We will start with, I'll talk about the Q1 performance. Then our CEOs of our large portfolio companies will talk about their particular performance of their companies and how it's progressing. Giorgi, our CFO, will talk about portfolio valuation and liquidity and dividend income outlook. In the end, we will have a Q&A session, and as always, we'll answer to all of your questions. Now let me give you the key developments, overview of the key developments. Our NAV per share was flat in Q1. In pound sterling terms it went up 2.1%. This is due to the decline in share price of Lion Finance Group. It was in Q1.
However, its share price is recovered, year- to- date we have NAV per share growth of more than 9%. Basically, our large portfolio companies performed well, the LFG share price performed well post Q1. That was the result of the 9.2% year-to-date growth in GEL terms. The performance of our large portfolio companies, as I said, was exceptional. It continued to grow top line at 13.7%, it resulted in 27% year-over-year EBITDA growth. It's a phenomenal growth. I must say that our base for last year was pretty high. Our base was already grown quite a—i n Q1 2025 was already we had experienced a high growth.
On top of that, doing another 27% growth is phenomenal. Basically, I think that the performance is exceptional, and NAV growth will reflect it, as you see that we are pretty conservative when we are valuing the multiples of our private portfolio companies. Basically this is this growth will result in the end the higher NAV growth over the year. The one big development which we had, that one of our invested company, Lion Finance Group, got into FTSE 100 Index, which is another big achievement of the management team and overall the company. Congratulations to them.
That will increase the profile of the company as well as Georgia Capital. Our buybacks continued. We bought back 475,000 shares. In total, we bought, in value terms, $22 million, and in total, we bought back more than 1/3 of our issued share capital. I'm really pleased with the buyback pace, you know, we have and the magnitude of buybacks we are doing. We continue to do the buybacks obviously as, in case of the big share price, it's even more pleasant. To talk about the macro performance, we had a Georgia macro is firing on all cylinders. It's amazing performance of the macro.
You know, we have our 7.5% real GDP growth in 2025. That continues with 7.9% in January, 8.8% in February. Please note that this is on top of the high growth which we had in Q1 in 2025, and it's just compounding is amazing what's happening in Georgian economy. We expect this growth to continue, especially with this conflict in Middle East. It brings a lot of inward investment from Middle East in Georgia, as well as expats from Dubai coming to Georgia, as well as trade and logistics being a very strong in Georgia because of the conflicts in our neighboring country.
That, you know, plays very well with Georgian economy, unfortunately or fortunately, I don't know. You see, I will jump into the reserve slide. You see the reserves continue to grow. $ 500 million interventions the National Bank made in Q1. The reserves, foreign exchange reserves, are highest ever at $6.3 billion. That basically reflects the inflow of the foreign currencies through trade, logistics, through export of goods, what we are doing. This kind of, it also reflected in 2025 in current account deficit. On the back of the high GDP growth, we have recorded lowest- ever current account deficit in Georgia's 35-year history.
It's a -2.6% of current account deficit, which is unbelievable. You know, it's very hard to believe that Georgia could have achieved such a low current account deficit, especially on the back of, you know, the some of the years we had a double-digit current account deficit. That tells you the strength of the economy and the balance sheet. Even though this inflow of the foreign currency is very strong and there is a lot of interventions are coming from the National Bank of Georgia, inflation is still manageable at 4.3% level, which is on the back of this growth and on the back of this magnitude of intervention, it's still very good result. On top of that, the interest rate is still flat at 8%.
Very good combination, and I think that the National Bank and the government is managing the economy superbly, to see a such a great balance of the growth, interventions, foreign currency reserves growth, and the growth of the inflation being flat at 8%. If we move to the NAV per share chart, we see a breakdown. The breakdown is the growth breakdown is such that you see Lion Finance Group contributed - 0.6%. Nearly 3% contribution was the positive from the private large portfolio companies. Because we have decreased the value of the. We decreased the value because of the lower multiples we applied to the valuation, we had a nearly 1% negative contribution from the multiple change.
Emerging and other portfolio companies declined by 0.5%. Buybacks contributed + 0.3%. Operating expense was - 0.3%, and other was 0.9%. That should do is a flat NAV per share growth. However, you have a 9% growth year- to- date because a reversal of the share price of the Lion Finance Group. Now on the next slide six, you see a strong NAV per share growth over time.
