IHH Healthcare Berhad (IHH) Earnings Call Transcript & Summary

Ladies and gentlemen, good morning, and welcome to IHH Healthcare Berhad Fourth Quarter 2025 Analyst Presentation. [Operator Instructions] I must advise you that today's conference is being recorded. I would now like to turn the call over to your first speaker today, Mr. Kelvin Chong from Investor Relations at IHH. Please go ahead, Mr. Chong.

Thank you, and good morning, everyone, and welcome to IHH Q4 or Full Year Financial 2025 Analyst Briefing. Thank you for the time to join us today, early Monday. My name is Kelvin from IR, and joining us on the call and the meeting today are Dr. Prem Kumar Nair, Group CEO; Mr. Dilip Kadambi, Group CFO; Mr. Ashok Pandit, Group CCO. Very warm welcome, and good morning to all. Today's session will begin with Dr. Prem sharing some opening remarks about the quarter and the financial year, followed by Mr. Dilip, who will walk us through the financial highlights for the quarter and the year. Mr. Ashok will then cover the operational updates across key markets, geographies for the group, after which we will open up the floor to Q&A session. Dr. Prem, over to you, please.

Thank you, Kelvin, for the introduction. Good morning, everyone, and thank you for joining our Q4 2025 results briefing. Today, we will begin with our Q4 2025 results overview, move into operational highlights and finally, open up the floor for a Q&A session. Despite a challenging macroeconomic environment, we achieved resilient financial performance driven by higher inpatient admissions and greater revenue intensity across our key markets. In Q4, we demonstrated strong core growth with MYR 6.8 billion of revenue and MYR 1.5 billion of EBITDA. On a constant currency basis, we demonstrated double-digit revenue and EBITDA growth of 20% and 21%, respectively. This is a testament to our diversified portfolio of hospitals across our 10 geographies. Both EBITDA and PATMI margins remain healthy and are well within our guided range. ROE has also improved to about 9%, increasing by 20 basis points from the previous year. We will continue to stretch our existing assets better as we aim towards a double-digit ROE figure by 2028. Given our financial performance in 2025, the Board approved a final dividend of MYR 0.055 per share, bringing the total dividends for the full year 2025 to MYR 0.105. Our growth in daycare continues to be successful as we see greater daycare volumes in Malaysia. In Singapore, while Mount Elizabeth Orchard has been fully reopened, we have experienced a slower-than-expected recovery. We believe that this is an inflection point, and we foresee stabilized contributions from the second half of this year. In India, with the completion of the Fortis MTO, India is well positioned for greater growth. The MSA that was executed previously between Fortis and Gleneagles continues to be on track, and we are starting to see greater efficiencies in our operations. We continue on our multiyear digital transformation journey with multiple projects underway, including an ERP tender process, evaluation of a GBS model for process standardization and ongoing product engineering works for our hospital management systems. Overall, we remain cautiously optimistic about the financial performance of IHH in 2026. As mentioned earlier, the Board has approved a final dividend of MYR 0.055 per share for the full year ending 31st December 2025. Combined with the interim dividend of MYR 0.05 that was paid earlier, the total dividends declared for full year 2025 is MYR 0.105 per share, and this represents a 5% increase compared to full year 2024. At MYR 0.105 per share, this translates to a dividend payout ratio of more than 40% of PATMI, reflecting our disciplined capital management approach and confidence in IHH earnings sustainability. The increase in dividends underscores our commitment to deliver sustainable returns to our shareholders, and we recognize your continued and steadfast support for IHH. This slide demonstrates our 2030 strategy. Our goal is to be the most trusted multinational health care leader, and we have laid out 5 strategic priorities and 7 focus areas to achieve this goal. In Malaysia, we want to strengthen our payer provider relationships while growing our day cases and medical tourism segment. Where required, we will also allocate capital for brownfield bed expansion. In Singapore, we maintain our dominant leadership position through packages at Gleneagles and Parkway East. And for Mt E, continue to focus on high-value and high-intensity cases. We also aim to scale up the contributions from Mount Elizabeth Orchard following its reopening and growing our medical tourism segment. For India, we have completed the Fortis MTO and with the MSA, we aim to integrate Fortis and Gleneagles, driving up our leverage as a pan-India health care platform. We also aim to accelerate growth via brownfield expansions and M&As. In Turkiye, we aim to maintain market leadership and drive more operational resiliency. In Hong Kong, we aim to ramp up operations and continue with our margin expansion. We also plan to open more ambulatory care centers in the long term. On a group level, we're also progressing on our tech transformation to harmonize core systems across hospitals, and we'll continue to invest in AI and data to improve operational efficiency. We will also continue to drive synergies across the group. Overall, by 2030, we aim to maintain our dominant clinical leadership position in health care with greater expansion of scale and improved operational efficiencies to realize sustainable growth and returns for our stakeholders, all whilst maintaining a disciplined capital allocation policy. With that, I'll now pass the time over to Dilip to cover the financial highlights. Dilip, please?

