speed and the same amount as 2024 and 2025, I will tell you no. It is much, much better. We are faster. We have a very sharp team now on the ground since we started 2026. So our collection is totally different now. Also, the collection from the insurance company, also the collection days is much lower than previously. We used to submit all of our related to insurance bills in around 28 to 38 days. Now we are doing it in around, for the previous four months, we are doing it in 15 days. So we are much better in collection.

Nizar Mohammed: Ibrahim, I would like to answer this for Pan. I would just give you one simple information. I hope it is going to be useful. If you ask me, do your collection from Ministry of Health in the same speed and the same amount as 2024 and 2025, I will tell you no. It is much, much better. We are faster. We have a very sharp team now on the ground since we started 2026. So our collection is totally different now. Also, the collection from the insurance company, also the collection days is much lower than previously. We used to submit all of our related to insurance bills in around 28 to 38 days. Now we are doing it in around, for the previous four months, we are doing it in 15 days. So we are much better in collection.

Speaker #2: If you ask me do your collection from MOH is the same speed and the same amount as 2024 and 2025 I will tell you no it's much much better we are faster we have a very sharp team now on the ground since we started 26 so our collection is totally totally different now and our also the collection from the insurance company also the days the collection days is much lower than previously we used to go we used to submit the all of our all of our related to insurance bills in around 28 to 38 days now we are doing it in around for the previous four months we are doing it in 15 days so we are much better in collection if this can help to answer what is your I'm not really sure if it will help but I will ask for if they have anything to add.

[Company Representative] (Middle East Healthcare Co.): If this can help to answer what is your. I am not really sure if it will help, but I will ask Sultan Khalid if they have anything to add.

Nizar Mohammed: If this can help to answer what is your. I am not really sure if it will help, but I will ask Sultan Khalid if they have anything to add.

Speaker #4: If let me jump in here for a second. The restatement was related to last year or the restatements were based on mainly non-cash items while Dr. Nizar said we have been seeing significantly better collection performance the evidence of that is that our finance costs are down and our net debt is down compared to the similar periods from last year.

Sultan Khalid: If I may, let me jump in here for a second. The restatement was related to last year. The restatements were based on mainly non-cash items. What Dr. Nizar said, we have been seeing significantly better collection performance. The evidence of that is that our finance costs are down and our net debt is down compared to the similar periods from last year.

Speaker #3: Excellent. Speaking of restatements and the previous two years’ financials, was cash overstated as well, or you don’t think that’s the case right now?

[Analyst]: Excellent. Speaking of restatements and previous two years' financials, was cash overstated as well, or you don't think that is the case right now?

[Analyst 1]: Excellent. Speaking of restatements and previous two years' financials, was cash overstated as well, or you don't think that is the case right now?

Speaker #2: No.

[Company Representative] (Middle East Healthcare Co.): No.

Nizar Mohammed: No.

Speaker #3: So, cash is correctly stated. Operating cash flows in the previous two years were perfectly stated.

[Analyst]: Cash is correctly stated.

[Analyst 1]: Cash is correctly stated.

[Company Representative] (Middle East Healthcare Co.): Yes.

Nizar Mohammed: Yes.

[Analyst]: Operating cash flows in the previous 2 years was perfectly stated.

[Analyst 1]: Operating cash flows in the previous 2 years was perfectly stated.

Speaker #2: Yes. Yes.

[Company Representative] (Middle East Healthcare Co.): Yes.

Nizar Mohammed: Yes.

Speaker #3: This I guess with high confidence or you haven't?

[Analyst]: Is this a yes with high confidence or-

[Analyst 1]: Is this a yes with high confidence or-

[Company Representative] (Middle East Healthcare Co.): Yes.

Nizar Mohammed: Yes.

[Analyst]: You are having-

[Analyst 1]: You are having-

Speaker #2: Yes, yes. 100. Confidence. Confidence. We know where it is. We know the assets very clearly were overstated. Okay. So, very simply, the assets were very overstated, very clearly.

[Company Representative] (Middle East Healthcare Co.): Yes. 100% confidence. Personally, Ibrahim, we know where it is. We know the asset very clearly was overstated.

Nizar Mohammed: Yes. 100% confidence. Personally, Ibrahim, we know where it is. We know the asset very clearly was overstated.

Sultan Khalid: Right.

[Company Representative] (Middle East Healthcare Co.): The assets were very overstated, very clearly.

Nizar Mohammed: The assets were very overstated, very clearly.

Speaker #2: So

[Analyst]: But the overstatement of revenue related to which client exactly? Is it Ministry of Health, insurance, or blended?

[Analyst 1]: But the overstatement of revenue related to which client exactly? Is it Ministry of Health, insurance, or blended?

Speaker #3: the overstatement of revenue related to which client exactly? Is it MOH insurance or blended?

Speaker #2: Well, the overstatement is in which revenues?

Sultan Khalid: The overstatements in which revenues?

Speaker #3: The revenues you're mentioning in the announcement. 430 million over the last two years.

[Analyst]: The revenues you are mentioning in the announcements, SAR 430 million over the last 2 years.

[Analyst 1]: The revenues you are mentioning in the announcements, SAR 430 million over the last 2 years.

Speaker #2: It was increased in the fixed asset.

[Company Representative] (Middle East Healthcare Co.): It was, indeed, in the fixed assets.

Nizar Mohammed: It was, indeed, in the fixed assets.

Sultan Khalid: We had overstatements in the fixed assets, and we had understatements in the accounts receivables. For the revenues right now from our position as executive management, the revenues have not been impacted at all by the prior period impact.

Speaker #4: We had overstatements in the fixed assets, and we had understatements in the accounts receivable. So, the revenues right now, from our position as executive management, have not been impacted at all by the prior period impacts.

Speaker #3: Okay.

[Analyst]: Okay.

[Analyst 1]: Okay.

Sultan Khalid: It was purely from a fixed assets and the receivables side.

Speaker #4: So it was purely from a fixed assets and the receivables side.

Sultan Khalid: It was purely from a fixed assets and the receivables side.

Speaker #2: Is it clear?

[Company Representative] (Middle East Healthcare Co.): Is it clear, Ibrahim?

Nizar Mohammed: Is it clear, Ibrahim?

Speaker #3: Yeah. If it's the receivable side, then it's related to revenue, right? Or am I mistaken? I'm not sure.

[Analyst]: Yeah. If it's receivable side, then it's related to revenue, right? Or am I mistaken? I'm not sure.