Since the inception, we nearly have a 19% of CAGR or in NAV per share growth, which is respectable. Not at the level we want to be. We want to be at 25%+ over the longer period. In a shorter term, in five-year period, we are at 27%, and in three-year period, we are at 32%. Five and three-year NAV growths are along in line with our ambition. Longer is we are still behind in since inception to our ambition of having a 25%+ NAV per share growth. If you look at the next slide, you see a discount shrinking. We are at a historically lowest point at 16% NAV discount.
This is on back of the high growth of NAV, what we are being achieving, probably is not very demanding, NAV per share discount. On the next slide, we see our progress in capital return program of GEL 700 million. We have announced very recently, and pretty much we have achieved it. We are it not much to complete this program, and once we complete, we will announce a new program, obviously.
On the next slide, share buyback and cancellation program, you see more kind of granular information, how it has changed over time. Basically the share buyback cancellation program has reached $268 million mark. Which it's a lot of buybacks we've done. Please, I would remind you that during the COVID or just right after the COVID, our market cap probably was along that number of $250 million. We managed to buy back.
Unfortunately, share price went up, we cannot buy back as aggressively as we used to do, as we were doing before. Net capital commitment, you see, we are at 3.6% level, which is within our 10% limit. As you know that we are, we want to retire whole of our HoldCo debt, which currently gross is $50 million, probably we will be retiring that soon. We will go our leverage to zero. That's kind of our next target to have no leverage at GCAP level.
The next slide, net capital commitment overview. You see reasons of movement during this one-year period, and you see that the cash, net cash increases is the largest contributor into this decrease in the NCC ratio. On the next slide, you see the even farther over the longer period of time how it has changed, and you see that our. Once we were pretty over-levered at 42% of NAV, and right now we are at 3.9%, as I say. Now just to give you the aggregate portfolio company performance.
As I said, this magnificent performance cannot be done, like, such a high growth rates on the back of the very high base. It's that's kind of which I was myself surprised. I guess the economy doing well as well as our management performing exceptionally well, very efficiently and very effectively. They have achieved the, you know, 27% year-over-year EBITDA growth. It's unbelievable. Year- to- date, year, last 12 months is 25%, which is another high growth. Revenue went up like 13%+ , so it's way above the inflation.
We are really growing well, and our CEOs will talk about same-store sales growth and other metrics which they have been looking closely. The cash accumulation, same. It's a very strong cash accumulation. In Q1 we are 30% up year-over-year. LTM is lower, but due to this seasonality effects, basically we expect this cash, operating cash to grow along with the EBITDA. Cash conversion is close to 100% for all of our portfolio companies. Now I will let our Pharmacy CEO, [Tornike Nikolaishvili] , to talk about the details of the performance of the company, and I'll come back when we have a Q&A session.
Thank you, Irakli. Hello, everyone. I am pleased to share a brief business overview and update on the performance of our Retail Pharmacy business. For the first quarter of 2026, business continued to deliver very strong and solid results across all key metrics. We continue to be the largest player in the Retail Pharmacy market in Georgia with around 34% market share in organized trade based on 2024 figures. Retail remains our core business, contributing around 85% of total revenue. We operate two well-positioned pharmacy brands, GPC, targeting the high-end segment, and Pharmadepot serving the mass market. In addition, we operate two franchise brands, The Body Shop and Alain Afflelou Optics. We are active in Armenia and Azerbaijan.
During the first quarter, we expanded our network by five pharmacies, including one in Armenia, primarily in a cost-efficient format requiring limited capital investment. As of March 2026, our network includes 458 pharmacies, 14 Body Shop, and five Optics stores. In terms of performance in first quarter 2026, our retail revenue grew by 8.6% year-over-year, supported by 4.5% same-store revenue growth and strong ramp-up of newly launched pharmacy stores. We added 42 new pharmacies in last 12 months. Revenue growth was also supported by 11% year-over-year increase in average bill size. We are encouraged by this trend as it reflects healthy consumer demand and solid in-store execution. Our wholesale business achieved 6.7% revenue growth as we continue to deliver on our strategic focus.
This growth is primarily driven by increased product availability across distribution channels. At the same time, we continue to deliver consistent gross profit margin improvement, reaching a record high of 34% in first quarter 2026, up by 1.7 percentage points year-over-year, supported by a shift in the sales mix towards high-margin products and improved supplier terms.
On the next slide, let me share how it is translated into financial performance. Improved profitability supported by disciplined cost management across the business resulted in record high quarterly EBITDA of GEL 29 million, up by 20.5% year-over-year. Importantly, this growth was accompanied by strong cash flow generation, with EBITDA to cash conversion at 114%. It's well above our 90% target, highlighting the quality of earnings and operational discipline. The combination of EBITDA growth and strong cash generation translated into a solid leverage position with adjusted net debt to LTM EBITDA at 1x , which is comfortably below our target level of 1.5x.
