MLP Saglik Hizmetleri A.S. ($MPARK)

[indiscernible] 2025 results webcast. [Operator Instructions]. Today, our CEO, Dr. Muharrem Usta; and our CFO, Burcu Ozturk will be presenting. Thank you for joining. I would like to remind you of our disclaimer regarding forward-looking statements. You can find the disclaimer on the second page of this presentation. Financial statements with footnotes are also available on our website. Now I will hand over the floor to our CEO, Mr. Muharrem Usta. Muharrem bey.

[Interpreted] Thank you, Deniz. Welcome, everybody. Indeed, we have just concluded the year 2025, and we maintained our real growth in 2025. The revenue increased by nearly 6% in real terms to reach TRY 55.1 billion. And in the meantime, our EBITDA rose by 15% to TRY 15.3 billion. And especially in the second half of the year as part of our digitalization and operational improvement efforts in [indiscernible] digital hospital efforts, we have gained significant success. We have made human resources much efficient. The services are much better, and the patient satisfaction has increased significantly. Thanks to this, the effectiveness efficiency increased quite well. And in line with the measurements, we see that hospital satisfaction has increased significantly for 2025. And in regards to the energy consumption of our group, we had our targets in regards to decreasing them, and we have completed 65% of our solar energy plant investments. And thanks to that, a significant portion of our energy needs are now generated by renewable plants. And in 2025, we had our strategic plan to guarantee our growth for the coming period. We have taken that into commission, and it is being implemented. We are now in an investment period and will be explaining the details. The licenses of hospitals, the doctors, there have been many great investments indeed. So this year, 2025 was an investment year. And of course, the net debt-to-EBITDA ratio increased slightly, but this ratio is below 1. And excluding IFRS 16, it corresponds to 0.3, when only the bank debt is considered, which is quite low. And in 2024, we have included a couple of hospitals to our portfolio. And in 2025, we have seen positive contribution from all these hospitals. And this is a remarkable progress actually in a very short period of time, these hospitals are contributing positively. In 2025, we further strengthened our hospital network in Istanbul. Medical Park Onkoloji and Medical Park TEM Hospitals were added to our portfolio. And through management service agreements, we have also added Istinye University Liv Hospital, Topkapi and Istinye University Gaziosmanpasa Hospital. Thus the four new hospitals joining our group in 2025, the number of hospitals in Istanbul increased from 10 to 14. When we take a look at our operations in Turkey for 2026, in 2026, we provide services with a total of 34 hospitals in 13 provinces. We operate with approximately 6,800 reps and 3,200 doctors throughout Turkey. And we believe that especially in metropolitan areas, primarily Istanbul, Ankara, Izmir, Bursa, Trabzon, [Çanakkale ] and Adana, there is a growth potential, still a growth potential. So we -- our efforts to build hospitals from scratch are ongoing. We plan to open our new hospitals in [Çanakkale ] and Bursa and those are quite important hospitals for us. By the end of the year, this will be hopefully in commission. Now I will leave the floor to our CFO, Burcu Ozturk.