Thank you, Dr. Prem, and good morning to all of you on the call. I appreciate you taking time off early this morning to join us. As always, we focus on the blue box, which excludes MFRS 129 since this is more accurately representing our operating performance of each of our business units. Overall, we see a 10% growth on both revenue and EBITDA following: one, a higher patient volume; two, revenue intensity from those patients with higher acuity, continued growth in our medical tourism segment and continued shifting of some of our operational operations into the day care model that we spoke about earlier. On a constant currency basis, we had a robust double-digit growth of 20% on revenue and 21% of EBITDA, demonstrating our strong operational performance across all our BUs. Despite some of the macroeconomic headwinds, our performance remains within our guided range, and we continue to be cautiously optimistic about our performance in 2026. We exercise prudence in our capital expenditure as we continue to grow our day care business in some of our BUs. On the next slide, for 2025, we continue to see a trend of strong core growth offset the currency translation losses due to an appreciating ringgit. Revenue and EBITDA reached a new high of MYR 26.2 billion and MYR 5.8 billion, respectively. On a constant currency basis, revenue and EBITDA grew 18% and 15%, respectively. We also noted that the analyst consensus had projected a PATMI of MYR 2 billion, but IHH has outperformed and closed at MYR 2.3 billion. Overall, we are delighted with the FY 2025 results. And moving ahead, we remain cautiously optimistic of our performance in 2026. As with our previous presentations, the blue box represents our reported revenue, EBITDA and next to it, constant currency revenue and EBITDA. Overall, a constant currency basis, the group achieved a 20% growth in revenue and EBITDA, demonstrating our robust financial performance. In Malaysia, we continue to see results shifting towards daycare cases as net day care revenue continues to grow double digit. Also, medical tourism continues to be a key growth factor for our operations in Malaysia. In Singapore, the recovery of Mount E Orchard has been slower and Q4 2025 was an inflection point. We foresee contribution to stabilize by second half of 2026. We continue to ramp up on our ACCs and dean more hospital capacity towards lower acuity procedures in our ACCs. Turkiye and Europe demonstrated robust double-digit revenue and EBITDA growth, both on reported as well as constant currency basis despite the FX erosion. Similarly, India continues its growth trajectory with double-digit revenue and EBITDA growth on a constant currency basis. India remains to be a key growth market for the group, especially after the MSA and as the integration is on track. Margins for the countries and the IHH Group continue to be within our guidance range. Overall, we have seen continued growth on a constant currency basis, driven by operational and clinical excellence, anchored by our operations in Malaysia and India. Despite the slower-than-expected recovery in Mount E Orchard, we remain confident in Singapore's trajectory over the second half of 2026. Similarly, for the full year FY 2025, we saw strong double-digit growth in both revenue and EBITDA on a constant currency basis, growing by 18% and 14%, respectively. Overall, at MYR 26 billion, the company -- we have demonstrated a strong growth in all our key markets. This slide shows our financial performance trend for a quarterly basis. As indicated by the solid purple line, our EBITDA margins ex MFRS 129 in Q4 was at 22%. This is aligned with our guidance of 22% to 24%. The bold green line indicates our core PATMI margin, which excludes TI and MFRS 129 in Q4, this stood at 9%. While our EBITDA and PATMI margins have remained stable within the guidance, we continue to demonstrate strong growth in absolute value of our earnings, reaching a new high of MYR 26 billion in revenue and MYR 5.8 billion in EBITDA. Looking ahead, we continue to maintain our EBITDA margins within the range of 22% to 24% as a group. Our business continues to generate strong operating cash flows for Q4. As at 31st December 2024 -- 2025, sorry, we have a cash balance of over MYR 1.5 billion. Our gearing levels remain healthy with net debt-to-EBITDA at 2.4x and net debt to equity at 0.5x. Overall, we remain confident in our ability to fund future CapEx and investment activity. And this concludes the financial highlights segment. With that, I will probably hand over to my colleague, Ashok, who will take you through the operational highlights.

