Hello, everyone. This is Ahmad Matas from ERGMS, and welcome to Care's Second Quarter of twenty twenty five Results Conference Call. I'm pleased to be joined with Doctor. Abdelaziz Al Abid, Chief Executive Officer Jan Zepreim, Chief Financial Officer Moshe Ralli, Chief Strategy Officer and Alia Balba, Head of Investor Relations. We'll start with a brief presentation on recent results and developments, and then we'll open the floor for Q and A. Alia, please go ahead.
Thank you, Ahmad. Good afternoon, everyone, and thank you for joining us today. We are pleased to report Care's first half results, which saw a continuation of the positive momentum established at the start of the During the first half of the year, we reported a growth of 32% in revenues as well as 10% increase in net profits year on year. During this call, we'll go through our first half performance in more details and provide updates on our strategic progress. We will start today with an overview of our performance and strategic direction by Doctor.
Abdulaziz. Mr. Jahan Sep Khan will then take you through a detailed breakdown of our financials for the six months period. Finally, we will open the floor for Q and A session to address any question you may have. With that, I'll hand over to Doctor.
Abdulaziz to begin the presentation. Doctor. Abdulaziz, over to you.
Thank you, Ali, and good afternoon, everyone. Thank you for joining our call. The 2025 has been a period of remarkable growth for Care Medical. The company has delivered strong performance across all key financial and operational metrics. Operationally, we saw a 40% year on year increase in total patient count to four hundred and sixty thousand, more than four hundred and sixty thousand, where you can see it in the middle of top graph.
That was driven by both Verizon outpatient visits and higher inpatient admission. Year on year growth of, in the inpatient volumes is primarily linked to the seamless integration of a Salem hospital and consistent growth recorded at our legacy hospitals at Rawabi and their Melas branches. Similarly, inpatient admissions grow grew significantly, in the first half of the year, and that was supported by similar factors. It is worth mentioning that the continued growth of more in the more established facilities has been partially driven by increased contribution from our three year contract with Prince Sultan military medical city. The operational expansion reflected positively on our financial performance with revenue growing 32% year on year.
Further down the income statement, we saw EBITDA expanding by an impressive 36% year on year and net profit climbing 10% year on year, reaching SAR 165 millions, as you can see in the graphs in the lower, side of the screen. It is important to note that the last year's, bottom line figures had been partially boosted by a one year off SARO of 29,000,000 ZCAT provision reversal following the finalization of prior year's assessment by ZCAT. Looking ahead, our strategic focus remains centered around expanding our business, diversifying revenue streams, and further improving efficiency. Now I'll take you at the strategic initiatives supporting these goals before driving it to the financial details. The consistent growth was delivered as a direct result of our focused strategy, is built on four key pillars, new services, expansion, efficiency improvement, and digital automation.
Over the last year, we have taken notable strides on all four pillars with our efforts and investments already translating to improve performance and returns. In terms of, new services, our recently launched, Relive, mental health, center provides specialized mental health services for wellness, focused clients, supported by growth in our cash segment and diversified our offering. On the expansion front, the integration of SLM Hospital is exceeding expectations with the facility achieving, key operational and financial milestones well ahead of schedule. The development of, the 400 bed greenfield hospital in in the real in Riyadh is also proceeding as planned with construction underway for a a phased launch in 2028. Internally, we continue to prioritize operational efficiency and digital automation.
And currently, we're integrating our ERP system to unlock, greater economies of scale and aligning with the MOH standards to accelerate our transformation. These initiatives make care a more streamlined and efficient organization, and I want to thank entire team at care for their commitment to this process. With that, I'll hand it over to Jazz, our chief financial officer, to walk you through the operating and financial performance.
Thank you, doctor Abdulaziz, and good afternoon, everyone. I appreciate you joining us today. We have achieved solid operational growth in the first half of the year driven by healthy organic, expansion at our legacy facilities combined with the successful integration of Al Salaam Hospital. As you can see on the slide, we served over 460,000 patients in the first six months of twenty twenty five, marking a strong 40% increase from the same period last year. The growth was supported by a 40% rise in outpatient visits.
Al Salam Hospital contributed nearly 83,000 visits, while our Rawabi and Malas branches recorded growing outpatient volumes as well in the first half. Similarly, inpatient admissions rose by 47% to over 14,000, driven by Al Salam Hospital's contribution as well as considerable inpatient volume increases at the Rawabi and Malas facilities. In line with increasing admissions, surgical procedures also saw a significant increase in the 2025, growing 4044%, year on year to 12,000 procedures. Al Salaam Hospital accounted for eighteen percent of the total surgeries performed during the period. A key highlight of our strategy execution is the substantial increase in our bed occupancy rate, which rose to around eighty one percent in the first half from sixty one percent this time last year.