Our revenues grew by 4% in the fourth quarter. And if you look at the full year, the revenue growth was 6%. Domestic private medical insurance has been the key growth driver in our total revenue portfolio. Analyzing the components of our domestic revenue, we observed that robust growth in both outpatient and inpatient segments during the year. Outpatient and inpatient revenues currently accounted for 49% and 51% of our total domestic revenues, respectively. On the left-hand side, you will see that outpatient revenue increased by 14%. This was driven by a 3% rise in volume and mix, and the remainder 12% was related to the improvement in our pricing. On the right-hand side, our inpatient revenues grew by 5%. This was supported by a 3% increase in the volume and mix and a 2% improvement in our pricing with respect to the inpatient revenues. In Q4 '25, our EBITDA increased by 26% year-over-year to TRY 4.4 billion. This was driven by a favorable change in the payer mix, and the ongoing efficiency initiatives aimed at optimizing our cost base. On an annual basis, our EBITDA grew by 15% to TRY 15.3 billion. On the profitability side, our EBITDA margin improved to 27.8%. On a cost basis, our costs with respect to the materials as a percentage of revenue decreased by -- decreased to 11.8% in '25. This was driven by the effective inventory management as well as the changes in the patient mix towards the more outpatient-focused revenue profile. On the doctor cost, our doctor cost as a percentage of total revenues increased to 26.7% in '25. This was mainly related to the opening of new hospitals as well as change in the classification of doctor costs. And personnel expenses as a percentage of total revenue decreased to 21.1%. This was mainly related to the inclusion of outsourced staff into the company's payroll. And the cost associated with the outsourced services decreased to 2.4% of revenues due to the inclusion of certain outsourced services into the company following the regulatory change in this segment, and the decline in the ratio is reflected in the doctor and personnel cost ratio increases as a percentage of revenues. And lastly, our other expenses, including utilities, rent and marketing increased to 10.2% of our total revenues, primarily due to the inclusion of medical equipment rental expenses into the company following the regulatory changes that I just mentioned. On the net profit side, in Q4 '25, net profit attributable to equity holders of the parent increased by 7% to TRY 1.2 billion. And if you look at full year, our net profit attributable to equity holders of the parent decreased by 19% to TRY 5.5 billion. This was primarily related to the lower income that was coming from the investing activities, basically related to the negative goodwill related to hospital acquisitions, compared to the previous year, and also, higher depreciation expenses and increase in the corporate tax with respect to the inflationary change were the other reasons with respect to the net profit decline. On the net debt side, our total net debt, including obligations under IFRS 16 increased by TRY 5.1 billion to TRY 12 billion at year-end. And net debt-to-EBITDA ratio increased from 0.5 to 0.8 in '25. This was due to the acceleration of the capital expenditure with respect to the new hospital openings. On the other hand, if we exclude the IFRS 16 liabilities, net debt increased by TRY 3.9 billion and ending at TRY 4.9 billion at year-end. And excluding IFRS 16, our net debt-to-EBITDA ratio currently stands at 0.3. On the CapEx side, our CapEx increased by TRY 6.6 billion at the end of '25. This was mainly driven by the expansion investments to secure the future growth of the company. If you look at the total CapEx ratio of revenues, it increased from 8.9% in '25 to 20.4% within -- throughout this year. And maintenance-related CapEx accounted for 4.6% of revenue this year, and this was mainly related to the floor openings, renovations or medical equipment renewals within the existing hospitals. If you look at the CapEx related to new hospital openings, this is around 15.9% of total revenues. And out of this total, 7.1% was related to license and medical equipment of the acquired hospitals, while the remaining 7.1% was related to license and land costs for new hospital openings of the greenfields. And the ratio of CapEx related to renewable energy in '25 was 1.6% of revenues. We are currently planning investments for hospitals to be opened over the next 5 years. In this respect, CapEx to sales ratio was temporarily above the historical averages in '25, but if you look at the following years, starting from '26, we expect to return back to 10% of revenues as part of CapEx spending. On the cash flow side, our operating cash flow decreased by 3.9% to TRY 10 billion in '25. This was again related to the cash outflows related to CapEx as well as the higher corporate tax payments. The operating-cash-flow-to-EBITDA ratio was 67% in '25. If you look at the free cash flow, this was negative TRY 1.3 billion in '25, primarily driven by the increased CapEx as well as the -- to support the future growth within the following years with respect to greenfield openings. Now I will hand over to Deniz for the Q&A session.

[Operator Instructions] Aytunç Uz.

[Foreign Language]

[Foreign Language]

Okay, I can continue in English. So I got 3 questions, actually. So the first one is, can you share further details regarding your plans for the next 5 years regarding the new hospital openings?

Are you going to ask all of them or do you want it piece by piece?

We can do it piece by piece, if you like.

[Interpreted] So the question is in regards to the hospital plans for the next 5 years.

[Interpreted] And as we have already explained for the next 5 years, it's 8 or 9 hospitals will be opened and majority of them are in Istanbul, Izmir, Ankara, Adana are among other provinces that we are going to have new hospitals. The planning surely mainly on the licenses. And we have completed the majority of the process. Two of these hospitals will be opened in the last quarter of this year. And almost two hospitals each year will be commissioned in the next 5 years.

What kind of total bed capacity? Do you plan, like 200 beds per hospital?

Indeed, yes. The average will be 200 beds per hospital.

Further details regarding the jump in the depreciation expenses. If I am right, I calculate that there's a real quarter-over-quarter 38% jump on depreciation expenses.

So we had the opening of greenfield hospital of Topkapi. And besides, we are currently investing heavily into the licenses as we just talked about. So this year's higher CapEx, which is around 20% of our revenues, has led to increase in the depreciation expenses.

Do you depreciate licenses?

Yes.

Okay.

That we acquire are depreciated, but the licenses that we acquired through hospital acquisitions are -- does not have any depreciation cost.

So separately acquired licenses are depreciated?

Yes.

The hospitals are not, okay. The last question is, how much did you -- or do you plan to make a personnel wage hike, the personnel cost hike, I mean, not the doctor cost. Is it going to be something like parallel to minimum wage?

