Bumrungrad Hospital Public Company Limited (BH) Earnings Call Transcript & Summary

And we're going to run the Pet hospital in a corporate structure style. What do I mean by that? It's going to begin with 50 beds, and it will grow by 50 beds at a time as the fill rate increases. But we're not going to hire an Orcon there. We're not going to hire a Sorrentino there. We're not going to hire a Rajeev there. We're going to, in various key areas, run it from here with executives from here, whereas we'll be able to run IT from here, we'll be able to run finance from here. We'll be able to run contact center from here. This allows us to streamline that operation, not have duplicate heavy costs in one organization as well as another organization. I've used this in the U.S. many times on greenfields. It works very, very well until the hospital becomes a grownup. Then as it becomes a grown-up, we can have independent senior executives there. And that's how we plan to do that, especially in consideration of streamlining the costs in a smaller hospital to begin with. And Andrew Giles deserves a proper a proper introduction. Andrew comes to us from Kaiser Permanente. He was with them for, I think, 11 years. We did an expansive search looking for the right kind of executive to be able to -- his wife is Thai. That was an important decision, why we hired him. No, not really. But he's learning Ti, and he likes the market, and he's going to do a fine, fine job for us. He's a very experienced day-to-day hospital operations executive. Khun Ling, he will report to Khun Ling and they together as a team, there's others on this team, but they together as a team will drive this new organization forward. And there's a tremendous amount of interest by the doctors in the community, by the -- just the patients in the community looking for something different in that market, and we intend on delivering Bumrungrad style difference there. please.

For the workforce planning, I would like to update you that the good news that clearly we received the candidates for the doctors over our demand. Let's say, we don't think that we will short about the workforce, especially the physicians. For the staff, we also plan to relocate partial staff from here, especially as Khun mentioned, we will not create any hierarchy in terms of organization structure. So the key teams that develop the operation over there will be only to heads from here to set up the operation. And we also plan to integrate Vife into Banguket Hospital. So as of now, the strategy is to build the center of excellence and the key specialties over there. Our doctors here, some will create a cop to remain and ensure that the quality between Bumrungrad and Bungrauket will be the same. Some will have to local -- recruit local doctors and local staff to run like internal medicine, something like that. So as of now, I pause and then we will update you later on the next quarter. Thank you.

