Ahmed Moataz: Hello, everyone. Welcome to IDH's first half of 2026 results conference call. I am pleased to be joined with Dr. Hend El Sherbini, Chief Executive Officer, Sherif El Zeiny, Vice President and Group CFO, and Mirette Ahmed, Investor Relations Officer. As usual, the company will start with a presentation on recent results and developments, and then we will open the floor for Q&A. IDH management, please go ahead.
Mirette Ahmed: Thank you, Ahmed. Good afternoon, ladies and gentlemen. Thank you for joining us for IDH first half 2026 analyst call. My name is Mirette Ahmed, and I am IDH Investment Section Head and Investor Relations Officer. I am pleased to be joining you today in this capacity, and I look forward to working closely with the investment community going forward. Joining me today are Dr. Hend El Sherbini, our CEO, and Mr. Sherif El Zeiny, our CFO. Dr. Hend will begin the call with a summary of the main highlights from the first half. After that, I will discuss the main macroeconomic and geopolitical trends seen across our markets before Sherif offers a deeper analysis of our financial performance and will then end the call with a Q&A session. With that, I will hand it over to Dr. Hend for her introduction. Dr. Hend?
Hend El Sherbini: Thank you, Mirette, and good afternoon, everyone. I am Dr. Hend El Sherbini, CEO of IDH. I am pleased to report a strong first-half performance with IDH delivering broad-based operational and financial growth across our footprint while sustaining healthy profitability. The results we are presenting today reflect the resilience of demand across our markets and the continued strength of our operating platform, supported by network expansion, deeper patient engagement, service diversification, and disciplined execution. During the first half, we continued to strengthen our leadership in Egypt, maintain stable progress in Jordan, build on the turnaround achieved in Nigeria, and accelerate the ramp-up of our Saudi Arabia operations. We are also pleased with the Group's ability to deliver sustained profitability while continuing to invest for future growth, particularly in radiology, radiotherapy, specialized diagnostics and our broader regional footprint. Turning to our performance in more detail, IDH delivered 37% revenue growth year-on-year in H1 2026, with revenues reaching EGP 4.9 billion. Growth was supported by both volume and value, with test volumes increasing 20% year-on-year to 23.6 million tests performed, and average revenue per test rising 14% to EGP 206. During the period, we served 4.9 million patients, reflecting year-on-year growth of 14%. These trends also helped us further strengthen average tests per patient, which reached a new record of 4.9 tests per encounter, compared with 4.6 in H1 2025. This improvement reflects deeper patient engagement, stronger referral flow, and continued success in expanding cross-service utilization across our growing platform. In Egypt, momentum remained strong during the first half, with revenues increasing 41% year-on-year to EGP 4.2 billion. Growth was supported by a 21% increase in tests performed and 16% rise in average revenue per test, reflecting continued strength in demand, price optimization, and improving diagnostic mix. Egypt remained the core engine of group performance, contributing around 86% of total revenue in H1 2026 and continued to demonstrate scale, resilience and strong operating fundamentals. The continued expansion of our physical network in Egypt remained a key driver of growth and accessibility. Over the past 12 months, we added 157 new branches in Egypt, bringing our national network to 793 locations as of the 30th of June 2026. These new sites continue to deepen our presence across Greater Cairo and regional cities, supporting stronger access for both contract and walk-in patients. Our household service also remained a core pillar of our Egyptian operation, accounting for approximately 22% of Egypt's revenues during the first half. The service continues to benefit from strong patient adoption, enhanced digital booking capabilities, efficient logistics, and the strength of our nationwide network. Our radiology and radiotherapy platform continued to play an important role in our long-term strategy to build a more integrated diagnostics platform. During H1 2026, combined radiology and radiotherapy revenues reached EGP 220 million, up 79% year-on-year. Growth was supported by both higher volumes and improved pricing, with total scans and radiotherapy procedures increasing 40% year-on-year