On the final slide, to summarize. First, we are delivering sustained revenue growth supported by same-store revenue growth and strong wholesale performance. Second, we are consistently improving profitability and achieving record earnings through margin expansion and disciplined execution. Third, we are maintaining a healthy level of leverage, supported by strong business performance and solid cash generation. It's giving us flexibility for future investment and potential shareholder returns. Thank you for your time. I am happy to take your questions during Q&A session.
Now let me hand over to Giorgi Baratashvili.
It's healthcare, I think, [Tornike], Irakli, and then I.
Okay. I'm very pleased to report another strong quarter for the healthcare business. We remain focused on higher- margin outpatient services. As a result, our outpatient revenue grew by 17% in first Q 2026, with its share in total revenue rising by 1.4 percentage points to 46.2%. We have significantly broadened our clinical capabilities across the network. We introduced neuronavigation in two large hospitals, expanding the service portfolio with a complex high acuity capabilities that was not previously available within our network. We also introduced catheterization laboratory in two of our regional hospitals in Western Georgia, representing a significant milestone in the expansion of our cardiovascular service coverage in the areas. We introduced dozens of new services in the regions, including chemotherapy, neuromyography. We also opened Georgia's first human milk bank in Batumi.
On the leadership front, we appointed a new CEO for our regional and community hospitals. We also continued to recruit star doctors and attracted more than 60 physicians in total in Q1, meaningfully strengthening our medical capacity and ability to deliver high-quality care across the network. Our lab retail network continued to grow, reaching 12 branches with further expansion planned ahead. In Q1 2026, EBITDA grew by 16% year-over-year to GEL 27 million. EBITDA margin also grew further to 20.4%, reflecting a 0.3 percentage- point improvement compared to last year same period.
On the slide two, turning to our hospital business, EBITDA grew 12% in the first quarter with operating cash flow of GEL 8 million and an EBITDA- to- cash conversion ratio comprising 45%. Cash conversion in first quarter reflects typical seasonality in state collections, with the ratio expected to improve in the second half as payments will normalize. Occupancy rates declined by 4 percentage points from 75% to 71%, driven by a lighter flu season compared to the prior year. Flu-related admissions typically carry above-average margins. On the next slide, in our polyclinics business, a favorable shift in revenue composition towards higher- value services contributed to the overall revenue growth of 14%, which translated into a 28% growth in EBITDA.
The diagnostics segment maintained its focus on retail expansion, which is a key driver for profitability improvement. Retail revenue grew by a remarkable 54%, fueling strong overall segment performance, with total revenue up 18% and EBITDA growing 26% year-over-year. To summarize, the first quarter was strong, both in terms of financial performance and the strategic steps we took. EBITDA grew significantly, margins improved, our operating model continued to demonstrate its resilience. Alongside this strong performance, we continued to invest in our clinical capabilities and people, expanding infrastructure, onboarding new talent, and deepening medical expertise across the network. Quality remains at the core of our strategy as we consistently raise clinical standards and broaden access to specialized services, ensuring that our approach translates into tangible improvements in patient care.
That's it for today. Thank you. I will hand on now to Giorgi.
Thank you, Irakli. Hello, ladies and gentlemen. I will overview the Insurance business we run. Just a quick reminder that we divide our business in two main business lines. That's Property and Casualty and Medical. We had an amazing quarter. On the base of last year's high results, we recorded record- high revenues. Our I nsurance revenues grew by 27%, while the profits grew by 70%. Backed on the high profits and revenue growth, our key operating metrics through both Insurance lines still remain very strong. Our net premiums totally in both lines grew by 54%, while in medical we invested 75% growth and in P&C we've seen 77% growth.
To have a dive in each business line, our property will remain market leaders in P&C business line with a market share of 34%. Our revenues increased by 13% in P&C that were backed by our life insurance portfolio and property portfolio that was supported by the tariff improvement increase, plus the retail growth in both portfolios I mean, in retail growth in motor insurance mainly, plus the adjustment of the rates in corporate and retail business. Our profits grew even more in main P&C with the record high of 27%, and of 27% growth and our ROEs still remain very strong at 32%. In total, we paid a lmost GEL 5.5 million dividends to GCAP in total.
