Q2 2026 Mouwasat Medical Services Co Earnings Call
Speaker #1: Alrazi Capital, I'm proud to host Mouwasat's Q2 2026 earnings call. From Mouwasat's management, with me I have Dr. Amin Emad, Corporate Chief Medical Officer.
Speaker #1: Emad, Mr. Emad Radhwan, Deputy CFO. Mohammad, I'll do Corporate Finance Manager, and Mr. Sultan will also be IR Manager. Without any further delay, I'll hand over the mic to Emad.
Speaker #1: Emad, the floor is yours. Please go ahead. Emad, you're on mute, in case you're trying to speak.
Speaker #2: Thank you, Madhu. Welcome, everyone. We'll start with a brief presentation from our side. Hello, everyone, and welcome. Okay, okay. Good morning, Dr. Amin speaking.
Speaker #2: Chief Medical Officer. This presentation will show a brief about Mouwasat Medical Services. The first slide shows the milestones of development of Mouwasat, starting from 1974, by establishing Daman Polyclinic and the first hospitals in Daman. In the year 2000, Mouwasat Hospital opened in Medina, which now becomes LDC Hospital.
Speaker #2: Then, in 2004, the opening of Mouwasat Hospital in Jubail. In 2006, the acquisition of Mouwasat Hospital Khatib. Then, by the year 2009, Mouwasat was the first private healthcare company to be listed in the joint stock market.
Speaker #2: In 2014, the opening of Mouwasat Hospital in Riyadh. In 2018, the opening of Mouwasat Hospital Khobar. And near 2022, two facilities: the Mouwasat Hospital expansion in Dammam, Tower 2, and the new Mouwasat Hospital in Medina.
Speaker #2: In 2024, the new Medina Hospital opened, and in February 2026—last February—we opened Mouwasat Hospital Yamhor. So these are the milestones for Mouwasat Medical Services. This shows the total capacity of Mouwasat hospitals: starting from Dammam with 180 beds, Jubail 200, Khafji 120, Riyadh 200, Khobar 260, new Medina Hospital 240, Medina LDC 100, and Yamhor with 200 beds.
Speaker #2: Future expansions: we have Jeddah Hospital, with a capacity of 200 beds, 80 clinics, and 60 critical care beds. The construction is completed, and we are preparing for licensing and to start the operation.
Speaker #2: It's in Q4 2026. In Riyadh, Riyadh expansion: we have expansion in Riyadh Hospital by adding 100 extra beds and 55 clinics, with 24 critical care beds. It's under design and expected to be in operation in Q2 2029.
Speaker #2: And the other expansion is in Khatib Hospital, with an additional 100 beds, 20 clinics, and 20 critical care beds. It's under construction, expected to be completed in Q4 2028.
Speaker #2: Another new hospital will be built in Khobur, with a capacity of 200 beds, 60 clinics, and 60 critical care beds. It is expected to be in operation in Q4 2029.
Speaker #2: The next expansion will be in Abha City, with capacity of 200 beds, 80 clinics, 60 critical care beds, expected to be in operation Q4 2029.
Speaker #2: We have planned to have a second hospital in Riyadh, in the Al Nargis area, with 280 beds, 120 clinics, and 120 critical care beds. It is still under design for this hospital.
Speaker #2: In addition to the expansion for hospitals, we have expansion for polyclinics. We're going to have two polyclinics—one in Khobar City and one in Jubail Industrial City.
Speaker #2: Usually, our polyclinics offer 25 services, 30 OBD clinical clinics, pharmacy, emergency room, laboratory, and diagnostic radiology with physiotherapy services. Next, this slide shows the capacity of our hospitals now and in the future, and this is the capacity details for inpatient, critical care beds, emergency room, and so on.
Speaker #2: Okay, we served our patients—this is through the last five years—we reached 2,554,000 patients, and for the last year, for inpatients, we have reached nearly 25,100 or 7,107,000 admissions.
Speaker #2: Okay, and we believe we have specialized in having 16 centers in our hospitals, 13 departments, and 8 units. Okay, financial.
Speaker #1: This is a summary for Mouwasat Co. Q4 last year 2025, the revenue was 3.2 billion. Annual profits in 2025 was 809.7. Dividend distribution in 2025 was 425 million.
Speaker #1: And these are some ratios about Q2 results. Our revenue was 876, with a 10.1% gross. Net profit was 211, gross 16%. Gross profit was 336 million, gross 4.3.
Speaker #1: EBITDA was $300 million, and earnings per share were $1.06 for the period of 2024, 2025, and 2026, as presented. For 2026, revenues were $1.7 billion, net profit $412 million, gross profit $699 million, EBITDA $582 million, and earnings per share $2.06.