This remarkable increase, which comes despite the significant 16% expansion of our overall capacity versus last year is underpinned by two key drivers, our proactive efforts to diversify our patient mix and increasing volumes leveraging the recently signed, Prince Sultan contract. Our ongoing operational enhancements and our diverse service offerings are fundamental to our growth strategy. They make us a more compelling choice for major players like Osee, MOH, and insurance providers, which is key to capturing more referrals and successfully navigating the changing health care market. Let's now move, to the financial trends for the period. Keyera delivered a robust financial performance in the first half of the year, with revenue rising 32% year on year to 783,000,000 riyals, While total cost of revenue increased versus the comparable period of 2024, company wide efficiency measures resulted in a 33% year on year increase in gross profit to 290,000,000 with an expanded margin of 37%.
Further down the income statement, we saw operating expenses increase by 34% year on year, predominantly driven by a 40% year on year rise in, SG and A outlays, related to the newly acquired assets as well as ongoing efforts to strengthen the company's head office team. However, improved gross profitability filtered through to our EBITDA, which expanded 36% year on year to 233,000,000 rials, yielding an improved margin of 29.8%. Net profit in the first half of the year increased by 10% year on year to 165,000,000 riyals with an associated net profit margin of 21%. It is important to note that last year figures include a one off, 29,000,000 reversal for Zakat provisions following the finalization of prior year's assessments by Zadka. Adjusting for this reversal, the normalized net profit for the first half of first half of the year shows robust underlying growth of around 36%, year on year.
Now let's take a closer look at our revenue and cost breakdown. Our top line expansion in the 2025 was fueled by several factors, increased revenue from Gosi referrals, contribution from Al Salam Hospital acquisition, and the continued ramp up of our contract with Prince Sultan. At the cash paying segment, targeted initiatives strategically introduced throughout 2024 propelled an impressive 34% year on year rise in revenue. The insurance segment also contributed positively, recording double digit growth during the period, fueled by higher patient visits and improved, insurance policy uptake. In terms of revenue by hospital, the Rawabi facility remains the primary revenue contributor currently, accounting for 45% of total revenue, followed by Malaz at 39% and Al Salam at 8%.
Now let's take a closer look at our costs. Our total expenses grew 31% year on year to record 601,000,000 rials. Cost of revenues made up 82% of this figure, while operating expenses accounted for the remaining 18%. During the period, we saw our cost of revenue, rise 31% year on year mainly due to two factors, higher salary expenses as we acquired new facilities and increased spending on medicines and consumables as our surge surgery volumes, continue to rise. At almost 62%, salaries and benefit constitute the biggest component of our cost of revenue followed by, supply chain costs at 27.4%.
Similarly, our operating expenses rose by 34% year on year. As previously mentioned, this was largely driven driven by higher, g and a expenses for the most part related to the integration of our recently added Al Salaam Hospital. Let's turn now to our balance sheet and cash conversion cycle. As of the end of the 2025, Care's balance sheet remains solid with total asset reaching 2,500,000,000.0 rials, a 1% rise year to date. In the six month period, current assets increased as higher cash and cash equivalents outweighed the decline in trade receivables and term deposits.
Liabilities declined by 5% year to date to 832,000,000 rials, mainly due to a 5% decrease in noncurrent liabilities driven by payments against lease liabilities and long term loans. Current liabilities also decreased by 4% on a year to date basis due to lower the card provision balances. Day sales outstanding improved by 5% year to date, standing at hundred and forty five days in second quarter. This was balanced by a reduction in days payable outstanding to ninety six days. Meanwhile, the inventory turnover period shortened to seventy five days.
Overall, the cash conversion cycle remained stable at a hundred and twenty four days. Net debt stands at 23,000,000 rials, down 70% from Kears' net debt as at year end. I will now quickly discuss our receivables management in the first half of the year before before moving on to cash flow dynamics. Trade receivables grew by 16% from the 2024, a figure consistent with our top line growth. This growth is mainly the result of higher balances from insurance providers and the MOH and associated government bodies.