Proceeding from the abovementioned, I'm really proud that our key operating metrics remain really solid. Our net premiums grew by 7%. We had a significant improvement in combined ratios by 2 points that were mainly driven to lower loss ratio, plus the improvement in motor and property insurance tariffs that we adjusted. As you remember of our main operating principles are health portfolios, so we adjust our insurance rates quarterly according to the actuarial opinions and the reports. It's good that we had another round of improvement, and that was translated into combined ratio improvement in Q1. Even though we increased our rates and adjusted, we had an increase in the number of insureds by 10%.
The return of policies grew by 15%, and still our renewal rates in retail stood very strong at 78%. To have a look at the health insurance, I would say that the health insurance recorded historic- high figures that we've never seen during the existence of the health business, health insurance business that we run. Our insurance business in health insurance grew by 34%. Just to underline, yeah, we remain market leaders also in the medical insurance with a market share of 34%. Really strong and high market share in line with the appetite of our appetite that is in the range of 30%-35%.
Insurance revenues grew by 37%, while we had a, I would say, 200% growth in our profits that we've never seen. Our management in health insurance lines did an amazing job. Mainly the growth was driven by newly added tenders with the new tariffications in line with our healthy portfolio strategy and disciplined underwriting, plus the organic growth that we've seen in corporate business in Q1 2026. Plus the tariff adjustments that was in mid-teens and about 15% in health insurance. The key operating metrics remained very solid. Net premiums grew by 75%.
I would like to remind you that, during last investor call, I underlined that we have secured about GEL 60 million. It was GEL 50 million, but it turned out to be GEL 60 million contracts already that they incepted in Q1, and it's translated already in our revenues plus the profitability. I'm very happy that the adjusted underwriting approach has been translated already in the profitability that we see right now with the translating ROEs of almost 50%. We had a significant growth of combined ratios of more than 7%.
That was mainly driven because of the low seasonality of the flu in medical insurance in Q1, plus, as I said, the diversification of the portfolios in retail insurance, plus the mix of the new added products of the newcomers for the foreigners. Starting from the Q1 2026, all foreigners that come to Georgia are obliged to buy travel insurance. That added in another GEL 1.5 million in our revenues. And we had a 77% growth in the retail. As I said, our main retail remains core of our strategy in the coming years and the coming months. We had a 77% increase in the retails.
That translated into 35% increase in our medical insurance, where out of this 35%, we have added about 16,000 new retail insureds to our portfolio. While we had an increase of mid-teens of the rates, where I'm really happy that our renewal rate still remains at record high. In health insurance above 80%, that's according to the peers and according to the insurance business, 80%+ in renewal rates is considered as very high. To make a summary on the health insurance, the improvement mainly was, we had a robust growth, yeah, of the profits of 70%.
That was translated into improved ROEs, 32% in P&C, while we had almost 48% in medical insurance. As I said, the retail remains in the core of our strategy, and we are really in line with our strategy to develop retail business, where the QoQ had a 77% increase, translated to additional 16,000 insurers and driving to 2.8 million new insurers. The good news here is, as I said, we had a law passed in the Parliament obliging every tourist that comes into Georgia to buy the travel insurance, and that added our total revenue GEL 1.5 million, plus the distribution mix that we really, really pay attention.
We think that together with the tariff improvements, sustainable profitability is done with the product mix, and that helped our product mix in terms of the optimization in support of sustainable profitability. To end up, we paid GEL 5.5 million to GCAP in dividends in Q1. For as dividend in Q1 2026. Thank you. I will pass the floor to my colleagues. Thank you.
Thanks, Giorgi. Hello, everyone. I will quickly now take you through the impact of this remarkable first quarter results by our portfolio companies on our NAV valuation. Starting with the summary page, in the first quarter, as you know, in every first quarter and the third quarter, we do in-house valuation. All these valuation updates were performed internally by the Georgia Capital's valuation team. Our portfolio value was around GEL 5 billion, which was spread roughly half was in Lion Finance Group shares, and another half was a private portfolio companies, where 40% was attributable to the large portfolio companies with the Retail Pharmacy being the largest private portfolio company that we hold. On the following slide, you will see the impact on the multiples.
The multiples in healthcare services business continue to be flat versus previous periods. In the Retail Pharmacy and in Insurance, we had the multiples decrease, you know, slightly. Part of the reason was that they had both very strong performance, which was ahead of the previous DCFs that we had. We would expect that as these performances continue, that these multiples will likely recover to the previous levels. On the next slide, you see the change in the portfolio value during the quarter. We had about a GEL 100 million decrease in the value of the Lion Finance Group.