Thank you. Thank you, Dilip. Starting with Malaysia. I think Malaysia saw very strong double-digit growth in both revenue and EBITDA. This is steered by a competent management team, which saw EBITDA growth of 15% and 29% on a constant currency basis and largely attributed to higher revenue intensity and higher occupancy. Despite strong and growing competition, IHH Malaysia continues on its growth trajectory and continued expansion into day care and medical tourism, as mentioned by Dr. Prem and Dilip as well. Our day care revenue continues to grow, reaching more than MYR 550 million for FY 2025, an increase of 10% compared to the previous year. This illustrates our efficient use of CapEx to capitalize on growth opportunities. We expect daycare revenue and volumes to increase in 2026. We remain prudent in managing our manpower costs and have continued to manage our variable costs through continued rationalization of suppliers and consolidation of procurement and several other efforts. Overall, our EBITDA margin grew to 29%, highest in our record on the back of higher revenue and better cost containment and probably demonstrates our leadership position in Malaysia. In the long term, we maintain our guidance of mid-20s to our Malaysian operations. If we go to the next slide, if we dive deeper into our medical tourism in Malaysia for 2025, our foreign patient contributed around 15% of our revenue. The contribution from foreign patients has doubled since our Island Hospital acquisition and on back of robust industry demand. Our hospitals in Malaysia continue to see double-digit growth in medical tourism, underpinned by steady growth in census and high equity treatments. Moving forward, we do expect to see continued growth from medical tourism, and this will be a larger proportion of our revenue in Malaysia going forward. Moving on to Singapore. In Singapore, as mentioned by Dilip earlier as well, we have experienced slower-than-expected recovery following the reopening of Mount Elizabeth Orchard, coupled with seasonality and season holiday in Q1, Chinese New Year and Hari Raya, we expect the contribution from Mount Elizabeth Orchard to stabilize towards the second half of 2026. Further, our lower occupancy is also partially attributed to newly opened transition care facility since 2025, which has seen an increase in our bed count by 200. Despite this, our revenue growth remains flat. And we see our EBITDA margin at a pretty healthy 27% levels. This demonstrates our resilience of our Singapore business. In this quarter, we experienced a 6% growth in revenue intensity that has partially helped to offset some of the headwinds we experienced in our Singapore business. To boost our Singapore operations, we continue to collaborate with our insurers to offer targeted packages for our patients, also including bundling of higher-end treatments into our packages to cover for both Mount Elizabeth hospitals. We've also positioned Gleneagles and Parkway East to compete with public health care system grade Class A awards by offering price competitive packages with shorter waiting times. We remain active in managing our manpower costs and other operating costs and to boost our productivity through various means, including AI and automation. Overall, we believe that the headwinds are temporary, and we are at an inflection point. As we continue to ramp up our utilization across our facilities, we are confident that the Singapore operations will grow -- will recover and grow further. Moving on to Turkiye and Europe, a very strong quarter. This is our Acibadem business on both reported and constant currency basis, we saw revenue and EBITDA demonstrated grow at 45% to 50%, respectively. Occupancy was at 71% and the revenue index grew -- revenue intensity grew at 16% from more acute patient cases. EBITDA margin climbed to 23% in Q4 of 2025. Despite higher FX volatility and translation effects, our Turkish and European business continue to perform quite strongly and has contributed significantly to the group. In FY 2025, our foreign patient contribution stands at 14%, mainly due to faster increase in local patient revenue, which grew at more than 50%. We remain confident about Turkey outlook as its economy continues to recover following a shift towards more conventional economic policies. Moving on to India. In India, we remain confident of its growth trajectory following the implementation of MSA, which seems to be on track. It's taken a little bit time for the operations, especially the Gleneagles operations under Fortis to stabilize. But I think they're on the track -- on a good track as we get into 2026. In Q4 of 2025, there was a slight drag on the Glen India -- from the Glen India operations. But with the implementation of the MSA, we remain confident of the growth of our India operations. The inpatient admissions and revenue intensity has increased by 9% and 6%, respectively. And on a constant currency basis, we have seen a double-digit revenue and EBITDA growth of 17% and 11%, respectively. You may have already seen the Fortis results. They were pretty healthy, double-digit growth in revenue at 17.5% and EBITDA growing by 34.8%. EBITDA margins for overall India business stands at 16% and occupancy at 70%. In the long term, we continue to make headway with the MSA, and we remain optimistic in seeing convergence of margin between Fortis and Gleneagles through greater clinical and operational synergies. Hong Kong, for Gleneagles, Hong Kong, our operations continues to be on a steady growth trajectory. Our relentless efforts in driving volumes through our clinics and more specialist consult have resulted in a rise in inpatient admissions and greater revenue intensity leading to a 12% increase in revenue and a 25% increase in EBITDA. In December 2025, GHK has achieved PATMI breakeven despite a HKD 4 billion of bank borrowings and HKD 4 billion of shareholder loan at more than 3% yields. Our new ACC, Gleneagles's Medicenter in Admiralty has contributed positively to our operations in Hong Kong as we continue to see increase in day care volumes. Overall, we continue to project growth in our Hong Kong operations, and we maintain our guidance of high teens in the long term. The laboratories had a softer Q4. Our lab segment volumes grew by 6%. On a constant currency basis, our lab revenue increased by 6%, whereas EBITDA remains flat with a margin at 17% in Q4. Our focus remains on high-end tests, and we continue to expand the number of tests, especially in the high-end tests to more accurate and effective test availability to both our hospitals and our outreach patients. Passing on to Dr. Prem.