Good afternoon. So I would like to present in terms of the financial highlights and financial performance of second quarter and first half this year in the detail. In terms of the financial highlights in second quarter 2026 total revenue increased by 2.9%. EBITDA and net profit increased by 2.4% and 1.7%, respectively. The EBITDA margin and net profit margin in second quarter this year was 41.1% and 30.1%, respectively. In first half this year, total revenue increased by 1.8%. EBITDA and net profit increased by 3.7% and 2.4%, respectively. The EBITDA margin and net profit margin in first half this year were 40.3% and 29.4%, respectively, which improved from first half last year. I will walk you through more detail in financial performance section. Total revenue in 2nd quarter 2026 was THB 6,278 million improved from same period last year by 2.9%. The total revenue improved mainly came from the increase in revenue from hospital operation, which improved by 3.8% when compared to second quarter last year. The growth was primarily driven by a 7.1% increase in revenue from non-Thai, set2.2% decline in revenue from patient. increase in non- mainly attributed to a higher contribution from Middle East market segment increased by 7.1%. Myanmar increased by 28% U.S. increased by 19.2%, mainly due to higher cerengthay. For the first half this year, the total revenue was THB 12,532 million improved from same period last year by 1.8%. The total revenue mainly came from the increase in revenue from hospital operations, which improved by 2.6% when compared to first half last year. The increase in non-Thai mainly to a higher contribution of the East market segment increased by 13.5%. Myanmar increased by 21% and Bang by 9%, mainly due to higher intensity and longer stay as well. In terms of revenue contribution by service. In second quarter 2026, the revenue contribution from inpatient service slightly increased to 51% from 50% in second quarter last year due to IPD revenue increased by 8.2%, while revenue declined at 2.8% increased mainly due to higher intensity longer length of stay. In first half this year, the revenue contribution from inpatient service increased to 51% from 49% in first half last year due to IPD revenue increased by 7.8%, while revenue slightly declined 0.8% IP mainly due to higher intensity and length stay Inmsribpe,sur contribution in first half this year is 22% remained the same as first half last year. The government thirdpyrib17%, from 14% in first half last year due to higher Middle East revenue. contribution slightly dropped to 16% in first half this year from -- sorry, 3% in first half last year, but still the highest contribution of EBITDA and EBITDA margin 2 EBITDA was THB 259 million from same period last year by 2.4%, with EBITDA margin at 41.4%. For first half this year, EBITDA was THB 5,054 million from same period last year by 3.7% with EBITDA margin at 4.3%. In terms of net profit and net profit margin in second quarter 202 net profit was THB 1,889 million improved from same period last year by 1.7% with net profit margin at 30.1%. In first half this year, net profit was THB 3,679 million, improved from same period last year by 2.4% with net profit margin at 29.4%, slightly improved from first half last year at 29.2%. In terms of ratio, net debt to EBITDA of first half this year was negative at 0.4x and net debt to EBITDA was also negative at 0.1x due to less net debt. In terms of liability to asset. At the end of second quarter 2026, the liability to asset ratio increased to 16.4% from 14.8% in the previous quarter, but still remained at the low level. The increase was primarily driven by a reduction in total assets. This decline was mainly attribution from lower cash and cash equivalents following the higher dividend payment made to shareholders during second quarter this year. These are our financial highlights and financial performance of second quarter 2026 and first half 2026. Thank you for your attention.

Thank you. I want to introduce Dr. Polikit, who has several titles. One is the CEO of VitalLife, CEO of Esperance. He's a practicing cardiologist. He's a geneticist, who was educated in Boston, and he's one of our up-and-coming stars for the future in this company. So Dr. Polkit is going to talk a little bit about VitalLife and some other aspects to it as well as introduce a new person in his organization. Dr. Polikit?