to 162,000, while average revenue per scan increased 28% to EGP 1,358. The platform served 121,000 patients during the period, up 41% year-on-year, and expanded to nine branches, including eight Al Borg Scan branches and one radiotherapy facility. The continued expansion of these capabilities strengthens our position in higher-value specialized diagnostics and oncology-related services and expands our ability to serve patients and referring physicians across a broader range of needs. In Saudi Arabia, our new geography continued to show strong progress during the first half. Biolab KSA generated SAR 5.5 million in revenue in the H1 2026, representing 191% year-on-year growth. In Egyptian Pound terms, revenues increased 199% to EGP 76 million. Growth was driven by a sharp increase in patient test volume, with patients served increasing 144% year-on-year and tests performed rising 194%. This momentum reflects growing brand awareness, stronger utilization across the existing branch network, and continued ramp-up following expansion to five operational branches. While the business remains in its early stages, the progress achieved so far continues to reaffirm our confidence in Saudi Arabia as a key pillar in IDH regional growth strategy. As always, profitability remained the core focus, and we are pleased to have delivered sustained profitability while continuing to invest for long-term growth. Gross profit increased 41% year-on-year to EGP 2.1 billion, while EBITDA increased 38% year-on-year to EGP 1.6 billion. Gross profit margins improved to 43.3% from 42% in H1 2025, supported by procurement optimization, stronger operating leverage, and disciplined cost management. EBITDA margin recorded 33.9%, broadly in line with 33.6% last year, despite ongoing investment in Biolab KSA and the expansion of our radiology and radiotherapy platform. At the bottom line, the net profit increased 47% year-on-year to EGP 839 million, excluding foreign exchange gains and losses in both periods. Adjusted net profit increased 40% to EGP 802 million, with the adjusted net profit margin improving to 16.5%. We are also pleased to see Nigeria continue generating positive EBITDA during the period, while Saudi Arabia materially narrowed EBITDA losses as utilization improved. As we look ahead, our priorities remain unchanged. We will continue to deepen our leadership in Egypt, expand our radiology, radiotherapy, and specialized diagnostics platforms, accelerate the disciplined ramp-up of Saudi Arabia, and build on the profitability improvements achieved in Nigeria. Across the group, we remain focused on operational efficiency, digitalization, procurement optimization, and enhancing the patient experience. At the same time, management continues to closely monitor evolving macroeconomic conditions and regional developments, which may introduce volatility across parts of our footprint. Overall, we believe IDH remains well positioned to build on its strong first half performance and continue delivering sustainable long-term growth. With that, I'll hand the call back over to Mirette and Sherif, who will take you through key trends across our markets and a more detailed breakdown of our financial performance for the first half. Thank you.
Mirette Ahmed: Thank you very much, Dr. Hend. During the first half of 2026, we continued to operate against a mixed but manageable macroeconomic backdrop across our markets. In Egypt, inflation remained well below the level seen five years. However, it remained sensitive to currency movements and energy-related pressures. Urban headline inflation eased to 14.3% in June before rising slightly to 14.9% in July. The Egyptian Pound saw renewed pressures earlier in 2026, especially around regional developments, but regained part of the move by June and continued to trade within a relatively stable range through July, supported by improved FX availability. In Nigeria, operating conditions continued to show signs of gradual stabilization. The Naira traded within a relatively narrow range through April to July, supported by improved liquidity and continued FX market reforms. Nigeria's headline inflation stabilized around the 16% level during the second quarter before easing to 15.4% in July, supporting a more constructive operating environment for Echo-Lab. Over in Jordan and Saudi Arabia, the healthcare demand remains structurally supportive, and both markets continue to provide IDH with exposure to relatively stable regional economies. In Jordan, inflation remained contained, with CPI rising to 