[Analyst 1]: Yeah. If it's receivable side, then it's related to revenue, right? Or am I mistaken? I'm not sure.

Speaker #4: No. You have your revenues, and from that you have your receivables, and then after the receivables you have the ECL, which is your expected credit loss. But the revenues—consider it fixed—we have not touched the revenue because we have not identified anything in the prior period revenues. The areas that were identified were purely from the accounts receivables and the fixed assets.

Sultan Khalid: You have your revenues, and from that, you have your receivables. Then after the receivables, you have the ECL, which is your expected credit loss. But the revenues, consider it fixed. We have not touched the revenue because we have not identified anything in the prior period revenues. The areas that were identified were purely from the accounts receivable and the fixed assets.

Speaker #3: Okay. All right. Very clear. One last question. Very small. What's the remaining balance of outstanding receivables related to MOH?

[Analyst]: Okay. All right. Very clear. One last question, very small. What is the remaining balance of outstanding receivables related to MOH?

[Analyst 1]: Okay. All right. Very clear. One last question, very small. What is the remaining balance of outstanding receivables related to MOH?

Speaker #4: So, MOH, just a second.

Sultan Khalid: MOH, tell me just a second.

Speaker #2: You mean the for the remaining period? We still have.

[Company Representative] (Middle East Healthcare Co.): You mean for the remaining period that we still have?

Nizar Mohammed: You mean for the remaining period that we still have?

Speaker #3: As of June I mean.

[Analyst]: As at June, I mean.

[Analyst 1]: As at June, I mean.

Sultan Khalid: Around SAR 750 million.

Speaker #4: Around 750 million.

[Company Representative] (Middle East Healthcare Co.): All right.

Nizar Mohammed: All right.

Speaker #3: How much?

[Analyst]: How much?

[Analyst 1]: How much?

Speaker #4: 750 million.

Sultan Khalid: SAR 750 million.

Speaker #3: 750 million. MOH.

[Analyst]: 750 million MOH.

[Analyst 1]: 750 million MOH.

Speaker #2: Yes.

[Company Representative] (Middle East Healthcare Co.): Yes.

Nizar Mohammed: Yes.

Speaker #4: Approximately. Yes.

Sultan Khalid: Approximately, yes.

Speaker #3: Excellent. Thank you, gentlemen. Wish you the best of luck.

[Analyst]: Excellent. Thank you, gentlemen. Wish you the best of luck.

[Analyst 1]: Excellent. Thank you, gentlemen. Wish you the best of luck.

Speaker #4: Thank you.

Sultan Khalid: Thank you.

Speaker #3: Thank you, management. We will now move towards our next participant. Mr. Asmar, your line is unmuted. You can go ahead with your question.

[Company Representative] (Middle East Healthcare Co.): Thank you, management. We will now move towards our next participant. Mr. Asmer, your line is unmuted. You can go ahead with your question.

Nizar Mohammed: Thank you, management. We will now move towards our next participant. Mr. Asmer, your line is unmuted. You can go ahead with your question.

Speaker #5: Hi. Just a follow-up about the provisioning adjustment. So the restatement just to clarify you'll be booking an additional provisioning amount for 2025 across the future reporting periods, right?

[Analyst]: Hi, I just have a follow-up about the provisioning adjustment. So, the restatement, just to clarify, you will be booking an additional provisioning amount for 2025 across the future reporting periods, right? You would be charging that directly to previous year's equity. Is that the correct assessment? If so, does that impact your ability for future dividends? Also, if you can clarify this SAR 427 million of extra provisioning, for what class of receivables is it specifically for? Is it for Ministry of Health receivables? Is it for any other kind of receivables? Can you please clarify that?

[Analyst 1]: Hi, I just have a follow-up about the provisioning adjustment. So, the restatement, just to clarify, you will be booking an additional provisioning amount for 2025 across the future reporting periods, right? You would be charging that directly to previous year's equity. Is that the correct assessment? If so, does that impact your ability for future dividends? Also, if you can clarify this SAR 427 million of extra provisioning, for what class of receivables is it specifically for? Is it for Ministry of Health receivables? Is it for any other kind of receivables? Can you please clarify that?

Speaker #5: And you would be charging that directly to previous year's equity. Is that the correct assessment? And if so, does that impact your ability for future dividends?

Speaker #5: And also, if you can clarify this 427 million of extra provisioning—for what class of receivables is it specifically for? Is it for MOH receivables?

Speaker #5: Is it for any other kind of receivables? Can you please clarify that?

Speaker #4: Yes, sure. I'll answer your last question first. As mentioned in the disclosure by the external auditor, they have still not verified the numbers that we have provided.

Sultan Khalid: Yeah, sure. I'll answer your last question first. As appeared in the disclosure of the external auditor, they have still not verified the numbers that we have put in. So it is very important to know that this restatement has still not been quantified by our external auditors. We have still not identified the receivables, but we have identified that prior period receivables were overstated, and the correction for the Q2 amounted to SAR 50 million impairment. This is what we did.

Speaker #4: So this is very important to know that this restatement has still not been quantified by our external auditors. We have still not identified the receivables, but we have identified that prior period receivables were overstated, and the correction for the second quarter amounted to a 50 million impairment.

Speaker #4: And this is what we did.

Speaker #5: Okay. And how much further is remaining for 2025 that you will be booking in the third quarter and fourth quarter? I mean, you're showing in those numbers.

[Analyst]: Okay. How much further is remaining for 2025 that you will be booking in Q3 and Q4? I mean, you're showing in those numbers.

[Analyst 1]: Okay. How much further is remaining for 2025 that you will be booking in Q3 and Q4? I mean, you're showing in those numbers.

Speaker #4: I mean in the announcement it says 183 million for 2025. So there's yes there's approximately 120 130 million remaining for the rest of the year.

Sultan Khalid: In the announcement it says SAR 183 million for 2025. There is, yes, there is approximately SAR 120, SAR 130 million remaining for the rest of the year.

Speaker #5: Okay. And as per your assessments, which category is this for? Is this for MOH? I mean, I understand that you do not have the final figure from the auditors, but as per your assessment, what category of receivables is this for?

[Analyst]: Okay. As per your assessment, which category is this for? Is this for MOH? I understand that you do not have the final figure from the auditors, but as per your assessment, what category of receivables is this for?

[Analyst 1]: Okay. As per your assessment, which category is this for? Is this for MOH? I understand that you do not have the final figure from the auditors, but as per your assessment, what category of receivables is this for?