Thank you so much, Kun. So basically, I would like to move you to another area that is strategically important for our organization, and that is VitalLife. I think it's quite interesting because like nowadays, we are dealing with the megatrend like longevity and longevity economy. Everyone would not want to miss the train. And I think it's useful to look at VitalLife not simply as a stand-alone clinic anymore. I would say that as part of our longer-term business strategy and evolution of Bumi National Hospital, collectively and comprehensively, we have talked at length among our executives, including Khun Ling, our CEO, Khun Chief Business Development and Khun from the strategy standpoint. And we come up with the very great strategy and how we can bring VitalLife to the world starting from last year. So at the very beginning of this year, you may have heard our press conference that Khun Ling and I announced the partnership in terms of longevity ecosystem. Next slide, please. So I would like to draw your attention to this slide, and we are going to stay at this slide for a moment. We are seeing a gradual shift from what I would say, sick care treatment to prevention to early detection. A couple of years ago, we strategically warm up the market in terms of the preventive medicine at hospital site by having preventive genetics clinic where we bring all the technology to understand everyone coming for a medical checkup in a very better sense. And that can also lead to Vital could be the bidirectional communication in terms of the patients and times between both sides of the hospital campus. And that's why ultimately, brought us to what we call longevity. And what we believe here, Bumlab would have a lot of opportunity to participate in this whole and entire continum, and that's the role we see for Vitalife. And I'm going to walk you through all of these partnerships across 5 sectors and industry. The key asset we bring is not simply a wellness service as you may be able to see from some other people in the market, but I think it's the combination of Bab medical expertise, clinical infrastructure here, scientific capabilities, technologies and most importantly, I would say the trust associated with Bunabnd we are taking these capabilities beyond traditional hospital segment this year. And just maybe what we can do even better is how we can integrate in different industry. First and foremost, I would like to draw your attention to the one in the middle financial services. And I will give you an update in the next slide later, what we have done so far. At first, this may not appear very, I would say, directly related to our business, which is health care at the moment. But when we think about longevity as a whole and the connection becomes quite clear. I would say people with longer financial planning and also health planning become interconnected more and more increasingly. And people are not asking anymore how much money do I need to retain for retirement, right? I think now if you look at in other businesses, especially even from banking or insurance standpoint, people also ask how do I remain healthy enough so I can enjoy the rest of my life with all these additional years. Thank to technology, thanks to human capabilities in terms of the doctor and nurses and even artificial intelligence. I think this is a very important question for Bumrarin Hospital as a whole. And this creates the opportunity to introduce preventive health and health intelligence into existing financial models. For strategic value, it's perhaps simply not another distribution channel, but I would say this is the ability to provide the wellness layer for other industry. So moving on to the next one, the first one, first and foremost, hospitality, and that would also include the wellness real estate. This is very interesting, especially for me and then talking to our executives here. The interesting part because industry already have strong relationship with consumers around lifestyle and also wellbeing hotels and residential developments elsewhere, increasingly provide fitness spar and also wellness offering. But we, Bunlab Hospital believe this is a good opportunity for us because we want to move beyond conventional wellness amenities. What we are very unique is the medical grade wellness and personalized wellness and the model is complementary. So partner provides the environment, lifestyle platform and also customer relationship. Partner like hotels and residential projects. We VitalLife will provide medical assessment, scientific expertise and also personalization. Bumrungrad Hospital will be the platform, will be the foundation, will be the core, provide broader clinical ecosystem when medical care is needed. So it's very important to make it clear that if we work with partner like hospitality or real not only Vitalif, but the whole ecosystem from Bumula, including the C care model. So strategically, I think this would create another access point to consumer. So before even consumer becomes sick or becomes a hospital patient. So I think this is how we are going to expand our health care journey together. Lifestyle and retail, the third area, basically, the strategic rationale is quite straightforward because health is influenced by how you live every day, right? What people do every day, how you eat, how you sleep, how you exercise and even how you manage your skin or how you age. So preventative health is the objective. Health care cannot remain confined in the hospital anymore. So that's why our differentiation