Ladies and gentlemen, good morning, and welcome to the Second Quarter 2026 Financial Results of IHH Healthcare's Analyst Presentation Conference Call. At this time, all participants are in listen-only mode. There will be a presentation followed by the question-and-answer session. At which time, if you wish to ask a question, you need to press star one one on your telephone keypad. You will then hear an automatic message advising you that your hand is raised. I must advise you that this conference is being recorded today, 27th of August 2026. I would like to hand the call over to our first speaker today, Mr. Kelvin Chong from Investor Relations at IHH. Please go ahead, Mr. Chong.
Thank you. Good evening, and thank you for joining us. I'm Kelvin from Investor Relations, and welcome to our Second Quarter Results Presentation. With me today are Dr. Prem, sitting in the middle, our Group CEO. Dilip, Group CFO, to my right. Ashok, Group CCO, to Dr. Prem's right, and far right we have Evren, Deputy CEO of Strategy and Business Development of Acıbadem, our Turkey segment. Result materials are also available for download on the IHH website. We will begin with an opening address by Dr. Prem. Dilip will then present the financial highlights, followed by Ashok, who will update on operations across our various markets, with Evren taking on the Turkey or Acıbadem segment. Dr. Prem will then provide the closing remarks, and we will then move into Q&A. With that, I will turn over the call to Dr. Prem. Dr. Prem, please.
Thank you, Kelvin, for the introduction. Good evening, and thank you all for joining our Second Quarter 2026 Results Briefing. We will begin, as usual, with key updates on a group level, followed by result highlights, operational highlights, and lastly, we will open the floor to Q&A. In Q2 2026, on a constant currency basis, revenue and EBITDA grew by 19% and 25% respectively, demonstrating the strength of our diversified portfolio. PATMI (ex EI) was up 30% year-on-year. Strong performances were recorded from Malaysia, India, and Turkey, all of which has delivered higher revenue intensity and inpatient volumes whilst maintaining a strict cost discipline. In Singapore, we have been responding to the cyclical shift of patients utilizing public healthcare by introducing new packages with payers.
We are pleased to announce that performance has bottomed out, and we have seen an improvement in occupancy to 51% in Q2 and 55% in July 2026. We will continue to roll out these new packages in the coming months, and we expect volumes to increase. Overall, we remain confident in Singapore's recovery trajectory. On a group level, EBITDA and PATMI margins continue to be healthy and within our guided range. Our multi-year transformation plans continue to be on track, and we will share a few details in the next few slides. Given our strong financial performance, we will be declaring an interim dividend of MYR 0.055. We continue to manage our risk effectively by leveraging on our diversified portfolio and size to navigate global uncertainties. Overall, we remain cautiously optimistic for the remainder of 2026 and are on track to deliver double-digit ROE by 2028.
As mentioned, the board has approved an interim dividend of 5.5 cents per share for the first half of 2026. This represents a 10% increase compared to the first half 2025 interim dividends. Dividend payout ratio is close to 40% of PATMI, which is well above our dividend policy of 30%. The increase in dividends underscores our continued commitment to deliver sustainable returns to our shareholders whilst managing disciplined capital management approach. Moving on to the key group updates. This slide was previously shared in our Q1 briefing, I will not dwell too much on it. Overall, I just wish to highlight that we are continuing to execute these initiatives on the slide on all fronts, and results are being delivered with the aim of getting us towards a double-digit ROE by 2028.
On our transformation plans, we would like to provide some key updates which have been denoted in boxes with a green font. Our EMR system, which started off in Singapore, has now been implemented in four Fortis hospitals in India and will be rolled out to other Fortis and Malaysian hospitals in due course. On the harmonization of our enterprise systems with Oracle solutions, global design workshops are underway and phased country rollouts will commence in Q2 2026, with the first go-live expected in Q2 2027. Overall, we remain steadfast in our transformation journey as we continue to unlock synergies, future-proof IHH, and catalyze sustainable growth. We continue also to demonstrate strong capital allocation and management at a group level. Our year-to-date interest expense has been lowered by 8%, following better refinancing rates and a steady progress in de-leveraging our balance sheet.
Our year-to-date interest income has grown by 24%, with improved treasury yield optimization. Group-wide procurement consolidation and centralized sourcing initiatives continues to be on track as we aim for greater economies of scale to lower overheads. Overall, we have saved more than $200 million in the past five years. Our CapEx guidance remains unchanged at MYR 2 billion for this full year. Despite lower CapEx in the last 12 months, we continue to deliver outstanding results. Overall, our CapEx will be allocated to projects with the greatest capital efficiencies to maximize growth. That wraps up our key updates on a group level. I will now pass the time to Dilip to cover the financial section. Dilip?
Good evening to all of you, and welcome to the Analyst Call. Thank you, Dr. Prem. Building on some of the key points that Dr. Prem had mentioned, in Q2, our core operating performance, which excludes the effect of MFRS 129, recorded MYR 6.9 billion of revenue and MYR 1.6 billion of EBITDA. PATMI (ex EI) grew at 30% to MYR 675 million in Q2. On a constant currency basis, revenue and EBITDA grew by 19% and 25%, respectively, demonstrating our strong and resilient growth achieved by our multinational diversified global footprint. Both EBITDA and PATMI margin continues to be healthy and are within our guided range previously. We recorded strong performance from Malaysia, India, Turkey, due to higher inpatient volumes and higher revenue intensity whilst maintaining very strict cost discipline.