Speaker #2: We can start the Q&A, Mr. Madhubir.
Speaker #3: Sure, but I'll now open the floor for the Q&A session. And as usual, just a few general instructions: limit yourself to two questions, and to ask a question you can use the hand raise button.
Speaker #3: Or the chat box to post your question. So as we wait for our first question—okay, so there are a couple of them.
Speaker #3: Okay. As of now, you know I have asked a few from my side, but there are quite a few hand raises now. The first question I will take is from the line of Junaid Faruk.
Speaker #3: Junaid, please unmute yourself and go ahead.
Speaker #1: So hi, thank you, Madhubir.
Speaker #2: Can you hear me?
Speaker #1: Yes.
Speaker #2: Yes, okay. Thank you very much for this opportunity. I have two questions. If you could give some color on receivable collection—it seems from your balance sheet that your receivable collection has slowed.
Speaker #2: What could be the factor? Is it a temporary, seasonal issue, or is it linked to a particular payer base that is slowing down the payment? That is the first question.
Speaker #2: My second question is, again on your balance sheet: I see your contracts are now above 300 million Riyal at the end of June. Should we see this as an indication that the rejections are not settled with the insurance, and there is a gap between you and the insurance as far as the rejection settlement is concerned?
Speaker #2: Thank you.
Speaker #1: Right. Toward the first point of collection, actually there is something we can issue done while we are raising the main claim, which caused some few days' delay from the payment of A we received in the first week of July.
Speaker #1: About May month, about 200 million we received during July. Usually, we are receiving June—I am talking about May claim. This caused a little bit of an increase in the collection, which is about 1.3 or something like that in the trial balance, in the balance sheet.
Speaker #1: Comparing with 1.1 million, 1 billion, and 2 million in 2025. Besides, there was some delay from MOH. We also received, during July, more than 100 million from MOH.
Speaker #1: If we received these two amounts—insurance and MOH—during June, the receivable balance was healthy and at the same level for the partner of 2025. Second, your second point is looking at reconciliation and rejection.
Speaker #1: We finished almost all insurance company reconciliation till end of 2025, including biggest insurance companies like Bupa and Tawuniya. The level of rejection came in as per our expectation, and due to that, the refund liability and rejection rate have strong stability and strong provision. We will not face any issue within—we didn't find any problem or obstacles to close this with insurance companies because we have good provision that exceeds what we need to close the reconciliation with insurance companies.
Speaker #3: I hope, Junaid, that is clear for you. If you have a follow-up, please come back in the queue. Okay. So, the next question we will take is from the line of Taha.
Speaker #3: Please, Taha, please introduce yourself and go ahead.
Speaker #4: Hi, thank you so much. Taha here from AIMS Investments. I have a couple of questions—both, I guess, are easy ones. I think in the slide I was seeing that the Jeddah facility will start from Q2, but I don't recall any announcement around that.
Speaker #4: So if you can share what’s the update on its opening, and secondly, obviously the first half for most of the health sector was, in terms of margins, a bit difficult.
Speaker #4: So how is the trend at least till July-August? How are you seeing the patient volumes, if you can just comment a bit on that.
Speaker #4: Thank you.
Speaker #1: Right. I will answer the first question for you about Jeddah. Actually, during Q2, the construction work finished, and now we are in the stage of getting all licenses to open.
Speaker #1: For the opening commercial openings, we are expecting to, maximum, during October we will start, we will start the patient flow for Jeddah. That's why it is quarter two—means the construction fully finished.
Speaker #1: According to your second question, it is talking about patient flow. That's right.
Speaker #4: Yes.
Speaker #1: During quarter two, we didn't notice that there is a big impact on demand. It is a normal impact for the seasonality of the second quarter, which has the start of school vacations at the end of June.
Speaker #1: And during June also, we received a good number of patients in Yamwa. This all had a good impact on the revenue, which grew 10%.
Speaker #1: And toward number of patients, we have about 3% growth in the number of patients, including Yamwa.
Speaker #4: Right.
Speaker #3: Overall, how is the Q3 patient volume looking? Like for July and August?
Speaker #1: July, definitely, and it's a natural July low patient flow level because of the season of vacations. But August is not yet finalized, but the same trend in Q3 has seasonality impact toward the number of patients.
Speaker #3: Great, thank you so much. Best wishes for the year.
Speaker #4: Thank you, Taha. Next question, we'll take from the line of Maha.
Speaker #1: Madhu, our first claim, because some people say there is still slight disturbance.