Speaker #2: It will be MOH.

[Company Representative] (Middle East Healthcare Co.): It is only MOH.

Nizar Mohammed: It is only MOH.

Speaker #5: MOH, right? Okay. And does that impact your ability for future dividend payments, considering you will be taking a direct charge to the retained earnings?

[Analyst]: MOH, right. Okay. Does that impact your ability for future dividend payments, considering you will be taking a direct charge to the retained earnings?

[Analyst 1]: MOH, right. Okay. Does that impact your ability for future dividend payments, considering you will be taking a direct charge to the retained earnings?

Speaker #2: We are hoping not. Our results now are reassuring, and we are still working on the numbers. But I can tell you with confidence, we are going to come out of this charge.

[Company Representative] (Middle East Healthcare Co.): We are hoping that our results now is reassuring, and we are still working on the numbers. But I can tell you with confidence, we are going to come out of this situation in a good way.

Nizar Mohammed: We are hoping that our results now is reassuring, and we are still working on the numbers. But I can tell you with confidence, we are going to come out of this situation in a good way.

Speaker #2: In a good way.

Speaker #5: All right. Thank you.

[Analyst]: Right. Thank you.

[Analyst 1]: Right. Thank you.

Speaker #3: Thank you, management. We will now move towards the chat box in which people have posted question. Christine asking directly what is your current and target client mix?

[Company Representative] (Middle East Healthcare Co.): Thank you, management. We will now move towards the chat box in which people have posted questions. Christine asking directly that, what is your current and target client mix? Also following up on the previous question just to confirm, are restatements in Q2 2025 related to overstated revenues in the past?

Nizar Mohammed: Thank you, management. We will now move towards the chat box in which people have posted questions. Christine asking directly that, what is your current and target client mix? Also following up on the previous question just to confirm, are restatements in Q2 2025 related to overstated revenues in the past?

Speaker #3: Also, following up on the previous question, just to confirm—are restatements in Q2 2025 related to overstated revenues in the past?

Speaker #4: So, okay. To answer your question, we have not identified anything at the revenue level. Our identification was purely at the accounts receivable level.

Sultan Khalid: To answer your question, we have not identified anything on the revenue level. Our identification was purely on the accounts receivable level. The accounts receivable were overstated because of less than adequate provisioning. But this is why we have taken the decision, the right decision, because as a disclosure, we had overstated revenues, but to fix that was through the impairment.

Speaker #4: The accounts receivables were overstated because of less than adequate provisioning. But this is why we have taken the decision the right decision because as a disclosure we had overstated revenues but the fixed assets was through the impairment.

Speaker #4: Can you just repeat the first question?

[Company Representative] (Middle East Healthcare Co.): Can you just repeat the first question?

Nizar Mohammed: Can you just repeat the first question?

Speaker #3: Yeah. The first part is asking about the what is your current client mix and what is your targeted client mix?

[Company Representative] (Middle East Healthcare Co.): Yeah, the first part is asking about what is your current client mix and what is your targeted client mix.

Nizar Mohammed: Yeah, the first part is asking about what is your current client mix and what is your targeted client mix.

Speaker #2: So our client mix now is around 55%.

[Company Representative] (Middle East Healthcare Co.): So our client mix now is-

Nizar Mohammed: So our client mix now is around 55% insurance Yeah, 55%, 56% insurance.

[Company Representative] (Middle East Healthcare Co.): Around 55% insurance

Speaker #4: Yeah. 55 56.

[Company Representative] (Middle East Healthcare Co.): Yeah, 55%, 56% insurance.

Speaker #2: Around 57 MOH. And we are working to increase the percentage of insurance significantly in the coming few.

[Company Representative] (Middle East Healthcare Co.): Around 27% Ministry of Health.

Sultan Khalid: Around 27% Ministry of Health.

[Company Representative] (Middle East Healthcare Co.): And we are working to increase the percentage of insurance significantly, Inshallah, the coming period.

Nizar Mohammed: And we are working to increase the percentage of insurance significantly, Inshallah, the coming period.

Speaker #3: Understood. Makes sense. Thank you for the answer. We'll now move to another participant. Yash is asking: Do you have any update on the implementation of DRG shadow billing?

[Company Representative] (Middle East Healthcare Co.): Understood. Makes sense. Thank you for the answer. We now move towards another participant. Yash is asking, do you have any update on the implementation of DRG shadow billing?

[Analyst 1]: Understood. Makes sense. Thank you for the answer. We now move towards another participant. Yash is asking, do you have any update on the implementation of DRG shadow billing?

Speaker #2: Yes. Our update is we are now 100% meeting the expectation of all of our cases being tagged and being evaluated. Our DRG CMI increased to 2.4 on average over all the group.

[Company Representative] (Middle East Healthcare Co.): Yes. Our update is we are 100% now meeting the expectation of all of our cases being tagged and being evaluated. Our DRG CMI increased to 2.4 in average over all the group. This is coming up from 1.6 previously when we started. We are still improving. We have done a significant number that we never done. We have done more than 12 transplants in the past six months, which has never happened in the group before. We are seeing more complicated that it will be translated into a higher CMI and DRG preparation.

Nizar Mohammed: Yes. Our update is we are 100% now meeting the expectation of all of our cases being tagged and being evaluated. Our DRG CMI increased to 2.4 in average over all the group. This is coming up from 1.6 previously when we started. We are still improving. We have done a significant number that we never done. We have done more than 12 transplants in the past six months, which has never happened in the group before. We are seeing more complicated that it will be translated into a higher CMI and DRG preparation.

Speaker #2: This is coming down coming up from 1.6 previously when we started. We are still improving. We've done significant number that we never done we've done more than 12 transplants in the past six months.

Speaker #2: Which is never happened in the group before and. More complicated that it will be translated into a higher CMI and DRG preparation.

Speaker #3: Thank you, management. I think Mr. Asmar has some follow-up questions, so I am now unmuting Mr. Asmar again. Asmar, you can go ahead with your question.

[Company Representative] (Middle East Healthcare Co.): Thank you, management. I think Mr. Asmer has some follow-up questions, so I am now unmuting Mr. Asmer again. Asmer, you can go ahead with your question.

Nizar Mohammed: Thank you, management. I think Mr. Asmer has some follow-up questions, so I am now unmuting Mr. Asmer again. Asmer, you can go ahead with your question.

Speaker #5: Yeah, thank you. Just a follow-up on the provisioning. I understand you mentioned that it was a lack of provisioning in prior years that caused you to book this extra provision.

