Medicare Group Q.P.S.C. ($MCGS)

Hello, and welcome to Medicare Group. Please note that this call is being recorded. You will have the opportunity to ask questions to our speaker for today later on during the Q&A session. [Operator Instructions] I'd like to hand the call over now to Phibion.

Thank you all for joining us this afternoon for the Medicare Group Earnings Conference Call for Q1 2026. On the call today from Medicare Group is Muhammad Burjaq, who is the CFO and IR Officer. And as usual, Muhammad will first give us an overview of the Q1 performance, and then we have a Q&A session immediately afterwards. Let me turn over the call to Muhammad to begin. Over to you, sir. Please go ahead.

Thank you, Phibion. Good afternoon, everyone, and welcome to Medicare Group Q1 2026 Results Conference Call. As usual, I'm going to start with a brief on our performance, after which we can move to the questions and answers. Medicare Group reported a net profit of QAR 10 million in Q1 2026 compared to QAR 21.6 million in Q1 2025, which represents a decline by almost 54%. Now the main cause for such a decline is the 13% decrease seen in operating income, which was a direct result of the ongoing geopolitical situation in the Gulf leading to a major drop in patient numbers specifically residents during the month of March 2026. Now this, together with the Eid holidays, 3 days of Eid holidays, reduced operating income by QAR 16.5 million. Operating costs, on the other hand, and due to the presence of fixed costs such as salaries, only decreased by 4.5% when compared to the 13% decline in operating income. As for G&A expenses and due to our cost containment efforts, they decreased by 7%. With regards to the court case with SEHA, the final judgment was passed by the Court of Cassation during the quarter, obliging SEHA to pay Medicare Group an amount of QAR 130 million. We are currently in the process of execution of the judgment. Moving to our projects, works relating to the construction of the new physiotherapy, orthopedic and ENT centers were complete, and the project will be operational very, very soon. I hope this has shed some light on our performance. We can now move to the questions and answers.

[Operator Instructions] Your first question comes from Adnan Muqeem with AI Rayan Investment.

So I have 2 questions. One is like you said that there was fewer number of patients due to the Eid holidays and Ramadan. I wanted to like find out like how -- what was the occupancy during this period compared to previous year?

We had -- I mean the main cause for the decline is just not just Ramadan because Ramadan was present during last year as well. It's the 3 days of Eid coupled with a major reason, which is the decrease in the volume of residents here in Qatar. A lot of people -- I mean, you're aware of what happened during March. Schools were online, some people chose to leave the country during that period. This affected us negatively, reducing our volume by around 30% during the month of March alone. So this was the main reason for the decline in operating income.

Could you clarify like it's inpatient or outpatient, the 30% decline?

Both. Inpatient. A lot of people delayed their elective surgeries during the period. Even if they have not left the country, people chose to postpone any elective or nonurgent procedures. And we've already seen -- on the positive side, we're already seeing an improvement in the numbers in April, I mean, post Eid, month-to-date -- compared to month-to-date last year, there is an improvement, which is a very positive sign.

So currently, like how is the volume? Is it recovered in April?

Yes, it has.

It has recovered. And any update on SEHA program?

SEHA, as I mentioned before, the Court of Cassation passed the final judgment. Now our lawyers are in the process of execution of the judgment against SEHA.

No, I'm talking about the new Seha, which government wants to...

The new Seha -- it was supposed to come about this year. The first date we heard was April and then we heard for mid-year, but no new announcement by the government. So we don't know when that will go online. And I think everybody is waiting for the situation in the Gulf to settle and to be able -- to project and to make decisions based on solid grounds. Can you hear me?

Thank you.

I think we can move on to the next question, if we have anybody online.

Your next question comes from the line of Jonathan Milan with Waha Investment.

You mentioned -- just a few moments ago, you mentioned that the volumes are back to normal. I mean are they back to normal, are you seeing growth again year-on-year or back to normal, I mean, relatively speaking, you're flat year-on-year because...

I'm not going to -- I'm not going to say it's major growth, but there is growth year-on-year, yes.

Okay. Excellent. And with that growth, and again, we've seen decent cost containment year-on-year, you should actually see some expansion in margins.

[Foreign Language] We're working -- I mean we're continuing our efforts with regard to the costs, and hopefully, it will reflect positively in the next quarters on the margin.

Okay. And may I ask what's your spare capacity? What's your bed utilization or bed occupancy and the same for the outpatient clinic?

Now, the usual bed occupancy average annual is around 60%. But for the quarter, it was much, much slower because of March. I mean, the decline in inpatient was a bit higher than outpatients. A lot of people chose to, I mean, postpone the nonurgent elective surgeries. And this explains also the increase in volume because it's a timing difference. Whoever didn't do it during March, will do it again in April.