Speaker #3: Is it better? Hi Junta, am I audible? Yes Maha, you're audible. First of all, thank you for the presentation. I have two questions, but the first one is: could you provide some guidance on the number of beds you're currently operational with in Yamwa, or how many beds are you planning to operate initially in Jeddah? And also, could you give us some color on the incremental opex associated with these two expansions?
Speaker #1: Regarding the number of beds for Yamwa, we will start with 75 beds, and we are planning to start in Jeddah with the same number of beds. According to patient flow, we can increase the number of beds at any time, and also increase the staff to cover any increase in the number of beds or patient flow. Your second question is about CABEX.
Speaker #3: The opex related to these expansions.
Speaker #1: Opex, okay. For sure, there is an impact from Yamwa on Opex. Also, the pre-operating cost has started for Jeddah.
Speaker #3: I'm sorry, but I can't hear you well. Yes, I'm at the—can you hear me now?
Speaker #1: Can you hear now please?
Speaker #3: Yes I think so.
Speaker #1: Regarding the opex for Yamwa and Jeddah, yes, there is pressure from Yamwa and Jeddah on opex for sure, but it's decreasing with the ramp up, and this is regarding Yamwa.
Speaker #1: For Jeddah, the pre-operation hiring, training, and preparation for opening Jeddah started, and there is for sure an impact on our gross profit margin by these two facilities.
Speaker #3: Okay, very clear. If I can just ask one question, please. Can you give us some color on the potential scale of the debut with Dawa?
Speaker #3: Do you expect it to be comparable to Nahdi's model, which served around 2 million patients and generated $350 million in revenue? If you could just give us some direction on the JB, please.
Speaker #4: Is my question audible to you?
Speaker #1: One second yes yes.
Speaker #4: Yeah yeah sure sure.
Speaker #1: We have just started the opening of Modawa and Madina. We are at the beginning of the road still, we are building up on these things, and once we have something else, a new facility, we will announce about it.
Speaker #4: All right. Next question. We take from the line of Abdullah—Abdullah Omer. Abdullah, please unmute yourself and go ahead.
Speaker #3: Thank you, Madhu. Hi, this is Abdullah from Al Jazeera Capital. I have just two sets of questions. The first one is related to your second quarter top-line growth.
Speaker #3: If you could just break down the growth of 10% on a year-on-year basis into how much of this growth came from the renegotiation of insurance contracts, how much growth was contributed by Yamwa Hospital, and lastly, how much of this growth comes from your legacy hospital. If you could bifurcate your growth in the second quarter.
Speaker #3: Hello was I audible?
Speaker #4: Yes, Abdullah. Bye. I believe the management will respond to you in a minute. Ahmed, was Abdullah's question audible to you? Ahmed, you're on mute.
Speaker #4: Yeah sure sure.
Speaker #1: Madhu you hear me?
Speaker #4: Yes Ahmed.
Speaker #1: Yes. Regarding the contribution from Yamwa, as we published, the gross top line for revenue was about 10%. Yamwa contributed about 1.6% to this total.
Speaker #1: Regarding our customers and the prices, as we know, there is about a 3% inflation increase in prices. The distribution categories of cash, insurance, RAMP, and MOH remain almost the same.
Speaker #1: We didn't see any change in the prorata and distribution from this category.
Speaker #3: So, if I sum it up, around half of your growth comes from—like 3% from the insurance renegotiation of the contracts, and 1.5–1.6% from the Yamwa Hospital.
Speaker #3: So, the rest of the 5% year-on-year growth in revenues comes from your legacy hospital, right?
Speaker #1: Yeah.
Speaker #3: Okay, so mostly this 5% growth was based on patient throughput.
Speaker #1: Yeah. The reason for your patient, our OBT and admitted patient.
Speaker #3: Okay, thank you. Just one last question—on the Jeddah hospital, if you could share more details on the hospital, like which insurance class it would serve, and how do you foresee the competition in Jeddah? Even if the hospital is coming in as class B or class A, competition is still ramping up in the city in both insurance sets of classes, like class A and class B.
Speaker #3: So, how do you plan to tackle this competition, and would you like to mention the break-even target period for this hospital? For example, in how much time do you expect to achieve break even?
Speaker #1: About break-even, first let me answer about break-even. We used to achieve break-even bottom line in about 18 months. For your first question, talking about tracking and contracting, we have five contracts with all insurance companies.
Speaker #1: We don't—sorry, we don't say something.
Speaker #3: No, no. So basically, the hospital will not be classified solely as a Class B. It can serve both Class A and Class B patients, right?
