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

Hello, and welcome to Medicare Group. Please note that this call is being recorded. I'd like to hand over the call to our moderator, Phibion. Please go ahead. Thank you.

Thank you, Gil. Good afternoon to you all, and thank you for joining us for this year's first quarter of 2025 Earnings Conference Call for Medicare Group. My name is Phibion Makuwerere. I'm with QNB Financial Services. On today's call, we have from Medicare's management team, Muhammad Burjaq, who is the CFO and also the IR Officer. And as usual, Muhammad will go over the numbers first, and then we have a Q&A session immediately after. Let me now turn the call to Muhammad to begin. Please go ahead, sir.

Thank you, Phibion. Good afternoon, everyone, and welcome to Medicare Group Q1 2025 Results Conference Call. Today, as usual, I'm going to start with a brief on our performance, after which we can move to the questions and answers. Now we ended Q1 2025 with a net profit of QAR 21.6 million compared to QAR 19.8 million for the same quarter in 2024. This is a growth by around 9%. I want to point out that on 30th of April last year, Medicare discontinued the operations of Al Wakra Clinic and the results of Q1 2024 includes an amount of QAR 2.8 million relating to the loss from Al Wakra operations during that quarter. Now when comparing the net profit for Q1 2025 to the net profit from continuing operations of last year, a decline of 4% is noted. This decline mainly relates to the decrease in operating income by around 2% when compared to the same period last year. This quarter included 11 additional days of Ramadan in addition to 2 days of Eid. Now our revenues typically falls by around 20% during Ramadan, and we have 2 days of Eid with negligible revenues during these days because our clinics are closed. Now this is mainly due to the fall in inpatient admissions during that period and due to elective surgeries being pushed by patients until after Eid. Operating costs, on the other hand, witnessed a decrease by 0.5%. Overall, both of them -- both of these factors contributed to a decrease in gross profit by 4%. The period also witnessed a growth in profit from short-term deposits by around EUR 1.3 million. As for G&A expenses, they only increased by 0.5 percentage point. Now with regards to the court case with SEHA, on the 3rd of December 2024, the Court of Cassation decided to return the case to be considered again by the Court of Appeal, requesting the appointment of an expert with the medical background together with the existing financial experts. A hearing is scheduled by the Court of Appeal at the end of this month. Moving to our projects, works relating to the construction of the new physiotherapy, orthopedic and ENT center are in their final stages, and the project is expected to be handed over during the third quarter of 2025. I hope this has shed some light on our performance and development seen during the quarter. We can now move to the questions and answers.

[Operator Instructions] So for your first question, it comes from the line of Rob Skepper with Ashmore.

Yes. So just on the latest news on the kind of legal stuff on the court case. So I guess there's a little bit of a reset there. But in terms of -- so how many steps is this now potentially away from conclusion from this point?

Well, we're looking at the full half of the cup, let's say. Now previously, if you can recall, the initial ruling by the court was for QAR 130 million. With the Court of Appeal, the latest that went to the Court of Cassation, they reduced the amount to QAR 109 million. This is based on an expert's opinion. As per the Court of Cassation, I don't think they saw this decrease justified. That's why they asked for the report to be reviewed again to justify, I mean, why there was a change in the numbers, which was recommended before and the appointment of an expert with a medical background. So we see it as a positive step, although there is a delay, but we're hopeful that it will result in a higher number, hopefully.

Okay. So Court of Appeal looks at the number again, then it goes back to the Court of Cassation for the final judgment.

Yes.

Got it. okay. Good stuff. And then, yes, I guess just coming a little bit more to the operations. Yes, just be good to get your thoughts on. Yes, just how 2025 is really shaping up, to be honest, just in terms of population.

I mean you cannot really judge from now. I mean we started really strong for January and February. But the month of Ramadan, when it comes, I mean, it changes our calculations a little bit because there's a lot of, I mean, push by our guests for elective surgeries to be done after it. It's starting to pick up now. So we're still seeing 2025 as a positive year.

Yes. Okay. And any comments on pricing?

Pricing for the time being, I mean, we're reviewing our pricing for specific services. We might adjust a little bit. But overall, there will not be a major change.

Okay. And is there anything new like on the regulatory front?

No, nothing on the horizon. I mean, in terms of mandatory health insurance, I mean, it was supposed to kick in the beginning of 2025. It still did not. So we're hopeful that it will come during this year.

Yes. Okay. Good stuff. And then yes, just with Hamad, is there kind of anything different going on there and competition more generally? Is there anything that's changed particularly?

Competition, I mean, we did not see a major effect of competition. Yet, they have their own, let's say, client base. They did not affect our numbers. We have an increase actually during the quarter, although there's a decline in revenue in the number of outpatients. So the decrease mainly relates to inpatient. So I mean, we're positive in that regard.

[Operator Instructions] Your next question comes from the line of [ Hua Chao ] with [indiscernible].

Muhammad, this is [indiscernible] from [indiscernible] Investment. Just a few questions. Firstly, I'm sorry, we got cut off, so I wasn't able to listen to your update on the performance for the quarter, but I'm assuming that say that the Ramadan impact has been the rationale for the decline in revenues. Will my assumption be correct?

Absolutely. Spot on.

So how much was -- how much -- could you give us the stats of growth on the inpatient and outpatient numbers for the first quarter?

We have a growth in our outpatient numbers actually. It's not a major growth. It's a growth by 2%. But for in-house, I mean, it's typical for the month of Ramadan, all elective surgeries are being pushed in after Eid. So we had a decline there.

Okay. And you mentioned that January and February were the strong months. So could you -- for those months, if we take those -- only those 2 months, what would be the inpatient and outpatient growth?

Both of them around 3%.

Around 3%. Sounds good. And what makes you so confident that [ SEHA ] can come in this in 2025?

Historically speaking, the months of April, May and June, I mean, free of Ramadan are one of the best months. So we're maintaining the growth that we achieved in 2024. And also 2025 will not have the impact of Al Wakra anymore. So we're expecting hopefully strong results at the end of the year.

Sounds good. And are you having any impact from competition on, for example...

Negligible.

Neither patients nor staff?

Staff, I mean, we had an impact around a year ago. It put pressure on our costs a bit to retain our staff to protect them from going somewhere else. But this year, it is down.

Okay. I mean last year, your gross margins did improve. So -- do you think that this year, probably they should improve even further?

We're working on it. This year, I mean, our target is to tackle our costs to do some cost savings. You saw that we have some savings in staff costs during the first quarter compared to last year as well. So yes, we're working on that.

Thank you so much, everyone. And that concludes our Q&A session for today. I will now turn the call over back to our moderator, Phibion. Please go ahead.

Thank you, Gil. Yes. Indeed, if there are no questions, it brings us to the end of our call today. I'd like to thank all of you who have joined. I'd like to thank Muhammad for taking your time and responding to questions from investors. Please do join us for the 2Q call again. Thank you, and have a good day.

Thank you. Thank you, everybody.

Thank you, everyone. That concludes today's call. Thank you all for joining. You may now all disconnect. Have a nice day ahead.