Riyadh, Saudi Arabia: Arabian International Healthcare Holding Company (“Tibbiyah” or the “Company”, 9530 on the Saudi Exchange’s Nomu - parallel market), a leading integrated healthcare solutions provider in Saudi Arabia, announced its financial results for the  six-month period ended 30 June 2024 (“H1 2024”).The company reported a decline in revenues and profitability compared to the same period last year (“H1 2023”), reflecting the impact of seasonality, and ongoing investments to counter early-stage scaling issues in new business ventures.

In H1 2024, the company navigated a mixed environment, driven by seasonality in its core segments, a normal part of its business cycle, and operational challenges in IHC. Strategic diversification of portfolio along with prudent cost management led to a 2.6 percentage point improvement in company-wide gross margins to 22.6%, partially offsetting the revenue decrease and demonstrating the company’s resilience.

The performance of the Medical Equipments Division (FMS) in H1 2024 was shaped by the cyclical and seasonal nature of its project-based business, which typically sees stronger activity in the second half of the year. The efficient execution of the backlog in H2 2023 left limited pipeline for H1 2024. Additionally, the completion of a major one-time project in H1 2023 set a high comparison base. Despite this, FMS is well-positioned, with strong H1 bidding activity and a growing share of private-sector orders, setting the stage for sustained momentum and stronger future results. 

The Medical Supplies Division (Premma) demonstrated stability, by advancing its strategic portfolio expansion and reinforcing key supplier partnerships. The onboarding of new Chinese vendors last year has now progressed to the registration stage, enabling Premma to successfully participate in larger and additional bidding opportunities.  This strategic move not only broadens Premma’s portfolio but also strengthens its competitive position in the market

IHC encountered challenges during H1 2024 due to competitive pressures and certain operational difficulties in key practices. The segment is taking steps to stabilize performance, focused on recruitment and service optimization. Additionally, the opening of a new branch this year in North Riyadh marks an important geographical expansion, positioning IHC for a stronger presence and enhanced offering.

Genalive, operationalized in December 2023, is focused on building its market presence. The business has also made strong progress in bidding for new contracts, positioning itself for strategic growth.

It is important to note that the one-off adjustments related to restatement of acquisition of Innovative Healthcare Company Holding Limited (IHC) from FY23 continued to impact comparability with H1 2023 results.

 Mr. Wael Aref, Chief Financial Officer at Tibbiyah, commented:

“We maintained resilient margins in H1 2024 despite cyclical challenges and revenue decline. Our focus on strategic cost management has led to improved gross margins, reflecting the strength of our core operations. As we move forward, we remain committed to optimizing our operations and advancing our growth strategy to deliver sustained value to our shareholders.”

Following the recent resignation of the former CEO, the Board of Directors has approved the appointment of Mr. Yasir Khattab as the new CEO of Tibbiyah, effective September 1, 2024. Mr. Khattab brings a wealth of experience in the healthcare sector and is well-equipped to lead the company through its next phase of growth.

Yasir Khattab, Incoming Chief Executive Officer, stated:

“I am honored to take the helm at Tibbiyah at such a pivotal time. As we continue to build on our solid foundation, my focus will be on driving our strategic initiatives forward, ensuring we capitalize on emerging opportunities, and positioning ourselves as a leader in the healthcare sector in Saudi Arabia.”

 FINANCIAL REVIEW

Revenues of SAR 274.1 million (H1 2023: SAR 316.0 million) represented a 13.3% decrease year-on-year (YoY). This was primarily due to a 23.5% drop in revenues in the medical equipment segment (FMS), due to slower project execution and cyclical headwinds typically encountered during the first half of the year. However, the segment remains well-positioned with a robust project backlog and private-sector growth driving future prospects.

Premma’s stable performance, despite market challenges stemming from supplier production issues and prolonged lead times provided resilience to the core segment.

Management is focusing on targeted recruitment efforts to stabilize operations at IHC and support recovery in the second half of the year following the departure of a number of doctors. As a consequence, revenues reduced by 16.1% year on year. The segment also continues to face broader industry challenges, including market dynamics and competitive pressures, that have influenced overall performance.

Gross profit of SAR 62.0 million (H1 2023: SAR 63.2 million), represented a marginal decrease of 1.9% YoY, with margins increasing from 20.0% in H1 2023 to 22.6% in H1 2024.  This improvement in margin reflects the company’s strategic focus on cost management across its core segments. In particular, the FMS segment saw an improvement in gross margins due to optimized project execution, enabling Tibbiyah to mitigate the impact of rising supplier costs.

Tibbiyah's SG&A expenses rose by 7.7% YoY, mainly due to IHC’s newly acquired branch in the first half of this year.  

The GenaLive JV, initially maintained conservative cost levels till it received its license to operate. As it transitioned to full operations in December 2023, standard cost structures took effect, leading to a decrease in share in earnings from affiliates. This impact was partly balanced by the robust performance of the Philips JV.

Tibbiyah continued to refine its provisions to account for evolving market conditions and ensure long-term financial stability, leading to an increase in impairment loss on trade receivables.

As a result, Tibbiyah’s net loss excluding non-controlling interests increased to SAR 31.8 million in H1 2024, compared to SAR 23.5 million in H1 2023.