Speaker #1: For in usual we have class A and VIP and once we opened once we opened Jeddah typically it will be covered by our current current contract with insurance.
Speaker #1: We will not make a new agreement for Jeddah or a new extension of the contract for Jeddah.
Speaker #3: And in terms of competition, you were mentioning something—how do you see Jeddah? Will you still maintain your guidance for the break-even period of 18 months for the Jeddah hospital, considering the current level of very intense competition in the city?
Speaker #1: We think so for the usually we have the break even we take the we take always we take the competition and consideration and we have our own way how to meet with this usually with this competent provider working with us in the same area.
Speaker #1: We assume that we're going to have the break-even in 18 months, as usual.
Speaker #3: Okay, understood. Thank you very much.
Speaker #4: Thank you, Abdullah, for those questions. Next question we take is from the line of Michelle Said. Michelle, please unmute yourself, mention your company name, and go ahead.
Speaker #5: Hi, good afternoon, Jasmin. Thank you for taking my questions. Michelle Said from Franklin Templeton. I just had a question regarding the ramp-up of Yamwa as a start.
Speaker #5: Is it going in line with expectations? And the second one, regarding the chart that showed the evolution of the number of inpatients—we've seen a decent growth over the years.
Speaker #5: So, can you just clarify what was the edge here of Mouwasat, and the reason behind this increase in the number of inpatients over the past three to five years?
Speaker #5: Thank you so much.
Speaker #1: So, what was the first question, excuse me?
Speaker #5: Whether the Yamwa hospital traffic and revenue is going, or even on the profitability level, is it going in line with your budget?
Speaker #1: Yes, yes. For Yamwa, we are expecting to have the break-even even before 18 months. The market is promising, and we're doing well about our expectations in the operation.
Speaker #1: We expect to have the break-even maybe, maybe this time before 18 months. The second question was inpatients—the reason for increasing and raising up is that we have developed a strategy to improve our inpatient figures and numbers. First of all, we increased the number of clinics and increased the number of subspecialties that attract more patients.
Speaker #1: We have developed highly specialized services, including highly paid oncology and cardiac services. This is in addition to attracting more patients from MOH, especially with the increase, and in addition to the medical services that we improve, we have also focused on customer service improvements and providing good hospitality for the patients.
Speaker #4: Thank you so much.
Speaker #1: Regarding Yamwa, Michelle, as we have now—as we said regarding Jeddah—once we open the new facilities included in our network with this insurance company, the same happens in Yamwa. We are seeing the ramp-up and increase in number of patients, and as Dr. Amin mentioned, we still...
Speaker #1: And maybe we are more confident that Yamwa, inshallah, will achieve break-even before the 18 months.
Speaker #4: Okay, thank you. Can I ask one last question, please? The utilization of the group now—what's the number, at least for the existing network?
Speaker #1: Right, for inpatients, we are above 63% by a little bit, excluding Yamwa.
Speaker #4: Thank you so much.
Speaker #3: Thank you, Michelle. Next question, we will take from the line of Hekmat. Hekmat, please unmute yourself, mention your company name, and go ahead.
Speaker #6: السلام عليكم. Thank you, Rashid Abdul, for hosting. Thank you, management, for the presentation. This is Hekmat from Capital. Just one question from my side.
Speaker #6: Regarding your outflow of receivables of around 400 million. For the first half of the year I just want to understand is it mainly the spike is it mainly from government or is it from insurance companies?
Speaker #1: I mentioned before, this spike was only related to a few days' delay in the May submission, but our number of receivable days came back to normal starting, I think, July 5th. This is because the conviction in the May claim came in July, not in May. That's why you see a little bit—or not a little bit, it's a big amount—increase in receivables. But we collected this amount in the first three days of July.
Speaker #6: Yeah, but was it mainly from insurance companies or from the government?
Speaker #1: Yes, yes, yes, we have a prompt payment agreement with the insurance company. We receive our collections after about 10 days from the submission, so maybe for the biggest three—the big three insurance companies—there was little…
Speaker #6: Okay, so it's mainly insurance. Okay.
Speaker #1: Also not not pure insurance.
Speaker #6: Sorry.
Speaker #1: Both insurance.
Speaker #6: both. both. MOH and.
Speaker #1: It's a difference of 300 million compared with the corresponding quarter, not only related to insurance. But almost 75 or 80% is related to insurance.
Speaker #6: Okay, okay, clear. Yeah, very best of luck going forward. Thank you.
Speaker #1: Thank you.
Speaker #4: Thank you, Hekmat. Before we take questions from Andreas Burton, there are a few questions in the chat box. I'll read those out for you.