In Singapore, our performance has bottomed out, as we previously had mentioned, as occupancy recovers from Q1 lows and margin stands at 29%. In July, our utilization has actually gone up to 55%. Recently, we have announced packages with payers which had contributed to the recovery of inpatient occupancy and increase in daycare cases. For the remainder of 2026, we will continue to focus on driving volume to expedite the growth in Singapore and the recovery thereof. This will include more health partnerships with corporates and payers with more price-competitive packages. Overall, we remain cautiously optimistic on IHH's financial performance for 2026. As always, we focus on the blue box, which illustrates our core operating performance, excluding MFRS, which more truly represents the performance of all our units. We see a 7% and a 14% growth on revenue and EBITDA, respectively, following higher patient volumes and higher intensity.
PATMI (ex EI) grew at 30% for the same period. On a constant currency basis, we had a robust double-digit growth of 19% and 25% of revenue and EBITDA, respectively, again, demonstrating very strong operational performance and growth. For a year-to-date basis on 2026, we continue to see a trend of strong core growth offset by currency translation losses due to the appreciating Ringgit. However, on a constant currency basis, revenue and EBITDA grew significantly higher by 17% and 21% on a year-to-date basis, respectively. PATMI (ex EI) grew by 17% to MYR 1.2 billion for year-to-date 2026. Despite macroeconomic headwinds, our performance remains within our guided range, and we continue to be cautiously optimistic for our performance for the remainder of 2026. We will continue to exercise prudence in our capital expenditure as we execute our brownfield projects and grow our daycare business going forward.
This slide shows our financial performance trend on a quarterly basis. While our margins have remained within the guided range, our earnings continue to take an upward trajectory. Revenue and EBITDA (ex MFRS 129) has increased 31% and 34%, respectively, between year-to-date 2023 to year-to-date 2026. In Q2, our core EBITDA margin was at 23%, while our core PATMI margin was at 10%. Looking forward, we continue to maintain our EBITDA margin guidance within 22%-24%. Overall, on a constant currency basis, the group achieved a 19% and a 25% growth on revenue and EBITDA, respectively, demonstrating our robust financial performance. As mentioned earlier, we recorded strong performance from Malaysia, India, and Turkey, all of which have recorded double-digit growth in revenue, EBITDA on a constant currency basis. Singapore has implemented various strategies to regain volume.
As mentioned earlier, recovery is at play and performance has bottomed out with improving utilization. Margins for Singapore stood at 29%, following strong cost control. Margin for other countries and IHH Group continue to be within our guided range. Overall, we are cautiously optimistic for the rest of 2026. On a year-to-date basis, we saw strong double-digit growth in both revenue and EBITDA on a constant currency basis, growing 17% and 21% respectively. As Singapore's performance has bottomed out from Q1 lows, the performance gap has narrowed. Year-to-date revenue is down 5% versus Q1 of 7%. Likewise, year-to-date EBITDA is down 7% versus Q1 of 13%. We remain confident on Singapore's recovery trajectory, and the gap will continue to narrow going forward. With that, I will now hand over to Ashok, who will next take us through the key operational highlights. Over to you, Ashok.
Thank you, Dilip, and good afternoon, everyone. Starting with Malaysia. In Malaysia, revenue and EBITDA grew by 15% and 29% on a constant currency basis on the back of higher revenue intensity and greater patient admissions. Overall, better utilization at 64% and increased day cases, along with greater cost control measures, have improved margins to 28%. Despite this, we continue to maintain our guidance in the mid-20% in the long term. While there is growing competition from the peers, we remain confident in IHH Malaysia's growth trajectory. If we take a deeper dive into Malaysia's day cases, revenues and volume increased by double digits in Q2, and year-to-date 2026 daycare revenue has seen an increase of 13% year-on-year growth. Over the past three years, daycare revenues have grown by 41%. The strong growth in daycare illustrates our efficient use of CapEx to capitalize on market demand and growth opportunities.
We expect daycare revenues and volumes to continue increasing for the remainder of 2026. On to medical tourism. In Q2 2026, foreign patients contributed 14% of Malaysia's revenue. Year-to-date 2026 also at 14% of Malaysia's total revenue in lieu of stronger local growth. Key hospitals like PHKL, PCMC, PHP, and GHJ continue to see double-digit growth year-on-year in medical tourism, underpinned by robust industry demand and higher acuity treatments. Overall, medical tourism grew by 236% over the past three years. Moving forward, medical tourism trends in Malaysia will continue to endure, and we expect to see continuous growth for medical tourism in our Malaysian operations. Moving to Singapore, and I think this, to some extent, has been covered by Dr. Prem and Dilip as well. We have released new price-competitive packages with payers to regain volumes.
In Q2, we saw occupancy rising from Q1 lows to 51%, and July's utilization is around 55%. This illustrates the effort of our Singapore team to ramp up volumes. Margins stood at 29%, indicating strong cost controls. We will continue to pursue more initiatives to drive up volumes, including more tie-ups with corporates and pushing out more price-competitive packages with our payers. Overall, we remain confident in Singapore's recovery trajectory. As mentioned, the slide covers a little bit more on what we've been doing at Singapore. As mentioned, we've been working closely with payers to forge stronger alliances and roll out new packages. Just to share some examples, in the last quarter, we have launched new cardiology packages with leading insurers, including Great Eastern, to address the rising cost of cardiology treatments. We've also signed a memorandum of understanding with Allianz Indonesia to drive up volume from Indonesian patients.