So just a few other points before we end this. I think many of you would know that our Island hospital in Penang, Malaysia awarded the first flagship medical tourism hospital by Malaysian Health Travel Council, outperforming 3 other well-established hospitals. In Singapore, as Ashok mentioned, we've opened our first 200-bed transitional care facility. This is in a partnership with the Ministry of Health. And this caters to patients with chronic disease, lower-risk patients, doubles up as a treatment facility for the next pandemic as well. And in Turkiye and Europe, our landmark solar energy plant, and this is actually a very big achievement. It supplies 80% of Acibadem's total annual electricity spending. So this is a significant step in achieving our net zero goals by 2050. So maybe just to reiterate the key takeaways. We have demonstrated strong performance in 2025, and we remain cautiously optimistic for 2026. We will continue to drive growth through transformation and clinical leadership anchored by our framework set out back in 2023. We remain steadfast in our operations in key markets. We'll continue to grow them further. So with that, we'll now move to Q&A, and I'll pass this back to Kelvin.

Thank you, Dr. Prem, Dilip and Ashok for the insights and updates. Before we start, we'll first take questions from participants on the call before moving to questions on the webcast. [Operator Instructions] With that, operator, please proceed with the Q&A. Thank you.

[Operator Instructions] First question comes from Yen Voo from JPM.

On the first question, for your 2030 strategy on Slide 6 deck, you are still guiding for 4,000 beds. Can you give more details which countries? And more importantly, I guess, for investors, where are this CapEx spend? And why should we believe that the CapEx cycle will raise the ROE above 9% target? That's the first question.

Okay. This is -- I think this is consistent with what we have been mentioning to the investors and analysts over the last couple of years. A large part of this growth is coming from India and the other growth centers remain Malaysia and Turkey. We do believe some of these are brownfield expansions. And therefore, from a CapEx point of view, these are well captured within our cash flows. And therefore, these are -- given that these are brownfield expansions, mostly, these are definitely going to be ROE accretive compared to a new acquisition or greenfields.

And maybe just to add, Yen, if you remember, previously, we've spoken about 4,000 beds by 2028. Given our pivot to daycare, especially in Malaysia and maybe also the ramp-up in the ACCs in Singapore, et cetera, right? We are -- that's why we are saying this 4,000 beds now will be extended over a period of time, which I've always mentioned to all of you. And hence, we are saying this 4,000 bed capacity rather than come in by 2028 can actually come in by 2030. And fundamentally, if you look at our markets, there is still a secular need for growing demand in health care, whether it is Malaysia or India, you will need beds, you will need higher acuity beds. But just that given that we are pivoting to day care, especially in Malaysia, we can push the CapEx cycle over a longer period of time.

Okay. So we can expect this would not be front-loaded, but more back-end loaded, yes, and will be funded by a cash -- free cash flow.

That is right. That is right. And all of our brownfield expansion will be funded by cash. And again, as I've always mentioned, it will be the brownfield expansion also will be on a case-to-case basis, where there is need for beds where we're already operating at 80% plus utilization, we will add on brownfield beds. But again, where there is ability to put on daycare centers, that's something that we will focus on as well because the cost per bed on some of these daycare centers are more efficient and hence, from an ROE perspective, is more ROE accretive as well.

Maybe I can give a bit of nuancing so that you understand what we are doing now and for the future as well. I could almost say there's a little bit of a strategic shift in the way we think about health care operations. And I've said this many times before. The fact is that there's been a big shift in payer provider relationships. And because we have been working very well with our insurance partners in the 2 countries that affected Malaysia and Singapore, you will note that in Singapore, we are doing a lot more packages, and it's at our -- the 2 hospitals, Gleneagles and Parkway East. In Malaysia, day cases volume has grown tremendously. This is partly due to changes in the way we manage patients and improvements in clinical treatment. For example, a total knee replacement that would have required a few days of stay. Today, you can discharge the patient on the same day or the next day. So you shorten the stay, you turn around the beds faster. So we don't really need a 100-bed expansion, for example, in a big hospital like Gleneagles KL or Pantai KL. You can do it as a day case. So this is actually shifting our thought on large CapEx developments in our hospitals. And so the 4,000 beds will still remain because in a country like India, demand still far outstrips supply. So you'll see that Fortis will continue to put in more and more beds. But they're not -- that may not be the case in a country like Malaysia, where the expansion will primarily be in our secondary hospitals where they are operating at a very, very high occupancy of anywhere between 80% to 100%.

That's clear. If I can move on quickly to my second question. It will be around the EBITDA margin, especially for Malaysia. The fourth quarter was a very good number. Can we expect this trajectory to stabilize at this level?