Speaker #4: This question is from Eman Mouasat from EFG. The first question is about the losses in the quarter related to Yanbu, and if there were any losses due to Jeddah.
Speaker #4: That is question one. The second is about volumes. If you have a slide with volumes, what were the trends? And if you can, you know, go back to that slide, that would be great.
Speaker #4: If not, if you can talk about it verbally, that's fine. And third is the revenue split for Q2 by payer.
Speaker #1: Okay, for the gross profit, gross profit is talking about...
Speaker #6: Yeah, gross profit or overall losses related to Yanbu? And Jeddah, if there was anything.
Speaker #1: And we cannot say how much the amount is, but as we said, let me tell you our gross profit margin: in 2020, for the first half, it was about 43.2%. In 2026, it was about 40.9%. Excluding Yamwa and Jeddah, it would be about 42.6%. Okay.
Speaker #6: 42.7.
Speaker #1: Yeah, the decline in gross profit margin is only about 0.5%. Okay, it's a very good correspondence. Yes, 125 versus 126, half one. Regarding the— as we said, regarding the receivable number of days, it came to normal in July.
Speaker #6: Yeah, so in addition to receivables—that is from another participant, that question—but the other two questions from Eman Mouasat are about volumes and the revenue split by payer.
Speaker #1: Okay, for the split, as we mentioned, we have about 5% from cash, 7% from MOH, 16% from Aramco, and the rest from insurance.
Speaker #6: Okay, and the last question is about volume trends in Q2 as well as H1.
Speaker #1: Volume trends: we said that there is an increase of about 3% in our patient list.
Speaker #6: Increase of 3% in outpatients.
Speaker #1: Yeah.
Speaker #6: Okay. And then inpatient—could you confirm the inpatient numbers?
Speaker #1: Inpatient number is definitely more than 3%, but what is paid here is the outpatient.
Speaker #6: Okay, okay, clear. Now I'll go back to the Andreas option. We have a question on the line from Ebrahim Atia Ebrahim. Please unmute yourself and go ahead.
Speaker #5: Thank you, Madam, and thank you, Musa, for the presentation and congrats on the strong results. One question, probably from my side.
Speaker #5: Can you can you get some color on on how outpatient or how inpatient traffic is outpatient the outpatient traffic both on on on patient count as well as as revenue?
Speaker #1: Sorry can you clarify more?
Speaker #5: Can we get some color on how the inpatient revenue and traffic are outpacing the growth in the outpatient?
Speaker #1: Okay. First of all, outpatient is the base of our capacity for patient flow, and this is an important number for patient flow. Then, for the inpatient, there are many factors changing the inpatient capacity compared with outpatient capacity, because there is something called the inpatient ratio, which is the percentage of your outpatient visits that will transfer to inpatient.
Speaker #1: This inpatient ratio depends on the share you have and which subspecialty you have, so it is not the same percentage between hospitals.
Speaker #1: The second big factor comes from outside, according to your agreement with the insurance company. If you have some agreement to increase or decrease the number of referred patients. The third one is: what is the quality of your services and the quality of your medical effort for patients to make turnover from existing patients and receive new patients. Because it's known that the first day or the first two days is the period with the highest costs for the patient.
Speaker #1: This factor is controlling and changing the percentage or frequency between inpatient and outpatient, right?
Speaker #6: Very clear, Ahmed, and very insightful—thank you. Can you please elaborate more on the agreements with insurance companies to increase the referral?
Speaker #6: Is this sort of exclusive contracts to increase the referrals, or are you offering a certain level of discounts and competing on pricing to get more volume from competition?
Speaker #1: Let me be very honest with you, all insurance companies are watching and controlling the cost. If—what is your price compared with another player at the same level? What is your average claim? Then what is your, let me say, what is your, more, more discount you will give to them according to volume or, or in the prices? Most of our insurance company, or, or most of our contracts have volume level discounts. If you increase the work with us, according to some slabs, you will get more discount and, and most of the time, we are very flexible to give them more discount or some advantage to encourage them to refer patients to us.
Speaker #1: Especially from primary health care, from our polyclinics around our hospitals, we have to increase our portion during the competition. We need to get more patients outside our network, so especially for inpatient, we can have a compromise deal with insurance companies to get more referrals based on some specific amount for extra discount for patients who are not eligible to come to us.
Speaker #6: Okay, very clear. Thank you, gentlemen. I'll go back.
Speaker #4: Thank you, Ebrahim. Next question, we take from the line of Jonathan. Jonathan, you mentioned your company name and brand.
Speaker #6: Thank you, Madam. Jonathan Malan from Waha Capital. Hi, everyone. Can you please give us an idea of the growth by region? What was the growth in Q2, for example, in the Central Region, Eastern, and Western Region?