2.03% during the first half of 2026 and reaching 2.7% year-on-year in July. The main drivers were rents and transportation costs. Jordan's economy will also continue to expand, with GDP growth of 2.7% in 2025 and 2.9% in the first quarter of 2026, reflecting resilient activity despite regional headwinds. Saudi Arabia continued to benefit from long-term healthcare sector transformation, rising private sector participation, and growing demand for high-quality diagnostics. Saudi inflation remained low at 1.8% both in June and July 2026, while real GDP growth reached 4.5% in 2025, supported by expansion across oil and non-oil activities. That said, given broader geopolitical developments in the region, management continued to monitor potential implications for economic activity, patient volume, and consumer sentiment across these markets. Turning quickly to our latest first half results, we are pleased to have the highest generated half-year volume since 2021, steeped on our successful volume-focused strategy that was driven by the Egyptian subsidiary. While Jordan continued to deliver revenue growth in both local currency and Egyptian Pound terms. Test volumes increased 10% year-on-year, while patients served remained broadly stable, reflecting higher tests per patient and the continued impact of Biolab's promotional cross-selling and loyalty initiatives. In Nigeria, Echo-Lab continued to build on the turnaround achieved last year, with revenue increased 12% in local currency terms and EBITDA margin improved to 7% from 2% last year. In Saudi Arabia, the ramp-up continued at a strong pace, with revenue increasing 191% year-on-year in Saudi Riyal terms, supported by a sharp increase in patients, test volumes, and the expansion of the country network to five branches. Finally, in Sudan, operations remain significantly constrained by an ongoing conflict, with only one branch partially operational and no material change to report at this stage. I will now hand the call over to Mr. Sherif, who will provide a more detailed overview of our costs, profitability and balance sheet position for the half year. Mr. Sherif?
Sherif El Zeiny: Hi. Good afternoon, ladies and gentlemen, and thank you for your time today. As Mirette mentioned, during my presentation, I will focus on costs, margins, profitability, and our working capital and liquidity position before we open the floor to your questions. During half one 2026, profitability remains strong, supported by higher volumes, improved cost absorption, and continued procurement optimization. Revenue increased 37% year-on-year, supported by broad-based growth across the group, while gross profit increased 41% to EGP 2.1 billion. Gross profit improved to 43.3% compared with 42% in the prior year period. This improvement reflected a stronger operating leverage as volume growth, procurement optimization, improved inventory planning, and better cost optimization across the expanding network. Raw materials, including specialized analysis cost, improved as a share of revenue declining to 18.1% from 19.6% last year. Direct wages and salaries, including employee profit sharing, remain broadly stable at 19.1% of revenue in both periods, reflecting your ability to support branch expansion and higher activity level while maintaining operating efficiency. Depreciation and amortization declined to 6.2% of revenue from 7%, supported by stronger revenue generation and improved utilization across the network. The SG&A front expenses amounted to EGP 780 million in half one 2026, up 37% year-on-year. As a percentage of consolidated revenue, SG&A remained broadly stable at 16.1%, compared with 16% in half one 2025. The increase in SG&A was mainly driven by wages and salaries, which rose 18% year-on-year to EGP 312 million, reflecting annual salaries adjustments, selective headcount additions, and FX translation effects on Jordanian and Saudi payroll costs. Advertising and marketing expenses also increased 56% year-on-year to EGP 151 million as we continued investing in brand visibility, patient acquisition campaigns, and promotional initiatives. These investments were particularly important in supporting the continued ramp-up of Biolab KSA, while also reinforcing patient acquisitions and service awareness across Egypt and Jordan. Despite these investments, SG&A, as a share of revenue, remained broadly stable, reflecting continued discipline and the scalability of the Group platform. Turning now to EBITDA and overall margin performance. Looking at the EBITDA bridge, the main driver was the 