Q2 2026 Dallah Healthcare Co Earnings Call

August 12, 2026

[Company Representative] (Dallah Healthcare): initiatives. We have basically initiated with CHI on designing the bundle payment. We are moving very fast on that, but this is again on the co-designing phase. We are also in an integration phase for the DRG shadow billing. On the other hand, from a regulatory perspective, we do have an official date now for DRG. This quarter is expected that we all, as a market, go live in shadow billing. However, 2028 is the official date where DRG is expected to be basically billed. So during this year and next year, the ecosystem is supposed to be maturing. That is on the DRG. We have also recently signed an agreement with an insurance company as part of value-based healthcare.

Omar Mohammed Al-Jabari: initiatives. We have basically initiated with CHI on designing the bundle payment. We are moving very fast on that, but this is again on the co-designing phase. We are also in an integration phase for the DRG shadow billing. On the other hand, from a regulatory perspective, we do have an official date now for DRG. This quarter is expected that we all, as a market, go live in shadow billing. However, 2028 is the official date where DRG is expected to be basically billed. So during this year and next year, the ecosystem is supposed to be maturing. That is on the DRG. We have also recently signed an agreement with an insurance company as part of value-based healthcare.

Speaker #1: initiatives. We have basically initiated with CHI on designing the bundle payment. We are moving very fast on that, but this is, again, on the co-designing phase.

Speaker #1: We are also in an integration phase for the DRG shadow billing. On the other hand, from a regulatory perspective, we do now have an official date for DRG.

Speaker #1: This quarter is expected to, without we all, as a market, go live in shadow billing. However, 2028 is the official date when DRG is expected to be basically billed.

Speaker #1: So during this year and next year, the ecosystem is supposed to be maturing. That's on the DRG. We have also recently signed an agreement with an insurance company as part of value-based healthcare, to basically that agreement was population-based payment agreement, which is basically an agreement with one of the leading insurance companies and one of the leading policyholders in Saudi Arabia.

[Company Representative] (Dallah Healthcare): That agreement was population-based payment agreement, which is basically an agreement with one of the leading insurance companies and one of the leading policyholders in Saudi Arabia to basically be an exclusive referral center for the patients of that policy, exclusively to Dallah hospitals in Riyadh that would cover Dallah Al Nakheel and Dallah Namar. That confirms the leadership position that Dallah is currently taking in designing the scene of the value-based healthcare in Saudi Arabia and reflects the confidence and trust of payers and policyholders in the brand of Dallah. Meanwhile, Dallah remains one of the very active companies in certification and accreditation on value-based healthcare.

Omar Mohammed Al-Jabari: That agreement was population-based payment agreement, which is basically an agreement with one of the leading insurance companies and one of the leading policyholders in Saudi Arabia to basically be an exclusive referral center for the patients of that policy, exclusively to Dallah hospitals in Riyadh that would cover Dallah Al Nakheel and Dallah Namar. That confirms the leadership position that Dallah is currently taking in designing the scene of the value-based healthcare in Saudi Arabia and reflects the confidence and trust of payers and policyholders in the brand of Dallah. Meanwhile, Dallah remains one of the very active companies in certification and accreditation on value-based healthcare.

Speaker #1: To basically be an exclusive referral center for the patients of that policy. Exclusively to Dallah Hospitals in Riyadh. That would cover Dallah Nakhil and Dallah Namar.

Speaker #1: That confirms the leadership position that Dallah is currently taking in designing the scene of value-based healthcare in Saudi Arabia, and reflects the confidence and trust of payers and policyholders in the Dallah brand.

Speaker #1: Meanwhile, Dallah remains one of the very active companies in certification and accreditation on value-based healthcare. As mentioned by Saud, we were the first hospital, not only in Saudi Arabia but even in the world, to get the ICOM certification, which is a very prestigious accreditation in value-based healthcare.

[Company Representative] (Dallah Healthcare): As mentioned by Saud, we were the first hospital, even in the world, not only in Saudi Arabia, to get the ICHOM certification, which is a very prestigious accreditation on value-based healthcare on the OBGYN, and on the newest version of ICHOM as well. We adopt the Ribbon 5 rating, which is one of the highest level of achievement on implementation of patient-reported outcomes measures, the PROMS, by the Newsweek in the US and by CHI as well in collaboration with Statista. We also got the silver level excellence recognition by CHI also on the PROM. So Dallah, from a positioning perspective, is basically positioned very well in leading the value-based healthcare scene in the Kingdom of Saudi Arabia.

Omar Mohammed Al-Jabari: As mentioned by Saud, we were the first hospital, even in the world, not only in Saudi Arabia, to get the ICHOM certification, which is a very prestigious accreditation on value-based healthcare on the OBGYN, and on the newest version of ICHOM as well. We adopt the Ribbon 5 rating, which is one of the highest level of achievement on implementation of patient-reported outcomes measures, the PROMS, by the Newsweek in the US and by CHI as well in collaboration with Statista. We also got the silver level excellence recognition by CHI also on the PROM. So Dallah, from a positioning perspective, is basically positioned very well in leading the value-based healthcare scene in the Kingdom of Saudi Arabia.

Speaker #1: On the Obigayni, and on the newest version of ICOM as well. We got the Ribbon 5 rating, which is one of the highest levels of achievement on implementation of patient-reported outcomes measures, the PROMS 5, a news week in the US, and by CHI as well in collaboration with Statista and we also got the silver level excellence recognition by CHI, also on PROMS.

Speaker #1: So Dallah, from a positioning perspective, is basically positioned very well in leading the value-based healthcare scene in the Kingdom of Saudi Arabia.

Speaker #2: Okay. Thank you, Mr. Omar. The next two slides is about our strategy. I will leave the floor for our chief strategy officer, Engineer Matib, please.

[Company Representative] (Dallah Healthcare): Thank you, Mr. Omar. The next two slides is about our strategy. I will leave the floor for our Chief Strategy Officer, Engineer Motaz, please.

Saud Mohammed Alraqraq: Thank you, Mr. Omar. The next two slides is about our strategy. I will leave the floor for our Chief Strategy Officer, Engineer Motaz, please.

Speaker #3: Thank you, Mr. Said. Dallah has well-defined growth strategy, certified in by end of 2021 for the next five years, and it's mainly the Dallah now is having an operating companies to focus on the core provider operating, to be a one-stop VIP and a private insured patient in Riyadh.

[Company Representative] (Dallah Healthcare): Thank you, Mr. Saud. Dallah has a well-defined growth strategy certified by end of 2021 for the next five years. Dallah now has been operating companies to focus on the core provider operating to be a one-stop VIP and a private insured patient in rehab. That is to cover the patients from P60 cycle, either hospital, polyclinics, home care, and telemedicine. Service offering to have an integrated health system and providing extra services to the patient by subspecialties that we are already offering in our facilities. For the key success factor, to be convenient and close to the customer by having the polyclinic and telemedicine and the referral center to our facilities. To cover many areas, services under one roof, like the rehab and the addiction and the psychiatry we have and the subspecialties that we have in the existing facilities.

Muteab Abdullah Altukeas: Thank you, Mr. Saud. Dallah has a well-defined growth strategy certified by end of 2021 for the next five years. Dallah now has been operating companies to focus on the core provider operating to be a one-stop VIP and a private insured patient in rehab. That is to cover the patients from P60 cycle, either hospital, polyclinics, home care, and telemedicine. Service offering to have an integrated health system and providing extra services to the patient by subspecialties that we are already offering in our facilities. For the key success factor, to be convenient and close to the customer by having the polyclinic and telemedicine and the referral center to our facilities. To cover many areas, services under one roof, like the rehab and the addiction and the psychiatry we have and the subspecialties that we have in the existing facilities.

Speaker #3: That is to cover the patient from a 360 cycle, whether in a hospital, polyclinics, home care, or telemedicine. And service offering to have an integrated health system and provide extra services to the patient.

Speaker #3: By subspecialities that we are already offering in our facilities. And for the key success factor to be convenient and close to the customer, by having the polyclinic and telemedicine and the referral center to our facilities.

Speaker #3: And to cover many areas, services under one roof, like the rehab and the addiction and the psychiatry we have, and the subspecialties that we have in the existing facilities.

Speaker #2: Thank you, Engineer Matib. Now, the financial part, which is most important to our CFO, Mr. Amin. Please.

[Company Representative] (Dallah Healthcare): Thank you, Engineer. Now the financial part, which is the most important, to our CFO, Mr. Amine, please.

Saud Mohammed Alraqraq: Thank you, Engineer. Now the financial part, which is the most important, to our CFO, Mr. Amine, please.

Speaker #1: Thank you, Mr. Saud. Good afternoon or good morning, wherever you are. So, our performance in the first six months of '26—we have here the reported performance, and on the right side we also included the adjusted performance, taking out the non-recurring items that we had specifically reported in each of the respective quarters.

Amine Hariz: Thank you, Mr. Saud. As-salamu alaykum. Good afternoon or good morning, wherever you are. Our performance in first six months of 2026, we have here the reported performance. On the right side, we also included the adjusted performance, taking out the non-recurring items that we had specifically reported in each of the respective quarters. There was SAR 51.4 million. You can see these down below the chart, SAR 51.4 million of exceptional gains that were reported in Q1 2026 related to contribution of land parcels to Wahet Al-Nakheel Real Estate Fund. For Q2 2025, we had SAR 12.5 million of exceptional reversals of Zakat provisions versus that in Q2 2026, we have an exceptional expense related to managing the Mina Hospital in Mecca.

Amine Abderraouf Hariz: Thank you, Mr. Saud. As-salamu alaykum. Good afternoon or good morning, wherever you are. Our performance in first six months of 2026, we have here the reported performance. On the right side, we also included the adjusted performance, taking out the non-recurring items that we had specifically reported in each of the respective quarters. There was SAR 51.4 million. You can see these down below the chart, SAR 51.4 million of exceptional gains that were reported in Q1 2026 related to contribution of land parcels to Wahet Al-Nakheel Real Estate Fund. For Q2 2025, we had SAR 12.5 million of exceptional reversals of Zakat provisions versus that in Q2 2026, we have an exceptional expense related to managing the Mina Hospital in Mecca.

Speaker #1: So there was 51.4 million you can see these down below the chart, 51.4 million of exceptional gains that were reported in Q1 26 related to contribution of land, parcels to Wahat Nakhil Real Estate Fund for Q2 25.

Speaker #1: We had 12.5 million of exceptional reversals of Zakat provisions versus that in Q2 26 we have an exceptional expense related to managing the Mina Hospital.

Speaker #1: In Mecca, so on this amount in particular, this is net of a small revenue that was collected around 500,000 riyals. And we booked the net exposure or the net cost in GNA so after adjusting for these non-recurring items we can see that revenues obviously remain unchanged between reported and adjusted moving from 1.9 billion as of H1 25 to 2.1 billion as of H1 26.

Amine Hariz: On this amount in particular, this is net of a small revenue that was collected, around SAR 500,000, and we booked the net exposure or the net cost in G&A. After adjusting for these non-recurring items, we can see that revenues obviously remain unchanged between reported and adjusted, moving from SAR 1.9 billion as of H1 2025 to SAR 2.1 billion as of H1 2026. EBITDA increased 5% from SAR 410 million to SAR 471 million. EBIT increased 1% from SAR 303 million to SAR 305 million. Net profits were down by 9% from SAR 221 million to SAR 201 million. Earnings per share decreased by the same percentage, from SAR 2.17 per share to SAR 1.98 per share. Moving to the next slide, please. We have the same chart focused on the quarterly performance, Q2 2026 versus Q2 2025. On the adjusted numbers in gray on the right-hand side.