We have recently announced the empowerment of Mount Elizabeth Royal Square into Prudential's network, expanding patients' access to specialist daycare surgery and endoscopy surgery services. We will also be announcing our latest partnership with AIA, in which IHH Singapore hospitals will be part of AIA's facility network. Overall, these partnerships highlight our efforts to strengthen our payer relationships and bringing about greater packages for our patients. More packages are expected in the coming months, and we continue to deepen our payer partnership in effort to increase volumes. On another note, we've also further entrenched our clinical leadership by attaining the International Accreditation System for Interventional Oncology Services. Being the first hospital in Asia to achieve this significant milestone, it solidifies our position as a regional COE of choice for local and foreign patients that are opting for interventional radiology treatments.
Also, IHH Singapore attained the American Nurses Credentialing Center Pathway to Excellence designations with distinction. We are Singapore's first and only healthcare service provider to receive this award, which recognizes healthcare organizations that foster positive practice environments where nurses are empowered to excel professionally and deliver high-quality patient care. With that, I will now pass the time to Evren, who will take us through the operations in Turkey and Europe.
Thank you, Ashok. On our Acıbadem vertical, on both reported and constant currency basis, we recorded double-digit revenue and EBITDA growth despite the holidays in May. On a constant currency basis, revenue and EBITDA grew at 44% and 61%, respectively. Occupancy was at 71%, and inpatient admissions increased by 15%, despite the addition of 353 new overnight beds from Kartal, Kent, and Bayindir hospitals. At the same time, revenue intensity grew by 22% from more acute patient case mix. EBITDA margins stood steady at 20% in second quarter 2026. Strong cost measures are in place to mitigate the financial impact from the new doctor employment model, which has recently been rolled out in June. As stated previously, we expect a marginal impact to the margins. Despite FX volatility and translation effects, our Turkish and European operations continues to perform well and has contributed significantly to the group.
In second quarter, foreign patient contribution in Turkey operations stand at 12%. Year to date 2026, this figure was at 11%. The decline in foreign patient ratio was due to the strong growth in domestic revenues in Turkey. Volumes and revenue for medical tourism continue to increase year over year. Year to date, foreign patient revenue was at MYR 1.4 billion. Overall, Acıbadem's growth continues to be robust from strong local and foreign demand. We remain confident in Turkey's growth and outlook as its economy continues to recover from the shift towards conventional economic policies. Now, I'll hand it back to Ashok to cover the remaining slides on our operational highlights.
Thanks, Evren. Moving to India. In India, we remain confident of the growth trajectory. Integration plans in the MSA continue to be on track, and we continue to see positive improvements on our Gleneagles India operations. Overall, inpatient admissions and revenue intensity has increased by 14% and 5%, respectively, and occupancy stands at 72%. On a constant currency basis, our India operations recorded double-digit revenue and EBITDA growth of 19% and 15%, respectively. The latest Fortis results were healthy, with strong growth in revenue and EBITDA. Excluding ESOP expenses, margins for our India operations would have been at 19%. As the MSA progresses, we remain optimistic in seeing convergence of margins between Fortis and Gleneagles through greater clinical and operational synergies. Now to Hong Kong. For Gleneagles Hong Kong, revenue and EBITDA increased by 13% and 52% on constant currency basis.
EBITDA margin reached an all-time high of 19%, following higher occupancy levels of 64% and greater inpatient admissions and rising revenue intensity. Our daycare business, we continue to see double-digit growth in both revenue and volumes. Overall, we continue to project growth in our overall Hong Kong operations and maintain our guidance of high teens in the long term. Last, our labs. Our lab segments continue to grow with test volumes increasing by 10%. On a constant currency basis, our lab revenue and EBITDA increased by 10% and 13%, respectively. Margin stands at 22% for Q2 2026. We will continue to grow our outreach revenue to diversify our revenue streams and expand the number of tests offered, especially the high-end tests that allow the doctors to be more informed decisions and improve patient outcomes.
With that, we have concluded our operational review, and I will now pass it back to Dr. Prem to wrap up our key takeaways from Q2.
Thank you, Ashok. Very quickly to wrap up things. Firstly, we have achieved resilient growth across Malaysia, India, and Turkey. In addition, Singapore continues on its recovery with increased occupancy post Q1 lows. Secondly, our multiple transformation initiatives continue to be in play, and this will help productivity and reduce costs in the long run. Lastly, we have declared an interim dividend of MYR 0.055 for the first half of 2026. Our diversified portfolio mitigates single-country risk, and we reaffirm our confidence for double-digit ROE by 2028. With that, we will now move to the Q&A session. I will pass this back to Kelvin. Thank you.
Thank you, Dr. Prem. We will first take questions from participants on the call before moving to questions from the webcast. I would like to request for each participant to keep to two questions, please. You may rejoin the queue thereafter. With that, operator, please proceed with the Q&A. Thank you.