37% increase in revenues, which added approximately EGP 1.3 billion to the top line year-on-year. This was partially offset by higher cost of goods sold, which increased in line with the continued expansion of the branch network, higher test volumes, and ongoing investments in operational activity capacity. However, as a percentage of revenue, COGS improved to 56.7% from 58% last year, supported by procurement optimization, stronger supplier negotiations, improved inventory planning, and better cost absorption across the network. Overall, EBITDA increased 38% year-on-year to EGP 1.6 billion, while EBITDA margins remained broadly stable at 33.9%. The stability of EBITDA margin is particularly important given that we continued to invest in long-term growth initiatives during the period, including the ramp-up of Biolab KSA and the ongoing expansion of our radiology and radiotherapy platform. This performance reflects the strengths and scalability of the Group's operating models with higher volumes and improved pricing, helping to absorb cost pressure across the platform. Overall, the first half results demonstrate our ability to balance growth and investment with margin resilience, supported by operating leverage, disciplined cost management, and continued efficiency gains across the group. At the bottom line, net profit increased 47% year-on-year to EGP 839 million, with net profit margin expanding to 17.3% from 16.1% last year. The strong bottom-line performance was supported by higher operating profitability, with operating profit increasing 44% year-on-year to EGP 1.3 billion. During the first half, the group recorded foreign exchange gain of EGP 36.9 million, compared with foreign exchange loss of EGP 3.5 million in half one 2025. These gains and losses primarily relate to the revaluation of foreign currency-denominated intercompany balances. Excluding foreign exchange gains and loss in both periods, adjusted net profit increased 40% year-on-year to EGP 802 million, with adjusted net profit margins improving to 16.5% from 16.2%. Tax expenses including current and deferred tax stood at EGP 483 million, up 41% year-on-year, while the effective tax rate remained broadly stable at 37%. As a reminder, there is no tax payable at the level of IDH to holding companies. As always, we maintain disciplined approach to liquidity and working capital management while supporting growth across the business. Net trade receivables stood at EGP 1.4 billion as at 30 June 2026, compared with EGP 996 million at year-end 2025. While days on hand stood at 131 days compared with 122 days at the end of 2025. Inventory stood at EGP 686 million as at 30 June 2026, compared with EGP 424 million at year-end 2025. Days inventory outstanding reached 119 days versus 94 days at 31 December 2025. This increase reflects a deliberate inventory build-up strategy implemented by management to secure the availability of critical medical supplies and test kits amid high tended regional tension and ongoing uncertainty surrounding global supply chains and logistics routes. Cash balances and financial assets at amortized cost reached GBP 1.9 billion as at 30th of June 2026, compared with GBP 2.1 billion at year-end 2025. IDH net cash balance stood at GBP 239 million as at 30th of June 2026, compared with GBP 472 million year-end 2025. Finally, interest-bearing debt including accrued interest, stood at GBP 378 million at the end of June, compared with GBP 432 million at year-end 2025, reflecting repayments of short-term borrowing during that period. Thank you for your attention. We now welcome any questions you might have. Thank you very much.
Ahmed Moataz: Thank you very much to all participants on the call. If you wish to ask questions, you can either send them through the chat or you can use raise hand function. We will take questions from the line of Darren Smith. Please unmute yourself and go ahead.
Darren Smith: Good afternoon, everyone. Congrats on a very strong set of results. Two questions. Given the very strong cash flow, what is the outlook for an interim dividend? The dividend was quite low at the end of the year. You continue to build cash. It would be great to see that return to shareholders. The second question is, margins seem quite a bit higher in the second quarter versus Q1. Do you expect that to continue for the rest of the year, or should we be looking at H1 margins on a holistic view to think about the second half of the year? Thanks.
Ahmed Moataz: You guys are muted, so just reminding you have to unmute. Yes, go ahead.