The receivables portfolio is balanced across our various payer segments and aging profile. We are effectively managing the aging of our receivables and remain focused on maintaining an efficient collection process. In terms of cash flow highlights, we saw a marked improvement in cash flow from operations in the first half of the year, which was bolstered by strong earnings and notable decrease in payments for Zakat, finance income, and end of service benefits. Net cash flow from operations totaled 80,000,000 rials for the six month period, a significant turnaround from the negative 17,000,000 riyals recorded last year. While working capital changes remain largely stable at 145,000,000 riyals, the company's improved operational performance contributed positively to its liquidity.
CapEx spend amounted to around 48,000,000 rials during the first half of the year related for the most part to building and leasehold improvements as well as medical equipment. These investments were more than offset by 300,000,000 rials returned in time deposit during the first half. Net cash outflow from financing activities recorded 122,000,000 rials related to payments on loans and lien lease liabilities. As a result of these factors, Care Medical saw a net increase in cash and cash equivalent of 213,000,000 rials in the first half. As of June 30, the company's cash reserve stood at 477,000,000 rials, positioning Care Medical well for continued operational and strategic expansion initiatives.
This wraps up our presentation, and we are now happy to take any questions you may have.
Thank you very much. We'll open the floor for q and a. If you wish to ask questions, either send them through the chat, or you can use raise hand function. We'll start with questions from the line of Michelle from SMB. Please unmute yourself and go ahead.
Thank you, gentlemen, for the presentation and good afternoon. Couple of questions from my end. First, on the cost profile this quarter. And I'm here comparing the figures in the second quarter versus first quarter this year. I have adjusted the reversals we had in ACL in Q1, and I can see that EBIT margin was pressured in the second quarter when I compare it to the first quarter.
Even though that we have growth in sales, Salam is doing much better. Can you elaborate here? Did we see any increase in SG and A for Salam specifically this quarter? Because as per my understanding, Hany, we don't have much of ramp up as of now. If you can give me a color on on SG and A in the second quarter compared to the first quarter this year.
And, also, you used to report details on Salam. So if you can give me, like, the number of patients we saw either in the first half or the second quarter. And do you expect any CapEx to for Salam to in order to renovate the facility? I have another question, so we'll do it later.
Okay. So I'll answer the SG and A, first. SG and A is a very fluid, expense for us. As you know, there are a number of initiatives, that we are undertaking, and there are a number of avenues that we continue to explore in terms of strategic growth, yeah, and implementing our strategy. So we do engage with, consultants and advisers on a regular basis.
That, keeps the SG and A quite variable quarter on quarter. But what I can assure you is that it this is not driven by Al Salam. Al Salam has a very stable G and A as of now. Regarding your other questions on Salam's disclosure that we used to do before and not now, doctor Bilazis will take that.
Hi, Usha. Salam, we wanted to give some disclosure at the beginning just to make sure that people appreciate what was happening there because there was some skepticism around the performance and the impact, you know, and then our overall performance. However, going forward, as we don't disclose every unit specifically yeah. I mean, we we will not continue to disclose the slam consistently. Keep in mind that what happened in quarter one is a reflection of the overall improvement.
Yet, there are lots of initiatives that, in short, we we think will improve their performance further down. The CapEx, yes, we're spending on Islam. However, it's not a major expenditure. When improving the outpatient pharmacy, the clinics, the the layout of some of the rooms, the reception, introducing some digital solutions as well there, and the the ICU better than a patient. So there is a CapEx expenditure, and that's will further improve it for this. But it's not a major CapEx expenditure.
Thank you. I think I have it. So, Angelus, maybe just one last question on the on the receivables. Did we notice any delays from a launch this quarter? I've seen the trend in other players.
So is this seasonality being good? And well, I didn't notice anything out of nature from a March.
Nothing in particular. It was the summer month. People were on vacation. However, it's just a timing issue. As of now, what I know, there are significant payments from Ministry of Health and Prince Sultan that have been forwarded this week to Ministry of Finance to for payments to care.
So it's just a timing issue for us. We have not experienced any significant delays.
Perfect. Thank you.
Welcome.
Thank you. We'll take questions from the line of Margherita. Please go ahead. Unmute yourself and go ahead.
Hi. Am I audible? Yes.
Yes. You are now. Go ahead.
Perfect. Thank you. Thank you for taking my question. Congrats on another great quarter. My quick sorry.
My key question is around GYR. I was wondering what happened there. We saw a steep decline in patient volumes quarter on quarter and year on year. Are you seeing any structural changes in the market? Is there a decline in pilgrims or maybe something else has happened there?
There isn't any decline in the pilgrims. However, there are the insurance for the pilgrims and the ombre performance is under a continuous revision by the Minister of Health. There are many stakeholders. There's the Minister of Health, the Minister of Health, as well as the insurance companies. So back and forth discussions among all the parties.
