Integrated Diagnostics Holdings plc

Webinar is being recorded and summarized.

Hello, everyone. This is Ahmed Mathez from UFJMS, and welcome to IDH's third quarter of 25 results conference call. I'm pleased to be joined with Dr. Hendra Shirvini, Chief Executive Officer, Shriviraj Bilzaini, Vice President and Group CFO, and Tara Yahya, Director of Investor Relations. The company, as usual, will start with a brief presentation, and then we'll open the floor for Q&A. IDH management, please go ahead.

Thank you, Ahmed. Good afternoon, ladies and gentlemen, and thank you for joining us for our third quarter underscore. My name is Tariq Yahya. I'm head of Investor Relations. Joining me today, Dr. Hindul Shirbini, our CEO, Mr. Sharif El-Zaini, our CFO and VP. Dr. Hindul begins the call with a summary of latest period main highlights. After that, I will discuss in more details the main macroeconomics and geopolitical trends seen across our markets. Then, after my presentation, Mr. Sharif will offer a deeper analysis of our financial performance. Then we will open for Q&A. Dr. Hande will start now. Thank you.

Thank you, Tarek, and good afternoon, everyone. I'm Dr. Hande Sherbini, CEO of IDH. As we approach the end of what has been another very strong year for the group, I'm pleased to report a robust set of results for the first nine months of 2025. The performance we are presenting today reflects not only healthy market dynamics, but also the tangible results of the strategic initiatives we have been implementing over the past two years, particularly around network and geographic expansion, operational optimization, digitization, and service diversification. Throughout the year, we have continued to strengthen our core business in Egypt and Jordan, while making pronounced progress in newer markets, namely Nigeria and Saudi Arabia. We are also very encouraged by the sustained improvements in our profitability matrix, which confirmed the scalability of our model and our ability to translate revenue growth into margin enhancement. We are particularly pleased to see the continued strength and stability of operating conditions in our home market of Egypt, where macroeconomic sentiment has improved and demand for high-quality diagnostic services remain strong. Turning to our performance in more detail, during the first nine months of the year, we continued to build on the strong momentum established earlier, delivering 41% revenue growth year-on-year, supported by growth across both volume and value matrix. Test volumes increased by 10% with all operation geographies contributing to this expansion, supported by stronger patient engagement, deeper penetration in walk-in and corporate channels, and improved referral flows. At the same time, our average revenue per test rose 28%, reflecting a richer test mix, broader uptake of high-value radiology and specialized diagnostics, and favorable price adjustments introduced earlier in the year. These trends also helped us further strengthen our average deaths per patient, which reached 4.6 deaths per encounter, demonstrating the continued depth of patient relationships and our success in expanding cross-service utilization across our platform. In Egypt, momentum strengthened further through Q3, supported by solid growth in both volumes and value, alongside strong brand equity and stable market conditions. Test volumes in Egypt continue to grow steadily, while average revenue per test saw a significant uplift, owing to favorable mixed dynamics and strong traction in radiology, specialized diagnostics, and corporate channels. Egypt remains the core engine of growth performance, contributing 84% of total revenues in the nine months of 2025, and continue to demonstrate high scalability, resilience, and operating efficiency. The ongoing expansion of our physical network in Egypt continues to be a key growth driver. Over the past 12 months, we have added 103 new branches in Egypt, bringing the total to 670 locations nationally as of September. These new sites have helped deepen our presence not only in Greater Cairo but also in fast-growing regional cities, allowing us to better serve both corporate and walk-in patients. Our household service remains a strategic differentiator, sustaining its strong contribution of around 20% of Egypt's revenue, continues to demonstrate the effectiveness of our post-pandemic strategy, and reinforces our position as an early mover in home-based diagnostics in the region. The Borg scan continues to demonstrate strong momentum as a key component of our long-term strategy to build a fully integrated diagnostics platform. Year-to-date scan volumes and patient traffic recovered well following the Q1 of Ramadan slowdown, with Q3 recording clear sequential volume growth. The integration of Cairo Ray for radiotherapy, which was consolidated this quarter, is progressing well. This acquisition provides us with direct access to radiotherapy service and strengthens our positioning in oncology diagnostics, a fast-growing and strategically important segment. We expect ideology to play an increasingly prominent role in our growth mix over the coming quarters, supported by continued network expansion, enhanced surface capability and rising demand for specialized imaging. Over the past two years, a key strategic priority for IDH has been the successful launch and scale-up of our Saudi operations. I'm pleased to share that our presence in the kingdom continues to develop very encouragingly with strong momentum supported by growing demand, deeper market visibility and sustained improvement in both volume and value matrix. Year to date, we have seen revenues more than quadruple compared to the same period last year, reflecting rising tech volumes, improving mix and early network scale benefits. This growth continues to highlight the effectiveness of our ramp-up strategy in the market, which aims to accelerate revenue growth and establish Biolab KSA as a key player in the large but high fragmented Saudi diagnostics market. As part of this plan, we inaugurated our third branch in Riyadh during the third quarter, and we remain on track to open three additional locations over the coming months. These new branches will help extend our footprint across high-potential catchment areas. At the same time, we continue to advance our growth approach, which includes targeted marketing campaigns to build brand recognition, selective promotional initiatives to drive patient acquisition, and ongoing discussions with insurers and corporate healthcare providers to broaden our referral and partnership networks. While still in the early stages of development, Biolab KSA is demonstrating strong cooperation traction and reaffirming our belief in the long-term potential of Saudi Arabia as a key pillar in the group's regional growth strategy. As always, profitability remains a core focus for us and we are very pleased to see sustained improvements across all levels of the income statement. We continue to benefit from strong operational leverage, tighter cost controls, and better resource allocation across our subsidiaries, including Nigeria, where Ecolab remained a positive abductor of the nine-month period, marking a key milestone in its turnaround and confirming the potential of this high-growth market. Overall, both COGS and SG&A as a share of revenue continue to decline, supported by disciplined cost management and our growing digitization efforts. COX-2 revenue fell to 57%, while SG&E declined 15% from 17% last year, underscoring the success of our optimization initiatives. Consequently, our EBITDA margin expanded to 35% from 30% last year, while gross profit margin rose to 43% compared with 38% in the nine months of 2024. These efforts combined with strong top-line growth and improved pricing dynamics have translated into meaningful margin expansion and greater earnings quality with adjusted net profit more than doubling year-on-year while excluding FX effects. Before handing the call over to Tariq, I would like to briefly reiterate our full-year guidance in light of our year-to-date performance and the momentum we are seeing across our markets. Given the strong results delivered over the first nine months, coupled with the relatively stable operating conditions, continue to expect full-year revenue growth to come at more than 35% in the full year of 2025. On the profitability front, we remain confident in delivering an EBITDA margin of more than 30%, supported by sustained post-discipline, stronger operating leverage, and the continued improvement in our Nigerian operations. With that, I will hand the call back over to Tara and Sherif, who will take you through key trends across our markets and a more detailed breakdown of our financial performance of the period. Thank you very much.