Speaker #1: In the Eastern Region, when we announced regional or hospital growth, we were talking about company growth, not the growth of individual units.
Speaker #6: Yeah. Yeah. I mean yeah I can't I imagine I cannot ask you for growth by individual hospital but at least by region. Like like for like growth.
Speaker #1: Even like that, we didn't announce.
Speaker #6: Okay. All right. Thank you very much.
Speaker #4: All right, there is a follow-up from the line of Junaid. Junaid, please unmute yourself and go ahead.
Speaker #6: Thank you for this opportunity. I have a question regarding DRG implementation. Is there any update you can share with investors on DRG?
Speaker #6: My understanding was, last year Mouwasat was part of the pilot project where you were doing shadow billing. Are you still continuing with shadow billing, and what is your estimation of DRG implementation? Thank you.
Speaker #1: Since there is no announcement about the implementation of DRG, from our side we are working as a preparation in-house on how we are going to meet these requirements for the DRG.
Speaker #1: We have seen in some other places and other countries how they are implementing this and what the impacts are on the services that the hospitals provide.
Speaker #1: So there is no, no, not yet announcement for the implementation and how it is going to be done. Still, the issue is postponed.
Speaker #6: Okay, just a follow-up, if I may. DRG—so, what percentage of your revenue today would be subject to DRG if, let's say, DRG were to be implemented?
Speaker #1: Still we are under study because still we are under study because not yet clear what's the things that we will be implementing.
Speaker #6: Got it. Thank you.
Speaker #4: All right. At the moment, we do not have any questions through the 'hand raise' button. There is one follow-up in the chat box, and the follow-up is related to receivables.
Speaker #4: I believe you have partly answered it. The part that you have not answered, I believe, is related to the quantification—like, how much of the delays, or how much of the increase in receivables, you would attribute to collection delays versus pricing changes or volume-related accruals.
Speaker #4: And what is the target for H2 in terms of receivable days?
Speaker #1: We we talk about the delay of collection for May claim for May claim which cause this increase in receivable funds. And for for what's the second part talk about number.
Speaker #4: Is there any target for the second half? How much do you plan to have the receivable days? Should the number of days remain the same?
Speaker #4: Same. Okay. Same as H1.
Speaker #1: Same Q1.
Speaker #4: Okay, got it. So you would attribute most of the increase to collection delays, not pricing changes or volume-related factors.
Speaker #1: Because of yes.
Speaker #4: Okay, clear. There's a question about your guidance, and this question is from Ahmad Moutaz. Could you talk a bit about your guidance for 2026 on revenue, margins, gross margins, and net profit, as well as capex?
Speaker #1: Okay. As we mentioned, for the Q1 goal, we are expecting 10% top line and 5% bottom line. Regarding the capex, it would be about 800.
Speaker #6: 800 million capex this year.
Speaker #1: Yeah.
Speaker #6: Okay. Clear.
Speaker #4: We have a follow-up on the line of Ebrahim—Ebrahim Matia. Ebrahim, please unmute yourself.
Speaker #6: Thank you again. You understand more about how insurance companies manage the referral of the inpatient. So I understand they can manage the traffic between all the healthcare providers in both departments.
Speaker #6: The inpatient and the outpatient. But how can they manage the inpatient alone and refer more to your hospital versus others?
Speaker #1: This is not the issue of sending more; rather, it's one of the sources for our improvement in the inpatient statistics and revenue. It's not just the number from insurance.
Speaker #1: So, so many sources, and also the highly paid cases regardless of the number. So this is the issue. And again, it's from our visits, in-house referrals.
Speaker #1: It's not only from external referrals; it's from in-house referrals, from outsourced cases, from other kinds of patients. And if you mean what I said about those who were not visible, I will give you an example.
Speaker #1: It is Spencer. It is Spencer you need, for example, MRI. It is MRI is not available. Not working, Spencer. So he will.
Speaker #6: Mr. Ahmed, your voice is cutting out. I couldn't understand anything.
Speaker #1: Is it clear now?
Speaker #6: Yeah. Yeah.
Speaker #1: If we are talking about the ineligible patients, okay. For example, one patient that, for instance, you need MRI investigation, but the MRI is not working. So they will request a referral from this distance.
Speaker #1: So this in this case company will tell them okay it's available in specific provider and go there they will accept you. This is the same will happen for same will happen for inpatient cases also.
Speaker #6: Very clear. But how sustainable is this part of the business?
Speaker #1: It's ongoing. It's ongoing, but we are—is it always ongoing?