Of course, makes sense. And then, sorry, you mentioned some additions of the services, some form of expansion. Can you please elaborate on this because I'm sorry, but I'm not very familiar with that.

Sure. I mean, we did -- I mean, we have a new -- had a new expansion project. We are moving certain clinics from the main building, which is the original old building. Basically, physiotherapy, orthopedic and ENT centers, ophthalmology, we're moving it to a new building, which is now complete. We are actually in the process of shifting these clinics. These clinics were occupying certain rooms, They were patient rooms that were converted to clinics and now removing the clinics, and we're going to be working on the rooms again to convert them to inpatient rooms.

And what kind of growth -- how many rooms could that have?

22 beds.

22 beds. Okay. Excellent. So this would give you ample capacity once the mandatory insurance scheme is rolled out?

It will. And just to give you another piece of information, with our current bed capacity, we were catering for the initial Seha program, which was in 2014 and 2015, although we were at 100% capacity, but now with the additions of these rooms, we should be -- we should have just enough capacity.

And -- Look, I'm not very familiar with the market, but basically, if you're forcing a company to buy insurance, I would have thought that maybe they would buy the cheapest insurance. And the cheapest insurance doesn't exactly give you access to your hospital, which is not a low-class hospital, it's actually very nice hospital. Can you please elaborate?

Yes. Let me just explain to you. I mean I don't know if you were present in previous conference calls, the implementation of the Seha program will come in stages. The first stage will be for the Qatari nationals, which will -- which was bound to happen this year. We're hoping that it will happen towards maybe Q2, Q3 of this year, but no announcement was made by the government. So this, by itself, will add volumes to us because these people -- I mean, the table of benefits is very, very generous for the Qatari nationals. And these will be, I mean, our target for this year. In the future, when Stage 2 of the implementation happens, which will cover the expatriates, as you said, certain companies might choose a lower -- to pay a lower premium and they will not have access to Al-Ahli Hospital. But that is the case currently because some companies insure -- I mean higher ranks of their staff at Al-Ahli Hospital and the lower grades that insured somewhere else. So that is expected. But the big volume is expected from Phase 1, which will cover the Qatari Nationals.

Your next question comes from the line of Adnan Muqeem, again, with AI Rayan Investment.

This is actually Lee from AI Rayan Investment. I'm just using Adnan's line. Just to circle back again to your question earlier about volumes, the decline in volumes, you said, was very significant in March. Was that just purely due to -- I mean was there any other things that were affecting the volumes other than just the war? Or was there some...

It was just the war. Once the truce happens, the ceasefire -- once the ceasefire happened, the volumes came back up. because when the ceasefire happened, foreigners who left during the month of March came back, and we started seeing an increase in volumes.

Are the volumes closer back to what it was in 1Q last year?

Yes.

Right. So I guess it would be safe to say that what we saw in 1Q this year is just a blip due to the crisis that happened we should be back to...

Yes. That's what I'm trying to explain. I mean it's a regional situation that affected us because we're dealing -- I mean, our revenue, I mean, depends purely on the population numbers here. And you can see during the months of July, for example, and mid-August, there will be a drop in our revenue due to seasonal factors because most people go on their summer holidays. But we saw this effect in March now, and, to an extent, exaggerated effect.

Right. But seasonality aside, 2Q, 3Q, 4Q, I guess, assuming this ceasefire continues...

Assuming everything settles and everything goes back to normal the way it was Yes. We should see -- I mean we're working to increase our volumes. And especially if the new Seha program for the Qatari nationals comes this year, you should see also a positive effect.

Correct. So we actually, we should have a double -- double positive kicker isn't it? One is return of volumes to what it normally is, so business as usual, plus the additional Seha program.

Exactly. If it happens this year, yes.

Our next question comes from the line of Mohit [indiscernible].

Just I have one question regarding any updates that you have for the HMC reference? Are you seeing any volumes there yet?

We have seen an increase in volumes in inpatient, not to the extent that we want, but there is an increase I mean, I cannot say that it has a major effect on us, but there is an increase. There is a shy increase, let's say, in patient numbers.

Okay. So probably because of the ongoing situation in March was a little -- the volumes may have been a little less. So is it fair to expect in Q2 to see kicker from that side as well?

Yes. Now if things got settled and the situation in the Gulf was resolved, we already -- I mean, I said before, we're already seeing positive results in terms of volume numbers in April, month-to-date, April. And if this continues, we should see an improvement in Q2.

Thank you, everyone, and that concludes our Q&A session for today. I will turn the call back over to Phibion for our closing remarks.

Thank you, and I would like to thank you all for participating and special thanks to Muhammad Burjaq, the CFO for taking his time to update the market and respond to questions. Please do join us for the Q2 call. Enjoy the rest of your day.

Thank you. Thank you, everybody.

Thank you, everyone. You may now disconnect. Have a nice day ahead.

Thank you.