[Analyst]: Yeah, thank you. Just a follow-up on the provisioning. I understand you mentioned that it was a lack of provisioning in prior years that caused you to book this extra provision. Just for the understanding, what triggered this? There must have been some sort of either rejection of payment from Ministry of Health. So what exactly triggered this reassessment of provisioning for prior years? Thank you.

[Analyst 2]: Yeah, thank you. Just a follow-up on the provisioning. I understand you mentioned that it was a lack of provisioning in prior years that caused you to book this extra provision. Just for the understanding, what triggered this? There must have been some sort of either rejection of payment from Ministry of Health. So what exactly triggered this reassessment of provisioning for prior years? Thank you.

Speaker #5: But just for understanding, what triggered this? I mean, there must have been some sort of either rejection of payment from MOH. So, what exactly triggered this reassessment of provisioning for prior years?

Speaker #5: Thank you.

Speaker #2: I believe it's very it was very obvious from the previous public initially it was rejection MOH related and the problem really affected all the years if we may say.

[Company Representative] (Middle East Healthcare Co.): I believe it was very obvious from the previous problem. Initially it was rejection Ministry of Health related, and the problem really affected all the years we mentioned.

Nizar Mohammed: I believe it was very obvious from the previous problem. Initially it was rejection Ministry of Health related, and the problem really affected all the years we mentioned.

Speaker #5: Okay, so it's the same issue. Okay. Okay, thank you.

[Analyst]: Okay, so it is the same issue. Okay, perfect. Okay, thank you.

[Analyst 2]: Okay, so it is the same issue. Okay, perfect. Okay, thank you.

Speaker #3: Thank you, management. I will now move again towards the Q&A chat box. Another question posted by Yash is asking about does the company have any plans to redeem the subcoup in FY26 or maybe next year?

[Company Representative] (Middle East Healthcare Co.): Thank you, management. I will now move again towards the Q&A chat box. Another question posted by Yash is asking about does the company have any plans to redeem the Sukuk in FY26 or maybe next year?

Nizar Mohammed: Thank you, management. I will now move again towards the Q&A chat box. Another question posted by Yash is asking about does the company have any plans to redeem the Sukuk in FY26 or maybe next year?

Speaker #2: So the subcoup we don't have a call on the subcoup like the previous board we had the decision or basically approved to buy back from the market but it's very liquid honestly in the secondary market.

[Company Representative] (Middle East Healthcare Co.): The Sukuk, we do not have a call.

Nizar Mohammed: The Sukuk, we do not have a call. Yes On the Sukuk, the previous board, we had the decision or basically approved to buy back from the market. But it is very illiquid on, see, in the secondary market. We tried to buy some of the tradable ones, but the executed volume was very low. I do not think we will have that option, basically. We have the board approval, but they are very illiquid in the secondary market to buy from the bank.

[Company Representative] (Middle East Healthcare Co.): Yes

[Company Representative] (Middle East Healthcare Co.): On the Sukuk, the previous board, we had the decision or basically approved to buy back from the market. But it is very illiquid on, see, in the secondary market. We tried to buy some of the tradable ones, but the executed volume was very low. I do not think we will have that option, basically. We have the board approval, but they are very illiquid in the secondary market to buy from the bank.

Speaker #2: So we tried to buy some of the payable ones but the executed volume was very low. So I don't think we will have that option basically.

Speaker #2: So like we have the board approval or basically but they are very illiquid in the secondary market to buy from the market.

Speaker #3: Thank you, Management. Another participant, Jethanya, is asking about the decline in Ministry of Health contributions in revenues. Is it because of some sector-specific reason, or is it only related to Saudi German?

[Company Representative] (Middle East Healthcare Co.): Thank you, management. Another participant, Chaitanya, is asking about decline in Ministry of Health contributions in revenues is because of some sector-specific reason or only related to Saudi German Health?

[Analyst 2]: Thank you, management. Another participant, Chaitanya, is asking about decline in Ministry of Health contributions in revenues is because of some sector-specific reason or only related to Saudi German Health?

Speaker #2: No, it's across the board. We've been seeing it drop in the MOH business to the private sector. That's been something we've been seeing across the board over the past few quarters.

[Company Representative] (Middle East Healthcare Co.): No, it is across the board. We have been seeing it, a drop in the Ministry of Health business to the private sector. That has been something that has been seen across the board over the past few quarters, not just SGH.

Nizar Mohammed: No, it is across the board. We have been seeing it, a drop in the Ministry of Health business to the private sector. That has been something that has been seen across the board over the past few quarters, not just SGH.

Speaker #2: Not just SGH.

Speaker #3: Okay. And the second question from Mr. Jethanya is about the outlook that you may want to share for 2026 and 2027, in terms of top-line growth and gross margins.

[Company Representative] (Middle East Healthcare Co.): Okay. Second question from Mr. Chaitanya is asking about the outlook you may want to share for 2026 and 2027 in terms of top-line growth and gross margins.

[Analyst 2]: Okay. Second question from Mr. Chaitanya is asking about the outlook you may want to share for 2026 and 2027 in terms of top-line growth and gross margins.

Speaker #2: I think at this stage we'll revisit things—still, the strategy, we have a new board as everyone knows, and everything has been revised. Still, the operational direction is the same, but to have more than one year forward guidance of this level, at least.

[Company Representative] (Middle East Healthcare Co.): I think at this stage we are revisiting still on the strategy. We have a new board, as everyone know, and everything has been revised. Still, the operational direction is the same, but to have a more than one-year forward guidance of this level, I think, still.

Nizar Mohammed: I think at this stage we are revisiting still on the strategy. We have a new board, as everyone know, and everything has been revised. Still, the operational direction is the same, but to have a more than one-year forward guidance of this level, I think, still.

Speaker #3: Okay. Thank you, management. We will now move towards our next participant. Akash your line is unmuted. You can go ahead with your question.

[Company Representative] (Middle East Healthcare Co.): Okay, thank you, management. We will now move towards our next participant. Akash, your line is unmuted. You can go ahead with your question.

[Analyst 2]: Okay, thank you, management. We will now move towards our next participant. Akash, your line is unmuted. You can go ahead with your question.

Speaker #6: Hi. Thank you, management, for the presentation, and thank you all for arranging the call. This is Akash Tomer from SECO Investment Bank, Bahrain. I just wanted to follow up on the previous questions.

