• Q1 revenues of SAR 1,343.3 million grew 9.4% and decreased by 4.4% on the previous quarter
• Group’s total capacity stands at 1,913 beds and 1,371 clinics as at 31 March 2020, through which an integrated system of general and specialized services is provided
• Ramp-up of electronic services and remote medical consultations; delivery of medicines and other medical services to serve customers at home
29 April 2020: Dr. Sulaiman Al Habib Medical Group (“HMG”, or the “Group”), Saudi Arabia’s largest private medical services provider, has announced its financial results for the 3-month period ended 31 March 2020.
First quarter revenue increased by 9.4% year-on-year to SAR 1,343.3 million, driven by revenue growth across the Hospital and Pharmacy segments, as well as by the Solutions segment, while gross profit of SAR 399.9 million decreased by 1% from Q1 2019 and by 3.3% from the previous quarter, due to increased operating costs for the Khobar Hospital, which is in its first operating year and still in ramp-up phase.
First quarter net income grew 5.35% year-on-year and decreased by 8.7% on the previous quarter, to reach SAR 246.6 million; year-on-year growth was driven by growth in revenues and a focus on operational efficiency and cost containment measures. The decrease in net income compared to Q4 is a result of revenue seasonality, with Q4 typically representing the best performing quarter in terms of revenue and net income. EBITDA of SAR 353.3 increased by 10% year-on-year, with an EBITDA margin of 26.3%.
Revenue from the Hospital segment exceeded SAR 1,053 million, increasing by 5.4% year-on-year. Revenues from the Pharmacy segment reached SAR 237 million, a 13.9% increase compared to Q1 2019. As for the Solutions segment, its growth has continued through the significant expansion of operations and services, with first quarter revenues increasing by 152.4% to reach SAR 53 million compared to the first quarter of 2019.
Dr. Sulaiman Al Habib, Chairman of the Board of Directors at HMG, commented:
“The first quarter results are a testament to our continued focus on sustainable growth, with our core Hospital segment continuing to drive top-line performance. During this period, we saw an increase in revenue volume in the Hospital segment, resulting from the ramp-up of our new hospital in Khobar, supported by our continued efforts to grow and diversify our offering, and focus on operational efficiency and cost containment measures.
Gross profit experienced a slight decrease of 1%, due to the anticipated increase in operating costs at the new Khobar hospital, which remains in its first operating year and at the accelerating revenue growth stage of its lifecycle, where the value of the revenues has not yet reached the level of fixed operating costs.
The Group works in an integrated manner on sustainable growth and revenue diversification, and its efforts in these areas have resulted in the Pharmacy and Solutions segments gaining ground. Our commitment and leadership in healthcare technology has made us agile in adapting to current market conditions, enabling us to serve many patients at their homes.”
Dr. Al Habib continued: “The Group is well-positioned to provide full support for patients and government authorities during the Covid-19 pandemic, and we remain committed to increasing our capacity and efficiency in order to serve the highest number of patients at all our existing facilities. However, if current conditions continue, it could have an impact on the Group’s performance, cash flow, and financial position in the future. We anticipate a negative impact on the financial performance in the second quarter, but the Group and all of its departments are working alongside management to monitor and manage the situation on a real-time basis, in order to rapidly introduce all necessary mitigating actions.”
Dr. Al Habib concluded: “On behalf of the members of the Group’s Board of Directors and all its employees, I would like to extend my sincere thanks and appreciation for the government’s efforts in addressing and combating the spread of the new coronavirus, as well as to mitigate the negative effects of the pandemic. We thank all health sector workers and medical carers in the Kingdom and pray to Allah to protect the country and the people from all evil and harm.”
Financial and operating highlights: Q1 2020
• Q1 revenue growth of 9.4% year-on-year, reaching SAR 1,343.3 million
• Q1 gross profit margin at 29.8% and net profit margin at 18.4%
• Q1 EBITDA of SAR 353.3 million, EBITDA margin at 26.3%
• Q1 net income grew 5.35% year-on-year, to SAR 246.6, at a margin of 18.4%
• Number of patients for the first quarter decreased by 1% year-on-year, to 802,353
Covid-19 impact and response
In light of the precautionary measures taken by the Saudi government to limit and counter the outbreak of the Covid-19 pandemic, including a curfew in some of the Kingdom’s cities and governorates, HMG’s facilities and subsidiaries are fully operational. It is expected, however, that there will be an impact on certain activities during the precautionary measures period, which will have an impact on the business and activities of the Group. HMG has worked to enhance and develop patient services, and has increased the readiness of its electronic services channels by activating remote medical consultation services, as well as delivering medicines and other medical services to customers at their homes.
In light of the present situation and given the unknowns about the transmission of the virus and the effectiveness of the measures to contain it, the potential impact of the pandemic remains hard to predict. Management anticipates that these developments could have a material impact on the Group’s results, cash flow and financial position in the future. The Group is monitoring the situation on a real-time basis in order to rapidly introduce all necessary mitigating actions. In relation to recent government announcements regarding stimulus plans for the private sector, to minimize the impact of the precautionary measures, HMG is working closely with the relevant authorities to determine the stimulus mechanisms, and how they will be implemented.
HMG’s overarching growth strategy remains unchanged, with a focus on growing the scale of the Group’s facilities including the South West Jeddah Hospital, which began construction in 2019 and is expected to start operations in 2023; the North Riyadh hospital which began construction in 2019 and will start operations in 2023; and the North Jeddah Hospital for which construction is scheduled to begin in 2021, with a projected completion date of 2024. Further opportunity is provided by the government’s 2030 Vision for the healthcare sector, which is expected to reflect positively on growth at Group level.
The Group continues to build up its IT services offering, through its Solutions segment, which has become a leader in technology services for healthcare. During the current Covid-19 health crisis, the service offering has become particularly important for boosting the resilience of the business and for adding value to multiple stakeholder groups. Cloud Solutions, a subsidiary of the Group, will continue to be a growth driver for HMG, providing technical services for healthcare providers in the region. Areas of focus for technology will include developing the group’s Tele-ICU capabilities from the world-record 796 beds currently served, and developing HMG’s hospital information system, a one-of-a-kind electronic portal to manage medical procedures, diagnostics and analysis.
HMG is listed on Tadawul (Symbol: SULAIMAN ALHABIB: 4013), and is Saudi Arabia’s leading private healthcare provider. The Group’s portfolio includes 7 hospitals in Saudi Arabia and the UAE, 1,913 beds and 1,371 clinics, and 1 medical centre in Bahrain. HMG also operates 13 pharmacies and provides a range of medical and technical services for its own and other hospitals.