Roughly half of that was attributable to the dividends and the buyback dividends that we participated in, and another half was attributable to the changes in the share price, driven by the, you know, exchange rate impact and also us selling down a little bit of stake from 16.9% down to 16.6% during the quarter. The valuation gains in the large portfolio company were very strong, actually in excess of GEL 150 million. When we take into account the decreases due to the multiples, it was around GEL 100 million, where the biggest contributors were Retail Pharmacy, about half of it, and Insurance was also another half of that co-contribution.
Other portfolio companies decreased by 24, where roughly half of that was attributable to the two renewable energy pipeline projects that we discontinued during the quarter, that, you know, had a negative impact on the valuations. Now, like looking into more details in each portfolio company, you can see on the next slide that we have in the Retail Pharmacy about GEL 40 million valuation growth because of the 20% growth in the EBITDA. Also this quarter was very strong in terms of the cash conversion. Net debt decreased even more by, you know, we had GEL 27 million positive cash inflow, that decreased the net debt to EBITDA now down to 1x.
With that, you know, we had the Retail Pharmacy Business growing to above GEL 900 million in the quarter. In the Healthcare Services Business, again, as a strong quarter, it translated into about GEL 30 million EBITDA gains. However, the first quarter tends to be slow in terms of the cash conversion. The net debt increased here by GEL 21 million, which largely offset the gains that we had from the EBITDA change. Although in the coming quarters, we do expect that the operating cash conversion will go back to the levels that we've seen in the past. It tends to be that the fourth quarter is the best in terms of the cash conversion in this business.
In Insurance, the 70% growth in the net income that Giorgi spoke about also translated into a similar increase in the value of this business, which was then, you know, partially offset because of the multiple change. As I said, as we go through in the future periods, we should see that multiple converge again to the levels that we had here before. On the next slide, this, you know, largely concludes the valuation. In terms of the liquidity, we continue to have a very strong liquidity despite us spending about $22 million on the buybacks during the quarter and also paying the half-year coupon on our bonds. We still continue to be in a net cash position. We have about $85 million worth of liquidity at the end of March and about $50 million gross debt.
Our net cash was around $35 million, and, you know, we continue to have a very strong balance sheet. We do expect that in the coming quarters, dividend inflows will accelerate. You can see on the next slide the dividend inflows that we had in the first quarter, which tends to be slow in terms of the dividend collections. From the second quarter, more portfolio companies start paying us dividends, which, you know, leads us to conclude again that for the year in 2026, sorry, we still expect that the dividend inflows will be in excess of GEL 200 million across our public and private portfolio companies in 2026. So far, we received GEL 40 million, which was, you know, from Lion Finance Group and from our insurance business.
In the second quarter, the Pharmacy business will also start paying 2026 dividends in addition to the Insurance business. That summarizes the financial side and the valuations of our presentation, and I'll go back to Irakli for the wrap-up.
Thank you, Giorgi, let me just summarize what we talked about before we move on to Q&A. Strong performance of our private portfolio companies. Twenty-six percent EBITDA growth, 27% EBITDA growth year-over-year. NAV per share year-to-date more than 9% growth. Share buyback continues, and we expect to continue to do more buybacks. Our capital return policy is firing on all cylinders, and we expect strong growth in 2026. Now let's have questions. Anano, please, let's open the floor for Q&A.
Thanks, Irakli. I would like to remind the viewers that if you have any questions, you can type those in in the question and answer panel or raise your hand. Currently, we are waiting for the questions.
I think we have two people—
Oh, yeah.
Waiting here. Yeah.
First we have Dmitry. Dmitry, you can unmute yourself and the floor is yours.
Thank you very much. Congrats on solid results. I have a few questions, please. The first one is, regarding the discount to NAV and future M&A strategy. Just wanted to understand, like, because discount to NAV narrowed quite significantly. Congratulations on that, by the way. Great job.
Like, my question is whether you're planning to become a bit more aggressive, specifically in Georgia and maybe whether you're also looking into investing more in neighboring countries via your subsidiaries. That's the first question. The second question is just a quick follow-up. You mentioned that you plan to become debt-free on the HoldCo level, like, if you could share a bit more color on the potential timing. When should we expect that, since I guess buyback becomes a little bit more tricky? Thank you.