So we've seen an impact from that. However, we got a license to operate 20 intensive care unit beds. So as an inpatient rather than a critical care emergency room only. That should have an uplift on the performance. We should expect better performance in the months coming.
Okay. And overall, I remember we were extremely bullish about Mecca back in the day. How how would you estimate Mecca contributing to the top line of care, let's say, in the next maybe five years or so?
Look. I think we were bullish on Mecca as a strategic entry into the Western Province because that allows our allowed us to actually engage with our stakeholders in the best way we had never been before at in in because being in the Haram means you were in a much more prominent place. But as far as the financials are concerned, I think we have been very upfront since day one that this center, while ultimately it will be profitable and in percentage terms, will be accretive to our EBITDA profile. But in the overall legacy business context of pure volume and size of the revenue and absolute profitability, it will be in single digits. It would not be a sizable contributor.
The reason for going there going there was much more strategic as I just explained.
Right. Understood. Thank you.
We'll take questions from the line of Jonathan Milan from Moha. Please unmute yourself and go ahead.
Hi. Can you hear me? Yes. Perfect. Thank you.
Thank you, and congratulations on another fantastic set of results. I just have a couple of questions from my end. When is you're gonna renegotiate, I think, with insurers end of this year or early next year. Do you expect to be able to pass a price increase? And looking at the current occupancy around 80%, do you feel that you might have a bit of a ceiling on revenue growth because your hospitals are gonna be fully utilized, Salaam fully turned around, and that you can maybe struggle to grow revenues until the next acquisition or until Northern Riyad is open?
Mhmm. Or do you see room for better efficiency, like, lower average length of stay? I mean, how do you think about it this way? And also, how do you think about price increases specifically with insurance over the next few months? That's the the first question.
So, as far as, insurance contracts go, yes. Major contracts are coming up for renewal end of this year and mid of next year, and we are negotiating on price increases with them. Now, I can't, disclose the specific targets that we have, but, yeah, we are moving towards, a price increase. Now, as far as, your second question goes around, what was it?
Okay. Occupancy. Occupancy at 81%.
Occupancy. Yeah.
I'm I'm guessing without the long term care, it's
Yeah. Yeah. Yeah.
So I understand, your point that if if the hospitals are already 80% occupied, where is the growth going to come from? The you have to understand the Prince Sultan contract is a temporary fill in, contract for us. We have the beds. We are utilizing that contract to fill those beds and absorb our fixed costs. Now as the, business grows with Gosi, MOH, and insurance, we have a three year time period to gradually phase out Prince Sultan.
So at the next renewal, we may not go for the, the contract. We may not renew it and perhaps seek a smaller contract so that we can phase out these long term care patients and replace them with our other, more margin, accretive, contracts. So that's where the growth is going to come from.
Okay.
And and one last question. Regarding m and a, what are your thoughts now on potential m and a? And if you do you have a time line, say, a certain number of time, if we don't find the appropriate acquisition, we're just gonna continue growing maybe organically and and reduce some of the overhead that's brought about by the consultants?
Yeah. So, Jonathan, on the m and a side of things, keep in mind that, again, yeah, there is overhead, but the thing is the overhead is not ongoing. Right? So the consultants are actually engaged when we get into a discussion on an amenities that, you know, the other party has expressed interest in selling, and we have expressed an interest in buying. And now we are just going through the process of an offer, and we also on and so forth.
So outside of that particular scenario, there is no overhead that is incurred. The overhead, when it when we talk about consultants, keep in mind that the piece of work that's happening is not just on m and a.
There is a
there is a a piece of it. Someone probably needs to go on mute. So there is also a piece of work that's also happening on the organic growth opportunities. So for example, when we went into mental health and we went other areas, When we went into mental health and we went into other areas, we engaged consultants to help us scope out the market. So there is we're also that overhead is going. Now m and a by its nature onto the second part of your question. M and a by nature is something that you do active scanning for.
How and when an opportunity materializes and how you proceed with that is, again, time dependent. So I don't think there will be a scenario where we will say, you know what? We are not really finding anything. Let's just proceed with the organic side of the opportunities because keep in mind, we are proceeding with the organic side of the opportunities regardless. We are looking at all of those opportunity.
In fact, it's the other way around. So when m and a comes, we take a look at it and say, okay. This is something else that we can potentially pursue. So it's not an either or situation is what I'm trying to say.
Okay. Perfect. This is very helpful. All right, thank you.