comes from medical expertise, foundation of Bora -- going to #4, academic institute. I think this is the core DNA of our organization. And that's the reason why that Board and also top management has decided to let me carry 2 titles, Chief Science Officer and also CEO of VitalLife because we would like to do end-to-end pipeline from scientific discovery. We published the paper. We basically discover. We use our own data to create and to discover all the new service offerings. For example, the new bio age that we have recently implemented in the hospital and Vitalife. And together with this innovation and also clinical application, it will lead us to preventive health. Last but not least, I think we are in the era of artificial intelligence, digital technologies. We have worked tremendously with our partners, and I will have all the logos and the brands to show you later on. Patient comes to a hospital is very episodic. So we would like to offer some set of measurements because we would like to hook them up, have continuous monitoring. We don't want episodic or encounter like when people come to Bumbola in a very traditional way. We want to be part of their everyday lives. And this is so-called continuous health intelligence. So next slide, please. So connecting all the pieces, I do not want you to look at each partnership individually, but I would like to sort of like tell you that we are going to build wellness as a layer for Bumrungraang Hospital. We're not trying to be a real estate developer. We're not going to be a real estate developer. But I guess what we're going to do, and I think we have done quite well is to provide a wellness layer. We do not want to take every part of the wellness ecosystem, but we would like to own the relationship. We would like to be part of the ecosystem, and they would think of Bumrungrad Hospital as a whole. The hospital side becomes the core value when people are very soon. And I don't think these 2 areas would cannibalize each other, especially nowadays, the technology is that people could be less sick and sick. So that's why we are going to move forward in this strategy, we want to make sure that we cover the whole continuum of care. So I'm going to show you some examples of our events and like exerts from the events that we have done in collaboration with all the teams at Bumrungrad Hospital. For example, this is a corporate partnership level. Going on to the next slide, please. All right. So we work together with a lot of financial parties, for example, insurance companies, hotels. Next slide, please. From academic standpoint, we have seen and we have hosted a lot of delegates from different countries within this year from the government segment and also from the private segment. All these people, they are really look into the longevity ecosystem, and that's how we plan to work together with all these parties. Next slide, please. Okay. So basically, for the next slide, what I would like to show, I would like to just give you the visual understanding of how we work together with different brands. Next slide, please. So I think this will be the highlight and good examples of how we have planted seed together with our important partners. For example, for hospitality segment, you can see a wide variety of the leading institutes in this business. More recently, we announced our partnership with Thai Airways International. And if you get a chance to fly Thai, maybe you can see how we bring the wellness into the air. We have created in-flight enttainment, and that's very beginning. And maybe in the future, we'll have more and more collaboration with Thai Airways. This is how we bring wellness outside the hospital and we integrate this with other partners who have a high stake in the medical and wellness first in Thailand from some other institute and industries. For example, more recently, we work together with Huawei. So we are exclusive partner with Huawei, where we will conduct research with Huawei for the most recent watch where we can also use the watch to monitor the blood sugar. And after the research is done, I think maybe we can co-create more know-how together with Huawei and some other brands like Samsung. Next, please. So all these are just like a visual idea for all of you. Anyway, I think for transitioning to what we would like to do next, basically, if this strategy, if we want it to work, we also need to continuously identify what comes next. we would like to know which technologies would work for long economy. We would like to know what kind of innovations that are mature enough that we can implement here and where should invest. And that's why medical innovation and investment are become, I would say, becoming increasingly important and also like it would be very important and naturally to us that I would like to also introduce my colleague who's going to help me and the team for this endeavor. We have Dr. Nalin Deshawibon. So her title is Director of Medical Innovation. I will let her introduce herself, but I will give you a little bit background about her. So basically, she's working at the intersection of the medicine, technology and also investment. I think her role together with us is going to look beyond what we are doing today, basically help us identify the technologies, companies and opportunities that would shape health care tomorrow and to determine what will be best and what will be the good opportunities for us to implement longevity medicine within our hospital and also together with other partnerships. Dr. Lin, over to you.