Akash Tomar: Hi. Thank you management for the presentation and thank you also, Zira, for arranging the call. This is Akash Tomar from SICO Investment Bank, Paris. I just wanted to follow up on the previous questions. You have explicitly explained the restatements. I just wanted to know that, okay, you had previous 2 years, 2024, 2025, where you restated the receivables and you understand there was a discrepancy between the stated numbers and what it should have been. Just from the current perspective, the current quarter or the ongoing methodology, has that incorporated this new methodology which led you to restate the previous numbers? Or what is the current way that you are going ahead with these receivables or ECL provisioning?

Speaker #6: I mean you have explicitly explained the restatements so I just wanted to know that okay you have you had previous two years 24 25 where you restated the receivables and you understand there was a discrepancy between the stated numbers and what it should have been.

Speaker #6: So just from the current perspective—the current quarter or the ongoing methodology—has that incorporated this new methodology, which led you to restate the previous numbers? Or, what is the current way that you are going ahead with these receivables or ECL provisioning?

Speaker #4: I'm sorry—can you please clarify?

[Company Representative] (Middle East Healthcare Co.): I'm sorry, can you just clarify? I'm sorry we couldn't catch that question very well.

Nizar Mohammed: I'm sorry, can you just clarify? I'm sorry we couldn't catch that question very well.

Speaker #2: I'm sorry. We couldn't attach that question very well.

Speaker #6: Is it clear now? Is it better now?

Akash Tomar: Is it clear now? Is it better now?

Speaker #2: Okay.

Speaker #4: Yes.

[Company Representative] (Middle East Healthcare Co.): Okay, yes.

Nizar Mohammed: Okay, yes.

Speaker #6: Yeah. So I wanted to ask the current. Methodology that you are using for because of which you had these restatements is it all corrected now or like how are you measuring the ECLs currently?

Akash Tomar: Yeah. I wanted to ask the current methodology that you are using because of which you had these restatements. Is it all corrected now, or how are you measuring the ECLs currently? That is my question on the ongoing numbers. For example, for Q2.

Speaker #6: That's my question. Like, on the ongoing numbers—for example, for the second quarter?

Speaker #2: So we have you know we have our own formula as any so it's based on the aging of the receivables. So this is how we're doing the ECL and we measure that every month.

Sultan Khalid: We have our own formula as any. It is based on the aging of the receivables. This is how we are doing the ECL, and we measure that every month. We measure whatever receivables we have, and we apply against it the relevant ECL as per what we do internally.

Speaker #2: So, we measure whatever receivables we have, and we apply against it the relevant ECL, as per what we do internally.

Speaker #6: So my understanding is that that formula was not adequate right? That is what led to the restatements. Is that correct or am I missing something?

Akash Tomar: My understanding is that that formula was not adequate, right? That is what led to the restatements. Is that correct, or am I missing something?

Speaker #2: No. The restatement this is without reaching any conclusions on the restatement we found assets to be overstated by approximately 427 million reals and we found accounts receivables understated by about 427 reals so the move was to derecognize this property plants and equipment 427 million reals reverse the depreciation charges that was taken against them because you know that's a prior period error and we then what we did we added the amount of receivable that was understated and we add those receivables have been added with 100% ECL provision so it's still a provision it's still sitting on our books we haven't written off anything yet because we're still we need still conclude our forensic audit.

Sultan Khalid: No. The restatement, without reaching any conclusions on the restatement, we found assets to be overstated by approximately SAR 427 million, and we found accounts receivables understated by about SAR 427 million. The move was to de-recognize this property, plant, and equipment of SAR 427 million, reverse the depreciation charges that was taken against them, because that is a prior period error. And what we did, we added the amount of receivable that was understated, and those receivables have been added with 100% ECL provision. It is still a provision. It is still sitting on our books. We have not written off anything yet, because we need to still conclude our forensic audit.

Speaker #6: Okay. Okay, thank you. Just one more question on the operations part. So, you mentioned that Riyadh was the only place where you saw a kind of dip in revenue.

Akash Tomar: Okay. Thank you. Just one more question on the operations part. You mentioned that Riyadh was the only place where you saw a kind of dip in revenue. Can you talk about, if you can, more on the competition that is happening in Dammam and Jeddah, because we have other players reporting revenue declines in those areas as well. If you can just talk about the competitive landscape in those two regions, Jeddah and Dammam, or Eastern Province.

Speaker #6: Can you talk about if you can more on the competition that is happening in Dammam and Jeddah because we have other players reporting you know revenue declines in those in those areas as well.

Speaker #6: So, if you can just talk about the competitive landscape in those two regions—Jeddah and Dammam.

Sultan Khalid: I will tell you about Dammam. Dammam is doing, sorry, just a moment please for the exact number. Jeddah is big in the past six months, 2,337, compared to last year, 334, with a growth of SAR 2.6 million. Dammam is doing 224 compared to 185. This is SAR 38 million increase. This is 20% increase. Mecca is doing 159 compared to 176, with 10% increase. Al Ahsa is 8.9% increase. Medina is doing 4.2% increase. Asir, 6.8% increase. All of them increase except Riyadh is 6.6% drop from last year.

Speaker #2: I will tell you about Dammam Dammam is doing I'm sorry just say. Each foreign exact number. So Jeddah is in the past six months two three three seven compared to last year three three four with the loss of 2.6 million.

Speaker #2: Dammam is doing 224 compared to 185. This is a 38 million increase. This is a 20% increase. Mecca is doing 159 compared to 176, with a 10% increase.

Speaker #2: Al Jamaa is 8.9% increase. Medina is doing 4.2% increase. Al Seir 6.8% increase. So all of them increase except Riyadh is 6.6% drop from last year.

Speaker #5: I think the question is on the competition.

[Company Representative] (Middle East Healthcare Co.): I think the question is on the competition.

Nizar Mohammed: I think the question is on the competition.

Speaker #2: Yeah. If you are asking about that, yes, we are very well trusted. We are competing very well with the hospitals. Our inpatient occupancy, other than the pediatric beds, is reaching around a 96% occupancy rate.

Sultan Khalid: If you are asking about the competition? No, in Dammam we are very well trusted. We are competing very well with the hospitals. Our occupancy, in-patient, other than pediatric beds. The ward is reaching around 96% occupancy rate. We have a higher demand in the out-patient. Dammam is doing great compared to the whole organization, followed by Mecca and Medina. We are so happy about also the engagement in Jeddah, although we changed the HIS system, we had a couple of changes in the IT system that affected our operation, but we are still seeing significant growth and demand on Jeddah.