Thank you, dear participants. As a reminder, if you wish to ask a question over the phone, please press star one one on your telephone keypad and wait for your name to be announced. To withdraw a question, please press star one one again. If you wish to ask a question via the webcast, please use the Q&A box available on the webcast link at any time. Please stand by while we compile the Q&A roster. This will take a few moments. Now we are going to take the first question on audio line, and it comes line of Raghavendra Divekar from Nomura. Your line is open. Please ask your question.
Hi, Dr. Prem and team. Congratulations on a strong set of results. My first question is on the Singapore business. I know you highlighted that you are doing more packages to drive volumes. Are there any concerns about margin erosion from these packages going forward, or do you think you will be able to maintain your high 20% margins in Singapore? My second question is on the Fortis business in India. I saw an article which said that IHH plans to increase stake in Fortis to about 51% in the near term. Just wanted to understand if there are any timelines for this expansion and what sort of ways would we be looking at to increase our stake. Would this include an infusion of the current Gleneagles business into Fortis, or would there be other methods also? Thank you.
M aybe I can take the first question on the Singapore margin and pass it on to Ashok for the second. See, the Singapore margin, this is something that we have always maintained. What we are really trying to do with the Singapore business is to grow our dollar EBITDA and dollar earnings. There has been a lot of cost control, which has led to increase in the margins, but our focus is clearly on increasing the dollar earnings rather than just increasing the margin alone. So over the longer period of time, my guidance has always been that Singapore margin should be somewhere between 27%-28% in the longer term. But at this point in time, as I said, the focus is really to drive up volumes and thereby monetizing your cost better and improving your dollar earnings. Ashok?
Thanks. I think on India, I think we have said this previously as well, our medium term, two to five year horizon, we want to get to 51%. That has been our stated view. In India, you can do this through new capital primary or also through creeping acquisition through a secondary purchase. So I think that really would depend on what the real need for capital is, or do we have the ability to buy the stock in the secondary market. Hope that answers the question, yeah.
Yeah, just to pin down on that. Would the infusion of your current Gleneagles Healthcare India assets into Fortis also be on the table, or would you be waiting for margins of Gleneagles to come closer to Fortis before that would be a possibility? Thanks. I will jump back in the queue.
So right now, Fortis is managing and operating the asset. I think ultimately at some stage we would want to see integration complete between Fortis and Gleneagles.
Thank you. Now we are going to take our next question. The question comes line of Yen Voo from JP Morgan. Your line is open. Please ask your question. Excuse me, Yen. Your line is open. We will proceed with the next question. Just give us a moment. The question comes line of Selviana Aripin from HSBC. Your line is open. Please ask your question.
Sure. Thank you very much, Dr. Prem and the IHH team. Maybe I do have a bit of questions around Malaysia operations, medical tourism in particular. I note that it was about 15% of Malaysian revenue in first Q, and it is now 14% in the first half, which actually suggests a little bit of a slowdown in Malaysia. So two questions on that. The first one is on Indonesian medical tourists. How are we doing on that? Are you seeing a slowdown in 2Q? What are you observing in 3Q so far? My second question is around Cambodia. Have you been able to grow your Cambodian patient pool in Malaysia? Thank you.
Thank you. On Malaysia, medical tourism remains very strong. You will note that in the past we've said it was low single digits. With Island, it doubled, and subsequently, with the more medical tourists coming into our other hospitals in the Klang Valley and in Johor, it has continued to grow to 14%-15%. There will be some seasonal variations. 14%-15% it doesn't vary very much. We think that it will grow even further from what it is now. That's not only from Indonesia but from other markets as well. Malaysia has now tapped newer markets like Bangladesh and certainly Cambodia as well. Cambodian patients come to Malaysia, but they also come to Singapore. I think both countries have got offices now in the country to facilitate medical travel for patients as well.
Most notably, we also have patients now coming in from other markets, like Philippines.
Bangladesh.
Bangladesh as well. These are the countries that we. This one I think will continue to expand. Malaysia is an extremely conducive country for medical travel. The government has got an agency, the Malaysia Healthcare Travel Council, that helps to promote tourism as well as hospitals in the country. We are very positive about it. I wouldn't be too worried about the 14% or 15%. It can only go up.
Yeah. Maybe just to add 14% is the revenue contribution. But if you look at the absolute MYR number on a year-on-year basis, we've actually grown medical tourism by 15%. It's just that in Q2, we had a very strong local patient volume growth after the Q1 lows because of the festivities. That's why you saw a dip in percentage contribution of revenue. However, the absolute MYR number in terms of medical tourism actually grew.
Thank you.
Thank you. Dear participants, just a reminder, when you would like to ask a question, please make sure that your line is unmuted. Now we are going to take our next question. The question comes line of Nicole Goh from UBS. Your line is open. Please ask your question.
Thank you very much to the IHH team. Actually, I had a follow-up question on the Singapore margins. I note that, of course, the focus is to grow the dollar EBITDA and the dollar earnings. I just wanted to get a sense, does this mean that in the near term, given that you have introduced packages and all that we will likely see a dip in terms of the percentage margins? Or you think that you do have levers to kind of smoothen it a little bit out? My second question is also on Malaysia. Likewise, I think the margins are quite high. It is holding up at 28%. Again, going forward with continued pressure from insurance as well as the potential introduction of MediAsas in a wider manner, would we be expecting a lower margin in the longer term? Thanks.