So if you look at our cost base, around almost 80% of our employee cost base is minimum wage or minimum wage-linked. In this respect, we've already started the year with 27% growth. If you look at December versus January '26, we had around a little bit slightly less than minimum wage increase, but we are very much parallel to minimum wage hike with respect to the employee costs. Just to give some more clarity on that, we just had a pricing improvement with respect to the SSI, and also, the private medical insurance side had a price hike. So all in all, this employee cost increase that happened in January '26 was fully compensated through the revenue boost with respect to pricing.

[Operator Instructions]

So there is a question on the screen. So thank you for the presentation. Excluding the ramp-up period of acquisitions, we are observing a decline in patient volume per hospital, particularly in inpatient patients. What is the cause of this decline? And is it stemming from the SSI insured patient segment? [Foreign Language]

[Interpreted] Yes, I may, I may. Indeed, social security insurance institution has not made any increases in the payments for a very long time.

But in January, the profile, you will see that our revenues coming from outpatients increased compared to revenues coming from inpatients. So that's also kind of a deliberate strategy to decrease the inpatient volume within the hospitals due to the high profitability margin that we get from the outpatients. We were more heavily focused on to the outpatient segment, which can look like the number of inpatients decline, but this is kind of something that we deliberately made. [Interpreted] Another question. Hello, everyone. As you do know, the private university hospitals were exempted from the institutional taxes, but this was -- this exemption was lifted, how will it affect the company?

[Interpreted] This might have created an effect on the corporate taxes, but we have this consultancy agreement with the hospital. So there will be no impact on MLP.

[Interpreted] Another question. Indeed, we were expecting to hear your plans for the next 5 years together with 2025 financials.

[Interpreted] Indeed, we have prepared our plans surely. And recently, we had a very hectic meeting with our partners. Deniz is already involved in this. So we didn't want to ramp it all up in this meeting, in the upcoming months, we will share it.

[Interpreted] And the next question, thank you for the presentation. Could you please share the size in regards to the others involvements, other job involvements? What is the revenue projection for the next year? Indeed, there is no specific decrease in our revenues for the site process, but we have our agreements with the institutions. And it seems like that the revenues have decreased in other activities, but it is not the case, actually. You may see the details in the table. Please go ahead, Lutfu.

[Interpreted] There was TRY 775 million in delayed tax. I would like to have an explanation in regard to that because it was near 0 almost. And for the licensing, have you -- is it still possible to transfer the licenses from one hospital to another? Or is it not?

[Interpreted] In regard to license acquisition, we have no problem. You can still acquire hospital licenses. There are no changes. By the end of 2025, there was a change in regulation in regards to the doctors' position. We were able to acquire the doctors, however, it was just the tenure transfers have been concluded by us as it was going to be lifted in the regulation. But for hospital licenses, there is no problem. And Ministry of Health is now selling the licenses in certain provinces. There are not many hospitals. So we have been looking into that for certain provinces that we are thinking profitable. The hospital licenses are still in effect as it was before, no problems.

[Interpreted] There is also another question in regards to the investment revenue profit ratio. You have stated that you were expecting a 10%. And do you think is it for the long term or just for 2026? 2025 was an exception in terms of the CapEx ratio, as it has been stated, the renovations in the hospitals, and the equipment purchases for the new hospitals caused this CapEx, and we are expecting a good level for the next year.

Lutfu, note, indeed, no licenses could be transferred to Istanbul other than any other city. So we are going to have multiple hospitals in this -- in Istanbul, and we need major licenses for that. In Istanbul, there are 150 hospitals and two major licenses were on sale, but unfortunately, none were -- we were able to acquire them. And so the licenses on sales were a good opportunity for us, one of them 450 bed capacity license, nearly covering all the areas. I believe it is where 1 or 2 -- there are 1 or 2 such licenses in Turkey. We have acquired two of them. And we -- I have stated that we are still in the process of acquiring these licenses, but it is not possible to acquire them whenever you want, and the criteria must be met to be applied in our requirements.

[Interpreted] And another question from the chat. And congratulations for the results. In the fourth quarter 2025, we do see that there's an improvement in the CapEx. And it seems that this is because that the debt payment ratio is prolonged in the upcoming period. What will be the situation? Will we see a shortening in the duration?

[Interpreted] This is not a temporary improvement in our value. We have started with lower net working capital in previous years, but then there was an increase in 2026. We believe that there will be, again zero that was for our needs.

For the upcoming years in terms of the working capital to revenue ratio? [indiscernible] is asking, thank you for the presentation. You have stated that there could be a flexibility in regard to the regulation for physician CapEx in the group. Is there any improvement?