Amine Abderraouf Hariz: On this amount in particular, this is net of a small revenue that was collected, around SAR 500,000, and we booked the net exposure or the net cost in G&A. After adjusting for these non-recurring items, we can see that revenues obviously remain unchanged between reported and adjusted, moving from SAR 1.9 billion as of H1 2025 to SAR 2.1 billion as of H1 2026. EBITDA increased 5% from SAR 410 million to SAR 471 million. EBIT increased 1% from SAR 303 million to SAR 305 million. Net profits were down by 9% from SAR 221 million to SAR 201 million. Earnings per share decreased by the same percentage, from SAR 2.17 per share to SAR 1.98 per share. Moving to the next slide, please. We have the same chart focused on the quarterly performance, Q2 2026 versus Q2 2025. On the adjusted numbers in gray on the right-hand side.

Amine Hariz: Revenues increased 4% from SAR 1,062 million to SAR 1,108 million. EBITDA improved 3%, reaching SAR 237 million. EBIT was higher by 4% to reach SAR 174 million. Net profit was pretty much flat at SAR 116 million. Earnings per share increased from SAR 1.1 per share to SAR 1.14 per share at an increase of 4%. Next slide, please. We added this new slide which presents a snapshot of the balance sheet. Also, we highlight that our financial statements were published 2 days ago on the website of Tadawul. Inventories increased between December and June by 11%, reaching SAR 400 million. We had an increase in receivables by 27%. Property and equipment increased 4%. Investment in associates were down by 5%. Long-term Murabaha financing, pretty much a small increase of 2% to reach SAR 2.98 billion. Short-term Murabaha financing increased 43% to reach SAR 881 million.

Amine Abderraouf Hariz: Revenues increased 4% from SAR 1,062 million to SAR 1,108 million. EBITDA improved 3%, reaching SAR 237 million. EBIT was higher by 4% to reach SAR 174 million. Net profit was pretty much flat at SAR 116 million. Earnings per share increased from SAR 1.1 per share to SAR 1.14 per share at an increase of 4%. Next slide, please. We added this new slide which presents a snapshot of the balance sheet. Also, we highlight that our financial statements were published 2 days ago on the website of Tadawul. Inventories increased between December and June by 11%, reaching SAR 400 million. We had an increase in receivables by 27%. Property and equipment increased 4%. Investment in associates were down by 5%. Long-term Murabaha financing, pretty much a small increase of 2% to reach SAR 2.98 billion. Short-term Murabaha financing increased 43% to reach SAR 881 million.

Amine Hariz: Current portion of long-term Murabaha financing was stable at around SAR 206 million. Next slide. This is also a new slide related to cash flows between the opening and the end of the 6 months period. You can see that we had operating cash flows, excluding the one-off Mina project, at SAR 115 million positive contribution. Mina is a cost of SAR 15 million disbursed during the quarter, during Q2, and during the period itself. Cash flow related to investment and mostly CapEx, SAR 268 million, mostly related to Al Arab project. Dividend paid, SAR 101 million. Cash inflows from financing activities net is SAR 146 million. The cash balance itself decreased from opening SAR 211 million to a closing of SAR 88 million.

Amine Abderraouf Hariz: Current portion of long-term Murabaha financing was stable at around SAR 206 million. Next slide. This is also a new slide related to cash flows between the opening and the end of the 6 months period. You can see that we had operating cash flows, excluding the one-off Mina project, at SAR 115 million positive contribution. Mina is a cost of SAR 15 million disbursed during the quarter, during Q2, and during the period itself. Cash flow related to investment and mostly CapEx, SAR 268 million, mostly related to Al Arab project. Dividend paid, SAR 101 million. Cash inflows from financing activities net is SAR 146 million. The cash balance itself decreased from opening SAR 211 million to a closing of SAR 88 million.

Amine Hariz: We can say that the contribution from operating cash and from net financing activities, plus the decrease in the cash balance, is what helped finance our CapEx plus the dividend distribution. Next slide, please. Next slide, please. Yes. This is a new slide which shows a question that we are usually asked about share of revenue from outpatients and from inpatients. We included for the last 4 quarters plus the current quarter, the ratios, they are pretty much consistent. Usually, an outpatient roughly is between 65% and 67%, and inpatient represents the rest. We also added a component which is the sales of pharma and medicines and drugs generally. These are included within the other 2 components. We are just presenting the percentage out of the total revenues, and they are historically standing roughly between 24% and 26%. Next slide, please. Yes.

Amine Abderraouf Hariz: We can say that the contribution from operating cash and from net financing activities, plus the decrease in the cash balance, is what helped finance our CapEx plus the dividend distribution. Next slide, please. Next slide, please. Yes. This is a new slide which shows a question that we are usually asked about share of revenue from outpatients and from inpatients. We included for the last 4 quarters plus the current quarter, the ratios, they are pretty much consistent. Usually, an outpatient roughly is between 65% and 67%, and inpatient represents the rest. We also added a component which is the sales of pharma and medicines and drugs generally. These are included within the other 2 components. We are just presenting the percentage out of the total revenues, and they are historically standing roughly between 24% and 26%. Next slide, please. Yes.

Amine Hariz: This new slide also answers another question that we are often asked about which payers or which customers are contributing to our revenue generation. You can see that insurance is roughly 75%, MOH is roughly 8%, cash is roughly 13%, and remainder is around 3% of sales of B2B medicines through Dallah Pharma. Next slide, please. The growth of revenues. Historically, in the last 5 years, we had a CAGR of 18%. If we compare the current periods, H1 2026 versus H1 2025, we have an increase of SAR 12 million. For the quarter, we had an increase of 4.3%. The 4.3%, as you can see in the header, roughly 87% from that was contributed by Dallah Al Khobar and Dallah Al Ahsa Hospital, and the remaining 13% was contributed from the other businesses. Next slide.

Amine Abderraouf Hariz: This new slide also answers another question that we are often asked about which payers or which customers are contributing to our revenue generation. You can see that insurance is roughly 75%, MOH is roughly 8%, cash is roughly 13%, and remainder is around 3% of sales of B2B medicines through Dallah Pharma. Next slide, please. The growth of revenues. Historically, in the last 5 years, we had a CAGR of 18%. If we compare the current periods, H1 2026 versus H1 2025, we have an increase of SAR 12 million. For the quarter, we had an increase of 4.3%. The 4.3%, as you can see in the header, roughly 87% from that was contributed by Dallah Al Khobar and Dallah Al Ahsa Hospital, and the remaining 13% was contributed from the other businesses. Next slide.

Amine Hariz: In terms of gross profit and gross margin, our gross margin historically stood until the end of 2024 at around 37% to 38%. in 2025, we had a dip of around 2 percentage points. It was mostly related to the acquisition of Dallah Al Khobar in particular, because it was initially a loss-making hospital and we took it to a ramp-up in profitability. If we look at the current period, for Q2 2026, the percentage of gross margin remains pretty much consistent with the Q2 2025 at around 35%. This is up from 33% in Q1 2026. When we look at our half-yearly perspective, the 35% of 2025 became 34%. This is mostly a drag from Q1 2026, but we have a realignment of profitability starting from Q2.

Amine Abderraouf Hariz: In terms of gross profit and gross margin, our gross margin historically stood until the end of 2024 at around 37% to 38%. in 2025, we had a dip of around 2 percentage points. It was mostly related to the acquisition of Dallah Al Khobar in particular, because it was initially a loss-making hospital and we took it to a ramp-up in profitability. If we look at the current period, for Q2 2026, the percentage of gross margin remains pretty much consistent with the Q2 2025 at around 35%. This is up from 33% in Q1 2026. When we look at our half-yearly perspective, the 35% of 2025 became 34%. This is mostly a drag from Q1 2026, but we have a realignment of profitability starting from Q2.

Amine Hariz: Our full year guidance, which we had initially or in most recent communications, we said 36% to 37% range. We think that it is going to be closer to 36% or a little bit lower for the full year outlook. Next slide. For the EBIT, historically, EBIT margin was standing at around 17% on average. In H1 2025, it was 16%. It is down to 14.4% in H1 2026, pretty much for the same dynamics that we discussed for the gross margin. As you can see, Q versus last year quarter, we are exactly at the same ratio of 15.7% margin. Next. EBITDA is pretty much also reflective of the same pattern. We also highlighted the depreciation amount in the header to make it readily available for you. Next slide, please. Adjusted net margin. It has recovered in Q2 2026 to approach the Q2 2025 level.

Amine Abderraouf Hariz: Our full year guidance, which we had initially or in most recent communications, we said 36% to 37% range. We think that it is going to be closer to 36% or a little bit lower for the full year outlook. Next slide. For the EBIT, historically, EBIT margin was standing at around 17% on average. In H1 2025, it was 16%. It is down to 14.4% in H1 2026, pretty much for the same dynamics that we discussed for the gross margin. As you can see, Q versus last year quarter, we are exactly at the same ratio of 15.7% margin. Next. EBITDA is pretty much also reflective of the same pattern. We also highlighted the depreciation amount in the header to make it readily available for you. Next slide, please. Adjusted net margin. It has recovered in Q2 2026 to approach the Q2 2025 level.

Amine Hariz: After a softness that we had seen in Q1 2026, now we are at 10.5% net margin versus 10.8% same quarter last year. The deviation that you see on a semi-annual basis is mostly related to Q1 2026. Next. In terms of indebtedness, as some of you recall, after the acquisition of Dallah Al Khobar and Dallah Al Ahsa, as of end of Q1 2025, we had this surge of around SAR 1 billion in debt. This took our net debt to EBITDA ratio from a historical 2.5x give or take on average to around 4x. We remain in this kind of range as of end of H1 2026.

Amine Abderraouf Hariz: After a softness that we had seen in Q1 2026, now we are at 10.5% net margin versus 10.8% same quarter last year. The deviation that you see on a semi-annual basis is mostly related to Q1 2026. Next. In terms of indebtedness, as some of you recall, after the acquisition of Dallah Al Khobar and Dallah Al Ahsa, as of end of Q1 2025, we had this surge of around SAR 1 billion in debt. This took our net debt to EBITDA ratio from a historical 2.5x give or take on average to around 4x. We remain in this kind of range as of end of H1 2026.

Amine Hariz: As you can see, end of Q 2025, we had already an improvement, but working capital situation in H1 put a little bit of drag, so our short-term loans had to increase due to some slowness in collection of receivables, plus the need to increase the inventory given the geopolitical situation. We think this is mostly temporary and overall on the medium term, we still contemplate that reduction and the rate is going to be gradually happening. Also the good news is that the proceeds from the sale of the hospital of Dr. Mohammed Rashid Al-Faqih, we already collected SAR 467 million, and we already started a plan of de-leveraging, which is already being rolled out gradually from the current month of August. We think that the full effect may be unlocked from Q1 2027, but most of the effect will still be there even from Q4 2026.

Amine Abderraouf Hariz: As you can see, end of Q 2025, we had already an improvement, but working capital situation in H1 put a little bit of drag, so our short-term loans had to increase due to some slowness in collection of receivables, plus the need to increase the inventory given the geopolitical situation. We think this is mostly temporary and overall on the medium term, we still contemplate that reduction and the rate is going to be gradually happening. Also the good news is that the proceeds from the sale of the hospital of Dr. Mohammed Rashid Al-Faqih, we already collected SAR 467 million, and we already started a plan of de-leveraging, which is already being rolled out gradually from the current month of August. We think that the full effect may be unlocked from Q1 2027, but most of the effect will still be there even from Q4 2026.