S ure. Hi, Nicole. Just on Singapore, I will probably start with Singapore. You answered your own question. As I said, the focus is really on dollar EBITDA growth, right? We are trying to tackle a few things at the same time. One, we are trying to drive volumes up, which means packaging more, and hence there is certain discounting. On the other hand, we do have the ability to also kind of use some cost levers, which is what we are doing currently in Singapore. So it is a mix and match of everything else. I think longer term, if you ask me, steady-state margin, somewhere around, I would say the 27%-28% is what would be more sustainable, in my view, for Singapore. With regards to Malaysia, we spoke about this as well. We have worked on various cost initiatives in Malaysia.
We've kind of squeezed whatever cost we can in Malaysia, and the volumes have come through in Q2, and that's why you see the margins that you're seeing. Again, longer term, the margin guidance that we've always given to Malaysia is around the 26%-27% mark is what we've been giving in terms of guidance for Malaysia.
Sorry, can I just make a very quick follow-up on Singapore? Does it mean that the packages that you want to introduce, are there significantly more that you want to introduce or you're pretty much done and it's just more like tweaking on the surface? Thanks.
The packages will continue. As Ashok presented, tomorrow you'll see this sign-up with AIA. We're doing a big launch with AIA in terms of packages and being their preferred partner. Some of those efforts will continue with payers. As I said, the focus is really to drive volumes because if you drive volumes better, you'd be able to monetize your costs as well better. Some of the costs of running these hospitals are fixed, and as long as you're able to drive volumes, you can monetize your costs better. That's really what we are aiming to achieve.
Thank you, Nicole. Now we're going to take our next question. The question comes line of Amanda Foo from Macquarie. Your line is open. Please ask your question.
Hi. Good evening, Dr. Prem, Dilip, and the IHH team. Thank you for the call and congratulations for the strong set of results. If I could have a quick follow-up on your Singapore operations. I noticed that quarter-on-quarter, your inpatient revenue intensity was still going up despite some of the insurer pressure that you would have undergone. How should we be looking at this progressing in the coming quarters, especially since we are focusing on more cost-competitive packages? Are we still on track for normalization of Singapore operations by the second half of this year?
Okay. Maybe the first thing I want to say is that intensity is a combination of several things. First is the specialty mix, and as you know, specialties are changing very rapidly across our countries and our hospitals. Many years ago, when cardiology was the big focus, we tended to see cardiology as the dominant specialty in many of our hospitals. But over the years, as we have managed to control some of the risk factors better for cardiology, that has dropped. Today, oncology is rising, and when you have got patients with cancers, then the treatment tends to be more intensive because there's a wide variety of options for us to treat them with, and they are improving all the time, from chemotherapy to targeted therapies, from routine radiation to proton. There are a number of these things that happen. That's the first thing that happens.
Secondly, how complicated the problems are. Singapore and a few of our other countries as well tend to have more and more complex cases coming to us, especially when medical tourism is rising as well. Patients have got problems that have been with them for several months before they come to us in Singapore and some of the other countries where you see the intensity going up. This is across the board. But in Singapore, it's more pronounced because it is a hub for some of the most complex procedures that we do across our markets. That's the reason why you see the intensity growth as well.
On the normalization by second half, can we get a confirmation if it's still on track for second half?
Yeah. As we said, if you remember, last quarter, we mentioned that Singapore has bottomed out, and as you can see, Q2, it has indeed bottomed out, and it's ramping up. It is in the right direction, it's in the right trajectory. We expect Singapore to start ramping up. As I said, I think in July, if you look at the utilization numbers, it's already gone up to 55%. We are in the right trajectory, and we hope to normalize in the next couple of quarters.
All right. Thanks. Secondly, congrats on the PATMI margins. I see that you have reached double digits for the first time in three years. I just wanted to find out, is this something that we can expect continue sustainably? Also, with the strong momentum from Hong Kong and Acıbadem, can we expect dividends to be paid out of these entities? If so, what do you plan to do with these dividends? That's all for me. Thanks.
I can probably talk about the PATMI margins and then hand it over to Ashok for the Hong Kong dividend, and then in turn to Evren for Acıbadem. From a PATMI margin perspective, again, we've been doing several initiatives. One is looking at our current debt and the cost of debt and to see how we can rapidly reduce our cost of debt as well as reduce our debt itself. That's yielded results. As you can see, there's been a drop in our interest expense by 8%. On the other hand, we've also looked at cash, which sits here and there, and optimizing some of the treasury to make the cash sweat better, make it earn. You can see that we have some other income, which is due to some of these initiatives that we've undertaken across the group.
Yes, I would say apart from this, the other factor has been the depreciation bit. We are very cautious in terms of capital deployment and without compromising growth. We've been looking at capital commitment. You can see that there's been a reduction in CapEx, but not a reduction in growth. That's something that we are very focused on. Some of these elements have come together to help in expanding the PATMI margin. Ashok?
Yeah. I think the question on dividend, whether it's from Hong Kong or Acıbadem, this basically depends on our overall capital allocation policy. I think we mentioned this earlier as well. We want each of our entities to be capital sufficient so that they can meet their requirements for expansion through greenfield, brownfield CapEx themselves, rather than the funding coming from the group. I think that's the basic guiding sort of principle, and I think at the right stage where we think there's excess money sitting in any of our entities, that money can be extracted back to the group.