Sure. Thanks. Thanks, Dmitry. Basically in terms of our investment strategy, we are very actively looking in Georgia as always, but we have started to look at our neighboring country very closely. Through our portfolio companies, we wanna tap in the opportunity to invest and grow in neighboring Armenia. We are looking at the number of opportunities, but as you know, the M&A is very unpredictable. It's very difficult to predict. We don't want to promise anything here and that it will happen. What I can assure you that we've been very active in Armenia, and it's our strategic market in terms of the growth.
Georgia obviously remains and will be our core market, but we wanna make Armenia as core as Georgia is going forward. Hopefully we will grow there, and we make some investments, investment opportunities, especially through our portfolio companies. Bolt-ons, we like the bolt-ons in general, as you know. I hope this. Regarding deleveraging, basically we have only $50 million left on HoldCo level, we may, you know, delever it in this year. You know, it's not a big amount.
Thank you. Thank you. Thank you. That's very clear. Maybe a very quick follow-up on the geographies. You said you wanted to make Armenia, like, as important as Georgia, like, maybe have you looked at Uzbekistan, for example? It's also quite an active market, quite promising.
Well, we have looked at the Uzbekistan and it's, it is indeed promising. I think that we have a neighboring market which is very close, both culturally, mentally, economically. There is a lot of synergies there. I think one step at a time. I think that we like Armenia very much. It has also high growth like Georgia has. It has structural reforms which we like a lot. At this stage, as I said, you know, one at a time, we don't want to spread ourselves thin. I would not exclude Uzbekistan going forward.
Thank you very much.
Thanks.
Thanks, Dmitry. From what I see, Milosz wants to ask a question. Milosz?
Yes. Thank you for taking my question and for the presentation. I have one question regarding the Retail Pharmacy business. Obviously you highlighted the strong cash generation and the fact that leverage is below your targeted level of 1.5x . And this is despite the fact that the business has been contributing in terms of dividend income for GCAP. I was wondering whether you would consider something like a dividend recap recapitalization, which means, you know, raising debt to facilitate maybe a larger distribution from the Retail Pharmacy business. Do you prefer to keep some, you know, dry powder for inorganic growth or any other purposes?
Thanks, Milosz, for the question. We like the dry powder, especially what we talked about, you know. We are looking at neighboring countries, bolt-on acquisitions, and I think that, you know, instead of doing the dividend recap and then investing back in the growth, probably it's, you know, it's very good for the bankers, not for us.
Understood. Thank you. All clear.
Thanks, Milosz.
Thanks, Milosz. Now, Ben Maher would like to ask the question, so, Ben, you can go ahead.
Hiya. Thank you for taking my questions. I've just got a couple. The first is on the large private portfolio. Obviously, as you mentioned, the EBITDA growth this quarter was very strong and in the high 20s. I'm just interested how you see the sustainable growth in terms of earnings in those companies going forward, particularly in light of that greater- than- 25% NAV per share ambition you mentioned earlier on the call. That's my first question. Second one, again, is on capital deployment, how you're thinking about that. You mentioned Armenia. I'm also quite interested in your thoughts around, I guess, the accretiveness of buybacks going forward and also how you're thinking about potential divestments, if any, of existing portfolio companies.
Obviously, your track record on divestments have been very good. Again, I think that's another positive point for the equity story that I think some people are quite interested in. Thank you.
Sure. Thanks for the questions. So EBITDA growth, 25%, what we had, actually we had 27%, but basically 25%+ EBITDA growth this year. Is it realistic for our large portfolio companies with the economy growing like that and also the conflict in the Middle East? You know, probably it is realistic. I mean, the, the longer term what we are looking at on EBITDA growth, not only the operating performance growth, but also the buybacks which are accretive for us. Okay, it's as much as it used to be. It's now at 16% in every discount we have, but it's still accretive. We continue doing that. Also the divestments what you mentioned.
We like to sell above the NAV mark, and usually we've been selling above the NAV mark. Beer we sold 57% above the NAV mark. Water utility we sold more than 30% our NAV mark. Basically all of that, buybacks, selling above NAV, private portfolio growing, Lion Finance Group delivering excellent results, and they became a dominant power in Georgia with the banking. There was a two-bank game. It seems like we are moving to one- bank game. I think that would result to our target of 25% NAV growth over time to continue.
In terms of the capital deployment question you had, we have a very clear vision where we wanna deploy our capital, and this is clearly in Armenia. Structurally, neighboring-wise, everything. In all that things, it's just gives us a very strategic geography. I will not exclude that we open the office, as a GCAP we open the office in Armenia. There are a lot of interesting under-penetrated sectors to be consolidated, and that's what we've been doing in Georgia, and that's where the huge NAV growth and value creation we have delivered, and that's what we like about Armenian market. It's really behind in development of some of the sectors than in Georgia.