Right. We'll move on to questions from the line of Madhu from Russia Capital. Ahead. Madhu, you need to unmute from let me send the request again. I've sent one. You need to unmute from your own application.
Hello? Can you hear me?
Yes. We can now. Go ahead, please.
Thank you, Ahmad, for the opportunity. My question is follow-up to what, Jonathan was asking about the growth going forward. So let's take a scenario where, you know, given that Prince Sultan will be you have contract for next three years. So in such a situation, what would be the catalyst that will help you in growing from the existing assets in addition to your plans to increase pricing for insurance patients? So could you list like one or two or what, let's say, three catalysts that will help to maintain a decent growth rate going forward?
That is one. Second, is it possible for you to quantify the revenues from Prince Sultan in H1 twenty twenty five?
No. To start with the second question, no, it's a fixed contract. So it depends on the number of the patients. It's 250 patients, and we have now 200 patients. So we're willing to accept at least 50 more based on their needs.
But the price is fixed. Now, the what we're gonna do with the contract when it terminates, like the national gut contract, and we developed opportunities with GOESI MOA to increase our referral base. We had more acute patients. And that's why when we lost the National Guard contract or we decided not to continue with the lower prices, that that didn't affect the revenue or performance overall. Same thing for Prince of Time.
We will reevaluate in a couple of years before it ends whether we will continue. And if we decide to continue, are we gonna continue with the same prices or we may ask for a need lease? If they decide to lower the prices, we may just walk away. And keep in mind that opportunities do arise in the market. So it's not unique for Peninsula Plan.
You have National Guard as well, the Ministry of Interior, the Security Forces, etcetera. But we evaluate the these opportunities based on the the prices, the overall capability of the existing facilities to handle these patients.
Okay. Okay. Just a follow-up on Prince Sultan. You mentioned 200 patients you have admitted, and your contract is for two fifty in a single year. Is that correct?
To to two fifty, patients, at any given point in time.
At any given point of time. So that so does that mean that the revenue, budgeted, if I assume the the value of the contract is $3.80 on an annual basis, somewhere around $120,000,000. So are you making somewhere around a 100,000,000 if I assume 200 patients are admitted? Is that a fair assumption on an annual basis?
It depends on the because the key patients keep discharging and readmitting. There's a time gap. So you have to take average patients, to see how much revenue you would have earned. But it's a fair estimate to, you know, take a call on, let's say, throughout the first half, 180 patients were there.
Yeah. Just splitting the value of the contract in three years will give you a rough estimate. And keep in mind that we do offer other services for these patients. Let's say a patient is admitted and he needed an extra procedure or we would build that separately as part of the contract.
Okay. Clear. Another question I have is on cost. We have noticed that your OPEC spikes in quarter four and this trend, you know, for last two years, and you attribute this to consultant fees. Can we see similar thing happening this year as well, wherein first March, the OPEC remains broadly same, and then in quarter four, there is a spike?
Is no trend behind it, Madhu. It's more of a, opportunity. I think Nassir can elaborate further, but, there is no specific trend that q four always sees a spike.
Yeah. So the one of one of the potential reasons is, keep in mind, our, internal planning cycle.
Right.
So outside of the budget, we usually update our business plan around q four time. Now when we are going into a business plan update, which is usually a forward looking five year plan, prior to that business plan, there are a lot of questions that we want to be addressed in the plan so to ensure that it will current. Now when that generally happens, at times, we do engage external parties to help us answer some key questions. So there is a nominal spike as far as overheads is concerned in q four. Now the quantum and nature of that varies, but you cannot isolate it just on this one basis because as Jazz mentioned, there are some opportunistic deals that are also happening in the background and consultants fees become due.
So if keeping everything the same, their q four overhead should always be slightly higher because of this business plan cycle, but the quantum of that, you cannot compare year between year because of the opportunistic aspects as Jazz and I have just explained.
Clear. Thank you. Thank you. Yeah. That's all from me.
Thank you very much. I'll just ask one question in the chat, and then I'll go back to the raise hand function. Naif is asking, do you refer patients from your existing hospitals to SLM or the growth more or less is happening or just organically from SLM itself?
No. We don't refer patients because, mind you, it's a different insurance class. So SLM covers class c insurance while the our hospitals are b plus. So we don't refer patients. However, Prince Sultan contract covers SLM as well.
They have five patients, I think, five or six patients at any given point of in time. And basically, these are patients who prefer to be in SLM because of family location and etcetera.
Understood. We'll go back to the raise hand function and take questions from the line of Heckmann from Lazard. Please unmute yourself and go ahead.