The other thing that I'd also like to point out is Hong Kong, I think for about six months now straight, we have been PATMI positive. It's a $10 company with HKD 4 billion of shareholder loan and HKD 4 billion of external debt. So despite that, for six straight months, we've been PATMI positive, which is very encouraging to me.
Can I just quickly follow up? Can we then confirm that for Hong Kong and Acıbadem, we're already at an excess cash kind of situation?
No, I think so. I think especially for Hong Kong, like Dilip mentioned, most of the excess cash will go back into any CapEx requirements they have. With Acıbadem as well, the plan is basically any excess cash would be used to repay any intercompany loans.
Right. Thank you.
Hong Kong also has debt, so it is better for you to repay the debt rather than keep the cash there. So that is the other thing that we keep doing in terms of looking at paying down the debt levels in Hong Kong as we start generating cash.
Understood. Thanks.
Thank you. Now we are going to take our next question. The question comes line of Yen Voo from JP Morgan. Your line is open. Please ask the question.
Thank you. Good evening Dr. Prem, Dilip, and management team. Good sets of results there. Congratulations. The first question is with regards to the double-digit ROE that is on track for 2028. I just want to follow back up on the earlier question on increasing the boarded stake to 51% over the next three to five years. How much of that ROE improvement is expected to come from India, and how do you ensure the additional capital being deployed there is actually ROE accretive rather than dilutive? That's the first.
Our aim and intention is, like I said, to take our stake up to 51% over the next two to five years. But obviously, every time we increase our stake, that is on the basis that that investment is accretive to us. I think that fundamental doesn't change. And of course, if we are able to increase our stake in Fortis, the contribution to the PATMI level, and therefore ROE, will improve. But when we talk about double-digit ROE contribution, we are talking about all the entities, Malaysia, Singapore, Acıbadem, and India, the four big markets, basically playing in tandem and contributing to that double-digit path.
And Yen, to answer your question again, this is something that we've mentioned openly in many conversations, but any acquisitions that we do or any kind of co-production that we do, we do expect that to be ROE accretive year two, latest year three. And that's the guiding principle that we've always had for anything that we do.
Okay, that's clear. And a quick follow-up on that. Given the prudent capital allocation that you have done quite a fair bit there, how much more can we expect to come from deleveraging the balance sheet?
If you look at our overall leverage, I think we still have headroom. Please do bear in mind that out of the roughly MYR 13 billion in debt, almost MYR 6 billion comes from, one, our PLife REIT , and also we have ROU liability, which forms another big part of it. Those two contribute to the liability. If I take that out, I think your net debt to EBITDA will be probably about?
1.4x?
1.4x.
1.5 x.
Yeah, 1.5 x. There is reasonable headroom in our balance sheet for debt. But having said that, any debt that we raise for investment would be assessed very carefully. As you can see already from our CapEx, we have been very sharp and very focused in where the CapEx goes and what kind of return we need for the CapEx to generate.
That is clear. If I can squeeze in one more question. The growth in Malaysia, it is really looking coming from revenue intensity that has gone up 15%-16%. How much further can intensity grow before you start seeing resistance from insurers and patients?
Even though you see inpatient admissions grow single-digit , the reality is the daycare cases is growing double-digit . You must have seen in the presentation, Yen, that day cases or day case revenue grew double-digit , right? T hat has not been accounted for here. So one is intensity, the other is volumes, both in inpatient as well as in day cases. And in terms of intensity, obviously moving up the acuity in terms of more complex cases. And as Dr. Prem mentioned, as medical tourism goes up, some of the cases that do land in Malaysia are higher acuity, just like the way it is in Singapore as well.
Maybe this is a good point to reiterate our overall strategy, which is not just inpatient intensity in our hospitals. While that remains, of course, a key factor, we have spoken, I think, in the last few years about expanding to out-of-hospital day cases, ambulatory care, and that is a very deliberate strategy. So what you are seeing in Malaysia, the very significant shift, double-digit growth in day cases and ambulatory care is actually part of that strategy that we have executed. So while we are very appreciative of inpatient intensity, and if it is really because of we are doing more complex cases, medical tourism being one of the main drivers of that, we are also looking to increase our day surgery expansion, which in Malaysia contributes significantly to their revenues. So it is part of our overall strategy anyway.
That is clear. Thank you very much.
Thank you. Now we're going to take our next question. The question comes from the line of Raghavendra Divekar from Nomura. Your line is open, please ask your question.
Hi. Just a couple of follow-ups. I think if I look at the Turkey and Europe business, we've seen, especially for Turkey, foreign patient revenue share going down from about 18% in FY 2023 to now about 11% in the first half of 2026. Where do you see this settling in the future? Do you think it could stabilize at these levels, or do you think there's further downside to this? My second question is just on the Singapore cost control. If you could point out to any new measures that you've taken which have helped you improve your cost control in Singapore, whether it's things like improvement in your usage of IT or labor rationalization or any of these other measures. Thanks.