Amine Hariz: Next slide, please. These are new appendices whereby we try to showcase the performance of our own M&A activity. Historically, we had five acquisitions: Makkah Medical Center, Dallah Clinics Al Ahli, Dallah Al Khobar Hospital, Dallah Al Ahsa Hospital, and Kingdom Hospital, whereby the legal entity is called Care Shield Holding Company. Next slide, please. This first slide is on Makkah. As we can see, Makkah was turned around from historical losses. Actually, we have been an early investor in this business for over 20 years. We know it was pretty much loss-making in most of its history. Since we acquired it, we were able to turn it around to profitability starting from 2023. From there, you can see we reported the net margin and the gross margin. You can see a gradual improvement.

Amine Abderraouf Hariz: Next slide, please. These are new appendices whereby we try to showcase the performance of our own M&A activity. Historically, we had five acquisitions: Makkah Medical Center, Dallah Clinics Al Ahli, Dallah Al Khobar Hospital, Dallah Al Ahsa Hospital, and Kingdom Hospital, whereby the legal entity is called Care Shield Holding Company. Next slide, please. This first slide is on Makkah. As we can see, Makkah was turned around from historical losses. Actually, we have been an early investor in this business for over 20 years. We know it was pretty much loss-making in most of its history. Since we acquired it, we were able to turn it around to profitability starting from 2023. From there, you can see we reported the net margin and the gross margin. You can see a gradual improvement.

Amine Hariz: Now the net margin from 2025 onwards has entered into, even in 2024, it was on the edge of the double digit, and now it is moving gradually into the mid double digit. As we said on earlier calls for B class hospitals like Makkah and Al Ahsa, we think a 15% to 18% net margin is a good target. You can also see that revenue also continues to grow. We have also the positive impacts on the bottom line coming from revenue growth, plus improvement of cost efficiency and profitability. Next slide, please. This is Dallah Al Arab's clinic, one of the four clinics that we report under the Dallah Clinics brand, noting that we have a fifth clinic, which is consulting clinic, acquired with Kingdom Hospital and not yet rebranded as Dallah. For Dallah Al Arab in particular, again, a good story of turnaround.

Amine Abderraouf Hariz: Now the net margin from 2025 onwards has entered into, even in 2024, it was on the edge of the double digit, and now it is moving gradually into the mid double digit. As we said on earlier calls for B class hospitals like Makkah and Al Ahsa, we think a 15% to 18% net margin is a good target. You can also see that revenue also continues to grow. We have also the positive impacts on the bottom line coming from revenue growth, plus improvement of cost efficiency and profitability. Next slide, please. This is Dallah Al Arab's clinic, one of the four clinics that we report under the Dallah Clinics brand, noting that we have a fifth clinic, which is consulting clinic, acquired with Kingdom Hospital and not yet rebranded as Dallah. For Dallah Al Arab in particular, again, a good story of turnaround.

Amine Hariz: We improved the profitability of this business. We moved it to positive ground on Q5, and we continue this positive development immediately as of Q6. Next slide, please. Dallah, we took a different approach because the acquisition happened early in 2025, so we are reporting quarterly numbers other than yearly. You can clearly see an improvement also in profitability. This business, we acquired it effectively in Q2 of 2025, and from Q3 it had already a positive net profit, but with an exceptional component related to a loan renegotiation. In Q4 2025, it was able to achieve its first net profit, excluding non-recurring components. Q1 was a little bit of a dip, and then Q2 is back to profitability. Gross margin also you can see has become healthy, now it is above 30% and gradually moving upwards when we put the projected Q3 and Q4 numbers. Next slide, please.

Amine Abderraouf Hariz: We improved the profitability of this business. We moved it to positive ground on Q5, and we continue this positive development immediately as of Q6. Next slide, please. Dallah, we took a different approach because the acquisition happened early in 2025, so we are reporting quarterly numbers other than yearly. You can clearly see an improvement also in profitability. This business, we acquired it effectively in Q2 of 2025, and from Q3 it had already a positive net profit, but with an exceptional component related to a loan renegotiation. In Q4 2025, it was able to achieve its first net profit, excluding non-recurring components. Q1 was a little bit of a dip, and then Q2 is back to profitability. Gross margin also you can see has become healthy, now it is above 30% and gradually moving upwards when we put the projected Q3 and Q4 numbers. Next slide, please.

It took a different approach because the acquisition happened only in 25%, rather than nearly all, and you can clearly see an improvement. Also, in possibility, this business was required effectively in Q2 '25.

And, uh, from Q3, it has already a positive net profit, but with an exceptional component related to, uh, a loan in negotiation. But in Q4 '25, it was able to achieve this for its first net profit, uh, excluding all recurring components. Uh, Q1 was a little bit of a dip, and then Q2 is not too possibly, uh, gross margin. Also, you can see, it has become healthy; it is now above 30% and trending upwards. When you put the projected Q3 and Q4 numbers,

Next slide, please.

[Company Representative] (Dallah Healthcare): Next.

Amine Hariz: Yes. Next slide is Al Ahsa Hospital. Again, reported on a quarterly basis. This hospital historically was profitable, generally speaking, although in Q1 2025, before the acquisition, it had to account for certain, let us say, pre-transaction closing accruals, et cetera. Generally speaking, since we took it over in Q2, we see a decent improvement. Initially slow, but starting from Q2 2026, we see a positive development that we expect to continue to witness. This hospital in particular had one of the two major contracts renewed only from June 2026, as opposed to Dallah Al Khobar and Dallah Namar Hospital and Makkah having the renewal from February 2026. Next slide, please. Thank you. Now we hand over to No, I think we jumped. Sorry, there is one slide missing.

Amine Abderraouf Hariz: Yes. Next slide is Al Ahsa Hospital. Again, reported on a quarterly basis. This hospital historically was profitable, generally speaking, although in Q1 2025, before the acquisition, it had to account for certain, let us say, pre-transaction closing accruals, et cetera. Generally speaking, since we took it over in Q2, we see a decent improvement. Initially slow, but starting from Q2 2026, we see a positive development that we expect to continue to witness. This hospital in particular had one of the two major contracts renewed only from June 2026, as opposed to Dallah Al Khobar and Dallah Namar Hospital and Makkah having the renewal from February 2026. Next slide, please. Thank you. Now we hand over to No, I think we jumped. Sorry, there is one slide missing.

So, next slide is, uh, Hospital. Uh, again, reported on a quarterly basis. Uh, this Hospital historically was, uh, profitable generally speaking. Although, in q125 before the acquisition, uh, it had to account for certain, uh, let's say 3,

Pre-transaction closing uh across Etc. But generally speaking uh since we took it over in Q2 uh we we see a decent Improvement uh initially slow. But starting from uh Q2 26. We see uh a positive development that we expect to to continue to witness uh this hospital and particular uh had 1 of the 2 major contracts. Renewed only from drone 26 as opposed to uh Alpha and Maca having the renewal from February.

Next slide, please.

[Company Representative] (Dallah Healthcare): Just a second. Yeah.

Saud Mohammed Alraqraq: Just a second. Yeah.

So thank you. Now we hand over to Nouh. I think we jumped—sorry, there is one slide missing.

Just a second.

Amine Hariz: That is it. So, Care Shield Holding Company, Kingdom Hospital. This hospital, if you recall, we had acquired initially 58% back in 2020, but it continued to have an independent management given it was co-owned by two listed companies. From our perspective, although it had some good performance in 2023 and between 2022 and 2023, you can say, from 2024 onward, we thought that we are not seeing the full potential being unlocked. This is what really triggered the discussions to make an outright full acquisition, which was completed in December 2025. Now unfortunately, we were taken by surprise because, effective January 2026, sizable road works started around the hospital, two tunnels and three bridges, a project of very big size. Still, we see this as an opportunity because it will even improve the outlay of the area in general and the accessibility.

Amine Abderraouf Hariz: That is it. So, Care Shield Holding Company, Kingdom Hospital. This hospital, if you recall, we had acquired initially 58% back in 2020, but it continued to have an independent management given it was co-owned by two listed companies. From our perspective, although it had some good performance in 2023 and between 2022 and 2023, you can say, from 2024 onward, we thought that we are not seeing the full potential being unlocked. This is what really triggered the discussions to make an outright full acquisition, which was completed in December 2025. Now unfortunately, we were taken by surprise because, effective January 2026, sizable road works started around the hospital, two tunnels and three bridges, a project of very big size. Still, we see this as an opportunity because it will even improve the outlay of the area in general and the accessibility.

Yeah.

Exactly. So uh, Kirsty, uh, Kingdom hospital. So this hospital, if you recall, we had acquired initially 58% back in 2020, but it continued to have an independent management given it was for on by 2 listed companies.

Amine Hariz: Unfortunately, on the shorter term, it is going to delay our plans for improvement. I think as showcased in the initial four cases that we have here, Dallah Healthcare historically was able to make significant turnarounds for businesses it acquires. We think the same would apply for Kingdom Hospital, but with a delay related to the effect from the roadworks that are in its vicinity for now. If you see the header of this slide, some of the key success factors that we count on and we intend to use, prime location, significant land holdings. The hospital location itself still has a lot of space available, and there are ideas about expansion plans for the hospital. It has a strong expansion potential and then a very well-established and loyal patient base.

Amine Abderraouf Hariz: Unfortunately, on the shorter term, it is going to delay our plans for improvement. I think as showcased in the initial four cases that we have here, Dallah Healthcare historically was able to make significant turnarounds for businesses it acquires. We think the same would apply for Kingdom Hospital, but with a delay related to the effect from the roadworks that are in its vicinity for now. If you see the header of this slide, some of the key success factors that we count on and we intend to use, prime location, significant land holdings. The hospital location itself still has a lot of space available, and there are ideas about expansion plans for the hospital. It has a strong expansion potential and then a very well-established and loyal patient base.

Uh, so uh, from our perspective, although it had some good performance in 23 and, uh, between 22 and 23. You can say, but from 24 onward, we thought that, uh, we're not seeing the full potential being unlocked. This is what really triggered the discussions to make an outright full acquisition which was completed in December 25th. We were, uh, taken by surprise because, uh, effective January 26th, uh, sizable world. Uh, Road Works started, uh, around the hospital, uh, to to comments and 3 Bridges, uh, a project of various size, very big size. But still, uh, we see this as an opportunity because it will even improve the, the outlay of the area in general and the accessibility

And facility on the shorter term is going to delay, our plans for improvement. So I think as showcased in the initial 4 cases that we have here, de historically was able to make significant turnarounds for businesses. It requires. We think the same would apply for Kingdom hospital. But with a delay related to the effect from the road works that are in its vicinity for now. Now, if you see the header of the slide,

Amine Hariz: All of those dynamics make us really believe that this hospital could make a very nice story of growth and improvement in coming years. But our plans are delayed. They are going to be a J curve clearly in the near term, let us say at least for 2026, and potentially 2027, until we are able to unlock its full potential thereof. Thank you, and we hand the mic back to Saud and Madhu for the Q&A.

Amine Abderraouf Hariz: All of those dynamics make us really believe that this hospital could make a very nice story of growth and improvement in coming years. But our plans are delayed. They are going to be a J curve clearly in the near term, let us say at least for 2026, and potentially 2027, until we are able to unlock its full potential thereof. Thank you, and we hand the mic back to Saud and Madhu for the Q&A.