Speaker #2: We have a higher demand in the outpatients. Dammam is doing great compared to the whole organization, followed by Mecca and Medina. But we are also very happy about the engagement in Jeddah, although we changed the HIS system and had a couple of changes in the IT system that affected our...

Speaker #2: But we are still seeing significant growth and demand on Jeddah.

Speaker #6: Oh, thank you. Just a follow-up, if I may. Do you have any plans to add any beds in any of the facilities in Dammam or Mecca this year, or is that not the case?

Akash Tomar: Thank you. Just a follow-up, if I may. Do you have any plans to add any beds in any of the facilities, Dammam or Mecca this year, or that is not the case?

Speaker #5: Are there any new beds to be added in Dammam and Mecca?

[Company Representative] (Middle East Healthcare Co.): Any new beds to be added in Dammam and Mecca?

Nizar Mohammed: Any new beds to be added in Dammam and Mecca?

Speaker #2: No. No. Not yet.

Speaker #6: Yes.

Sultan Khalid: No, not yet.

Speaker #2: No.

Akash Tomar: Yes.

Sultan Khalid: No.

Speaker #6: Okay. Okay. Thank you so much, and all the best.

Akash Tomar: Okay. Thank you so much, and all the best.

Speaker #2: Thank you.

Speaker #1: Thank you, management. We will now move towards the chat box again. On a similar theme, we had a question from Chetania: Do you expect the Jeddah hospital to face some headwinds in the upcoming quarters, as we have seen other legacy players like Faqih report a decline in revenues from its Jeddah hospital owing to tough competition?

[Company Representative] (Middle East Healthcare Co.): Thank you. Thank you, management. We will now move towards, again, the chat box. On the similar theme, we had a question from Chaitanya. Do you expect Jeddah Hospital to face some headwinds in the upcoming quarters, as we have seen other legacy players like Fakeeh has reported the decline in revenues from its Jeddah hospital owing to tough competition?

Sultan Khalid: Thank you. Thank you, management. We will now move towards, again, the chat box. On the similar theme, we had a question from Chaitanya. Do you expect Jeddah Hospital to face some headwinds in the upcoming quarters, as we have seen other legacy players like Fakeeh has reported the decline in revenues from its Jeddah hospital owing to tough competition?

Speaker #2: I believe that we are going to have continuous, inshallah, improvement. We are very competitive, and I have to admit that the Saudi Airlines contract helped us also a lot to have more trusted patients in our services.

Sultan Khalid: I believe that we are in our continuous, Inshallah, improvement. We are very competitive, and I have to admit that the Saudia contract

[Company Representative] (Middle East Healthcare Co.): helped us also a lot to have more trusted patients in our services. And I believe we are doing very well now in the services, much improvement in the guest experience, and we are still hoping that we will continue with the same guest experience improvement. Competition is a fact. It is an infinite game. But we are still going to have the solid contract until March 2027, when we, Inshallah, will be able to operate our new facility, which is a brand new facility of 11 floors. I am sure this will help us to compete with all the other competitors which we respect totally.

Nizar Mohammed: helped us also a lot to have more trusted patients in our services. And I believe we are doing very well now in the services, much improvement in the guest experience, and we are still hoping that we will continue with the same guest experience improvement. Competition is a fact. It is an infinite game. But we are still going to have the solid contract until March 2027, when we, Inshallah, will be able to operate our new facility, which is a brand new facility of 11 floors. I am sure this will help us to compete with all the other competitors which we respect totally.

Speaker #2: And I believe we are doing very well now in the services, with much improvement in the guest experience, and we are still hoping that we will continue the same guest experience improvement.

Speaker #2: Competition is a fact. It's an infinite game. But we are still going to have the solid contracts until March next year, 2027, when we, inshallah, will be able to operate our new facility.

Speaker #2: She's a brand new facility of 11 floors I am sure this will help us to compete with all the other competitors which we respect totally.

Speaker #1: Thank you, management. We now have another hand raised from Mr. Ibrahim. Mr. Ibrahim, your line is unmuted. You may go ahead with your question.

[Company Representative] (Middle East Healthcare Co.): Thank you, management. We have now another hand raised from Mr. Ibrahim. Mr. Ibrahim, your line is unmuted. You can go ahead with your question.

Nizar Mohammed: Thank you, management. We have now another hand raised from Mr. Ibrahim. Mr. Ibrahim, your line is unmuted. You can go ahead with your question.

Speaker #5: Hello, gentlemen, again. Just a follow-up question. So, you've mentioned that PPE was overstated by $427 million. Can you elaborate more on this? What is it related to?

[Analyst]: Hello, gentlemen, again. Just a follow-up question. You have mentioned that PPE was overstated by SAR 427 million. Can you elaborate more on this? What is this related to?

[Analyst 1]: Hello, gentlemen, again. Just a follow-up question. You have mentioned that PPE was overstated by SAR 427 million. Can you elaborate more on this? What is this related to?

Speaker #2: Well, we discovered certain fixed assets that were incorrectly added—whatever you want to call it—that were added but should not exist on our general ledger.

Sultan Khalid: Well, we discovered certain fixed assets that were incorrectly added, whatever you want to call it, that were added, that should not exist on our general ledger. SAR 427 million worth of fixed assets across the years of 2024.

Speaker #2: 427 million worth of fixed assets, across the years of 2024. Please go ahead. Okay. No, so it was across the years of 2024 and 2025.

[Analyst]: Please go ahead.

[Analyst 1]: Please go ahead.

Sultan Khalid: Okay. No, it was across the years of 2024 and 2025. Those have been addressed by removing them. So decommissioning the fixed assets and reversing the depreciation charges on those fixed assets.

Speaker #2: Those have been addressed by removing them—so, decommissioning the fixed assets and reversing the depreciation charges on those fixed assets.

Speaker #5: Sure, perfect. And is this something that should have been expensed, or something that should not have been done or spent?

[Analyst]: Sure. Perfect. Is this something that should have been expensed or something that should not have been done or spent?

[Analyst 1]: Sure. Perfect. Is this something that should have been expensed or something that should not have been done or spent?

Speaker #2: At this point we are unable to answer you. We still need to run the forensic audit to determine what exactly happened. But those are the amounts that we determine and we took the corrective actions as per IAS 8 which we abide by.

