Arabian International Healthcare Holding Company (Tibbiyah), a leading integrated healthcare solutions provider in Saudi Arabia, has posted a first-half (H1) net loss of SR20.7 million ($5.5 million). Compared to this the company had posted a net profit of SR5.1 million in H1 2021.

 

Revenues of SR215 million (H1 2021: SR249 million) declined due to lower sales volumes of medical equipment as a result of global supply chain disruptions delaying the fulfilment of customers’ orders. Its medical supplies division reported stronger revenue versus the prior comparable period.

 

Gross profit of SR40.8 million declined 29.3% (H1 2021: SR57.7 million), predominantly due to the muted revenue performance during the period. This translated to a gross profit margin of 19% compared with 23.2% in H1 2021 which reflected heightened Covid-19 related demand. Gross profit margin for medical supplies remained stable, whilst gross profit margin for medical equipment was below the level achieved in H1 2021, reflecting the lower sales conversion level during H1 2022.

 

Decline in sales volume

The positive impact of the 26.6% reduction in finance charges driven by active cash management and debt reduction, was largely diluted by the decline in sales volumes and the 21.4% rise in SG&A expenses, as Tibbiyah implemented various sales support measures to drive topline growth, including material investments in its personnel.

 

Cash and cash equivalents increased from SR11 million at the end of 2021 to SR20.9 million. Despite the adverse revenue activity and 29.3% Gross profit decline during the period when compared to H1 2021, the company was able to maintain its Cash Flows from Operating Activities needs at SR79.6 million.

 

Total borrowings declined 21% YoY to SR362.5 million, with enhanced management of cash flows and working capital requirements.

 

Favourable dynamics

Alaa Ameen, Chief Executive Officer at Tibbiyah, commented: “Tibbiyah has continued to capitalise on the favourable dynamics of the domestic healthcare market, and the long-standing relationships with key business partners, to position the company on a solid path to become an integrated healthcare provider in the kingdom, supported by our successful IPO on Nomu in March.”

 

“Despite the weak financial performance due to the skewed base of the prior year and supply chain issues impacting our sales cycles negatively, we are confident that our full year performance will be positive supported by a typically stronger second half and the investments we have made in our internal capabilities, including our people. We have already received during the period solid and healthy orders intake which is the fuel for our future.”

 

“We are focused on driving our growth plans and remain committed to diversifying our revenue streams by increasing our exposure to the private sector and to specialised Healthcare Services, which are key elements of our strategic direction. In this regard, we are pleased to have announced the recent joint ventures with BGI and Unilabs as well as the signing of a definitive Share Purchase Agreement (SPA) to acquire 51% in Innovative Care Company (‘NewYou’) which will greatly enhance the range of offerings to our customers, whilst reducing the impact of the cyclicality typical of our project business.”

 

 

Strategy and outlook

Tibbiyah remains focused on leveraging its strong positioning and continued positive momentum in the kingdom’s healthcare sector, to deliver on its strategic growth objectives. 

 

In line with the company’s sustained initiatives to support the healthcare sector transformation under the Vision 2030 agenda, Tibbiyah is expanding its core portfolio into new higher margin specialised services, including in the private sector. This is primarily aimed at balancing the cyclicality of its project-based customers. 

 

Tibbiyah seeks to continue to be a provider of world- class integrated medical services and advanced solutions to a growing base of customers across the kingdom.

 

Based on historical trends, Tibbiyah expects the second half of the year to see much stronger sales volumes, as delayed projects are completed and investments made in its infrastructure begin to materialise, to support gross profit margins.-- TradeArabia News Service