Thank you, Yen. Again, this is something that we've always told the market. There is a lot of -- as Ashok mentioned previously in the call, there is a lot of cost containment efforts ongoing and efficiency improvement efforts ongoing in Malaysia to make our operations more efficient. And I can also tell you that the price increase is very, very minimal. It's probably even at or below inflation, right? So bulk of the margin expansion has really come from cost containment and efficiency improvement, right? So if you ask me longer term, what do I see in terms of a steady-state EBITDA, we would actually be quite happy with mid-20s, let's say, between 25% to 26% kind of margin for Malaysia in a long-term basis.

Okay. And on a group basis?

Group basis, we've always maintained 20% to 24%, and I think we'll stick to that guidance in terms of EBITDA margins, 22% to 24%.

Next, we have Amanda Foo from Macquarie.

Congratulations on the strong set of results. Two questions from me. Firstly, I just wanted to kind of dive a little bit deeper into Malaysia. The fourth quarter, with a 9% EBITDA margins, but we are still keeping with the mid-20s kind of long-term guidance. Are there headwinds ahead that we should be watching out for? And also related to Malaysia, can you share with us day cases or ACC, what's the revenue contribution in terms of percentage at this point?

Sure. So look, again, this is something that I've always kind of mentioned to all of you, I mean, as you know that I have said that, look, wherever possible in order to improve our efficiency, in order to better our cost, that is what we are focusing on in each of our countries, not just in Malaysia, but in each of our countries, right? By virtue of harmonizing processes, by virtue of adapting or adopting technology, et cetera, we are able to do this, right, in various fields, whether it's in normal workflow or procurement harmonization, so on and so forth, right? So we've been trying to do that. But however, sometimes, as I said, there is always a lead lag effect, right? There could be wage increases that would come through. There would also be some of the other stuff that would come through. So I think longer-term perspective, somewhere around the mid-20s is what I would definitely guide towards in terms of a steady-state margin to my mind. And in terms of your second question with regards to the ACC, the day cases growth in Malaysia has been double digit, has been excellent. But however, if you compare that to our overall inpatient revenue, it's still a small percentage, right? And it's -- but however, it's growing double digit. So if you ask me, let's say, 5 to 7 years out, how do you see day cases revenue as a percentage of overall revenue? I would probably put it around somewhere between 10% to 15% because by virtue of growing your day cases, your bill sizes are smaller, but also bear in mind that the intensity within the hospitals will also go up, which means the inpatient revenue will also grow quite significantly because of higher intensity cases going into higher acuity beds. So I would say, if you look out, let's say, 5 years or so, I would probably say it is about somewhere between 10% to 15% of our overall revenue.

I think, Dilip, if I can just add, what we've shown on Slide 14, in Q1 2025, we were at 24%, and we've ended Q4 2025 at 29%. It just shows a few things that we are large, we are market leaders, but we have the ability to also show operational strength, show how we can pivot our operations more towards like in 2025, we've gone more towards a little bit day care. There's been a very strong focus on cost optimization to get the right sort of outcome from a financial point of view for the market. So I think that shows the nimbleness and strength of IHH Healthcare as well.

That's very helpful. And if I could just squeeze one more. On India, on the latest Fortis earnings call, I believe you mentioned that Gleneagles is in a loss at this point, I think it's about 4%, if I remember correctly. So with this merge or merging of operations, when can we expect this to turn around? And what would be a more stable state EBITDA margin we can expect out of India once this is done? That's all for me.

So as you know, Fortis has already doing well in terms of margin expansion. And on a run rate basis, they are steadily progressing towards the 25% mark that they have set for themselves. You'll also see that on a run rate basis, they've been doing somewhere between 22% to 23%. And as I said, steadily progressing towards the 25% mark that they set for themselves. On the other hand, IHH India, again, this is something that is not new. When we took over that company in 2023 from the minorities, it was, I would say, a fairly distressed asset. We had low single-digit EBITDA margins, and we stabilized the operations all of 2024. And hence, in 2025, we thought it was -- with the MTO done, we thought it is timely to integrate the IHH India platform under Fortis' management. We think over a period of time, we would expect the IHH India platform in the medium term to get to about the mid-teens kind of mark and from there on, start converging towards a Fortis margin in the long run. So that's what we're expecting as an India platform together.

Next, we have Charul Agrawal from Bank of America.

My first question is on the capital allocation plan. So Fortis has indicated that IHH might be looking to infuse funds. So in that direction, I wanted to understand that what would be your capital allocation priority with respect to either increasing your stake in your India entity versus looking at other geographies like other Southeast Asia. So how should we think about capital allocation?