[Interpreted] No, there will be no such flexibility, and the health care service groups have concluded their purchase of CapEx and I believe that everyone is ready. Ministry has stated there will be no such flexibility. And indeed, we have already completed our needs, and the investments for that cadence for a significant portion.

In regards to asset management, please can we share expectations for revenue growth, volume and price mix for 2026? And also, what are you expecting for the EBITDA margins in 2026?

So we are currently working on the overall expectations for '26, but it's not going to be -- our expectation is that the real EBITDA growth will not be below the '25 numbers. If you look at our past 2, 3 years performance, you'll see that we've always had a minimum 14%, 15% real EBITDA growth numbers. And on the other hand, if you look at the margins, you probably noticed that within the third and fourth quarter, our EBITDA margins were higher than the first and second quarter. We are -- it's likely that we will continue this margin improvement trend within '26. So you see that from '25 to '26, there might be some further margin expansions on an annual basis. On the other hand, we are targeting around double-digit revenue EBITDA growth on the numbers.

[Interpreted] I've seen that there's a decrease in the international health care tourism incomes. This segment's margin is much larger as I've seen in this sector. How could you just keep that margin? And do you think geopolitical events have an impact on this?

As you know, there was a significant increase in this international patient -- international health care tourism. But in the last 2 years, there is a decrease. And in Turkey, we are seeing that the trend is lagging behind. Before Turkish lira is valid, almost 16% to 17% share was seen in our total revenues, but now I believe it is 10%, right?

Exactly.

[Interpreted] So in Turkey, the health care tourism is creating an impact on our percentages as well. It is parallel if the trend is gained back, then there will be changes in our figures. But maybe you have already noticed in the second half of 2025 and especially in the fourth quarter, we have shown a significant tremendous performance in regards to the efficiency increasing efforts. The digitalization is put into our focus, and we have seen the contribution of these tremendous efforts in our figures. Though there is a stagnation in health care tourism right now in our country, the fourth quarter, and the second half of 2025 contributed greatly to EBITDA. And we believe that in 2026, we will have even much better results. We have concluded the two first months greatly.

The TRY 27 million delayed income is stated in the presentation. Could you please explain that, Usta?

[Foreign Language]

[Interpreted] Thank you for the presentation. It has been stated that there could be a negative impact of the resultant cadence in the incomes. Can we expect to have EBITDA margin between 27.5% to 28%. Is it logical to expect EBITDA as 27.5% to 28% for 2026?

[Interpreted] Indeed, all the health care groups are working on that because the doctors cadence are creating certain impact and it is valid for everyone. We have created a 5% increase in our EBITDA with the changes that we realized in the last quarter of last year. We still have the same aim, and most probably in May, we will see quite high numbers for growth. There could be 1 or 2 point increase in our expenses, but we will not conclude 2026 lower than last years.

[Interpreted] There was another question. I believe you haven't heard that that's delayed income for TRY 775 million. Indeed, it will be -- it is commercially confidential, so we cannot explain it, but we have paid -- this amount is already paid and it will be seen in 3 years.

I mean all the numbers we declare are in real terms, let me start with that. The numbers that we are expecting are not a guidance because we decided not to include any guidance for '26. But overall, if you look at the expectations for '26, as mentioned by Muharrem, we are expecting some improvement into the margins. And if you look at this year's margin '25, we had -- we closed the year with 28% EBITDA margin. So by carrying this last two quarters' good margins throughout the '26 period, we are expecting to have around a margin of 29-ish percent. If you look at the EBITDA growth profile, we are expecting an EBITDA growth, double-digit numbers, probably 10% to 15% EBITDA growth on a real basis. Last year, '25 was close to 15%, which is very parallel to '25 for '26 expectations. And lastly, on the revenue side, we'll be having early teens with respect to the revenue growth.

[Operator Instructions] Last call for questions. One last question. In your projections, what is your inflation and exchange rate?

[Interpreted] For exchange rate, it is a 20% increase, actually.

[Interpreted] And we leave the floor to Muharrem for closing remarks. Thank you.

[Interpreted] Thank you, dear participants. Indeed, we have taken many steps in 2025, which has strengthened our operational structures, and also, we have tried to establish a sustainable business model that supports profitability. We had a very good second half, and that second half contributed to a strong start in 2026. Though there might be uncertainties we may face, but we are quite agile. We have taken many measures, and we continue to do so as a company, we are moving forward with a long-term robust growth plan, thanks to our strong financial structure and extensive service network. We will continue to focus on enhancing our service quality and create long-term value for our stakeholders in the coming period. Thank you for your kind attention. [Portions of this transcript that are marked [Interpreted] were spoken by an interpreter present on the live call.]