Saudi German Hospital expects to offset COVID-19 profit drop in H2 2020

Middle East Healthcare Co. (MEAHCO), the owner and operator of the Saudi German Hospitals (SGH), expects lower revenue in Q2 2020, on the coronavirus lockdowns and closure of outpatient clinics, Madani Hozaien, the group’s chief financial officer (CFO), told Argaam in an exclusive interview. 

SGH is likely to offset the decline in the second quarter profit during H2 2020 and convert it into a solid increase by the end of the year. 

SGH has efficiently managed the crisis and turned risks into new opportunities, Hozaien said.  

The 44.5% rise year-on-year (YoY) in SGH’s gross profit was driven by cost-cutting initiatives, which were adopted by the group since H2 2019.  

“SGH has not allocated special provisions for COVID-19 losses. The group recorded losses in revenue from outpatient clinics from mid-March to mid-May. It also reported increased expenses to combat COVID-19 infection, which were immediately recognized due to the pandemic outbreak,” Hozaien added. 

The group opened Saudi German Hospital Dammam, which was ready for operation since Q4 2019. However, its inauguration was delayed due to licensing measures.  

“Had it not been for those losses, net profit would have surged 167%,” Hozaien added. 

The Saudi German Hospital Dammam is forecast to break even by the end of Q2 2020, and generate net profit by the end of 2021.  

SGH has not expanded its capacity, it rather redistributed its operating capacity in light of the current conditions, Hozaien explained, adding that the group aims to complete the new projects on time or with the least possible delay. 

SGH reported a 45% YoY rise in net profit after Zakat and tax to SAR 21.2 million, compared to SAR 14.6 million in the same period last year.