Yes. No, thank you for the question. And this is something again that we've kind of highlighted in the past, I would say, 6 to 8 months. In terms of capital allocation, the 2 countries that will probably get the largest share of the pie is India, followed by Malaysia. India with the MTO done, we have the ability to increase or infuse capital into Fortis as and when required. If there is a need for capital, I think that's somewhere we would definitely deploy capital into as they grow their brownfield beds and as they acquire some assets on an opportunistic basis. And the second part is really in terms of Malaysia. As Dr. Prem said, there are still assets in the secondary hospitals in Malaysia, which still can expand on a brownfield basis. So we will allocate capital to that and in the larger Malaysia platform growth as well. So these are the 2 countries where we would really allocate more capital from a growth perspective.

Okay. So no other geography -- like expanding geographical presence is not on the cards?

At this point in time, we don't see anything.

I think we look at all opportunities from time to time. But I think we -- right now, our focus is on our 4 key geographies.

Got it. And just on this India piece, another question that we did indicate that we'll integrate the India platform over time. But do we have any time line for this?

Yes. I think we probably -- we're giving you more guidance through the course of the year and clearly demonstrating that the integration is working well. So I think please bear with us. But yes, I think you will get -- you will hear more from us on this topic as we progress this year.

Yes. And just to kind of add, the integration from an operational perspective is already happening, right? The back end with regards to whether it's procurement or whether it is IT back end, et cetera. Some of that is already happening between IHH India and Fortis. From an ownership perspective, what we are saying, give us a runway of about 12 to 15 months, and I think we should probably get there.

Got it. Sir, my second question is on the Turkey and Europe operations. So I think there were some discussions on certain regulatory changes that were happening in Turkey. So I wanted to get your perspective of how you see that business progressing from here? And any guidance in terms of what we can do in terms of margins?

Sure. So if you look at the Turkey business, the Turkey business had a pretty strong Q4, and we're expecting the momentum to continue into 2026 as well as we ramp up some of the newer hospitals. And again, Turkey has been looking at operational efficiency as well as productivity, right? So I would say we see a robust 2026 for Turkey. And also bear in mind, despite all the headwinds that we've seen in Turkey over the last 4 years, whether it is inflationary issues, FX devaluation or some of the other exigencies like earthquake, et cetera. The Turkish business on a ringgit basis has doubled in revenue as well as EBITDA over the last 4 years. So it is a resilient business. They have grown quite nicely. So from a margin perspective, there are some issues. We mentioned last time that we have a new regulation with regards to doctor employment where we may have to take clinicians full time on our payrolls from June 2026 onwards. And we also had mentioned previously that it may cause a margin erosion of somewhere between 1% to 2% impact. If it's a full pass-through, then it will probably be about 2%. If we're able to kind of ensure that we are able to pass on some of that, it will probably be somewhere around 1%. So it's 1% to 2% in terms of impact on margins.

Next, we have Xuan Tan from Goldman Sachs.

My first question is on 2026 revenue growth. Can you give us a broad guidance of the growth and key drivers across your key geographies? Second question is on strategic M&A and opportunities. Can you rank in terms of your top 3 priorities at this point?

So from a revenue perspective, let me take from a revenue perspective and then hand it over to Ashok to address the strategic part. From a revenue perspective, overall, the key growth areas that we see is, one, Malaysia would continue their growth trajectory. They will demonstrate strong revenue growth as we've stabilized some of the payer issues and we look at pivoting towards the day cases and also adding capacity where required in the Tier 2 hospitals. So we continue to grow double digit in Malaysia. We are, as I said, cautiously optimistic on Singapore as well. We've seen 2 good months in December and January in terms of some of the patient load come back in, especially with regards to the medical tourists in Mount E Orchard. We expect the trajectory to continue. And hence, we think by the second half of this year, we should start seeing Singapore in a growth trajectory as well going into, I would say, again, reasonably high single-digit growth. India will continue its growth. You've seen strong growth on the Fortis side, both in terms of the existing organic growth as well as they've looked at 1 or 2 stand-alone hospitals. So India will continue from a growth trajectory standpoint. And as we integrate IHH India with Fortis and optimize costs there, we will see an impact -- a positive impact on the margins as well in India. right? With regards to Turkey and Europe, you've seen pretty strong performance of Turkey and Europe in the Q4 of 2025. And hence, 2026 as well, we expect that momentum to continue in 2026. So overall, as a group, we are quite comfortable to say we should be, again, subject to ringgit on a constant currency basis, we should be able to kind of do a double-digit revenue growth number.

On the question around strategic priorities and investment opportunities, I think the main theme is we're going to be super disciplined on capital allocation. I think that's something that is very clear. We've now got a very good integration with Island Hospital and some of the M&A that was done by Fortis over 2024 and 2025, which gives us more confidence at least when it comes to 2 markets, which are India and Malaysia, as you think about future M&A opportunities going forward. These are the markets which are of focus to us. New markets, we're going to look at very, very selectively and carefully. We continue to see multiple opportunities. But like I said, our focus remains on delivering high ROE and proper capital allocations with 2 geographies in focus, India and Malaysia.