Mirette Ahmed: Yes. Regarding the first question about the dividends distribution, as indicated at the time of the first full year of 2025 ordinary dividends, the board has continued to evaluate the scope of an additional distribution as market conditions and the Group's capital requirements have evolved. Following this review, the board considers it prudent to preserve cash and maintain balance sheet flexibility. This will reflect both a number of well-defined expansion opportunities that we have on hand currently and the continued, of course, geopolitical uncertainty that is going in the region. We have seen that we need the cash for financial resilience and adaptability as the liquidity and the expansions as well. That is why we thought that for this quarter, there will be no dividend distribution. Thank you. Regarding the next question about the margins, we expect actually to have the same margins until the full year of 2026, with an expected of Q3 and Q4 to be resilient. Same for the first half. Actually, we have a seasonality in Q3 and Q4, which we do not have in Q1. We expect a good second half of 2026 with high margins.
Ahmed Moataz: Darren, if you have follow-ups, I have sent you a request to unmute.
Darren Smith: No, that is fine. Thank you.
Ahmed Moataz: All right. We'll move on to questions from the line of Roman. Please unmute yourself and go ahead.
Roman: Hi, guys. Can you hear me?
Ahmed Moataz: Yes.
Mirette Ahmed: Yes. Go ahead.
Roman: Great. Thank you for the presentation and congrats on the very solid results. My question was around the pace of expansion of the business in Egypt to begin with. I'm surprised to see how many new branches have been opened over the past 12 months. It seems like a faster pace of expansion than I remember in recent years. I was wondering if you could just talk about what the outlook is for future branch expansion going forward, whether this kind of pace that we saw in the last 12 months, I think you mentioned 157 new branches opened, whether that same kind of openings number is what we can expect going forward per year, or whether that number will start to come down as the branch network is now more maybe saturated across the country. That's the first question. The second question is, I wonder if you can comment on the progress in Nigeria. You talked about the performance in the first half of the year. It looks like you are not opening branches yet. I am curious what it would take for you to see in the country maybe a certain level of EBITDA margin for the model to be where you are hoping it is to justify opening additional branches. Thank you.
Hend El Sherbini: Regarding the branch opening, we have been focusing on hospital management and clinic management. This is why you are seeing the increase in number of branches this year compared to previous years. We have managed this year 20 new hospitals and 49 new clinics, as well as opening our own branches. This is the reason behind the increased number of branches that you see in our earning release this year, this half of the year.
Sherif El Zeiny: Regarding Nigeria. Sorry. Regarding Nigeria, for the first half, we made progress, 12% increase in revenue, while having 20% gross profit increase with EBITDA positive was NGN 142 million, which is 7% from last year from revenue, comparing to 5% last year, with amount of NGN 142 million versus NGN 87 million. It is about increase in the amount 63%. Also, the net profit showed the first time positive net income, NGN 35 million, which is about 210 extra profit, or this is the first time. Regarding your question about did we open any new branches, actually, no. What I did in the last period, we were having some branches in a very bad condition, so we refurbished six out of 12 we have. We refurbished a big part of them, and also we replaced one place, it was in a very bad area. When we tried to renew the rent contract, we moved to a very much better place in Lagos. I believe things will be. This is the main thing, with, of course, increasing the efficiency, working in lots of ways to increase the contracts, to increase the revenue with optimizing the cost. Thank you.
Roman: Maybe I can follow up. How many branches do we expect to open in Egypt over the next 12 months? Is there a level of EBITDA margin you'd like to see in Nigeria before committing to new branch openings?
Hend El Sherbini: We're looking at around 50 more branches in H2 in Egypt. Regarding Nigeria, it's not about opening more branches, it's more about increasing profitability and increasing the revenue from the existing branches. We're already present in all the big cities in Nigeria. We're looking at increasing revenue, patient footprint, tests, and profitability in these branches.
Roman: Okay. Thank you.
Ahmed Moataz: All right. We have two questions in the chat. One is, congrats on the good set of results. Why is the interest expense so high if you have a net cash position? I'll take them one by one, but—
Sherif El Zeiny: This is because of the loan of the debt of CAIRO RAY, which we acquired the Radiology Star branch. 400 [inaudible]. Yeah, 400 [inaudible].