Hello. Am I audible?
Yes. You are.
Okay. Thank you, AP, for hosting. Thank you, management, for the present. I have two questions from my side.
The first one is regarding first one is regarding the pricing of Lucy patient. Is there any color on that? And what is the likelihood of returning back to a formal contract agreement? That's my first question. The second question is on the Anarcus Hospital and the CapEx associated.
If you can provide some color on how much has been already spent, when is it expected to open and the remaining CapEx for that, that would be very helpful. Also, if you can provide some color on the class or the grade of the facility, as it had a class A slash VIP, Any color on something else? Thank you.
You're welcome.
So to cover your first point, regarding? Yeah. So the there is no news on the the contract. There are no discussions on it. Mhmm.
We we are not pursuing that subject anymore, because they continue to refer patients to us. We've seen tremendous growth in GoSee patients, over the past few years, even this, first half of the year as well. They continue to pay as well as per the old contract. So we don't have any indications of, changes in pricing as of, the half year. Now, your second question was around Nerges Hospital.
So the Nerges Hospital, the construction is ongoing. We have not disclosed the amount that we have spent up till now. It's not significant. We have announced the appointment of the contractor to construct the gray structure. On an overall basis, the, the CapEx for the full facility phase one and phase two is expected to be around 3,500,000.0 rials per bed. So it's a 400 bed facility times 3,500,000.
And it's clear. Okay. So and the And
as far as the your question around which insurance segment it will be, catering to, the plan currently is to that it it will cater to premium, customers. That is class a and VIP. We may choose to go for VIP alone, but that's a conversation we don't have to, think about right now. But it's definitely going to be premium.
Okay. Is it expected to be opened in 2028 or has that been revised?
No. That is still the target that the first phase should be operational in 2028.
Okay. So just to follow-up on Goosey, it's making the same prices as before. So roughly more or less the same margins that we witnessed before. There's no change on that?
Correct.
Okay. Thank you. I'll take a lot. Thank you very much.
I love you.
Right. We'll take questions from the line of Brian from Jazeera. Please unmute yourself and go ahead.
Yeah. Hi. Thank you for your time and the presentation. I've got two questions. And the first one is about, well, impairments.
I saw that the earnings release was crediting the spike in impairments to the increase in revenue. But as a share of revenue, it is still quite heightened from your normal. So I suppose my question is, can we expect to see less visions or impairments in the next quarters for the remainder of the year? My second question similarly also asks on gross profit margins considering the price increases and everything going on. Is it fair to, expect, you know, similar levels of 37 or higher for the remainder of the year on gross profit margins?
Yes. So, the ECL, it does tend to rise in q two because of summer vacations and, not much traction coming from settlements. But, yeah, q three, q four generally does see reversals, as and when we settle the periods with the insurance companies. We are also, as management, expect some reversals coming in in q three and q four. Yeah? Was your sec what was your second question? Sorry.
Gross I was I was wondering if we could
margin. Yeah.
Yeah.
We we we we are expecting the GoC business to keep increasing considering all the infrastructure, investments, that are happening in in Riyadh, with the expo coming up, with the the football World Cup. GoSi business is going to increase. And we've already seen its share of revenue, reach 37%.
So a GP margin of 37% and above, is can be, reasonably expected in the near future.
Alright. Alright. Thank you. And if I can squeeze in one one more question, you know, since we spoke about price increases, do you sort of have a, you know, a range in mind of what what you expect, you know, what where you expect price increases, where you expect to with We're
not disclosing that because we're still discussing with our partners. So we don't want to show our hands nor do we.
Sure. Sure. Alright. I understand. Alright. Thank you very much.
You're welcome.
Thank you. We'll move on to questions from the line of Ahmed Deshakti from CECO. Please unmute yourself and go ahead.
Hello. Am I audible? Yep. Hi. Congrats on the great results.
I just have a couple of questions from my end. My first question is about your strategy update. So when are you planning to provide a strategy update? And I have one more question about Islam. It's basically about margins.
Given any of the recent ramp up in the Islam Hospital and possibly the hospital maturing, how are the margins there compared to the legacy hospitals? And just one more question about the Relib facility. So what are the long term plan with the the Relib mental health facility? Do you expect to expand the facility given the rank ramp up and high utilization? That's that's my
Okay.
So I'll I'll take question one and three, and then Jazz can speak to the margins in Salam. So look. So the strategy, we are currently contemplating the strategy refresh. And what we are targeting is to have this done within, let's say, the last quarter of the year. And based on the outcome, we will communicate to the market appropriately early next year.