Thank you I see no further questions at this moment. I will now hand back to Kelvin.

Thank you. If we can take questions from the webcast First one comes from Jun Zhang. How significant is the new labor code to India operation? What's the long-term EBITDA margin moving forward? Following such implementation, what was the reason for lower lab revenue? And the third one, with the new Integrated Shield Plan ISP that comes in effect by April 2026, how would it affect your Singapore inpatient visit?

Yes. Maybe -- thanks, Kelvin. Maybe I can take question one, and then I'll probably kind of hand over question 2 to Ashok and then maybe Dr. Prem can address question 3. So in terms of our overall labor code -- the impact of labor code in India, we had a one-off of about roughly MYR 30 million impact on our EBITDA margins Q4. And I think over a period of time, we expect that to kind of settle down. And from a margin perspective, I don't think it will have a material impact on our India business margins as we drive, as I said, more efficiency and productivity in our India business. The other point that I'd like to add is in our EBITDA for Q4, we also had a REIT revaluation loss of about MYR 30 million. So we had MYR 30 million -- roughly about MYR 30 million from the labor code, which impacted our EBITDA, which is one-off and another MYR 30 million from the REIT revaluation as well. So those were the 2 things that kind of -- one-offs that kind of impacted our EBITDA in Q4 of 2025. I'll probably hand over to Ashok to talk about the lab.

Yes. I think on the labs, it's a good observation. I think while our focus remains on high-end tests, and I think that we are still seeing a steady volume increase and even higher contribution to our revenue and EBITDA. But in some of the markets, we had some sort of nuances. Singapore got impacted by lower inpatient, which impacted our lab volumes. Even in Malaysia with higher day care cases, that had an impact on the hospital business contributing to the labs. So I think that's some of the nuances we saw in Q4. Hopefully, we see those things getting addressed as we get into Q1 and a little bit more stable lab revenue. But one of the main key drivers of the labs from our point of view is going to be a focus towards high-end growth coming from high-end tests, especially in some of the bigger markets in all the 4 big markets like India, Turkey, Singapore and Malaysia.

Yes. And maybe just to add, just like the hospitals, we are looking at driving some of the efficiencies in the lab as well, both in terms of cost, reagent costs. On the other hand, also looking at automating our lab platform to enhance efficiency.

Maybe to address the IP integration plans issue, we don't anticipate that it will have a major impact for the simple reason that the patients who are shifting to the public sector who are going into the government A class beds which comprises about the most 10% of the beds in most hospitals. In some hospitals, it is even less. There are very long waiting times for getting a bed in the A class. And we are already -- after the height of the insurance issue last year, 2024 and '25, we are seeing a shift of the patients back into private hospitals. So while there will be some impact, but for me, this is always an issue that is sort of to-ing and fro-ing, right? Patients wanting to move, but they can't get a bid, you might have to wait for up to 2 days before you actually get a private bed. So -- and also with our new packages that we are doing in 2 of our hospitals, there's also a shift back into our hospitals to utilize these packages.

Right. On to the next set of questions from Jun Zhang. I believe questions 1 to 3 has been answered. Question 4, rising day care volumes in Malaysia, does IHH have any plans to establish ACCs to cater specifically to this? If not, does treating day care patients with a hospital setting affect your operating efficiency? Is the impact of payer pressure in Malaysia still persistent in this quarter? How do you expect Malaysia to perform once the premium cap is lifted by end of 2026?

So firstly, on daycare patients, maybe I can just say, in Malaysia today, the bulk of day care patients are treated within day surgery centers in our hospitals. So other than the wards, there are day surgery centers and some of the hospitals are doing some work to create dedicated day surgery centers. And the advantage of this is obvious. You have a single shift of nurses. It's -- you don't have a lot of CapEx. The beds are trolley beds because patients stay for anywhere from 2 hours to 6 hours and then they are discharged. However, having said that, Malaysia is looking at ambulatory care centers as well. There are ongoing projects reviewing where we can put ambulatory care centers. So that will be ongoing. But I can say quite clearly that Malaysia is seeing a significant shift into the day care space, which I think is positive all around for patients, for us and for the insurers as well.

Yes. And maybe just to kind of add the -- so if you look at -- and again, this is something that I've always mentioned. So if you look at -- even if the day cases are, let's say, somewhere around 60% of the inpatient bill, the beauty of the day cases is the revenue velocity is higher, right? Even though it's 60%, we're able to turn around the beds faster, which means you do more velocity of volume and hence, more velocity of revenue. So it's actually more efficient in that sense, number one. Number two, bear in mind that this is a separate center within our hospital. So from a running cost perspective, as Dr. Prem said, we are able to kind of reduce the running cost for that particular part of the hospital. And in some of our existing hospital where we do not have a day care center, we have the ability to grow the day care center at marginal CapEx. So overall, as Dr. Prem said, I'd like to reiterate, this is capital accretive, earnings accretive. But at the same time, clinically, this is how the world is going towards more day cases rather than having inpatient cases.