And potentially 27, until we are able to unlock its full potential there.

[Company Representative]: Thank you, Mr. Amin, for the detailed insights. Now we open the floor for the Q&A session. Before we open, as usual, a few general instructions. Please limit yourself to two questions. To ask a question, use the hand raise button or the chat box. First question we have is from the line of Maha. Maha, please unmute yourself and ask your question.

Operator: Thank you, Mr. Amin, for the detailed insights. Now we open the floor for the Q&A session. Before we open, as usual, a few general instructions. Please limit yourself to two questions. To ask a question, use the hand raise button or the chat box. First question we have is from the line of Maha. Maha, please unmute yourself and ask your question.

Thank you and we hand the mic back to South and madhu for the Q&A.

Thank you, Mr. Amin, for the detailed insights. And now we open the floor for the Q&A session. Uh, before we proceed, as usual, a few general instructions: please limit yourself to two questions, and to ask a question, use Andrew's button or the chat box. The first question we have is from the line of Maha.

Maha, please unmute yourself and ask your question.

[Analyst]: Good afternoon, gentlemen. Am I audible?

Maha AlMarwani: Good afternoon, gentlemen. Am I audible?

[Company Representative]: Yes.

Saud Mohammed Alraqraq: Yes.

Good afternoon, gentlemen. Am I audible?

Yes.

[Analyst]: My first question is about the price hike. You previously communicated that increases in prices was expected to result in approximately 15% growth in net profit. However, when we look at the quarterly and the H1 results, even the adjusted results, we see some weakness in earnings. Could you shed some light on the actual impact of pricing on net income during the H1, and what should we expect during the H2 of this year? This is my first question. My second question is about the demand in the central region. Could you provide some color on the decline in the central region? What were the key drivers behind the weakness, and did this trend continue into July? Given the H1 results, are you considering any changes to your full-year guidance in terms of revenue growth? Thank you.

Maha AlMarwani: My first question is about the price hike. You previously communicated that increases in prices was expected to result in approximately 15% growth in net profit. However, when we look at the quarterly and the H1 results, even the adjusted results, we see some weakness in earnings. Could you shed some light on the actual impact of pricing on net income during the H1, and what should we expect during the H2 of this year? This is my first question. My second question is about the demand in the central region. Could you provide some color on the decline in the central region? What were the key drivers behind the weakness, and did this trend continue into July? Given the H1 results, are you considering any changes to your full-year guidance in terms of revenue growth? Thank you.

Uh, so my first question is about the price tag, so you previously communicated that increases in prices with respect to the result in approximately 15% growth in net profit? However, when we look at the quarterly and the first half results, even the adjusted, uh, results. We see some weakness in earnings. Could you shed some light on the actual impact of pricing on net income during the first half? And what should we expect? During the second half of this year? This is my first question. Uh, my second question is about the demand in the sunset region. Uh, could you provide some color on the decline in the sunset region? What were the key drivers behind the weakness and did this trend continued into today and given the H1 results, are you?

Visiting any changes to your uh full year guidance. In terms of Revenue growth,

Amine Hariz: Well, let me start from the last one. Guidance, most recent, we said SAR 4.7 billion to SAR 4.8 billion. That was the picture as of end of Q1. Driven, to be honest, by the idea that the backlog of procedures that got delayed from Q1 would be fully unlocked in Q2. We had actually, until before Eid al-Adha, so pretty much April and the first 20 to 22 days of May, performance was really good. After that and after Hajj, June was weaker than we had initially expected. Overall now we think the guidance, and for another reason, which is going to be explained as part of the answer to your second question, we think the guidance should be reduced down to SAR 4.5 billion to SAR 4.6 billion. This is now where we think we're going to land at year-end.

Amine Abderraouf Hariz: Well, let me start from the last one. Guidance, most recent, we said SAR 4.7 billion to SAR 4.8 billion. That was the picture as of end of Q1. Driven, to be honest, by the idea that the backlog of procedures that got delayed from Q1 would be fully unlocked in Q2. We had actually, until before Eid al-Adha, so pretty much April and the first 20 to 22 days of May, performance was really good. After that and after Hajj, June was weaker than we had initially expected. Overall now we think the guidance, and for another reason, which is going to be explained as part of the answer to your second question, we think the guidance should be reduced down to SAR 4.5 billion to SAR 4.6 billion. This is now where we think we're going to land at year-end.

Thank you.

Okay. Uh,

okay, let me start from the

Uh, guidance most recent, we said—

4.7 to 4.8 billion. That was the picture as of end of q1.

Uh, driven to, to be honest by, uh, the idea that, uh, the backlog of procedures that were delayed from q1 would be fully unlocked in Q2, we had actually, uh, answered before. So pretty much April, and the first 20 to 22 days of May performance was really good before that after that, sorry. And after hash Zone was weaker than we had initially expected,

So, um, overall overall, now we think the guidance uh, and and, and for another reason, which I'm going to which going to be explained as part of the answer to the your second question, we think the guidance should be reduced down to, uh, 4.5 to 4.6. This is now where we think we going to end at year end.

Amine Hariz: Now, coming back to your earlier question about the impact from insurance contract negotiation. I think the numbers that we have communicated overall remain valid, but on a very near term, there was an impact on Dallah Al Khobar, which we tried to highlight on one of those slides that we have shown earlier. Dallah Al Khobar, when we renegotiated the contract, we moved from an insurance tier to another one, a higher one. The effect on the short term is that volumes continue to grow, but less than we had hoped initially, let's say, when we were working on the budget. It doesn't mean this insurance class change came to a surprise. It was part of the negotiation, but it was not very much possible to measure its impact.

Amine Abderraouf Hariz: Now, coming back to your earlier question about the impact from insurance contract negotiation. I think the numbers that we have communicated overall remain valid, but on a very near term, there was an impact on Dallah Al Khobar, which we tried to highlight on one of those slides that we have shown earlier. Dallah Al Khobar, when we renegotiated the contract, we moved from an insurance tier to another one, a higher one. The effect on the short term is that volumes continue to grow, but less than we had hoped initially, let's say, when we were working on the budget. It doesn't mean this insurance class change came to a surprise. It was part of the negotiation, but it was not very much possible to measure its impact.

Um, now, coming back to your earlier question about the impact from insurance contracts negotiation,

um, I think I think the the the numbers that we have communicated overall remain valid

But on a very near-term, there was an impact on Alpha, which we tried to highlight in one of those slides that we have shown earlier.

Uh, Hobart in when we renegotiated the contract. We moved from an insurance tear to another 1, a higher 1.

Amine Hariz: On the short term, I can tell you for Dallah Al Khobar in Q2, outpatient numbers and inpatient numbers both were in significant growth. Outpatient numbers grew by around 29% compared to the same quarter of last year, and inpatient by 11%. Revenue grew even more, so it grew 36%. This really tells us that the average bill is going to be a driver in the very short term for the growth in Dallah Al Khobar. Then we think the volumes, because of the dynamics of supply and demand in the Dallah Al Khobar area, whereby only two VIP hospitals are there, one is ours, so Dallah Al Khobar. We think the demand is there. It's just taking some time to readjust the curve of growth in the patients. Central region, there was a question on the central region in particular. Central region, sorry?

So the effect on the short term is that number volumes continue to grow but less than we had, uh, hopes initially, let's say when we were working on the, on the budget, it doesn't mean this uh Insurance. Uh, class change came to a surprise. It was part of the negotiation but it was not very much possible to measure its impact.

Amine Abderraouf Hariz: On the short term, I can tell you for Dallah Al Khobar in Q2, outpatient numbers and inpatient numbers both were in significant growth. Outpatient numbers grew by around 29% compared to the same quarter of last year, and inpatient by 11%. Revenue grew even more, so it grew 36%. This really tells us that the average bill is going to be a driver in the very short term for the growth in Dallah Al Khobar. Then we think the volumes, because of the dynamics of supply and demand in the Dallah Al Khobar area, whereby only two VIP hospitals are there, one is ours, so Dallah Al Khobar. We think the demand is there. It's just taking some time to readjust the curve of growth in the patients. Central region, there was a question on the central region in particular. Central region, sorry?

So, on the short term, I can tell you for Hobart in Q2, outpatient numbers and inpatient numbers both were in significant growth. So, our patient numbers grew by around 29%.

Compared to the same quarter of last year, patients are up 11%, and revenue grew even more. So, it grew 36%.

so, this really tells us,

That the average bill is is going to be a driver in the very short term, for the growth, in Huber. And then we think the volumes because of the Dynamics of supply and demand and and for area, whereby only 2 VIP hospitals are there 1. 1 is ours. So the the cover we think the demand is there. It's just taking sometimes to readjust the curve of, uh, growth in the patients.

So, Central Region—uh, there was a question on the Central Region in particular.

so, a central reason,

[Analyst]: Yes, continue.

Maha AlMarwani: Yes, continue.

Amine Hariz: Yes. Central region in particular, we had good numbers. I mean, stable revenue give or take in Dallah Al Nakheel, and we had a positive growth in the number of patients in Dallah Namar Hospital. Double digits, actually, for outpatients and inpatients. But we had some drag from Kingdom Hospital, as we explained earlier, and we expect to continue to see the softness in Kingdom Hospital in the remainder of the year.

Amine Abderraouf Hariz: Yes. Central region in particular, we had good numbers. I mean, stable revenue give or take in Dallah Al Nakheel, and we had a positive growth in the number of patients in Dallah Namar Hospital. Double digits, actually, for outpatients and inpatients. But we had some drag from Kingdom Hospital, as we explained earlier, and we expect to continue to see the softness in Kingdom Hospital in the remainder of the year.

Sorry, yes, yes, continue. Yes, so the central region in particular, um,

We have we have good numbers. I mean, stable Revenue, give or take and uh, in and uh, we had the positive growth in the number of patients in Neymar. Um double this is actually for o out patient and and patience but we had some drug from uh Kingdom hospital as we explained earlier. And we continue we expect to continue to see the softness in Kingdom Hospital in the remainder of the year.

[Analyst]: Very clear. Just one follow-up about the increases in prices. When should we see a clear impact on net income? Is it in 2027 or beyond that even? Just clarify this point for me, please.

Maha AlMarwani: Very clear. Just one follow-up about the increases in prices. When should we see a clear impact on net income? Is it in 2027 or beyond that even? Just clarify this point for me, please.

Uh, very clear.

Amine Hariz: Increase in prices is cumulative. I mean, it is not one-year price.

Amine Abderraouf Hariz: Increase in prices is cumulative. I mean, it is not one-year price.

When following up about the increases in prices and when we should see a clear impact on net income, is it in 2027 or beyond that? Could you just clarify this point for me, please?

[Company Representative] (Dallah Healthcare): Basically, the prices that you agreed with insurance companies are basically going to be done on the cycle of the contract. If you sign a three-year agreement, it is going to happen over the three years. For example, and these are not actual numbers, if you agree on a 5% increase year on year, you end up having around 16% because it accumulates year after year. I would say that you will start to see an impact by next year, 2027, because the impact of the network would be already done during 2026. Also, you will have Al-Ahsa, which was part of the slides that Mr. Amin presented. The contract for Al-Ahsa started also in June, not in February with the others. This is for one company. The other company, the contract is basically going to have the start date in September.