Now the relive facility is one of the key questions that we would like to address in the strategy refresh in terms of the way forward and how do we want to approach this relatively new market. So that's going to be part of it. Jazz?
Yeah.
So for Al margins, although we have not disclosed the margins, for this, hub, what I can tell you that definitely it's not, similar to our legacy facilities because they operate in a higher network than compared to Al Salam. Now Al Salam margins are lower than what we we we want them to be primarily because of the the legacy contracts that we are dealing with. What management is doing that we have a target to revise our prices to bring them, as at market standard so that, we can improve the margins. And we want to work on our, rejections as well because the previous rejections were quite high, and we continue to provide, based on historical trends. However, we do believe that given our experience and our relationship with the insurance companies, we can get those rejections provisions to significantly, lower than what where they currently are. So we we do expect improvements, there as well.
Okay. Thank you. So so basically, the insurance prices revision will also be applicable to Salaam as well. Right?
Yes. Mean, they they are separate contracts. They are subject to separate discussions because, both, Al Salaam and our legacy facilities operate in different, networks. So we can't have single pricing for both. So it's a separate discussion, and separate timing as well because the contracts dates are not aligned.
Okay. Thank you very much.
You're welcome.
Thank you. We'll take questions from the line of Chiro. Please unmute yourself and go ahead.
Hi. Hi. This is Chiro Ghosh. Two very quick question. The first one is the the new services, the home care, Relay, all these things.
So what is the kind of revenue contribution you foresee? I mean, we just want to get a sense. Would it be very small, like, two to 3% of your revenue or 10 to 15%? How big or how small it is? Just a ballpark would give us some kind of sense to build in our model.
That's my first question. And second one, I'm just new to the sector. So just wanted to understand about in the past, you have said that you are working to get the license of license in the in the Western Region to cater to the Mecca client Mecca patients. So if you can just, please remind us what exactly what is and where what is the status currently.
So as far as home care and ancillary services like executive health check and all, those are single digit revenue contributor. They're more of, you can say relationship building and, patient satisfaction and patient loyalty rather than, significant revenue generating segment. When it comes to Relip, that, and mental health, that is something that, has the potential to contribute significantly to the top line. Now as far as the license question goes, we already have a license to operate in Makkah. What we did was that, we, upgraded our license from a critical care unit to a hospital, and we've already done that.
And the reason was that we wanted the ability to, admit the patient, under in our ICU beds, for observation, for, generic treatment rather than, just treating them within the four hour time period that is average for any emergency room and then transferring them to another facility. So this enables us to generate more revenue per patient as opposed in the past.
Okay. That's all from my side. Thank you very much.
You're welcome.
Thank you. We'll move on to questions from Abdullah Shamsan. Please unmute yourself and go ahead.
Am I audible?
Yes, you are.
Yes, you are.
You for taking my question and congrats on the strong set of results. Two questions from my end. First, the company has an overall growth in the outpatient services on a quarter over quarter basis. However, the revenue from outpatient has dropped around 30% quarter over quarter. And secondly, could you please elaborate more on Al Salam facility, where the growth is coming from?
Is it volume based, price adjustment? What are the things that you did in order to drive the growth? And is it possible? Or do you refer Goosey patient to a Salam facility? That's all. And thank you.
Thank you. I'll I'll take you Salam Hospital. The we had multiple initiatives to improve the Salam performance. The occupancy rate was around 50%. Now, it's around 80% steady most of the time.
The number of surgeries have increased because we recruited most qualified surgeons. Some of our surgeons do operate there on a part time basis. The acceptance from the minister of health has improved significantly since we took over the hospital. They had issues before, but it's not there anymore. Gozi, yes, they do have some Gozi patients just like another facility, but we don't transfer Gozi patients from our legacy hospital to there just because we want to boost up to the performance.
Mind you, the occupancy rate is already healthy at eighty percent. So it's driven mostly by increase in number of patients. The prices haven't been adjusted or revised yet with insurance companies, but that's coming up, Nishad.
Regarding your question on outpatient revenue, I don't believe that's the case. What what what I we can take this offline. Can you I would appreciate if you can send an email to our investor relations address, and we'll answer you directly over there. Yeah? Is that okay?
Yeah. That that's okay. No problem.
Thank you.
Thank you.
Okay. Final reminder to everyone. If you have questions, please either use the raise hand function or you can send them in the chat. At this moment, we haven't received anything for it. Alamd, Rashid from Jadwa is asking, you mentioned in the past your intention to collaborate with players or nudges. Any developments on this front?