Speaker #6: or during certain parts of the cycle where competition increases, etc.
Speaker #1: It's ongoing, but we are increasing the volume of this amount, and we already have a good increase in this amount because, as we said, the deals and specific, more discount for these cases with insurance.
Speaker #6: And do you see this sort of behavior from all the top insurance companies, or just from selective ones?
Speaker #1: No, it will not be with all. We will select, based on—I mean, this, this...
Speaker #6: This focus from the insurance— from the insurance side, do you see it from both the top insurance companies or from one of them?
Speaker #1: Based on the contract. Okay. If someone gives them a better offer than me, he will send it to him.
Speaker #6: Of course. Excellent, excellent. Very clear. Thank you, gentlemen. Thank you, Ahmed, for your insight. Thank you. Wish you the best of luck.
Speaker #4: Thank you, Ebrahim. Do you have a follow-up from Abdullah Abdullah Omar? Abdullah, please unmute yourself.
Speaker #6: Thank you, Madou, again for the opportunity. I just have a follow-up question with regard to your CapEx outlook. You have mentioned about SAR 800 million.
Speaker #6: Don't you think this outlay will increase, considering the current impact of geopolitical factors and the subsequent rise in commodity prices? In fact, when we talk to other players in the healthcare sector, they did report some escalations on the project side.
Speaker #6: So, how do you foresee that, and what quantum of escalation do you expect on the capex?
Speaker #1: Yeah, I need to clarify this because your voice is not clear.
Speaker #6: Yeah. Sure. No problem. So I was basically asking about your capex outlet or the guidance you have provided for 800 million Saudi riyals. Does it incorporate the recent rise in the commodities prices due to geopolitical events and even in fact many healthcare operators especially those operators whose projects are coming in 27 and 28 they are reporting some sort of increase in their project cost.
Speaker #6: So, do you expect that increase to happen to Mouwasat as well?
Speaker #1: Yeah. The good news is the chart is finished, alhamdulillah, and all equipment—we already have our POs, and we have already received the machines.
Speaker #1: Also, the construction contract for the expansion in Riyadh and Qatif, maybe we paid a little bit increase in the construction contract, but of course, for 2027 and the equipment, we hope—not yet started the deals—but we hope that it will be, yeah, we have some space.
Speaker #1: We have some time until maybe the situation changes. But for the conflict or the effect, we have a little increase on OPEX, especially on inventory, and we are trying to increase our inventory levels to be more conservative.
Speaker #6: So, there is not a material impact from the recent increase in commodity prices on your capex planning, right?
Speaker #1: Sorry.
Speaker #6: So there is no material impact from the increase in commodity prices on your capex, right?
Speaker #1: Yes. Increase here, we don't think so because we, as Mr. Muhammad said, have already finished all equipment fees for Jeddah and two polyclinics. Of course, to start again for the new hospital, we are talking about 2028 or the last part of 2028 to start opening the POs for medical equipment.
Speaker #6: Okay, great. And one last follow-up question on the revenue composition. You have mentioned that a greater portion of your revenues comes from Aramco as well, which is around 16%.
Speaker #6: So, going forward, do you think that due to the increase in competition—especially in the Khobar, Al Ahsa, and Hafoof region, as new hospitals are coming up from Al Musa and from Suleiman Habib—you expect some of this revenue would be reduced, especially due to the competition of getting Aramco patients from other hospitals?
Speaker #4: Ahmed, was that clear—the question from Abdullah, the second question?
Speaker #1: Can you repeat please.
Speaker #6: Sure. So I was basically asking about, since Aramco constitutes one of the significant shares in your revenues—like 16% you have mentioned of the revenues come from Aramco—so in the future, like over the next two to three years, do you see any competition coming up, especially from Suleiman Habib or Al Musa Healthcare? Because these companies are establishing their hospitals in the Eastern Region in the next two to three years.
Speaker #6: So, do you expect any pressure on the Aramco revenues, or do you expect them to remain at the current levels—like 16%, or 16 to 18% of your revenues?
Speaker #1: Yeah. Regarding Johns Hopkins Aramco, the contract is still valid and we have registries in our hospital—the registration is stable. Because we are having a strategy to work with Aramco closely to have our registration stable, because we are providing good customer care for the patient and tracking them to be registered in our hospitals.
Speaker #1: Regarding the competition, it's always there, and we have our strategy to meet this competition in the Eastern Province especially. Yes.
Speaker #4: Clear. Before we take questions through the hand, there are a couple of them. There is a small question in the chat box. This is about the eastern region.