Sultan Khalid: At this point, we are unable to answer you. We still need to run the forensic audit to determine what exactly happened, but those are the amounts that we determined, and we took the corrective actions as per IAS 8, which we abide by. The whole accounting standards, not just IAS 8.

Speaker #2: The whole accounting standards, not just IAS 8.

Speaker #5: Exactly. And so far, do you suspect that this is related to the related parts transaction, or is it not?

[Analyst]: Excellent. So far, do you suspect that this is related to the related party transaction or it is not?

[Analyst 1]: Excellent. So far, do you suspect that this is related to the related party transaction or it is not?

Speaker #2: No, we do not think so. But we are still getting the forensic audit to cover all of these related issues.

[Company Representative] (Middle East Healthcare Co.): No. We do not think so, but we are still getting the forensic audit to do all of this related issues.

Nizar Mohammed: No. We do not think so, but we are still getting the forensic audit to do all of this related issues.

Speaker #5: Excellent. Thank you again. I appreciate this.

[Analyst]: Sure. Thank you again.

[Analyst 1]: Sure. Thank you again.

Speaker #6: And the forensic audit just so if I can add one point. The forensic audit is not just for us the management here in SGH it's for everybody that the stakeholder of SGH because we've had quite a number of restatements over the years you know just to give everybody the comfort that this will be after this the forensic audit we have clean books we have no more issues and from here the future is just brighter.

Sultan Khalid: The forensic audit, just if I can add one point, the forensic audit is not just for us, the management here in SGH. It is for everybody that is a stakeholder of SGH because we have had quite a number of restatements over the years. It is just to give everybody the comfort that this will be it. After this, the forensic audit, done. We have clean books. We have no more issues. From here, the future is just brighter.

Speaker #2: Yeah. The executive committee—we promised everyone: investors, people, the market, everyone—the commitment from us is to do the right thing all the time, and we do the best service we can to serve our patients.

[Company Representative] (Middle East Healthcare Co.): The forensic audit, we promise everyone, the investors, people, the market, everyone, the commitment of us is to do the right thing all the time, and we do the best synergy we can serve our patients.

Nizar Mohammed: The forensic audit, we promise everyone, the investors, people, the market, everyone, the commitment of us is to do the right thing all the time, and we do the best synergy we can serve our patients.

Speaker #5: Excellent. Wish you the best of luck. Thank you.

[Analyst]: Excellent. Wish you the best of luck. Thank you.

[Analyst 1]: Excellent. Wish you the best of luck. Thank you.

Speaker #2: Thank you so much Ibrahim.

Speaker #6: We are. We are inshallah.

[Company Representative] (Middle East Healthcare Co.): Thank you so much, Ibrahim. To you. Inshallah.

Nizar Mohammed: Thank you so much, Ibrahim. To you. Inshallah.

Speaker #1: Thank you, management. Our next question comes from the line of Alio Safaris. Your line is unmuted; you may go ahead with your question.

[Company Representative] (Middle East Healthcare Co.): Thank you, management. Our next question comes from the line of Alyusuf Faris. Your line is unmuted. You can go ahead with your question.

Operator: Thank you, management. Our next question comes from the line of Alyusuf Faris. Your line is unmuted. You can go ahead with your question.

Speaker #5: Assalamualaikum Dr. Nizar and team. My question is just a bit on the margin outlook. Could you give us some sort of color and guidance on what the second half of 2026 should look like, in terms of maybe gross or EBITDA margins?

Alyusuf Faris: Assalamualaikum, Dr. Nizar and team. My question is just a bit on the margin outlook. Could you give us some sort of color and guidance on what the H2 of 2026 should look like in terms of maybe growth or EBITDA margins? Thank you very much.

[Analyst 3]: Assalamualaikum, Dr. Nizar and team. My question is just a bit on the margin outlook. Could you give us some sort of color and guidance on what the H2 of 2026 should look like in terms of maybe growth or EBITDA margins? Thank you very much.

Speaker #5: Thank you very much.

Speaker #2: Well, thank you very much for the question. I will—I'll be very—as what I try always to be, is very transparent. I believe that we are going to have very well restructured and controlled costs, hopefully in the coming—

[Company Representative] (Middle East Healthcare Co.): Well, thank you very much for the question. Ideally, as what I try always to be, is very transparent. I believe that we are going to have a very good restructure and control in our costs, hopefully in the coming quarters. Because you know what, we are, I like to always use the phrase that is being dealt with in the company, is we are changing the engine of an airplane while it's flying. So we are changing the manpower, the structure, the org chart. We have a lot of employees that we need to reduce their numbers, and then we have to pay penalties. All of this is something we needed to do. It came back, we are seeing more complexity and better outcome. So it's a matter of time before we restructure, but it's the whole model of the organization. How do we operate?

Nizar Mohammed: Well, thank you very much for the question. Ideally, as what I try always to be, is very transparent. I believe that we are going to have a very good restructure and control in our costs, hopefully in the coming quarters. Because you know what, we are, I like to always use the phrase that is being dealt with in the company, is we are changing the engine of an airplane while it's flying. So we are changing the manpower, the structure, the org chart. We have a lot of employees that we need to reduce their numbers, and then we have to pay penalties. All of this is something we needed to do. It came back, we are seeing more complexity and better outcome. So it's a matter of time before we restructure, but it's the whole model of the organization. How do we operate?

Speaker #2: Quarter, because you know, what we are—I like to always use the phrase that is being dealt with in the company—is we are changing the engine of an airplane.

Speaker #2: While it's flying, so we are changing the manpower, the structure, the org chart. We have a lot of employees that we need to reduce their numbers, and then we had to pay penalties. But all of this is something we needed to do, and it's paying back. We are seeing more complexity, better outcome, so it's a matter of time.

Speaker #2: Before we restructure but it's the whole model of the organization how do we operate we are changing while we are serving patients so there must be a cost for it so we are totally aware we have a very good plan and we we always like to get the best results but inshallah it will take us a bit of time

[Company Representative] (Middle East Healthcare Co.): We are changing while we are serving patients. So there must be a cost for it. We are totally aware. We have a very good plan, and we always like to get the best results, but Inshallah, it will take us a bit of time.

Nizar Mohammed: We are changing while we are serving patients. So there must be a cost for it. We are totally aware. We have a very good plan, and we always like to get the best results, but Inshallah, it will take us a bit of time.

Alyusuf Faris: Okay. Thank you.

[Analyst 2]: Okay. Thank you.

Speaker #1: Thank you, management. We will now take some last set of questions which have been posted in the chat box. Shindra is asking about—it is clear that classifying receivables as fixed assets previously was an error.