Thanks. And moving on to the next question, and we'll pick up some of these questions that we do not manage to answer in the interest of time from [indiscernible], why has EBITDA margin improved quarter-on-quarter from Malaysian operations despite payer pressure? Is 28.6% sustainable? What is the expected EBITDA margin uplift attributable to your digital transformation initiative? And over what time frame do you anticipate these benefits to materialize? Could you also share Gleneagles India's EBITDA margin for 4Q FY '25 and how it compares with margins reported in first Q to third Q of the same year?

Sure. So maybe I can start with the first one. From a Malaysian perspective, obviously, as I said, there are not just one, but there are several initiatives that we've put through, whether it is process harmonization, whether it is some of the digital transformation exercise that the team has undertaken or whether it's procurement, so on and so forth. So there is a lot of effort that's being put into Malaysia, but actually not just Malaysia, as Dr. Prem mentioned in his 2030 strategy, across the group, we are looking at going big on digital transformation, right? So it will have impact. It will have a positive impact from an operational perspective to make things more efficient and more productive, right? But it's over a period of the next, I would say, 4 to 5 years. So from a -- having said that, I would say, long term, again, from a Malaysia perspective, I would still like to guide all of you towards a mid-20s, let's say, 25% to 26% in terms of margins over a longer period of time is what we think is sustainable for Malaysia. With regards to Gleneagles India, you know the Fortress margin. And hence, if you back calculate, you probably know the Gleneagles India margin as well. But also bear in mind that we've just started the integration exercise in Gleneagles. We expect that some of the synergies that we are able to drive between Fortis and Gleneagles would definitely, as I mentioned, in the medium term, get Gleneagles to a mid-teens EBITDA margin and in a longer-term basis, converge more towards the Fortis margin.

If I can just add, I see there's one similar question from Joe Liew as well. I think any M&A integration takes a little bit of time. I think in India, specifically with Glen India, with Fortis coming over, we had some churn in people. all the positions on our field. Fortis is fully on track in running those operations. So you will see changes coming through reflected in the financials as we get into 2026. But like you would understand, any integration takes some time. And I think this was done very strategically because over time, we want, like Dilip mentioned, Glen India to track the growth and margin trajectory of that of Fortis.

Thanks, Dilip and Ashok. Interest of time, perhaps we'll pick 1 or 2 more questions, and the rest we will get back to you via e-mail. call, if necessary. From Natasha, congratulations on your set of results. I'd like to check if there are any concerns on U.S.-Iran war, especially for IHH Turkey.

Well, we don't think so. If you look now our Turkish operations other than the big domestic sector that they have in the high A+ segment, the bulk of their foreign patients come from Europe, from Eastern Europe, from Central Asia predominantly. And I think that's relatively unaffected. But I mean, to be very honest, we don't -- these are early days. We don't know how the U.S.-Iran war is going to play out. But I think at the moment, probably not too much.

Last one from Mariana. You are targeting double-digit ROE by 2028. What are the biggest levers to get there, margin expansion, asset turns? Second, with regards to medical tourism, do you see any slowing down in volume following ringgit appreciation?

Sure. So look, I think ROE, there are several levers, right? As I said, the biggest ROE -- the reason for the ROE expansion would be really from better asset utilization, ensuring that we sweat our assets better, which is what Dr. Prem mentioned in the beginning; and two, making our processes more efficient and improving our productivity. I think these would be really the key in terms of driving our ROE, and that's what we're really focused on at this point in time. So these are the levers that we would use from an ROE productivity standpoint. With regards to medical tourism, even though we do see that what do you call, ringgit has appreciated. But bear in mind, some of the competing markets like Thailand, et cetera, are still quite expensive when compared to where the Malaysian market is from a build size perspective. So I think I do not see any slowing down of medical tourism in Malaysia. In fact, we do see double-digit growth as we go into January as well.

Thanks, Dilip. It looks like we've come to the end of our allocated time. We'll conclude the session here. Joanna, Magat, I see that you guys have questions. We'll come back to you by e-mail, call if necessary. Thank you all once again for your participation and questions. Thank you, Dr. Prem, Dilip, Ashok for sharing the insights. Should you have further questions, as usual, please don't hesitate to reach out to myself or Jeremy from IR team. Thank you, and have a great day ahead.

Thank you.

Thank you.

This concludes today's conference call. Thank you for participating. You may now disconnect.