Speaker #4: If you could provide insights on the competition in the Eastern Region, and what is the like-for-like growth for your legacy hospitals in the Eastern Region.
Speaker #1: Well, we have good growth numbers in the eastern region from our hospitals in Dammam and Khobar. And we definitely expect competition in the eastern region in 2024 and next year, and we think also in 2028 the competition will not have a big impact on us.
Speaker #1: May we start after 2029, we open Musa or Habib, but as Dr. Ameer said, now we have our strategy and our tools to meet this competition and maintain our patient level with good growth year to year.
Speaker #4: Clear. Next question. Let's go to the line of Muhammad Musa. Muhammad, unmute yourself and go ahead.
Speaker #6: Yes. Hi. Hello. Thank you for accepting my question. I'm wondering, longer term, how much capacity expansion do you think you will aspire to?
Speaker #6: And my second question is: Is the B class market growing in terms of capacity, or is it declining? And will it decline if DRG is enforced or not?
Speaker #1: See, for expansion of capacity and insurance classes, at the end there is some share you have in the market, even if the class changes, you have some share too. But Mr. Dr. Ameer said now the competition is there at the end, it's always, all the time, even with downgraded classes, hospitals around us.
Speaker #1: For DRG, the impact is not clear till now. We cannot say about the impact of DRG now, but what we can say toward DRG is that we are ready for DRG, and we have a very strong system for cost controlling to meet DRG requirements and to achieve good numbers after implementation of DRG.
Speaker #6: Okay, clear. My second question, if you allow me, is about acquisitions. Is it part of your plan?
Speaker #1: See. At this moment we don't have any plan for some acquisition but we are open for any opportunity in the market to make expansions according to our strategy to target some cities and some like Abha before we are Abha before before Abha we are searching about any opportunity in Abha we we have some offers for acquisition but at the end we talk what we have now we are open for any opportunity acquisition green zone but at this moment we don't have any clear plan.
Speaker #6: Okay. Thank you Mr. Ahmed.
Speaker #1: Last question please Mr. Madam.
Speaker #4: Sure, Ahmed. Last question: if we take us from the line now of Muhammad Al Kattani. Muhammad, please unmute yourself and go ahead.
Speaker #6: السلام
Speaker #1: Yes.
Speaker #6: Yes. Hi. This is Mohammed Al Qahtani from Marzam. Excuse me for this question has been asked before I had a connection issue but if you could just like explain to me the performance of Muwasa excluding like losses of Yanbu also I I think you've also front loaded costs for Jeddah so you know you grew profits like excluding both Yanbu and anything you're going to do for Jeddah I just want to understand like the core portfolio of Muwasa just how much did it grow if you understand where I'm like heading towards.
Speaker #1: Okay. Excluding Yanbu, we have growth in the revenue of about 8%.
Speaker #6: You grew revenues 8%.
Speaker #1: 8% revenue growth. Top line.
Speaker #6: Yeah.
Speaker #1: Gross profit margin excluding Yanbu is 42.7%.
Speaker #6: 42.7%.
Speaker #1: Yes. Excluding Yanbu, the profit margin is 20%.
Speaker #6: 22%.
Speaker #1: 20.
Speaker #6: 20%. Okay. And could you give us a rough split of, you know, the revenue mix? Where did this come from this quarter?
Speaker #1: Revenue mix mean our customers?
Speaker #6: Yes.
Speaker #1: We have about 17-16% from Aramco and 5% from cash. MOH is about 7%, and the rest is from insurance companies.
Speaker #6: And the rest is insurance companies. Okay, thank you very much. I had a question, although I think you guys answered it when it came to Musa, about the B class market.
Speaker #6: Do you guys view the Jeddah B-class market as a really interesting market to go in? Is it an underserved market? Because at the end of the day, we know how Jeddah performs; we know the performances of Faqih, Al Habib, and Saudi German there.
Speaker #6: Do you think your expanding into B class in Jeddah necessarily, guys, is like an underserved segment?
Speaker #1: We think so. We thought we would have our own structure, our own experience, our own service model, and work model. We have a positive vision and positive expectations from Jeddah.
Speaker #6: Yeah. Okay. Okay. And it's going to open in the third quarter, am I right?
Speaker #1: Inshallah.
Speaker #6: Yeah. Okay. Thank you very much, and good luck for the third quarter and the rest of the year.
Speaker #1: Maximum October.
Speaker #4: Clear. Clear, Ahmed. Thank you for the insights. Thank you, everyone, for joining the call and for your time. With this, we end the call.
Speaker #4: Wish you all a good day ahead.
Speaker #1: Thank you. Thank you. Thank you, Madam. Thank you.
