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Overview of Tadawul-listed healthcare firms Q2 2022 performance, bed capacity plans
The operating segments of the Saudi Exchange (Tadawul)-listed healthcare providers witnessed a positive performance in the second quarter of 2022, driven by the continued revenue growth of hospitals segment to record levels for the eighth quarter in a row.
The hospitals segment hit SAR 3.5 billion in Q2 2022, an increase of 17% year-on-year (YoY) and 2% quarter-on-quarter (QoQ).
The segment’s revenue growth followed the improvement in in-patient occupancy as number of visits at outpatient clinics increased. In addition, the companies reported expansions, as well as a continued increase in the patient base.
However, pharmaceuticals segment sales fell slightly to SAR 648.4 million on lower segment sales in most companies (Dallah, Care, Al Hammadi).
The following table shows the two segments’ revenues since Q2 2021:
|
Hospitals & Pharmacies Segments’ Revenue (SAR mln) |
||||
|
Segment |
Hospitals |
Change % |
Pharmacies |
Change % |
|
2021 |
||||
|
Q1 |
2,941.6 |
+20% |
642.1 |
+18% |
|
Q2 |
2,994.7 |
+34% |
651.1 |
+37% |
|
Q3 |
3,076.6 |
+13% |
646.0 |
+18% |
|
Q4 |
3,325.8 |
+13% |
721.3 |
+20% |
|
2022 |
||||
|
Q1 |
3,435.4 |
+17% |
706.5 |
+10% |
|
Q2 |
3,500.5 |
+17% |
648.4 |
(0.4%) |
In terms of consolidated financial results, profit margins saw a minor improvement YoY as direct costs continued to increase due to incurring operational losses in conjunction with expansions and operation of new hospitals.
The sector's profit margins were expected to decline in the short-term due to the start of new hospital branches, however, margins will benefit positively in the long run thanks to revenue growth driven by increased demand for healthcare services.
The operating expenses contributed to offsetting the increase in profit, after they rose by about 14% YoY to reach SAR 676.6 million, coupled with the rise in administrative expenses due to the increase in the salary of workers following the new expansions.
The sector's profits were also affected by the increase in the expected credit provisions after increasing by an average of 17% to reach a total of SAR 71.6 million due to the rise in provisions by (Sulaiman Habib / Mouwasat / AYYAN) during Q2 2022.
The following table shows combined profit of Saudi healthcare firms since Q2 2021:
|
Combined Profit of Saudi Healthcare Firms (SAR mln) |
|||||
|
Item |
2021 |
2022 |
|||
|
Q2 |
Q3 |
Q4 |
Q1 |
Q2 |
|
|
Revenue |
3,722.1 |
3,908.8 |
4,153.8 |
4,218.5 |
4,228.1 |
|
Profit Margin% |
34.3 % |
35.1% |
34.6% |
35.6% |
35.2 % |
|
Operating Expenses |
(596.0) |
(631.3) |
(652.4) |
(655.4) |
(676.6) |
|
Finance Charges & Other |
(36.2) |
(38.3) |
(40.4) |
(37.2) |
(52.1) |
|
Zakat & Taxes |
(49.2) |
(65.6) |
(36.0) |
(71.7) |
(64.9) |
|
Net Profit |
595.1 |
596.0 |
660.7 |
749.2 |
714.9 |
In terms of companies, Dr. Sulaiman Al Habib Medical Services Group led with the highest revenue as well profit, accounting for 48% of total revenue and nearly 56% of the industry’s profitability. Dallah and Mouwasat followed with 14% and 13% respectively. Saudi German Health ranked fourth with 12%.