Maybe I'll take that. On Turkey medical tourism, when you see the ratio coming down, it's actually a reflection of strong lira. I'll give you some numbers to back that as a data point. For example, first six months in Turkey medical tourism, we already crossed $100 million mark. If you look at second quarter, our medical tourism volume has gone up by 10%. For the first six months, this was 6%. For six months it was 6%, second quarter 10%, which means we had a very strong second quarter in terms of volume. How that got reflected into our dollar revenues, because 99% of our medical tourism revenue is charged on hard currency, we don't charge in Turkish lira.
If you look at the dollar revenue, our second quarter medical tourism revenue in dollar terms went up by 29% and compared to first six months of 19%. Conversely, because of the strong lira and our domestic revenues increasing higher than our dollar revenues, there was a ratio reduction. But in terms of real growth, we definitely see a very strong medical tourism business.
For Singapore, again, there have been several factors. It's not fair to just name one, but whether it is procurement initiatives, whether it is IT and FD productivity improvement initiatives. There have been various initiatives that have really come together to improve the cost performance in Singapore as well.
Thank you.
Thank you. Dear speakers, please be kindly advised that there are no further audio questions. Please kindly proceed with any written questions.
All right. I will just read out the questions, and I see some of it has already been answered. For the first one from John Chee, Singapore Ops. I think Dilip already addressed that and would encourage to focus on the full year rather than 2Q this year against 2Q last year. There are seasonality at play. Second question in terms of Fortis accreting its stake. I think Ashok has addressed that. Evren, if I can trouble you for outlook for Acıbadem in 2H of this year, please.
Sure. Definitely. Volume-wise, we expect a much better second half of the year because if you look at first half, we got various festive holidays, Ramadan shifting the first half of the year. That is why. With now summer season over, school starting, and typically fourth quarter is our strongest quarter for the year, we expect a much better performance in our operations.
Thank you, Evren. Next set of questions comes from Chun Song. Can you share progress of bed commissioning in Mount Elizabeth Orchard? I think it has been fully reopened since end of third quarter last year. What was the constant currency growth for Singapore revenue intensity? Do you expect better pricing power moving forward? I think as shared, revenue intensity is a function of case mix, so that does go up and down. Generally, I think we expect Singapore to recover towards year-end . In terms of pricing power, we are working on driving volumes, as Dilip mentioned, to monetize the cost better. Focus is not so much on margin as it is dollar EBITDA growth. What is the greatest challenge you face on your MSA between Fortis and Gleneagles India, Ashok?
Yeah, I think the transition has been very smooth, and I think we are quite glad with the progress in which MSA is progressing. Whenever there is change, there is some sort of risk of attrition. But those were all factored in at the time we went in for the MSA.
Thank you, Ashok. Can you share your progress on the Centers of Excellence initiatives in Malaysia? Any target launch and timeline on, Dr. Prem?
Actually, no specific target launch. These are initiatives that have been taking place for a while in Malaysia already. We already have COEs. We've had them for some time in Penang, for example, in Island and in Gleneagles. In Klang Valley, we are now taking the opportunity of our clustering approach. We are trying to cluster the tertiary hospitals together with the secondary hospitals clusters. There is some rejigging on where neurosciences will sit versus cardiology versus oncology. Some of that is happening in the Klang Valley and down south in Johor as well. These are our three key hubs at the moment. It's ongoing. It's already happened, and there'll be newer ones that are coming up as well.
Thank you, Dr. Prem. Next question, Joanna, Jefferies. With Singapore offering more price- competitive packages, how should we think about impact on margins? Is the current high 20% margin sustainable? Are these insurer packages typically annual or longer-term contracts? Are prices reviewed annually or fixed throughout contract? How much flexibility is there to adjust pricing for wage and other cost inflation? I think the first part of it, again, just to reiterate, the focus is on driving dollar EBITDA, not so much on margins, yet guidance for Singapore remains to be on the high 20%. In terms of the insurer contracts, I understand that this is a varying contract. It can be annual, it can be multi-year. Perhaps, Dr. Prem, you want to comment more on the pricing and flexibility there too.
Singapore has a large number of insurance contracts, both local, be it employee benefit contracts. The big ones obviously are our Integrated Shield Plans. We also have international insurers, the Bupa's and AXA's in all of the world. So we have several of these. They are usually contracts of a certain period with the ability to review prices mutually with the insurer. Maybe CPI-based, or it may be procedure-based . There are several ways of doing it, but there is some flexibility built into all these as well, certainly for wage and cost inflation.
Thank you, Dr. Prem. Chun Song, next question: What are the key drivers of double-digit growth for revenue intensity for Malaysia? This is mainly driven by case mix and just as Singapore sees its growth coming from that, it's similar for Malaysia as well. Timeline for Fortis and Gleneagles integration, Charul Agrawal. I think before when the MTO was completed and the MSA was signed, we did mention it's within 12 to 18 months from then, which is end of last year. Ashok, does that timeline still stand or are there changes?
From an operations point of view, it's fully integrated.
Right.
Fortis team is managing the assets except for Mumbai.
Next one comes from Izzat Munshi. How will Fortis fund its planned addition of up to 4,000 beds? Does it entail equity injection from IHH? If so, how would this affect your CapEx guidance? Fortis being separately listed has its own balance sheet as well, and as you're aware, once the MTO was done and dusted, opens up all capital structures for them to consider. Of course, as a controlling shareholder from IHH, if there is a clear need for capital, that is something we will consider. It doesn't change our CapEx guidance. It still remains at MYR 2 billion down from MYR 3 billion earlier. I think our focus is really on maximizing use of existing assets. Dilip, anything to add?