Omar Mohammed Al-Jabari: Basically, the prices that you agreed with insurance companies are basically going to be done on the cycle of the contract. If you sign a three-year agreement, it is going to happen over the three years. For example, and these are not actual numbers, if you agree on a 5% increase year on year, you end up having around 16% because it accumulates year after year. I would say that you will start to see an impact by next year, 2027, because the impact of the network would be already done during 2026. Also, you will have Al-Ahsa, which was part of the slides that Mr. Amin presented. The contract for Al-Ahsa started also in June, not in February with the others. This is for one company. The other company, the contract is basically going to have the start date in September.

The increase in prices is cumulative. I mean, it's not just a one-year price. So, basically, the prices that you agreed with the insurance companies—

Basically going to be uh, uh, done on the cycle of the contract. So if you sign a 3 year agreement, it's going to happen over the 3 years. Uh, so for example, for example, and these are not actual numbers. If you agree on a 5% increase year on year, it's going to end up. You, you end up having around 16% because it's accumulates year. After year, I would say,

made up, uh,

[Company Representative] (Dallah Healthcare): That will also have a very little impact on 2026 year. It is going to be more impactful in 2027 onwards, which is beyond the initial 15% that we reported earlier. This is the negotiation on the second major player of insurance we are signing now. Just to zoom out and zoom in again, we are talking about the two biggest players in the market. The due date for the renewal was 2026, and both were concluded on a positive impact on Dallah business for all the facilities that we have. One concluded and incepted on February 2026, and the other is concluded and incepted in September 2026. But one is for three years and the other is for four years. That includes the five facilities that we currently own, excluding Kingdom Hospital. So it includes Dallah Hospital Al Nakheel, Dallah Namar Hospital, Dallah Al Ahsa Hospital, Dallah Al Khobar Hospital, and Makkah Medical Center.

Omar Mohammed Al-Jabari: That will also have a very little impact on 2026 year. It is going to be more impactful in 2027 onwards, which is beyond the initial 15% that we reported earlier. This is the negotiation on the second major player of insurance we are signing now. Just to zoom out and zoom in again, we are talking about the two biggest players in the market. The due date for the renewal was 2026, and both were concluded on a positive impact on Dallah business for all the facilities that we have. One concluded and incepted on February 2026, and the other is concluded and incepted in September 2026.

you will start to see an impact by next year 2027 because, uh, the impact of the network would be already, uh, done in during 2026 and also, you will have, uh, uh, uh, which was part of the slides. That Mr. Amin presented. The, the contract for started also on, uh, June not on February with the others. Uh, this is for 1 company and the other company. The, the contract is basically gonna have the start date in September

And that will also have a very little impact on the 2026 year. It's going to be more impactful in 2027 and...

which is beyond the initial. Uh, the 15% that we reported earlier. This is the negotiation on the second, major player of the insurance. We are assigning now. Yeah. So so, so just to zoom out and zoom in. Again, we are talking about the 2, biggest players in the market, the due date for the renewal was 2026 and both were included, were were concluded on a positive, uh, uh, uh, impact, on on tala business, for all the facilities that we have 1, Khan and accepted on the uh, on February 2026.

Omar Mohammed Al-Jabari: But one is for three years and the other is for four years. That includes the five facilities that we currently own, excluding Kingdom Hospital. So it includes Dallah Hospital Al Nakheel, Dallah Namar Hospital, Dallah Al Ahsa Hospital, Dallah Al Khobar Hospital, and Makkah Medical Center.

And the other is concluded and accepted in September 2026. But, uh, one is for three years and the other is for employees, and that includes the five facilities that we currently own, excluding Kingdom. So it includes...

[Analyst]: Very clear. Thank you so much.

Maha AlMarwani: Very clear. Thank you so much.

Thank you so much.

[Company Representative]: Thank you, Maha. Now we move to Alexander. Alexander, please unmute yourself, mention your company name and go ahead.

Operator: Thank you, Maha. Now we move to Alexander. Alexander, please unmute yourself, mention your company name and go ahead.

Alex Stephanos: Hi, guys. Alex Stephanos here from UBS. A couple from me. One, just focusing on the guidance. I remember when we last talked, the guidance for revenue was, I think, 4.6 to 4.7. Am I correct in saying it's been revised down to 4.5 to 4.6? What sort of guidance can you provide on an operating margin or even gross margin for the H2 of the year? That's my first question.

Thank you, ma'am. Now, we move to Alexander. Alexander, please unmute yourself, mention your company name, and go ahead.

[Company Representative] (Dallah Healthcare): Yes. You are right. Yes, the guidance on revenue, we are revising it from our initial range that we had announced at the beginning of the year, aligned with our budget, which was 4.7 to 4.8. Now we are on a trajectory where 4.5 to 4.6 is a more, let's say, reasonable number. 4.6 is still achievable and anything beyond would be on the upside from that new guidance. In terms of gross margin, 36% is becoming the upper bound of what we think is achievable. Because the weakness that we had in Q1, we were not able to close the gap so far in Q2. We expect pretty much Q3 and Q4 to be in line with our initial expectations. That means that this initial drag from Q1, we may not be able to fully recover.

Omar Mohammed Al-Jabari: Yes. You are right. Yes, the guidance on revenue, we are revising it from our initial range that we had announced at the beginning of the year, aligned with our budget, which was 4.7 to 4.8. Now we are on a trajectory where 4.5 to 4.6 is a more, let's say, reasonable number. 4.6 is still achievable and anything beyond would be on the upside from that new guidance. In terms of gross margin, 36% is becoming the upper bound of what we think is achievable. Because the weakness that we had in Q1, we were not able to close the gap so far in Q2. We expect pretty much Q3 and Q4 to be in line with our initial expectations. That means that this initial drag from Q1, we may not be able to fully recover.

Hi guys, Alex is Stephanos here from UBS. Um, so a couple from me 1 just focusing on the, on the guidance. So I remember when we last talked, the guidance for Revenue was I think 4.6 to 4.7, am I correct in saying it's been revised down to 4.5 to 4.6 and what sort of guidance can you provide on a sort of operating margin or even, gross, gross margins for the second half of the year? That's my first question.

Yes. So um so you are right? So yes, so guidance on Revenue we are revising it from. Uh, our initial range that we had announced at the beginning of the year aligned with our budget, which was 4.7 to 4.8. Now, we are on a trajectory where 4.5 to 4.6 is the is more, uh,

um,

Let's say.

Reasonable number. 4.6 is still achievable and anything beyond would be uh, like uh, on the upside from that new guidance for uh, in terms of

In terms of gross, gross margin.

[Company Representative] (Dallah Healthcare): We are guiding now for something in the range of 35.5% to 36%.

Omar Mohammed Al-Jabari: We are guiding now for something in the range of 35.5% to 36%.

Alex Stephanos: Perfect. Thank you very much. That is super clear. The next question is more broad, I suppose, is when we look at your inventory going up and we look at what is happening across the sector, are you seeing that there are higher prices in your inventory, which means that the inventory balance goes up based on price rather than actual volume? What are you seeing via other cost pressures? An increase in salary demands across the board? Because looking at your peers, a lot of them have noted that salary pressure remains. We are taking this on two fronts here, your inventory/medicine supply chain, and then looking at your cost structure when it comes to employee salaries.

We had in q1. We were not able to close the gap so far in Q2. So we expect pretty much a Q2, or Q3 and Q4 to be in line with our initial expectations. That means that this initial drug from q1, we may not be able to fully recover. We are guiding Now for Something in the range of 36 35.5 to 36%.

Thanks, thank you very much. That's super clear. And then the next question is more more broad I suppose is when we look at your inventory going up, and we look at sort of what's Happening across the sector. Are you seeing that there are of higher prices in your inventory, which means that the inventory balance goes up based on price rather than actual volume. And what are you seeing via are the cost purchases, an increase in salary demands, um, across the board because, you know, looking at your peers, a lot of them have noted that salary pressure remains. So, we're taking this on 2 Frontier, your inventory slash medicine supply chain. And then looking at your cost structure, when it comes to employee salaries,

[Company Representative] (Dallah Healthcare): Employees and salaries, we do not see a very compelling case. We are doing, obviously, our market survey all the time, and we are aware of the situation. For certain positions, we had identified the need to make some adjustments, but this is not really expected to have a sizable impact on our profitability. On material costs, yes, there is a little bit of surge for non-regulated prices. Price of medicines is regulated. We have not seen surges so far. But price of other items, there was a little bit of surges driven by the fact that now we start to see consumption of items that were imported after the events evolved from 28 February onwards.

Amine Abderraouf Hariz: Employees and salaries, we do not see a very compelling case. We are doing, obviously, our market survey all the time, and we are aware of the situation. For certain positions, we had identified the need to make some adjustments, but this is not really expected to have a sizable impact on our profitability. On material costs, yes, there is a little bit of surge for non-regulated prices. Price of medicines is regulated. We have not seen surges so far. But price of other items, there was a little bit of surges driven by the fact that now we start to see consumption of items that were imported after the events evolved from 28 February onwards.

So employees and salaries, we don't see um, like a very compelling case. We are doing obviously our Mark Market survey all the time and we are aware of the situation. Uh and so and certain for certain positions, we had identified the need to make some adjustments.

Amine Hariz: This had some impact on shipping costs and insurance costs, which we start to see gradually or a little bit reflected. We expect that we will have a higher impact H2 versus H1 overall, because the consumption in the whole country that took place in H1. If you can mute yourself, Alexander, please. The consumption that took place in most of the whole country in H1 was pretty much of goods that were imported prior to this event. Another reflection of cost inflation is clearly that we put an increase in the cost to complete Dallah Al Arab. Initially, we were guiding for above the EPC contract, which is a firm price contract at $690 million. We had initially estimated $140 million or so to complete, which we have increased in most recent communications to $160.

Amine Abderraouf Hariz: This had some impact on shipping costs and insurance costs, which we start to see gradually or a little bit reflected. We expect that we will have a higher impact H2 versus H1 overall, because the consumption in the whole country that took place in H1. If you can mute yourself, Alexander, please. The consumption that took place in most of the whole country in H1 was pretty much of goods that were imported prior to this event. Another reflection of cost inflation is clearly that we put an increase in the cost to complete Dallah Al Arab. Initially, we were guiding for above the EPC contract, which is a firm price contract at $690 million. We had initially estimated $140 million or so to complete, which we have increased in most recent communications to $160.

But this is not really expected to have a size of an impact, on our profitability on material costs. Uh, yes, there is a little bit of of source for non regulated prices. Uh, so price of medicines is regulated. We haven't seen surges so far but price of other items. There was a little bit of Surgeons driven by the fact that now we start to see a consumption of items that were imported, uh, after the events, uh, evolved from, uh, 28th of February onwards. So this had some impact on shipping cost and the insurance cost, which we start to see gradually or or, or a little bit reflected, we expect that will have a higher impact H2 versus H1 overall because the consumption and the whole country that took place in H1. Uh, if you can

Yourself Alexander please. So the the the consumption that took place in most of the, the whole country is in H1 was pretty much of goods that were imported prior to this event. Another reflection of cost translation is really, uh, that we put uh, an increase in the cost to complete. So initially, we were guiding for, uh, above the APC contract, which is a firm price contract at 600.

Amine Hariz: But if you look at today's presentation, we're putting that number of SAR 200 million because there were, for those things that were not imported yet or not locked in in terms of prices, and even in some contracts, you had some price escalation mechanisms in rare cases. So all of that has had some post on the final equipment and furnishing commitments for the hospital.