[Company Representative] (Middle East Healthcare Co.): Thank you, management. We will now take some last set of questions which have been posted in the chat box. Shindra asking about, it is clear that classifying receivables as fixed assets previously was an error. However, could you please clarify the basis for the original accounting treatment? Specifically, what was the rationale for initially classifying the receivables as fixed assets rather than receivables?

Operator: Thank you, management. We will now take some last set of questions which have been posted in the chat box. Shindra asking about, it is clear that classifying receivables as fixed assets previously was an error. However, could you please clarify the basis for the original accounting treatment? Specifically, what was the rationale for initially classifying the receivables as fixed assets rather than receivables?

Speaker #1: However, could you please clarify the basis for the original accounting treatment? Specifically, what was the rationale for initially classifying the receivables as fixed assets rather than receivables?

Speaker #2: This is something we do not have the answer to right now. As I said, we've identified 427 million on the fixed assets, and we have identified 427 million on the receivable side.

Sultan Khalid: This is something we do not have the answer to right now. As I said, we've identified 427 million on the fixed assets, and we have identified 427 million on the receivables side. I do not want to reach a conclusion at this stage to say no, until the forensic audit is done.

Speaker #2: And so, we have still—I do not want to reach a conclusion at this stage to say, no, this was, until the forensic audit is done.

Speaker #1: Thank you for the response. Our last set of question is asking about participant is asking about which factors explain the contraction in gross margins on quarter on quarter basis when all other healthcare providers have reported improvements.

[Company Representative] (Middle East Healthcare Co.): Thank you for the response. Our last set of question, a participant is asking about which factors explain the contraction in gross margins on quarter-on-quarter basis when all other healthcare providers have reported improvements.

Nizar Mohammed: Thank you for the response. Our last set of question, a participant is asking about which factors explain the contraction in gross margins on quarter-on-quarter basis when all other healthcare providers have reported improvements.

Speaker #6: Sorry, could you repeat that? Can you see the question?

Sultan Khalid: Sorry, come again. Can you repeat the question?

Speaker #1: So, basically, the participant is asking about the decline in gross margin on a sequential basis, while all other healthcare companies who have so far reported their results reported an improvement in gross margins on a sequential basis.

[Company Representative] (Middle East Healthcare Co.): Basically, a participant is asking about the decline in gross margin on sequential basis, while all other healthcare companies who have so far reported the results, reported the improvement in gross margins on sequential basis.

Nizar Mohammed: Basically, a participant is asking about the decline in gross margin on sequential basis, while all other healthcare companies who have so far reported the results, reported the improvement in gross margins on sequential basis.

Speaker #6: This is mainly because of our cost of sales. I mean, our revenues are up, but our gross margin is down. This means that our cost of sales have gone up, and our cost of sales is mostly the cost of people—manpower. We also have medications and things like that. Because of our new strategy of focusing on subspecialty, we had to make an investment in manpower and upgrading our capabilities inside the hospitals to be able to make that strategy come to life.

Sultan Khalid: So this is mainly because of our cost of sales. I mean, our revenues are up, our gross margin is down. This means that our cost of sales have gone up and our cost of sales is mostly cost of people, manpower. We also have medications and things like that. Because of our new strategy of focusing on sub-specialty, we had to make an investment in manpower and upgrading our capabilities inside the hospitals to be able to make that strategy come to life.

Speaker #2: Predominantly manpower. If you look at our manpower year on year, it's up 20%—actually, more than 20% year on year. And still, the MOH business has been continuously declining.

[Company Representative] (Middle East Healthcare Co.): Predominantly manpower. If you look at our manpower year-on-year, it is up 20%, actually more than 20% year-on-year. Still the Ministry of Health business has been continuously declining, as a contribution to the overall revenue. That is basically the drag on the gross margin as well. So both factors combined were the reason behind the sequential drop in gross margin.

Nizar Mohammed: Predominantly manpower. If you look at our manpower year-on-year, it is up 20%, actually more than 20% year-on-year. Still the Ministry of Health business has been continuously declining, as a contribution to the overall revenue. That is basically the drag on the gross margin as well. So both factors combined were the reason behind the sequential drop in gross margin.

Speaker #2: Like, as a contribution to the overall, and that's basically the drag on the gross margin as well. So, both factors combined were the reason behind the sequential drop in gross margin.

Speaker #1: Thank you, management, for the explanation. I guess this marks the final question from our session. I would like to take this opportunity to thank all the participants for joining this call on very short notice, and I would also like to extend our sincere thanks to—

[Company Representative] (Middle East Healthcare Co.): Thank you, management for the explanation. I guess this marks the final question from our session. I would like to take this opportunity to thank all the participants for joining this call on a very short notice. I would also like to extend our sincere thanks to Saudi German Health management for answering all questions in a very detailed manner. So I will now hand it back again to the management for any closing remarks they may have.

Nizar Mohammed: Thank you, management for the explanation. I guess this marks the final question from our session. I would like to take this opportunity to thank all the participants for joining this call on a very short notice. I would also like to extend our sincere thanks to Saudi German Health management for answering all questions in a very detailed manner. So I will now hand it back again to the management for any closing remarks they may have.

Speaker #1: So, the German management for answering all questions in a very detailed manner. So I will now hand it back again to the management for any closing remarks they may have.

Speaker #2: I would like to thank you, Abdullah, and I really would like to thank myself, and again and again everyone who participated in the call on such short notice.

[Company Representative] (Middle East Healthcare Co.): We would like to thank you, Abdullah, and really would like to thank again and again everyone who participated in the call in a short notice. Thank you very much all. I hope it was a useful meeting. Thank you very much.

Nizar Mohammed: We would like to thank you, Abdullah, and really would like to thank again and again everyone who participated in the call in a short notice. Thank you very much all. I hope it was a useful meeting. Thank you very much.

Speaker #2: Thank you very much, all. I hope it was a useful meeting. Thank you very much.

Speaker #6: Thank you everyone.

Sultan Khalid: Thank you everyone.

Speaker #1: Thank you, everyone. The meeting is now over, and you may exit the call.

[Company Representative] (Middle East Healthcare Co.): Thanks everyone. The meeting is now over and you may exit the call.

Operator: Thanks everyone. The meeting is now over and you may exit the call.

Sultan Khalid: Thank you.

Nizar Mohammed: Thank you.

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Q2 2026 Middle East Healthcare Co Earnings Call

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