Yes. It remains on our platform. We've been I already engaged with some of them. But we just want to make sure that when we engage with any international partners, not gonna be just the name that we put the name on the billboard outside and say, we're working with Mayo Clinic. For example, it's not Mayo Clinic, but we want to through partnership, keep in mind that we still have at least a couple of years, so we're evaluating all the potential partners, but it's something that we would like to have to have that added value that will differentiate our hospital.
Understood. One question in the chat from Jonathan. If you get paid by the MOH in the third quarter, will you be able to reverse some of the bad debt provision?
So the we don't book any ECF provision against government clients, including Ministry of Health, because we already take rejection provisions against them. We don't believe that they have they don't have the ability to pay as a government entity. So no bad debt provision is taken against, Ministry of Health.
Sure. Someone is asking if you can share the payer mix for Salem Hospital.
Payer mix. We have not disclosed it, but we will consider consider this request for future periods.
Alright. And a follow-up on the prior question, what if insurance pay then? Will you be able to reverse some of the bad debt provision?
Yes. As we, settle with the insurance companies and they repay the remaining amount, the ECF provision will be reversed.
Understood. We'll take follow-up questions from Michelle from SMB. Please unmute yourself and go ahead.
Thank you, Ahmed. Just following the up on Nerges CapEx, so that's technically $1,400,000,000 almost if we calculate $3,500,000 per bed. Is this inclusive of the land cost?
No. This does not include the land cost.
Yeah. It doesn't.
The land cost was around 180,000,000.
186,000,000. That was the land cost. If you'd allow me, I I had the recent, like, analysis on the CapEx per bed profile across the sector. 3,500,000 per bed is is quite high and and on the on the higher range of the of the average. I mean, we see other hospitals in Riyadh expanding at 2,000,000, 2,500,000.0 CapEx per bed inclusive of the land. Don't you think that this is quite quite high?
No. I don't think so, Michelle. If you the most recent announcement on today, well, the hospital mentioned more than 4 millions for a hospital, I think, in Jubail or so. So I don't think it's higher than a class AVIP premium hospital overall.
Perfect. Yeah. Thank you.
I like it. I think we are running out of time. So can we have last question?
Yeah. Actually, there is only one final question, and that's going to come from the line of Madhu. Once he's done with any concluding remarks he can provide us, we can end the call. Madhu, please, I've I've unmuted your your mic. Please go ahead.
Thank you. Thank you, Ahmed, for the opportunity again. One question on the insurance, revenues. I I believe the key surprise this quarter was the sequential growth in insurance revenues. Just wanted to understand what helped you in growing insurance revenues in a weak quarter seasonally weak quarter.
That is one. Second is, assume you need to keep beds reserved for Gosi and Prince Sultan. So does that restrict you in terms of growth from insurance patients? Like, in terms of capacity for insurance, where are you? Are you at, like, maximum utilization and this is the max that you can grow from insurance patients?
So in terms of the growth for the insurance, it's not from pricing, it's volume growth. So we have more patients, both in the outpatient and the inpatient. And we don't reserve beds for clients. Like, we don't reserve beds for GoSee and dedicated certain beds for Princeton. But we do manage our bed situation on a daily basis.
So if we have more insurance patients, we still have capacity to accept them. We don't turn them down just because the beds are reserved for someone else.
Alright. So because I I was of the opinion that you can't turn down a Gosi patient or or also patient from Prince Sultan, even
Prince Sultan by contract, we cannot turn them down. Gosi, we don't have a contract with them. But we never had a situation where we turned down any patient. There's always capacity. It's about managing your bed situation.
So we have an efficient team that manage the bed situation, And we never turn patients down, whether it's cozy, dental plan, or insurance.
Okay. So does that mean that there is still room for growth in insurance patients?
Absolutely. And we always we've seen tremendous growth. The number of outpatient visits in the past five years have more than tripled as of up until the '24, and we expect continuous growth. It's part of our strategy with the diversification of revenue.
Okay. Thank you. Thank you. That's all from me. Thank you.
Thank you, Ahmed. Is there
No. No.
No questions?
No follow-up questions in the raised hand or the chat.
Close hand.
Thank you, everyone. To conclude this session, I would like to thank AFG and Ahmed for organizing it, and thank you all for attending. And we, Inshallah, we'll continue to perform as per the expectations of the market, And I wish you all a pleasant afternoon.
Thank you very much to Kerr's management and to all participants. This concludes today's earnings call. Have a good rest of the day.