Amine Abderraouf Hariz: But if you look at today's presentation, we're putting that number of SAR 200 million because there were, for those things that were not imported yet or not locked in in terms of prices, and even in some contracts, you had some price escalation mechanisms in rare cases. So all of that has had some post on the final equipment and furnishing commitments for the hospital.

$90 million—we had initially estimated $140 million or so to complete, which we have increased in the most recent communications to $160 million. But if you look at today's presentation, we're putting that number at $200 million, because for those things that were not imported yet or not locked in, in terms of prices, and even some contracts had some price escalation mechanisms in rare cases. So, all of that has had some impact on the final equipment and furnishing commitments for the hospital.

[Company Representative]: Great. Now we move to Akash. Alex, if you have follow-up, please join the queue again. Akash from SICO, please unmute yourself and go ahead.

Operator: Great. Now we move to Akash. Alex, if you have follow-up, please join the queue again. Akash from SICO, please unmute yourself and go ahead.

Great. Uh, now we move to A, and Alexis, you have the floor. Please, uh, join the queue again.

Aakarsh Tomar: Thank you so much, Madu, and thank you so much management for the detailed presentation. This is Aakarsh Tomar from SICO Investment Bank, Bahrain. Really appreciate the detailed analysis and the appendix that you have added to the slides. It answers a lot of the questions. Just from my end, I have two questions. First is on the broader. When you started the year, when you had a guidance or initial budget of SAR 4.7 billion to SAR 4.8 billion, when you compare that to where we stand today with H1 done in August, where did the expectations lack? Which region was it responsible? Was it just Care Shield or was it the new hospital in Khobar? Where exactly was it different from your analysis? That's the first one. Second, specifically on Care Shield, I missed the slide.

uh, a from

Uh, thank you so much and thank you so much management for the detailed presentation. Uh, this is a from Investment Banking. Uh, really appreciate the detailed analysis and the pics that you have added to the sites, uh, until a lot of the questions. Uh, so just uh, from my end, I have 2 questions first is on the broader. Uh, so when you started the year, when you had a guidance or initial budget of 4.7 to 4.8 billion real, uh, when you compare that to where we stand today, uh, with first of all, first off, done in in August. Where did the the expectations, you know, where did it lack? So which region was it responsible? Was it?

Aakarsh Tomar: If you can please go back to the Care Shield slide. You made, I think last year you were making around $20 million from that hospital. What's the expectation for this year? Does that 900% decline in net profit mean you'll be losing out $150 million, $160 million from this hospital? Am I correct or is there something I'm missing?

Just like care Shield or was it, uh, the new hospital in Cobar where exactly was it different from your analysis? That's the first 1, and second specifically on care Shield, uh,

Amine Hariz: No, this is completely wrong. I think the numbers last year were reported separately until Q3 because in Q4 there was the acquisition. We assume that you can get a feel of the final profitability for Care Shield last year from the non-controlling interest that you can see from the balance sheet notes. Last year it was already low profitability. Last year it was in the single digits, let's say, net margin. This year it will have losses. We don't expect losses to be, as you mentioned, $150 million or so. This is more of it will have losses. Maybe $30 million, maybe $50 million, we don't know. This kind of money is possible, but not to the extent that you had mentioned. Okay? This is on Care Shield. Can you remind me the first question, please?

Amine Abderraouf Hariz: No, this is completely wrong. I think the numbers last year were reported separately until Q3 because in Q4 there was the acquisition. We assume that you can get a feel of the final profitability for Care Shield last year from the non-controlling interest that you can see from the balance sheet notes. Last year it was already low profitability. Last year it was in the single digits, let's say, net margin. This year it will have losses. We don't expect losses to be, as you mentioned, $150 million or so. This is more of it will have losses. Maybe $30 million, maybe $50 million, we don't know. This kind of money is possible, but not to the extent that you had mentioned. Okay? This is on Care Shield. Can you remind me the first question, please?

Does that 900% decline in profit? Does that mean you'll be losing out? 150 160 million from this Hospital? Am I correct? Or is there something I'm missing?

No. No, this is completely wrong. I think, um, the the numbers last year were reported uh, separately and the Q3 because in Q4 there was the acquisition. Uh, but, uh, we assume that you can get a feel of the final, uh, profitability for care Shield. Last year from the non-controlling interest that you can see from the balance sheet notes.

Uh, so last year it was already low profitability.

And uh, this year. So last year, it was in the, in the single digits. Let's say net margin and this year, it will have losses. Now we don't expect losses to be as you mentioned, 150 million or so. So this is more of a

It will have losses. So, maybe $30 million, maybe $50 million—we don't know, but this kind of money is possible, right?

But not to the extent that you had mentioned, okay?

So this is on care Shields.

uh,

Aakarsh Tomar: The first question was the difference between what you had budgeted for the year during the start of the year versus now with the H1.

Can you remind me of the first question, please?

Amine Hariz: Yeah. Care Shield is a SAR 400 million give or take hospital. This is known because it was reported separately earlier anyway. It cannot have a drag of SAR 100 or SAR 200 million. This is not the case. Care Shield is one of the contributors. Dallah Al Khobar, as I mentioned, the dynamics of shifting from an insurance segment to another or a network level to the other, it was not necessary. We were not able really to very precisely project for it. Actually, a potential reversal could be there. Now we prefer, as we guide, we prefer to be conservative. I don't want to give you a guidance now in August and again miss it. I would rather try to have to be conservative. Landing between 4.6 and 4.7 is very much a possibility.

Amine Abderraouf Hariz: Yeah. Care Shield is a SAR 400 million give or take hospital. This is known because it was reported separately earlier anyway. It cannot have a drag of SAR 100 or SAR 200 million. This is not the case. Care Shield is one of the contributors. Dallah Al Khobar, as I mentioned, the dynamics of shifting from an insurance segment to another or a network level to the other, it was not necessary. We were not able really to very precisely project for it. Actually, a potential reversal could be there. Now we prefer, as we guide, we prefer to be conservative. I don't want to give you a guidance now in August and again miss it. I would rather try to have to be conservative. Landing between 4.6 and 4.7 is very much a possibility.

The first question was, uh, the difference between what you had budgeted for the year uh, during the start of the Year versus now uh, the first time. Yeah. So K Shield is a 400 million people. Take uh, hospital. This is known because it was reported separately earlier, any anyway. So it cannot have a drag of, uh, of 1 100 or 200 million. This is not the case. So, uh, keshi is 1 of the contributors, uh, Alpha in as as as I mentioned, the Dynamics of, uh, shifting from an insurance segment to another, or a network level to the other, uh, it was not necessarily, we're not able really to, to to very precisely project for it, and actually a potential reversal could be there. But now, we prefer, as we guide, we prefer to be conservative. I don't want to give you a guidance now in August and again, misses right? I would rather try to have to be conservative.

So, uh,

Amine Hariz: We can clearly see that central region, Care Shield in particular, but a little bit of below budget also numbers in Dallah Namar Hospital and Dallah Al Nakheel, slightly, but all of it does accumulate. Dallah Al Khobar Insurance segment movements, the dynamics of that, these are pretty much what's deriving this deviation. We hope that some of it is simply a shifting or a delay in ramp-up, but we are giving you a guidance that we think is now more conservative that we are in August already.

Amine Abderraouf Hariz: We can clearly see that central region, Care Shield in particular, but a little bit of below budget also numbers in Dallah Namar Hospital and Dallah Al Nakheel, slightly, but all of it does accumulate. Dallah Al Khobar Insurance segment movements, the dynamics of that, these are pretty much what's deriving this deviation. We hope that some of it is simply a shifting or a delay in ramp-up, but we are giving you a guidance that we think is now more conservative that we are in August already.

Landing between 4.6 and 4.7 is very much a possibility, but we can clearly see that central reason.

Uh, Care Shield in particular, but a little bit of, uh, below budget. Also, numbers in, in Neimar and slightly, but all of it does accumulate. And then I'll cover insurance segment movements, uh, the dynamics of that.

These are pretty much what's what's deriving this uh deviation?

And we hope that some of it is simply a shifting or a delay in ramp-up.

But we are giving you a guidance that we think is now more conservative, as we are in August already.

Aakarsh Tomar: Thank you very much. That has been helpful. All the best.

Well, thank you very much.

All the best.

[Company Representative]: Thank you, Akash. Now we move to next participant, Natin. Please mention your company name and go ahead.

Operator: Thank you, Akash. Now we move to next participant, Natin. Please mention your company name and go ahead.

Thank you. Now we move to the next participant. Please mention your company name and go ahead.

[Analyst] (UBS): Hi, can you hear me?

Amine Hariz: Yes, we can.

Operator: Yes, we can.

Hi. Uh, can you hear me?

[Analyst] (UBS): Hi. Thanks for the opportunity. I am from UBS. My question is regarding the sale of Dr. Mohammad al-Fagih Hospital. How much of the SAR 498 million will go towards the deleveraging? Can you shed some light on the leveraging profile in FY2025 and 2027 as well?

Yes, thank you. All right, thanks for the opportunity. I'm from UK. So so my question is on like regarding the sphere office and Dr. Mohammad much better. Uh, how much of the 490 million will go towards the delivery and also can you share some light on the leveraging profile in 2016 in The Next Day? 2021.

Amine Hariz: Okay. For Mohammed Rashed Al Faqih, as I mentioned, we collected SAR 467 million. The total profit is SAR 498 million. A small advisory fee will have to be paid on that. Then also there is the Zakat effect, which we will account for as we do our annual Zakat return. Pretty much 2.5% of the gain would go as a Zakat. The gross gain is the difference between SAR 498 million of total proceeds from the sale and the book value, which is SAR 102 million. The profit itself is roughly SAR 400 million or a little bit less. On top of that, there was SAR 100 million out of the total proceeds that was retained in an escrow account for any potential availing of the rep and warranties by the buyer in the first six months after the transaction closed in July.

Amine Abderraouf Hariz: Okay. For Mohammed Rashed Al Faqih, as I mentioned, we collected SAR 467 million. The total profit is SAR 498 million. A small advisory fee will have to be paid on that. Then also there is the Zakat effect, which we will account for as we do our annual Zakat return. Pretty much 2.5% of the gain would go as a Zakat. The gross gain is the difference between SAR 498 million of total proceeds from the sale and the book value, which is SAR 102 million. The profit itself is roughly SAR 400 million or a little bit less. On top of that, there was SAR 100 million out of the total proceeds that was retained in an escrow account for any potential availing of the rep and warranties by the buyer in the first six months after the transaction closed in July.

Okay. So, uh

For Muhammad Rashid. So, as I mentioned, we collected the 40,067 million. So, the total profit, uh,

Is uh, 498 million.

uh,

a small, a small uh, advisory fee will have to be paid on that. And then also there is a zakat effect which we will account for. As we do our annual zakat return, pretty much 2.5% of the gain would would go as zakat. So the gain, the gross gain is the difference between 488 million of

Uh, of the proceeds—total proceeds from the sales—and the book value, which is 102 million, okay?

So, uh,

so the, the the the the the profit itself is roughly uh, 400 million or a little bit less.

Amine Hariz: Our return on that SAR 100 million is SAR 31 million. Those SAR 31 million, we are unable to quantify how much we are going to finally recover. On transactions in general, there tends to be sometimes a certain amount that may not be recovered. We are being conservative and excluding that from the gain now. This is on the profitability. How much will go to deleveraging? Pretty much all the collected amount will go to deleveraging. We think that we will use at least SAR 420 to 460 million out of the SAR 467 million that were collected. We think that it is going to go to deleveraging. This will have an impact annualized for 2027, let us say, in the range of SAR 25 million of savings in financing costs, ballpark. Roughly speaking, this is the range of saving.