In fact, if I can. Fortis from a cash flow point of view and a balance sheet point of view, bulk of their brownfield expansion or greenfield expansions are self-funded or even their debt to EBITDA is very conservative right now. And again, CapEx optimization doesn't mean scaling back on growth. It is more effective utilization of our existing facilities and turning beds faster without having the need to grow the CapEx. So that's really what we are focusing on where we can.
Thank you, Ashok and Dilip. Next set of questions and Dr. Prem we'll take this one and one more, and then the rest will go back to the analysts separately and individually as we're running out of time. Natasha, Maybank. Hi, congrats on the results. Can you comment a bit more on Integrated Shield Plans now that it's been a couple of months since it's introduced? Do you see this as a major contributor to the patient shift towards public hospitals? Dr. Prem.
To clarify, the shift towards public hospitals, this was one of the reasons because of the restructuring of the Integrated Shield Plans in Singapore. But there were other reasons as well since the other was simply the general increase in costs in Singapore in other areas as well. So people who needed healthcare also looked to the public hospitals to spread their cost increases. The aging population, which we have already spoken about. Some of the folks who are retiring, who in the higher age group in the 60s and 70s felt that the public sector was a lower cost option in the long term. So there are a number of reasons for this. And I think typically whenever there are any Integrated Shield Plan changes, there will be a little bit of flux.
I think that is more or less settled down and we are seeing and primarily because the public hospitals are also pretty crowded now. We are seeing a shift back into private hospitals in general.
Thank you. Yep.
China ops, I think maybe very quickly, the clinics are doing very well after the restructuring. The hospital currently at a high occupancy of about 70%+ , and we are looking to increase the beds further. As you know, we've gotten the Chinese, the state insurance Yibao Plus. We've gotten that. We've also got partnerships of public hospitals for private cases to flow from these hospitals into our Parkway Shanghai Hospital, which has resulted in certain procedures like orthopedics, spine procedures, going up pretty significantly. That's where the China hospital's growth, the P/S ratio rate is going to be.
Yep. With that, we'll just close it off with Shen from Goldman, both your questions together, and we'll get back to the rest separately. Medical tourism revenue from Malaysia, top five markets and year-on-year growth for these. We'll come back with the growth stats, but the markets, as mentioned, Indonesia is the top. We have Cambodia and Bangladesh coming on strong. Revenue guidance 10%-12% for 2026, but first-half run rates below that on FX impact translation. Could you elaborate on whether the revenue guidance has been on constant currency? The answer is yes. Ding Soo, updates on China Ops. Maybank, we've addressed that. Maybe one last one from Joanna. Planned pace of ACC expansion in Singapore. Will this involve standalone centers, hospital-linked facilities or via partnerships? What CapEx utilization and timeframe are needed for a typical center to break even?
ACC expansion continues apace in Singapore. As you have seen, Mount Elizabeth Orchard has done it, Novena has done it. We are looking at some of the other hospitals to do that as well. It could be both facilities next to our hospitals because that makes sense from a decantment perspective. It's still linked to the main hospital, but we can do a lot of ambulatory procedures outside. We've got one in the community at Woodleigh Mall. The Singapore side is looking at other locations for ACCs. Also looking at different models. Instead of a pure community-based ACC, could it be an ambulatory surgical facility, for example? You would know that we have one which is fertility-based at The Heeren. Yeah. And typically, one of the reasons why we do that is, of course, we set it up very quickly.
The CapEx requirement is smaller, it is closer to the community, faster response time with respect to patients, patient experience is very good. That is something that we will be pushing apace, not just in Singapore but in all our countries as well.
The CapEx actually, Joanna, the CapEx varies from what kind of center it is. Whether it is just a day care center, but is it a surgical center, so on and so forth. It varies from center to center. The center at Woodleigh Mall, the CapEx will be very different from having a surgical center opposite our hospital. In terms of break-even , again, based on the facilities offered there and based on the intensity, the break-even also varies. It could be anywhere from six months or three to six months to even 12 months based on the kind of center that we operate.
Thanks, Dr. Prem. Dilip, just quickly on the last one. Chun Song, progress of EBITDA margin improvement, six Gleneagles hospitals. You can see the India segment through the quarter since MSA was announced. The gap between our results proportionate and Fortis has narrowed, so that tells you that is improving. What is the target margin over the medium term? I think Dilip shared before. If we can get to the mid-teens for Gleneagles on a standalone basis. I think in the next couple of quarters, there will be good progress. Anything to add on here, Dilip?
So obviously, we have always mentioned that over a period of time, the Gleneagles margins will start to converge with the Fortis margins. Bear in mind, not too long back, we were in low single-digit margins. Now the margins for Gleneagles standalone is in double digit. The idea is really to kind of bring it to the mid-teens as the next phase as we go on and approach the next phase in terms of integration of some of the operations.
Thank you, Dilip, and that concludes the results presentation. Thank you for joining us. As usual, if any questions or if we left out some of them, please feel free to reach out to myself and Jeremy from the IR team. Thank you.
Thank you.
Thank you.