We are really ahead. I think that we have a, you know, strategic advantage of going in and reforming some of the sectors, which would give a benefit to Armenian people as well as shareholder of Georgia Capital. On divestments, we don't rush. We like to divest with a premium, as I mentioned before. We have ongoing discussion all the time for the portfolio companies, what we call it, emerging in other, really on other portfolio companies. We have ongoing discussions. We are very open to such transactions given that we are happy with the price. We are very picky when it comes to the price.
On buybacks appetite, to address your question on our buyback appetite, we still like the 16% discount when we are growing 25% a year. Basically it is a, in a way, it is in a 12- month period, it's a 40%+ discount we are buying the shares. Forty percent discount, we used to, we were buying nearly 100% discount before. Unfortunately, market was smart enough to not to allow us to continue. Now I think that 40%+ discount is not a very bad discount. If you grow NAV per share by 25% and 16% or 15%+ you have a current discount, 40% discount, that's what we are investing in. It's not bad, we like it. We'll continue doing that, doing the buybacks.
I hope, Ben, this answers your questions, but if you have some more, please shoot.
No, no, that was very helpful. I think it's interesting your comments on Armenia. You know, I think you said it was gonna, at some point in the future expect it to be a similar size to Georgia. I know Lion Finance, when they changed their name a few years ago, that was to reflect their growing international expansion. I'm wondering if you guys are gonna change your names in the future also in a similar way.
We may have a subsidiary Armenia Capital, you know? We could be, you know, more local.
Exactly. No, I was joking.
No, no, it's not a joke. It's a very important part.
Thank you.
Cheers.
Thanks, Ben, for the interesting question. Next up we have [Melker Samuelsson], who would like to ask a question. [Melker], you can go ahead.
Yes. Hello, good afternoon. Maybe quick couple of questions. If we start on the healthcare, there was the lower occupancy primarily driven by regional and community. How much of that comes from the Gormed acquisition? Also, what is the margin impact from the acquisition, and what do you see as sort of a normalized level of profitability in this segment? Is the first question. Secondly, what do you see as the normalized level of combined ratio across the both the P&C as well as the medical insurance? Sorry, there's some background noise.
So, uh—
And then—s orry, continue.
Yes, yes. Normalized, level of combined ratio across the two insurance segments. Finally, on your remarks just now about investment into Armenia, would you be looking at the same sectors as you are currently established, or do you have any sectors in mind that you would evaluate to invest in Armenia, on what you just explained?
Yeah. Can I start with the investment? Because then I will have Irakli answering the healthcare, and then Giorgi will address your combined ratio for the insurance business. In Armenia, in the beginning, we will be fully occupied with the bolt-ons, bolt-on of our asset light businesses. Pharmacy is one of the that the outpatient healthcare is another one. Not inpatient obviously, it's asset heavy with outpatient is very interesting. Insurance, we are present there with the reinsurance business, and we will continue to be present and expand our insurance activities in Armenia. We will look at the also consolidating the insurance market there. There are a lot of opportunities within our bolt-ons.
We will look also outside the current portfolio companies. Next, I think the two, three years we'll be very much occupied with our bolt-on opportunities in Armenia. Basically, the Armenian economy is not as big as Georgia, but it's like 80% of it. We are looking at GCAP doubling its portfolio companies over time. The private portfolio companies, basically. You can look it that way. Does it answer your question on Armenia and sectors and?
Yes. Fully. Thank you.
Let's have Irakli addressing the healthcare question about the occupancies, and then combined ratio, we will have Giorgi.
On the first question on the occupancy level dropping from 75% to 71%, it was primarily driven by not having a flu season, especially in January. The Gormed has the acquisition that we made, they had a 70% occupancy rate in the first quarter, so it did not impact the overall occupancy levels. On the normalized profitability, we think that two years ago we had a EBITDA margin of 15.8%. Now we are at 20.3%.
We believe that in the medium to long term, 25% EBITDA margin is achievable. We will do our best to get there and maybe even more. That's it. I think it answers your questions.
Yes. Is that specifically for the regional community or is that healthcare overall?
Healthcare overall.
Regional and community, would it be lower or?