Thank you for the kind introduction and everyone. My name is Mel, and I'm trained as a biomedical engineer, I have a PhD in biomedical engineering, but I also have 6 years of experience working in finance, particularly in biotechnology. So I do have experience across both worlds, and I hope to leverage my experience to bridge that gap and also bring new medical innovation and technologies to Bumrungrad Hospital. I look forward to working with everyone.

If you notice up there, there's a number of hospitality circles on that slide. All of them approached VitalLife and asked about relationships and partnerships because they all realize that just being a hotel and a resort isn't the draw anymore that it used to be. You have to be offering something different. You have to be offering some kind of component such as our VitalLife operation at Rakxa. When you go to Roxa, for those of you that have gone there, we have a VitalLife center there. And when the patients go there, they find something incremental to their visit at Roxa -- and all of these entities have asked about associating with VitalLife in some way, in some form of wellness, clinical operation, et cetera. So we're going to pick and choose who we want to be associated with because the brand is very, very important to us. Now if you'll take me back, Jan, to my slides, thank you, Dr. Nudin. -- this one. Rajiv and I went to London to the JPMorgan Investor Conference, and they were shocked at the performance of the company from an EBITDA and NOPAT margin standpoint. But one of the people in the audience asked me, well, how well do you deploy your CapEx? So I decided to put this together. I've done this in the distant past -- but I thought I'd put this up, and I'm going to put this up on the Investor Relations website because it's very, very telling. When you look at it, stare at it for a minute, you'll see that -- and the next slide is about ROA, but it says the same kind of thing. It says that Bumrungrad against its competitors and even noncompetitors going to Apollo and Raffles and IHH, when you look at our ROE with the exception of one outlier period during COVID, you'll see Kouszinrod, BCH, they were getting a lot of money from the government to take care of COVID patients. That's what that spike up there showed. But generally speaking, they're really not amongst the highest at all. And this shows the ROE comparison for 5 years and go to the next slide. This is a tabular version of the same data and go to the next slide, and it shows you from an ROA standpoint, where we stood amongst our competitors and noncompetitors. And it's a telling slide. I don't know what it's going to look like after we add when we add back in the Bouquette project because that project obviously is going to be dilutive at some level for a period of time. I expect to lose money in the first year, 1.5 years of Bouquet, but we didn't build it for year, 1.5 years. We built it for 40 years. But it's a very strong indicator of the kind of performance of how we deploy our CapEx. And as you know, we have no debt. In fact, we have negative debt. And we really haven't thought about even though we're doing our Soy 1 project and our Annex project and our Phuket project, they're all in process. We don't intend on borrowing any money to manage those. We're going to pay for those out of free cash flow. I think that was all of the slides I wanted to talk about.

Actually, I have my slide. I want to present about what Khun and Khun -- of just mentioned. We launched a special promotion campaign. So, let's go through the operational update. I will brief you very quick. Okay. This is the first question from the COE of Center of Excellence. If you see on this slide, this is -- I rank by the revenue contribution from the highest to the lowest. So overall revenue contribution for this COE is 45% of total revenue. And the total growth of this COE is 12%. So for non-COE it's quite flat. However, this is to show that we still have the very high complexity case or high-intensity case that Khun Nu mentioned. And you can see that Khun mentioned about Spine, this quarter, it increased more than 20%.

No red... No negative year-over-year by quarter.

Right. Yes, amazing, right? Yes. So next one is this robotic assisted surgery case. This one, I would like to highlight about number of cases more than 120 now for Bumrungrad for around 16 months, and we are very successful in terms of we expand robotic surgery into many specialties. And lately, we are the first in Thailand private hospital sector that can achieve the milestone of minimally invested direct coronary artery bypass because we can recruit one of the top talent robotic surgeons in the city. Next one, as you know about Newsweek again, why Kun mentioned about overseas Middle East and international markets fly into Bumrungrad because we have been ranked #1 in Thailand across specialty from Newsweek. And you can see most of them also our center of excellence. Next, -- this is to support about our heart center. This is our Professor Dr. K. He is the Director of Heart Institute. He became the first physician in Asia to receive the Pioneer Award from the Heartist Society. He is our doctor. And this is a very prestigious international recognition in cardiac electrophysiology and his research and his practice in AF syndrome and innovative clinical research has significantly improved the diagnosis and treatment of life-threatening heart disorder worldwide. Next one. This is to show our collaboration, Kabamurga partner with National Innovation Agency and other health care ecosystem partners, bringing together the government academic institute and health care providers. This collaboration will support and strengthen Thailand as the regional health care and medical innovation hub. Next one, this is our campaign that Khun just mentioned. In the second quarter, we launched a health care campaign. And most of our screening package can increase downstream revenue. Only this checkout package we sold 6,600 packages and generate around THB 207 million in gross revenue. And Khun Dr. Bo just mentioned about Hwei -- for this campaign, who purchased over THB 100,000, we gave the complementary smartwatch Huwei that we expect them to have the wearable device and we can link with our Bang applications. Last but not least, this is a special promotion campaign that we try to launch this tactic to regain and increase more Thai volume. So we achieved around 92% of our target. That means we can 494 procedures with 13 uplift compared to the business as usual. So you can see that the more successful will be the orthopedic procedures, including knee shoulder surgery and also laparoscopic surgery. These results show that this special promotion can help activate demand and select the service line and support utilization of our clinical capacity. That's all for me.