Ahmed Moataz: [inaudible].
Sherif El Zeiny: Yeah.
Ahmed Moataz: Understood. The second question, if you can just state the guidance you have for 2026. How much of revenue or revenue growth, a gross margin, and an EBITDA margin?
Hend El Sherbini: We are forecasting a revenue of EGP 11 billion, gross profit of 46%, EBITDA margin of 37%, and net profit margin of 20%.
Ahmed Moataz: Understood. All right. Karam is asking, again, congrats on the strong results. It seems like revenue per test accelerated in the second quarter. Can you unpack this release? Is it mostly pricing, or a mix effect, or both of them? What should we expect in the second half of 2026?
Hend El Sherbini: In the second half?
Sherif El Zeiny: The revenue per test [ianudible].
Hend El Sherbini: During the second quarter, we increased the prices by 4%, and this will continue for the rest of the year.
Ahmed Moataz: Understood. Follow-up, please, to everyone, because we haven't received questions for the time being. If you have any final questions, please either send them through the chat or use the raise hand function. Darren is asking, what is the outlook for further price increases?
Hend El Sherbini: We are not planning to do any price increase for the rest of the year.
Ahmed Moataz: Understood. I think Roman has a follow-up. I have sent you an unmute request.
Roman: Thank you, Ahmed. I am curious if you can talk about the plan going forward in Saudi Arabia. You are at five branches today. It seems like the business is scaling up, and the branches you are opening are seeing traction. How many more branches do you expect to open over the rest of the year? And maybe if you can talk about the outlook more broadly, maybe over the next three years, how big you expect that business to become and what the competitive position is of the company as it grows in the kingdom.
Hend El Sherbini: The business plan in Saudi Arabia was to open nine branches this year. We opened—
Sherif El Zeiny: Five.
Hend El Sherbini: —five. We still have four to go. There is a big demand. The market is very fragmented, and we're seeing from the results that we shared with you that there is a demand and there is an awareness of the brand in Saudi Arabia. There is a progress in our operation there. So we're very optimistic about Biolab KSA.
Sherif El Zeiny: We'll expand outside. All the five branches we are having now is in Riyadh. So we are expecting the new force, at least two, will be outside in Jeddah and Khobar or Dammam, Western, Eastern.
Roman: Thanks. Is there an opportunity for M&A in Saudi Arabia, given the fragmented nature of the market?
Hend El Sherbini: So far, there is no concrete acquisition opportunity, but we're looking for all the opportunities that are there.
Roman: How many branches do you expect you'll have in the kingdom?
Sherif El Zeiny: Zero.
Hend El Sherbini: We put a plan to have 50 branches in three years.
Sherif El Zeiny: Five, zero. 50 branches.
Roman: Wow.
Sherif El Zeiny: Yes.
Roman: Is it the case that each Saudi branch is generating still, I think, 3x the revenue of an average Egyptian branch? Is that right?
Hend El Sherbini: We don't have the number right away, but we can definitely calculate it and get back to you.
Roman: Okay. All right. Is Saudi break-even?
Sherif El Zeiny: Expected to.
Hend El Sherbini: It's not breaking even yet.
Roman: Okay. All right. Thanks again. Thank you very much.
Hend El Sherbini: Thank you.
Ahmed Moataz: We haven't received any further questions. I'm not sure if you have any concluding remarks. Otherwise, we can end the call.
Hend El Sherbini: Thank you very much, everyone. Thank you.
Ahmed Moataz: All right. Thank you very much to IDH's management and all participants. This concludes today's earnings call. Have a good rest of the day, everyone.
Sherif El Zeiny: Thank you. Thank you very much.
Hend El Sherbini: Thank you so much.
Sherif El Zeiny: Bye-bye.
Hend El Sherbini: Thank you, everyone. Bye-bye.