It will be definitely lower because it is the most dependent on state revenue, so it will be most difficult there. You, you never know, the state might introduce maybe some new financing or whatever. As it stands now, it's most difficult to improve the margins in the regional and the community hospitals. Now, yeah, I think you're on the—
Sure. In the P&C business, our medium-term combined ratios are in the range of like we're targeting 85%, and that's where we want to stand in the medium term. And we have a track record of sticking in the range of 80%- 85%, so we think that it's quite achievable considering our diversification, the product mix in the P&C. For the health insurance, we are targeting something in the range of from 90%- 95%. As you know, the behavior of health insurance is higher in terms of the combined ratio. We have a track record of operating in the range of 90%- 95%.
We think that adding some new health related products, will enable us to give the combined ratios in the range of 90%-95% in the health insurance. Anything else about the insurance?
Yeah.
Does it answer your question?
Thank you, Giorgi.
Yeah, no, that's very clear. Thank you.
Thank you. Thank you, [Melker].
Thanks a lot, [Melker] . We have two incoming questions in the Q&A panel. Before we start answering the questions, I want to remind everyone that you can use the Q&A panel to ask questions. The first question is from Varun [Gosain]. Appreciate your plans to go zero debt. What are the risks to the upside? Appreciate your plans to go to zero debt. What are the plans for the private businesses over time? Go public or sell to strategic foreign buyers or keep them private?
All of the above, but I think that in terms of priority for us when we are considering divestment, strategics are the best because they appreciate the transaction. They appreciate our companies way more. They see the strategic value, they see the management value, they see the synergies with their own businesses. There is another higher, let's put it as a higher valuation than going public. Our philosophy, you know, is very simple. You know, if we can sell expensively, we sell it. There is no strategic asset for us. Our strategic assets are that we don't have strategic assets. That's kind of the thing. Basically, if we get a good offer for any portfolio company, we are happy to entertain.
The structure of the compensation for the management of the companies are such that they are happy either way to stay and manage the company or to sell and cash out. Basically, we want to align all the interests when we, when we talk about our strategy of having no strategic assets. For us, going just to summarize that, strategic buyer is the most valuable because they appreciate the work we, our management has done in institutionalizing the businesses and finding the, you know, Western style institution in Georgia is a big value. I n the market, which is a high growth, is a big value.
In the future, they will have a opportunity to buy assets which will be in two high growth markets in Georgia and Armenia, so bigger footprint. We are increasing the footprint for our presence. We will be hopefully increasing the footprint for our presence. That's kind of a target for us. Divesting to strategics is kind of the best recipe we had and I think that we will continue building the strong institutions which will be appreciated even more by strategics.
Thanks, Irakli. The final question that we currently have is from Harvey Sawikin. Goldman Sachs has raised their oil target by $10 for 2026 with risks to the upside. How much would this take of Georgian GDP, and how would that impact your business?
Basically, over the time, when I was managing the bank, you know, the oil price sensitivity was the biggest thing, and every time the oil price increases, you see our profits growing. Even though we are not oil country, we have, we are in a neighborhood of the oil producers. Middle East, Azerbaijan, Russia, et cetera, they have a positive impact on the GDP. Oil price going up, that's the beauty of Georgian economy. Oil price going down, we don't suffer that much as the oil producers are suffering. Actually, our economy is doing well even that, but when oil price is increasing, basically we are having a big inward investments, trades, trade continues to grow, logistics, et cetera.
It's, I think that the overall oil price increase plays well for the Georgian economy. I don't know how many percentage point of GDP growth we should see, but I don't exclude that we go from 8.5 to 10.5 growth.
Thanks, Irakli. We have another question from [Hong Bo]. The number of stores in Armenia is still small. Are you still studying the market, or are you ready to speed up the development?
Yeah, we are looking at both options. Basically, we have a option of expanding aggressively and building out the stores. We have that option. We also have an option of the acquisition option. We are looking at both options, and whichever is better in terms of the value creation, we will pursue that.
Thanks. There's one additional question. On Georgia side, back in a back-of-envelope calculation indicates of 3,000 people per store. How much growth room do you have in Georgia?
Let's go to Tornike on with this. Tornike, please open your video.
I'm here. The, as I understand to, how much are we going to grow the number of stores, yes? We don't have a plan to continue aggressive growth of the number of pharmacies. We are evaluating and analyzing any urban development or some strategic places where we don't exist and only doing that. To answer you more specifically, there won't be that kind of aggressive growth in the future. Organic.
Thanks, Tornike.
Thank you.
I think we have no further questions.
Yeah.
Thanks, Anano. Thanks, everybody for participating in our call. Special thanks to the people asking us the questions. We love engagement, and I hope that it continues. Stay tuned for, to see growth of our private portfolio companies. Thank you