Amine Abderraouf Hariz: Our return on that SAR 100 million is SAR 31 million. Those SAR 31 million, we are unable to quantify how much we are going to finally recover. On transactions in general, there tends to be sometimes a certain amount that may not be recovered. We are being conservative and excluding that from the gain now. This is on the profitability. How much will go to deleveraging? Pretty much all the collected amount will go to deleveraging. We think that we will use at least SAR 420 to 460 million out of the SAR 467 million that were collected. We think that it is going to go to deleveraging. This will have an impact annualized for 2027, let us say, in the range of SAR 25 million of savings in financing costs, ballpark. Roughly speaking, this is the range of saving.

For any potential availing of the rep and warranties by the buyer in the first time, first 6 months after the transaction closed—the transaction closed in July. Okay. So our current, that $100 million, is $31 million. So those $31 million, we are unable to quantify how much we're going to finally recover.

Uh, on on on transactions in general. They, they tend to be sometimes certain amounts that might may not be uh, uh, recovered. So we're being conservative and excluding that from the game now.

so, um,

This is on the, on the, uh, profitability.

Amine Hariz: Most of the effect will be captured already from Q4, but I would say Q1 will have the full effect for sure, Inshallah.

Amine Abderraouf Hariz: Most of the effect will be captured already from Q4, but I would say Q1 will have the full effect for sure, Inshallah.

Yeah. And how much will go to be leveraging, pretty much, pretty much all the collected amount will go through the leveraging. So we think that we will use at least 422 450 million out of the 467 that were collected. We think that it's going to go to leveraging, the this will have an, um, an impact on your life for 27, let's say in the range of 25 million of uh Savings in finance and cost wall park. So roughly speaking, this is the range of savings. Uh, most of the effect will be captured already from from Q4, but I would say, q1 will have the full effect for

For sure.

[Company Representative]: Sultan, if you have a follow-up, please unmute yourself and ask the second question.

Operator: Sultan, if you have a follow-up, please unmute yourself and ask the second question.

If you have a follow-up, please complete it yourself and ask the second question.

[Analyst] (UBS): Nothing. Thank you.

Amine Hariz: Okay. Thank you.

Operator: Okay. Thank you.

[Company Representative]: We will move to Abdullah from AlJazira Capital. Abdullah, please unmute yourself and go ahead.

Operator: We will move to Abdullah from AlJazira Capital. Abdullah, please unmute yourself and go ahead.

Nothing. Thank you. Okay, thank you. I will move to Abdullah. Abdullah, please unmute yourself and go ahead.

[Analyst] (AlJazira Capital): As-salamu alaykum, everyone. Thank you, Madhu, for the opportunity. Just one broader question on the overall decline in the central region revenues. If you could provide more details or colors on the overall quantum of decline in Kingdom Hospital during H1 2026 as compared to others hospitals like Namar and Nakheel. Although I do note that you do not disclose on a hospital basis, but still some color on how much was the revenue growth on other two hospitals in high single digit, lower single digit guidance along these lines.

Abdullah Alghubaini: As-salamu alaykum, everyone. Thank you, Madhu, for the opportunity. Just one broader question on the overall decline in the central region revenues. If you could provide more details or colors on the overall quantum of decline in Kingdom Hospital during H1 2026 as compared to others hospitals like Namar and Nakheel. Although I do note that you do not disclose on a hospital basis, but still some color on how much was the revenue growth on other two hospitals in high single digit, lower single digit guidance along these lines.

Everyone, thank you Madhu for the opportunity. Just one broader question on the overall decline in the central region revenues. If you could provide more details or color on the overall quantum of decline in the Kingdom's Hospital during the first half of '26 as compared to other hospitals, like numbers, and...

Although I know that you do not disclose on a hospital basis, could you still provide some color on how much the revenue growth was for the other two hospitals? Was it high single digit or low single digit? Just some guidance along these lines.

Amine Hariz: Yes. Yeah. Nakheel had a stable revenue. Very precisely, it had a drop of less than 1%. Namar also was pretty much in a stable overall revenue. I mentioned that Namar had a significant double-digit growth in number of patients, but the dynamics of average sales of payers, et cetera, made it that it made around 2% slip in revenue. Care Shield is less than 10%, so it is in the high single digit. This is roughly what we have. If you look at what we had published in terms of financial metrics, the total drop is SAR 9 million in central region for the 6 months. It is not big numbers.

Amine Abderraouf Hariz: Yes. Yeah. Nakheel had a stable revenue. Very precisely, it had a drop of less than 1%. Namar also was pretty much in a stable overall revenue. I mentioned that Namar had a significant double-digit growth in number of patients, but the dynamics of average sales of payers, et cetera, made it that it made around 2% slip in revenue. Care Shield is less than 10%, so it is in the high single digit. This is roughly what we have. If you look at what we had published in terms of financial metrics, the total drop is SAR 9 million in central region for the 6 months. It is not big numbers.

Yes. Uh,

uh,

so, um,

Uh, Nah has stable revenue, stable revenue. Uh, very precisely, it has a drop of less than 1%. Okay?

So also, it was pretty much stable overall revenue. So, I mentioned that Neymar had a significant double-digit growth in number of patients, but the dynamics of average pay of payers, etc., made it that it had around a 2% slip in revenue.

Shield is less than 10%. So it it is in the in the high double digit in the high, single digit story.

Uh, so this is roughly what we have, and if you look at the

Amine Hariz: But when you had initially a budget that also included some growth assumptions and then you end up flat or slightly lower, you have also the scissor effect coming from your higher costs. They bite you, your fixed cost is there, and you had anticipated through certain hirings, et cetera, a certain situation. What evolves or what happens finally is different from those assumptions. Sometimes this is why you see the impact on profitability is a little bit or sometimes even significantly higher than the effect on revenue deviation itself.

Amine Abderraouf Hariz: But when you had initially a budget that also included some growth assumptions and then you end up flat or slightly lower, you have also the scissor effect coming from your higher costs. They bite you, your fixed cost is there, and you had anticipated through certain hirings, et cetera, a certain situation. What evolves or what happens finally is different from those assumptions. Sometimes this is why you see the impact on profitability is a little bit or sometimes even significantly higher than the effect on revenue deviation itself.

At what you have, we had published in terms of financial metrics. The total drop is 9 million reals in the central region for the 6 months. So it's not like big numbers, okay?

but uh,

When you had initially a budget that also included some growth assumptions. And then you end up flat or slightly lower, you have also the scissor effect coming from your higher cost. So they bite you, your fixed cost. Uh, uh, is is there and you had anticipated through certain hirings Etc. A certain situation. And then what, what evolves or what? Uh, happens finally is different from those assumptions. So sometimes this is why you see the impact on profitability is a little bit or or, or sometimes even significantly higher than the effects on Revenue deviation.

Itself.

[Analyst] (AlJazira Capital): Thank you for the response, Mr. Amin. Just quick follow-up on the Namar and Nakheel. I think Namar is being at the south Riyadh and due to the locality of the hospital, maybe because of the patient profile, you were unable to increase the occupancy too much there, right? But in terms of Nakheel, do you see the competition is actually denting the overall growth profile of the hospital?

Abdullah Alghubaini: Thank you for the response, Mr. Amin. Just quick follow-up on the Namar and Nakheel. I think Namar is being at the south Riyadh and due to the locality of the hospital, maybe because of the patient profile, you were unable to increase the occupancy too much there, right? But in terms of Nakheel, do you see the competition is actually denting the overall growth profile of the hospital?

Amine Hariz: Sorry, it was cutting a little bit. I couldn't hear you well.

Amine Abderraouf Hariz: Sorry, it was cutting a little bit. I couldn't hear you well.

Thank you for the response, Mr. I mean, just quick follow up on the number and naked. Uh, I think uh, number is being at the South Riyadh and to the locality of, of the hospital maybe because of the patient profile, you were unable to, uh, increase the occupancy too much there, right? But uh, in terms of do you see the competition is actually denting the overall growth profile of the hospital?

[Analyst] (AlJazira Capital): Does any of the decline in the revenues of the flattish growth in Dallah Al Nakheel and Dallah Namar Hospital pertains to the competition? How do you see that going forward as well?

Abdullah Alghubaini: Does any of the decline in the revenues of the flattish growth in Dallah Al Nakheel and Dallah Namar Hospital pertains to the competition? How do you see that going forward as well?

So, uh, it was cutting a little bit. Do you see what I— I couldn't hear you well.

Amine Hariz: Most likely it is partially at least related to competition. Our play is, we have acts across different initiatives. Some of them relate to increase of depth of services, more subspecialties, more specialization in certain areas. Specific maybe service lines, for example, in Dallah Namar Hospital, we are working on certain matters. Then also, the pricing discussions that we have with insurance and what we were able to lock in terms of contracts for the two major insurers. But some of that will only take significant effect from 2027 onwards. This is why we are also being conservative for the remainder of the year. A lot of that is already locked in contracts. But seeing it unfold is going to just take whatever it takes. Plus, Mr. Omar mentioned earlier also that we signed a new contract with one of the major insurers and one of the major policyholders.

Amine Abderraouf Hariz: Most likely it is partially at least related to competition. Our play is, we have acts across different initiatives. Some of them relate to increase of depth of services, more subspecialties, more specialization in certain areas. Specific maybe service lines, for example, in Dallah Namar Hospital, we are working on certain matters. Then also, the pricing discussions that we have with insurance and what we were able to lock in terms of contracts for the two major insurers. But some of that will only take significant effect from 2027 onwards. This is why we are also being conservative for the remainder of the year. A lot of that is already locked in contracts. But seeing it unfold is going to just take whatever it takes. Plus, Mr. Omar mentioned earlier also that we signed a new contract with one of the major insurers and one of the major policyholders.

Pertains to the competition. And how do you see that going forward as well?

I mean, I mean, most likely it is. It is partially at least related to

So, our play is, uh, we are asked across different, uh, initiatives. Uh, some of them relate to, uh, increase of depth of services, more subsidies, more specialization in certain areas—uh, specific maybe service lines. Uh, for example, in Namar, we are working on certain matters. Uh, and then also, um, the pricing discussions that we have with insurance, and what we were able to look at in terms of contracts for the two major insurers,

Amine Hariz: That was to counter certain losses of patients that we had in Riyadh in H1. This new contract will allow us to partially recover those in the remainder of the year.

Amine Abderraouf Hariz: That was to counter certain losses of patients that we had in Riyadh in H1. This new contract will allow us to partially recover those in the remainder of the year.

but some of that will only take uh, significant effects from 27 onwards. This is why we're also seeing conservative for the remaining of the year. So a lot of that is already locked and contracts, but seeing it unfold is going to is going to just, uh, take, uh, whatever it takes, plus the Omar mentioned earlier. Also that, uh, uh, certain, uh, we, we signed a new contract with 1 of the major insurers and 1 of the major policy holders, uh, that was to counter, uh, certain losses of

Patients that we had already have and H1.

So this new contract will allow us to partially recover those uh, in the remainder of the year.

[Analyst] (AlJazira Capital): Thank you, Mr. Amin, for the detailed response. Much appreciated. Thank you.

Abdullah Alghubaini: Thank you, Mr. Amin, for the detailed response. Much appreciated. Thank you.