|
Income Statement by Company (SAR mln) |
|||||||
|
Income Statement |
Sulaiman Al Habib |
Saudi German Health |
Mouwasat |
Al Hammadi |
Dallah |
Care |
AYYAN |
|
Revenue |
2014.0 |
508.1 |
557.9 |
281.9 |
583.8 |
216.5 |
65.9 |
|
Profit Margins % |
33.3% |
31.2% |
46.3% |
38.7% |
36.3% |
30.9% |
19.7% |
|
Operating Expenses |
(256.1) |
(137.0) |
(102.8) |
(22.3) |
(115.2) |
(21.8) |
(21.5) |
|
Cost of Finance |
(10.8) |
(18.3) |
(1.6) |
(5.7) |
(14.6) |
-- |
(1.1) |
|
Zakat Expenses |
(39.1) |
(0.4) |
(6.9) |
(5.0) |
(4.7) |
(8.0) |
(0.7) |
|
Net Profit |
398.1 |
10.4 |
141.5 |
65.1 |
69.5 |
42.0 |
(11.7) |
The below table shows comparisons of operating segments of the Saudi-listed healthcare providers’:
|
Operations of Saudi Healthcare Providers (SAR mln) |
||||||||
|
Segment |
Item |
Dallah |
Mouwasat |
Care |
Al Hammadi * |
Saudi German Health |
Sulaiman Al Habib |
AYYAN |
|
Q2 2021 |
||||||||
|
Hospitals |
Revenue |
374.5 |
458.5 |
178.2 |
163.9 |
386.9 |
1366.0 |
66.7 |
|
Gross Income |
-- |
228.1 |
50.9 |
63.0 |
128.1 |
423.0 |
20.0 |
|
|
Pharmacies |
Revenue |
116.3 |
68.2 |
24.3 |
60.0 |
67.3 |
315.0 |
0.0 |
|
Gross Income |
- |
18.3 |
-- |
16.9 |
22.9 |
100.0 |
-- |
|
|
Others |
Revenue |
-- |
-- |
-- |
-- |
2.4 |
70.0 |
-- |
|
Gross Income |
-- |
-- |
-- |
-- |
1.7 |
28.0 |
-- |
|
|
Q2 2022 |
||||||||
|
Hospitals |
Revenue |
552.6 |
479.6 |
207.4 |
232.3 |
432.8 |
1534.0 |
61.8 |
|
Gross Income |
200.5 |
236.9 |
58.8 |
99.0 |
144.5 |
513.0 |
13.0 |
|
|
Pharmacies |
Revenue |
31.2 |
78.3 |
9.1 |
49.7 |
73.1 |
407.0 |
0.0 |
|
Gross Income |
11.6 |
21.2 |
-- |
10.1 |
12.4 |
129.0 |
-- |
|
|
Others |
Revenue |
-- |
-- |
-- |
-- |
2.2 |
73.0 |
-- |
|
Gross Income |
-- |
-- |
-- |
-- |
1.9 |
28.0 |
-- |
|
Sector’s players achieved a near-collective profit rise during H1 2022 driven by improved profit margins and higher hospital revenues thanks to growth in operations, in addition to the decline in provisions for expected credit losses.
Al Hammadi came out on top with a 68% increase in profits, followed by Dallah in second place with a 52% rise.
Saudi German Health took the third place with 46% profit increase, followed by Sulaiman Al Habib at 22%.
The following table illustrates financial results of healthcare companies with reasons for change and notes on the results for H1 2022:
|
Financial Results of Healthcare Companies – SAR mln |
||||
|
Company |
H1 2021 |
H1 2022 |
Change (%) |
Reasons/Other Notes |
|
Al Hammadi |
75.8 |
127.1 |
+68% |
Profit margins improved as a result of an average increase in revenues of 18% thanks to the medical services segment of Al Hammadi Al Nozha and Al Suwaidi Hospitals as a result of the increase in the number of outpatients and inpatients. The provisions for expected credit losses decreased from SAR 68 million to SAR 24.3 million by the end of the current period in accordance with the requirements and calculation of accounting standard No. (9). Increase in other income and the company's share in the profits of an associate company. |
|
Dallah |
100.2 |
152.2 |
+52% |
Revenues increased by 21% on continued growth in operations, growth in the number of visitors and an increase in occupancy rates in both inpatient and outpatient departments. Reduced ratio of operating costs to operating income as a result of improvements in operational cost management. The company's share in the losses of associate companies decreased to SAR 17.9 mln compared to SAR 19.5 mln. Decrease in the loss of credit provisions to SAR 4.6 mln compared to SAR 8.5 mln |
|
Saudi German Health |
21.2 |
30.9 |
+46% |
Increased revenues by 17% thanks to the growth in the hospital segment’s revenue to a record level after resuming business with Tawuniya Insurance as well as the increase in the prices of services provided and the high operating rates of Dammam Hospital during the current period. Other revenue increased from SAR 5.4 mln to SAR 8.4 mln |
|
Sulaiman Al Habib |
644.4 |
788.6 |
+22% |
Increased profit margins due to the collective growth of revenues of the operating segments, as well as the continued record levels of the hospital segment for the fifth consecutive quarter thanks to the continued growth of the number of visitors and the high occupancy rates. The company's share in associates increased from SAR 5.6 mln to SAR 10.7 mln. Increase in other revenues from SAR 20 mln to SAR 56.1 mln |
|
Care |
66.5 |
72.0 |
+8% |
Increased revenues as a result of higher volume of business and increased patient visits including hospitalizations and surgeries. Other operating income increased from SAR 3 mln to SAR 5.9 mln. |
