Dallah Health’s Q2 misses estimates as expenses rise: Al Rajhi Cap

Dallah Healthcare Company’s second-quarter results came in below expectations as net profit fell 73 percent year-on-year (YoY) to SAR 19 million, as compared to Al Rajhi Capital estimates of SAR 59.9 million and consensus forecast of SAR 56 million.

The reasons for the miss include lower-than-expected utilization rate from both its older as well as newly opened hospitals – Nakheel and Namar hospitals; along with higher-than-expected operating, general and selling expenses due to hiring for the new hospital, Al Rajhi Capital said in an earnings review on Monday.

Seasonality factors also added to the weakness, the report said.

“Going forward, we believe the company may have witnessed its optimal operating rates for the Nakheel Hospital. Hence we don’t expect further growth from it till the expansion is done in 2019,” Al Rajhi Capital said.

Namar Hospital (400 beds and 200 clinics), which opened in the beginning of April 2018, is expected to gradually drive top-line growth.

“However the ramp up could be slower than our projections given the overall macro environment,” it added.

Al Rajhi Capital maintained “overweight” rating on Dallah, with a revised target price of SAR 94 per share.