Cash and cash equivalents decreased from SAR 82.4 million at the end of FY23 to SAR 75.8 million as of H1 FY24.

Total borrowings stood at SAR 491.5 million in H1 2024, remaining nearly unchanged from SAR 490.0 million in H1 2023, reflecting Tibbiyah’s consistent financial management approach.

OPERATIONAL REVIEW

FMS (Medical Equipment) is strategically positioned for stronger performance in H2 2024, supported by a solid project backlog and increasing private-sector orders.

Premma Health (Medical Supplies) continues to focus on strategically expanding its supplier network particularly with new Chinese suppliers, which are expected to provide competitive advantages moving forward.

In IHC, management is prioritizing efforts to stabilize operations and address competitive pressures through strategic hires, targeted marketing initiatives, and an optimization of service offerings to address gaps in performance

Progress on strategic initiatives to ensure long term growth: In H1-FY24, Tibbiyah continued to advance its strategic initiatives, reinforcing its commitment to both portfolio diversification and sustainable growth.

  • Nephroplus, a 49:51 JV with Nephrocare Health Services Private Ltd, an India-based dialysis clinic network, is progressing with legal formalities underway. This JV is a key part of Tibbiyah’s strategy to diversify its portfolio by entering the high-growth dialysis care segment in the Kingdom and supporting the company’s long-term growth objectives.   
  • The acquisition of Al-Hammad Medical Services Co. was completed post-period, on 2nd July. Management is now focused on developing a comprehensive plan to fully integrate the acquisition and unlock synergies across FMS and Premma.

STRATEGY AND OUTLOOK

Tibbiyah is navigating a challenging environment as it works to continue strengthening its core segments and address scaling issues in new ventures. Despite these headwinds, the Company remains committed to a three-pronged strategy focused on protecting and expanding its core, diversifying its portfolio, and capitalizing on the Kingdom’s healthcare privatization initiatives. Through this approach Tibbiyah is positioning itself to mitigate cyclical risks and capture emerging market opportunities. The Company’s strategic investments, such as the IHC and Genalive ventures, alongside newly established JVs, are expected to drive long-term growth. As Saudi Arabia pushes towards increased private sector involvement in healthcare, Tibbiyah is well-placed to leverage these opportunities and deliver sustainable value.

Summary Financials (for the period ended 31 December 2023)

BALANCE SHEET (SAR million)

30 June 2024

31 December 2023

Current Assets

1,070.1

1,115.3

Non-Current Assets

263.7

286.1

Total Assets

1,333.8

1,401.4

Current Liabilities

880.8

874.2

Non-Current Liabilities

124.1

167.7

Total Liabilities

1,004.9

1,042.0

Total Equity

328.9

359.4

Total Liabilities and Shareholder Equity

1,333.8

1,401.4

INCOME STATEMENT (SAR million)

H1 FY24

H1 FY23

Revenue

274.1

316.0

Cost of revenue

  (212.1)

(252.8)

Gross Profit

62.0

63.2

Selling and marketing expenses

(38.4)

(38.0)

General and administrative expenses

(33.2)

(28.6)

Impairment of goodwill

(23.8)

0.0

Reversal/(impairment loss) on trade receivable

(6.8)

(0.8)

Other income, net

4.2

3.6

Share of profit of joint venture

(0.6)

0.2

Operating (Loss) / Profit

(36.7)

(0.3)

Finance charges

(18.1)

(15.9)

Finance income

3.6

2.1

Fair value change in contingent consideration

24.1

(2.0)

(Loss) / Profit Before Zakat

(27.1)

(16.0)

Zakat

(6.0)

(4.9)

Net Income for the year

(33.2)

(20.9)

Non-controlling interests

1.3

(2.6)

(Loss) / Profit for The Period

(31.8)

(23.5)

Loss per share

(1.61)

(1.19)

CASH FLOW STATEMENT (SAR million)

H1 FY24

H1 FY23

Net cash from (used in) operating activities

(18.0)

(29.4)

Net cash from (used in) investing activities

(6.6)

(2.0)

Net cash from (used in) financing activities

18.0

33.6

Cash and cash equivalents at the beginning of the period

82.4

83.6

Cash and cash equivalents at the end of the period

75.8

85.8

-Ends-

ABOUT TIBBIYAH

TIBBIYAH is a diversified healthcare holding Company founded in 2013 by Al Faisaliah Group to bring all its subsidiaries working in the healthcare sector under one umbrella. With 50 years of leadership supporting Saudi healthcare service providers improve the lives of Saudi Arabia’s population, TIBBIYAH continues to build on its enviable track-record of providing state-of-the-art fully integrated healthcare solutions and turnkey projects, including mega healthcare developments in Saudi Arabia.

TIBBIYAH has three business divisions: Core business including 100% owned Al Faisaliah Medical Systems Company (FMS) and International Healthcare Supplies Company (Premma); Philips Healthcare Saudi Arabia Company, a 50:50 joint venture with Philips; and its Health-tech vertical, including 51% owned IHC Medical Center and GenaLive, a 50:50 JV with BGI Almanahil Health for Medical Services (BGI).

For more information, please visit us on: https://www.tibbiyah.com/