[Company Representative]: Thank you, Abdullah. There are a couple of questions in the chat box. If you have time, we can take a follow-up from Alexander after that. I will read out the ones in the chat box. There are two. One is about the increase in rejection rates from Tawuniya this year. Did you witness any notable increase in rejection rates? If yes, then what has been your response so far? That is question number one. Second question is about details on the nature of Mina non-recurring expense. Could you elaborate that a bit, like what was that, and do you see that to be a recurring expense? These are two questions from chat box.

Operator: Thank you, Abdullah. There are a couple of questions in the chat box. If you have time, we can take a follow-up from Alexander after that. I will read out the ones in the chat box. There are two. One is about the increase in rejection rates from Tawuniya this year. Did you witness any notable increase in rejection rates? If yes, then what has been your response so far? That is question number one. Second question is about details on the nature of Mina non-recurring expense. Could you elaborate that a bit, like what was that, and do you see that to be a recurring expense? These are two questions from chat box.

Thank you, Mr. Army, for the detailed responses. Much appreciated. Thank you.

Amine Hariz: Let me take the first one in regards to Tawuniya. No, we have not witnessed any major change in the behavior of Tawuniya specific in regards to the rejection. It is very slight. I would say basically, some behaviors in terms of how they deal with insurance, with the claims. We have not seen that yet affect Dallah. We have already taken our measures, not only with Tawuniya, with everyone. We have a very good claim revenue integrity team. They do audits on our claims. They review that, they adjust, so we do not reach to a stage where insurance companies are putting pressure on us on rejections. We are working on technological solutions to do some claims scrubbing, to do some demand management initiatives that will basically lead to maintain and basically, I would say, mitigate the risks that could be associated with that.

Amine Abderraouf Hariz: Let me take the first one in regards to Tawuniya. No, we have not witnessed any major change in the behavior of Tawuniya specific in regards to the rejection. It is very slight. I would say basically, some behaviors in terms of how they deal with insurance, with the claims. We have not seen that yet affect Dallah. We have already taken our measures, not only with Tawuniya, with everyone. We have a very good claim revenue integrity team. They do audits on our claims. They review that, they adjust, so we do not reach to a stage where insurance companies are putting pressure on us on rejections. We are working on technological solutions to do some claims scrubbing, to do some demand management initiatives that will basically lead to maintain and basically, I would say, mitigate the risks that could be associated with that.

Thank you, Abdullah. There are a couple of questions in the chat box and, uh, if you have time, we can take a follow from Alexander after that. So read out the ones in the chat box. There are 2 1 is about the increase in rejection rates from town near this year. Is, did you witness any notable increase in rejection rates and if yes, then what is, what has been your response so far? That is question number 1. Second question is about the details on the nature of mina non-recurring expense. Would you elaborate that a bit, like what was that? And, and do you see that to be a recording of expense? Yeah, so these are 2 questions from chat box. Let me take the first problem in regards to the

No, we haven't seen any major changes in the behavior of Chi, specifically in regards to the rejection.

Very slight. I mean,

I would say basically, uh, uh, some, uh, behaviors in terms of how they deal with insurance. We have with the region with the claims. We haven't seen that yet affect de. We have also we have already taken our measures. Not only with Saia with everyone. We have

Amine Hariz: From a behavioral perspective, we have not seen any change in Tawuniya. What was the other question with regards to Mina?

Amine Abderraouf Hariz: From a behavioral perspective, we have not seen any change in Tawuniya. What was the other question with regards to Mina?

[Company Representative]: Yeah. It is about Mina Hospital expenses. Could you elaborate, what was that expense about?

Operator: Yeah. It is about Mina Hospital expenses. Could you elaborate, what was that expense about?

Amine Hariz: Yeah.

Amine Abderraouf Hariz: Yeah.

[Company Representative]: Should that be considered as a non-recurring expense?

Operator: Should that be considered as a non-recurring expense?

Amine Hariz: Yes. Mina Hospital, during Hajj, we were invited to manage this hospital, a 400-bed hospital in Mina, the largest there. We had, let us say, a communication that made us understand that a significant amount of revenue will not be able to get generated through this. While it has some social responsibility component, it was also supposed to generate a significant amount of revenue. We still have some efforts to collect some of that. For now, we only were able to initially collect SAR 500,000. The gross cost of that project was SAR 15.8 million, and the net cost after excluding the collected revenue is SAR 14.3. We book this as one line in the G&A.

Amine Abderraouf Hariz: Yes. Mina Hospital, during Hajj, we were invited to manage this hospital, a 400-bed hospital in Mina, the largest there. We had, let us say, a communication that made us understand that a significant amount of revenue will not be able to get generated through this. While it has some social responsibility component, it was also supposed to generate a significant amount of revenue. We still have some efforts to collect some of that. For now, we only were able to initially collect SAR 500,000. The gross cost of that project was SAR 15.8 million, and the net cost after excluding the collected revenue is SAR 14.3. We book this as one line in the G&A.

The claim Revenue Integrity team, they they do all this on our claims, they review that they are just so we don't reach to a stage where insurance companies are putting pressure on us or predictions. Uh, we have also we are working on technological solutions, to do some claims scrubbing, to do some denial management initiatives that will basically lead to uh maintain and basically uh uh uh uh I would say um the limit again the risks that could be associated with that but from a behavioral perspective, we have been feed. Any changes? What was the other question in regards to me now? Yeah, it's about Mina Hospital. Uh, expenses could you elaborate like what was that expense about is should that be considered as a non-recurring expense?

Yes, so many Hospital. Uh, this is

Uh, during Q2, we were, uh, invited to manage this hospital—a 400-bed hospital in MENA, the largest there.

Amine Hariz: Yes, we consider this as something which is non-recurring because had this been portrayed to us as a social responsibility project, we would have probably accepted to do it on a much less lower amount, maybe a few million riyals, but not to this extent. This situation is unlikely to happen again. This is why we consider it will be a one-off item that should be excluded from normal reported earnings.

Amine Abderraouf Hariz: Yes, we consider this as something which is non-recurring because had this been portrayed to us as a social responsibility project, we would have probably accepted to do it on a much less lower amount, maybe a few million riyals, but not to this extent. This situation is unlikely to happen again. This is why we consider it will be a one-off item that should be excluded from normal reported earnings.

Uh, and yes, we consider this as something which is a non-recurring because uh has this been portrayed to us as a social responsibility project we would have probably accepted to do it for for to on a much less lower amount maybe a few million years but not to this extent. So this situation uh, is is unlikely to happen again. Uh, and uh, and this is why we considered it would be 1 of item, uh, that should be excluded from uh, from normal reported earnings.

[Company Representative]: Clear. Mr. Amin, do you have time for one last question?

Operator: Clear. Mr. Amin, do you have time for one last question?

Amine Hariz: Sure, yes. One or two, no issues.

Amine Abderraouf Hariz: Sure, yes. One or two, no issues.

Yeah. Uh, Mr. Do you have time for 1 last question?

[Company Representative]: Okay. We have a follow-up from Alex. Alex, could you unmute yourself and go ahead?

Operator: Okay. We have a follow-up from Alex. Alex, could you unmute yourself and go ahead?

Sure. Yes, 1 or 2—no issues.

Alex Stephanos: Hi, guys. Not necessarily a follow-up question, but the call has been super informative, and I am wondering whether there is going to be a transcript that is made available.

Okay, so we have a follow-up from Alex. Alex, did you unmute yourself on YouTube? Go ahead.

Hi guys. Um not necessarily a follow-up question but the call has been super informative and I'm wondering whether that's going to be a transcript that's made available.

Amine Hariz: Yes. The presentation, right? Yes. It's going to be available.

Amine Abderraouf Hariz: Yes. The presentation, right? Yes. It's going to be available.

Yes.

Alex Stephanos: No. I mean the transcript. The words that were exchanged between us.

Amine Hariz: Yes.

Amine Abderraouf Hariz: Yes.

Alex Stephanos: Is that going to be transcripted?

[Company Representative]: Yes, it would be available. We will share it with the company, and the company will share it with you, or I can directly share it with you.

Operator: Yes, it would be available. We will share it with the company, and the company will share it with you, or I can directly share it with you.

Right. Yes, yes, yes, yes. It's going to be the transcript—the words that were exchanged between us. Yes. Is that going to be a transcript?

Alex Stephanos: Please do. It's very useful for me. Thank you.

Yes, it would be available. We will share it with the company, and the company will share it with you, or I can directly share it with you. Please do. It would be very useful for me. Thank you.

[Company Representative]: Yeah.

Operator: Yeah.

Amine Hariz: Also, on the revenue, Madhu, just one final comment. We had mentioned that we were able to secure an additional licensing for 50 beds in Dallah Al Khobar. This is now live. It fixed a couple of weeks ago. This also comes as an upside, let's say, to our guidance, because it will allow us to move from a situation of higher occupancy that we had in Dallah Al Khobar to be able to offer better quality of care and quality of service to our patients there. It is an additional step on the growth of revenue for Dallah Al Khobar and for the group in general.

Amine Abderraouf Hariz: Also, on the revenue, Madhu, just one final comment. We had mentioned that we were able to secure an additional licensing for 50 beds in Dallah Al Khobar. This is now live. It fixed a couple of weeks ago. This also comes as an upside, let's say, to our guidance, because it will allow us to move from a situation of higher occupancy that we had in Dallah Al Khobar to be able to offer better quality of care and quality of service to our patients there. It is an additional step on the growth of revenue for Dallah Al Khobar and for the group in general.

Yeah, okay, so I want we want on the revenue model, just 1, final comment. We had mentioned that, uh, we were able to secure an additional licensing for 50 beds in. This is now live effective, the couple of weeks ago, and, uh, this also, uh, comes in as an upside, let's say to our, uh, our guidance because it will allow, it will allow us to, uh, move from a situation of higher property that we had in over to be able to offer, uh, a better quality of care, and quality of service to our patients. There and it is an additional step on the growth of revenue for over and for the group in general.

[Company Representative]: Great, Mr. Amin. That was our last question. If you want to share anything else, please go ahead, and after that, we can end the call.

Operator: Great, Mr. Amin. That was our last question. If you want to share anything else, please go ahead, and after that, we can end the call.

Great. I mean, and uh, so that was our last question. If you want to share anything else, please go ahead, and after that, we can end the call.

Amine Hariz: Thank you. If no more questions are there, we really appreciate everyone joining us today. As always, we are welcoming anyone who wants to reach out for additional meetings between the quarters. We always welcome that. Thank you, Madhu and team, for organizing. Thank you.

Amine Abderraouf Hariz: Thank you. If no more questions are there, we really appreciate everyone joining us today. As always, we are welcoming anyone who wants to reach out for additional meetings between the quarters. We always welcome that. Thank you, Madhu and team, for organizing. Thank you.

So thank you and if no more questions, are there, we really appreciate everyone joining us today. And uh as always, we are welcoming, uh anyone who wants to reach out uh for uh, additional meetings uh, between the portals. We always welcome that.

[Company Representative]: My pleasure. Thank you. Thank you, Dallah management, and thank you, participants, who joined the call. Wish you all a nice evening ahead. Thank you.

Operator: My pleasure. Thank you. Thank you, Dallah management, and thank you, participants, who joined the call. Wish you all a nice evening ahead. Thank you.

Thank you for organizing. Thank you.

Amine Hariz: Very much.

Thank you so much. Thank you to the management, and thank you, participants, for joining the call. Wish you all a nice evening. Thank you.

Very much.

Browse all earnings call transcripts

Q2 2026 Dallah Healthcare Co Earnings Call

Request TrialDemo

Dallah Healthcare

Earnings