Medicare Group Q.P.S.C. (MCGS) Earnings Call Transcript & Summary

Hello, and welcome to QNB Financial Services Medical Group Conference Call. Please note that this call is being recorded. I would now like to hand the call over to our moderator, Roy Thomas. Please go ahead.

Thanks, Justin. Hello, everyone. This is Roy Thomas from QNB Financial Services. I want to welcome everyone to Medicare Group's Fourth Quarter and Year-end 2024 Financial Results Conference Call. On this call from Medicare Group, we have Muhammad Burjaq, the Chief Financial Officer and Investor Relations Officer. We will conduct this conference call with Muhammad first reviewing the company's results followed by a Q&A. I will turn the call now over to Muhammad. Go ahead.

Thank you so much, Roy. Good afternoon, everyone, and welcome to Medicare Group Q4 and Year-End 2024 Results Conference Call. As usual, I'm going to start with a brief on our performance. After which, I'll be ready to answer any questions you may have. We ended 2024 significantly well with an increase in net profit from continued operations by almost 24% to QAR 94.1 million compared to QAR 76.2 million in 2023. Now this growth was primarily driven by an increase in operating income by around 8% mainly coming from an increase in the number of both outpatient and inpatient guests. On the other hand, operating costs witnessed an increase by 5.5%. This has contributed to an increase in our gross profit by almost 12%. The period also witnessed growth in profits from short-term deposits by QAR 3.2 million. G&A expenses increased by 4.8% compared to 2023. Now this increase is in line with the increase in operating income. As a reminder, during the first half of 2024, Medicare suspended the services provided through Al-Wakrah Clinics and closed it starting from 1st of May 2024. The net negative effect from that on the bottom line of QAR 34 million represents a one-off charge relating to the impairment of the leasehold improvements and installations at Al-Wakrah for an amount of QAR 30.6 million in addition to results of Al-Wakrah Clinic from the start of the year until 30th of April of QAR 3.4 million. After taking the effect of Al-Wakrah closure into consideration, Medicare Group reported a net profit of QAR 60 million compared to QAR 65.7 million in 2023. We were able to recover most of the effect of Al-Wakrah closure in 2024. With regards to the court case with SEHA: on 21st of May 2024, the Court of Appeal decided that the national health insurance company, SEHA, is obliged to pay Medicare Group the amount of QAR 109 million and reject any other request imposing costs on it. This represented a reduction of QAR 21 million compared to the previous ruling by the Court of Appeal in January 2023, which was QAR 130 million. Both parties submitted an appeal with the Court of Cassation. On the 3rd of December 2024, the Court of Cassation decided to return the case to be considered again by the Court of Appeal. Moving on to our projects. Works on expansion of the operating theaters and labor and delivery rooms is in its final stages and is expected to be completed in the very short term. Also an ongoing project relating to the construction of a new physiotherapy, orthopedic and ENT center is expected to be handed over during the second quarter of 2025. I hope this has shed some light on our performance and developments seen during the year. We can now move to the questions and answers.

[Operator Instructions] And your first question comes from the line of Aashish Agarwal from The First Investor.

So just a couple of questions. If you can share your thoughts in terms of Qatar's population in 2025 and how do you look at the volume growth? That's my first question. And how is the pricing situation in 2025 versus 2024?

Second question, I cannot hear. I cannot recall the second question. Can you repeat it?

The second question is in terms of pricing, how do you look at the pricing in '25 versus '24? So that's my second question. And just a quick question. The expansions that you mentioned, is it possible for you to quantify those expansions in terms of revenue drivers or profits or something? Do you have any quantification on that? Any ballpark would be good.

With regards to the population, I think the population has been stagnant after the World Cup. I don't know if you have any indicators that there is growth during 2025. If you have, please let me know. Now in terms of pricing, pricing is expected to remain at the same level of 2024. We have competition coming up in the market and we think it's not the wise decision now to increase our prices especially if we want to increase our volume and maintain our market share. We're looking at cost optimization as an alternative. With regard to the expansion, it will free around 50 additional rooms. Now in terms of revenue and if this will increase the revenue, this will enable us to cater for the additional volume in the event the mandatory health insurance comes on board. Only then we will be able to quantify it into a specific percentage growth.

Okay. So I believe then the expansions should not materially impact the results for '25. Will I be correct in that assessment?

Not with the status quo. If the mandatory health insurance comes on board, it will impact.

Understood. Okay. So my previous interactions with you, you had indicated that the caregiving and nursing staff are a challenge. Obviously it's a global challenge for the health care industry. Is there any change in that situation?

It has slipped down a little bit, yes.

It is down a little bit. So that has basically got into your favor to an extent I could say.

I mean it has, but the competition in the market here is putting pressure on our costs as well in terms of that.

[Operator Instructions]

Muhammed, this is [ Fabian ]. Sorry, I joined the call a little late. Congratulations on the good numbers. My question you may have answered it earlier, but like I said, I joined a little late. It's around the revenue. I see that specifically for Q4 the revenue numbers was quite impressive. It's perhaps the highest you've had in a very long time. So my question is around the primary drivers. What were the sort of the volume growth for inpatient, outpatient and also the occupancy level and do you expect this to continue here?

We're hoping for it to continue. I mean we had a growth in our outpatient by around 5% in terms of numbers and inpatient by around 10%. The growth in the inpatient was in specialties such as pulmonary and gastro. So the volume has increased significantly in these 2 specialties. We're hoping that this will continue. We're increasing our marketing efforts. You can see by the level of expenses, which has increased by more than 70% compared to 2023. We're expecting to increase on that as well. I mean our presence on social media has improved a lot compared to prior years as well and this has contributed to the growth in revenues.

All right. That's really impressive. Just 1 more thing I think before I go. I ask about occupancy levels. Do you have like an average for the full year relative to last year, if you see any improvement?

There has been an improvement I mean considering the growth in our inpatient numbers. On average for the entire year, it's around the 60% level, but this is an average. In some months, it reaches almost 100% and in some months, it falls below 50%. It depends on the season as well. So the average for the year is around 60%.

And seeing as there are no more questions in the queue, I'll now turn the call over to our moderator, Mr. Roy Thomas. Sir, please go ahead.

All right. If there are no further questions, we'd like to thank Muhammad Burjaq for the results update and answering all the queries. And we look forward to speaking to you all for the first quarter 2025 results conference call. Thank you.

Thank you, Roy. Thank you, everybody.

Thank you. The meeting has now concluded. Thank you for joining. You may now disconnect.