|
Mouwasat |
288.5 |
291.7 |
+1% |
Increase in revenues by 6% as a result of continued improvement in performance in new specialized departments in hospitals. High both the share in the associate's profits, and other revenues. Financing costs decreased from about SAR 5 mln to SAR 2.9 mln |
|
AYYAN |
8.0 |
1.7 |
(79%) |
Profit margins decreased by 6.3% from the same period last year due to lower revenues and increased direct costs of revenue. Unrealized profits from investments at fair value decreased to SAR 1.2 mln compared to SAR 10.6 mln. |
|
Sector |
1204.6 |
1464.1 |
+22% |
|
Below are the most important financial indicators for healthcare companies, as of closing on Sept. 20, 2022:
|
Key Financial Indicators |
|||||
|
Company |
Closing price (SAR) |
P/E ratio (x) |
Operating P/E ratio (x) |
P/B ratio (x) |
Dividend (%)* |
|
Care |
65.30 |
20.6 |
20.6 |
2.5 |
1.5% |
|
Mouwasat |
205.40 |
35.3 |
35.3 |
7.8 |
1.3% |
|
Dallah Healthcare |
138.00 |
40.0 |
41.3 |
6.1 |
1.1% |
|
Sulaiman Al Habib |
198.60 |
45.7 |
45.7 |
12.4 |
1.6% |
|
Al Hammadi |
46.00 |
More than 50 |
More than 50 |
4.4 |
2.0%** |
|
Saudi German Hospital |
29.15 |
More than 50 |
More than 50 |
2.1 |
-- |
|
AYYAN |
16.70 |
Negative |
Negative |
1.7 |
-- |
|
Sector |
-- |
42.9 |
42.3 |
7.7 |
1.4% |
**Dividend yields for 9-month period based on the quarterly dividend policy year to date
The following table shows the most important financial indicators for healthcare companies, according to the latest financial data in June 2022:
|
Key Financial Indicators of Healthcare Sector |
||||
|
Company |
Net Profit Margin% |
REO ratio (%) |
D/E ratio (%) |
Debt-to-assets ratio (%) |
|
Sulaiman Al Habib |
19% |
27% |
58% |
27% |
|
Mouwasat |
26% |
22% |
35% |
21% |
|
Dallah Healthcare |
13% |
15% |
89% |
37% |
|
Care |
17% |
12% |
8% |
6% |
|
Al Hammadi |
14% |
8% |
18% |
13% |
|
Saudi German Health |
1% |
2% |
162% |
48% |
|
AYYAN |
(1%) |
(0.2%) |
71% |
36% |
|
Sector |
16% |
18% |
59% |
29% |
The combined occupancy rate of the healthcare companies reached around 7,585 beds at the end of the period.
The Tadawul-listed healthcare firms are expected to add 3,532 beds in the next period. Sulaiman Al Habib will add 1,466 beds in the next three years, while Saudi German Health and Mouwasat will add 900 beds each. Al Hammadi will add 300 beds, according to data compiled by Argaam.
|
Companies’ Current Capacities & Future Expansions |
|||||
|
Company |
Number of Hospitals |
Number of Beds |
Expected Bed Additions |
Notes |
|
|
Sulaiman Al Habib |
8 * |
1929 |
1466 |
It will add about 1,466 beds and 915 clinics over the next three years through five existing projects in Riyadh and Jeddah, at an estimated cost of about SAR 7.162 billion. The company will build two branches in Tabuk and Madinah. |
|
|
Saudi German Health** |
11 ** |
1837 |
296 |
The number of beds to be added in 2021 is 482, as follows:
- Expansion of Riyadh Hospital, 147 beds. - One-day surgery hospital in Jeddah, 15 beds. The hospital started operations with 20 beds in April.
- Outpatient Clinics Tower in Riyadh, 134 beds |
|
|
Mouwasat |
6 |
1279 |
604 *** |
The number of beds expected to be added to Dammam and Madinah hospitals does not include Yanbu Hospital due to the lack of data. |
|
|
Al Hammadi**** |
2 |
1028 |
300 |
It will build new hospital instead of Al Hammadi Hospital Al Olaya with 300 beds and 120 outpatient clinics. Trial operation is expected in Q1 2026. |
|
|
Dallah |
5 |
1032 |
126 |
The first phase of Dallah Namar Hospital opened with a capacity of 150 beds out of 400 beds. Its operating capacity rose to 274 beds by the end of 2021. |
|
|
Care |
3 |
530 |
245 |
The number of beds expected to be added after National Care Hospital’s expansion is complete. |
|
|
AYYAN |
1 |
220 |
495 |
The first phase of Al Salam Hospital for Medical Services is expected to be opened this year. The project was 99% complete by the end of Q2 2022. The company expected to get the relevant licence on Sept. 15, 2022. |
|
|
Total |
36 |
7885 |
3532 |
-- |
|
**Includes Makkah hospital and the one-day surgery hospital in Jeddah, as it opened in 2022, along with Abdul Jaleel Ibrahim Batterjee Sons Development Co. Ltd., Beverly Clinics and National Hail Company for Healthcare (47% stake)
***Excludes Yanbu Industrial Hospital as capacity was not disclosed by the company.
****The number of beds at Al Hammadi Hospital Al Olaya was excluded as operations were suspended.
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