Thank you, Dr. Hand. This year, we have continued to operate in relatively stable conditions, with supportive macro trends and constructive across all our key markets as we approach the end of 2025. In Egypt, we are continuing to see slower inflation compared to prior years, with the latest reading of September coming at a multi-month low of 11.7%. Decreasing inflation pressures have been supported by relative strengthening of EGP versus dollar, as well as increased forex inflows into Egypt as investor confidence recovers and remittances continue to rise. In fact, in recent weeks we have seen EGP continuing to appreciate reaching a low of $47.32 in October and as low as $46.92 last week. Successful rate cuts throughout the year continue to reach 6.25 points, have now brought overnight deposits to 21%. This will undoubtedly help prop up local investments activity and drive further recovery in consumer spending. Similar to Egypt, Nigeria also has seen relative stability in 2025. Inflation has come down from last year highs and expected to support gradual recovery in consumer spending. Over in Jordan and Saudi, the economic situation remains largely stable, despite increased regional uncertainty. While Saudi Arabia's economic could be tested by the ongoing global trade tensions, we remain confident that the excellent work done by the Saudi government to build resilience in the economy will help safeguard the country. Turning quickly to our latest results, Egypt continued to deliver strong growth, with revenue rising 44% year-on-year, supported by both volume expansion and significant increase in average revenue per test, particularly driven by radiology and high-volume diagnostics. Meanwhile, Jordan continued its solid performance, reporting revenue growth in both EGP and local currency terms. Test volume increased by 21% year-on-year, supported by Biolab's ongoing promotion campaign and digital outreach initiatives. In a market where volume-driven growth is critical for long-term sustainability, we are pleased to see Biolab's strategy continue to deliver strong volume, momentum, and patient retention through community engagement and service quality. In Nigeria, Ecolab has maintained its positive EBITDA, momentum supported by successful implementation of our turnaround strategy launched last year. We are increasingly confident in long-term potential for our Nigerian subsidiary to expand its radiology and specialized testing capability and capture the significant upside offered by growing markets. In Saudi, the ramp-up progressed ahead of expectations, with revenue more than quadrupling year-on-year, and subsection growth supported by increasing brand visibility and network expansion. Finally, in Sudan, operation remained significantly constrained by the ongoing conflict, with only one branch partially operating and no material updates to report at this stage. I will now hand in the call to Mr. Sharif, who will provide a more detailed overview of our costs and profitability for the first nine months.

Good morning, good afternoon, ladies and gentlemen, and thank you for your time today. As I mentioned during my presentation, I will focus on costs, margins, profitability and our working capital position before opening up the floor to your questions. in line with our guidance profitability for the first nine months of the year has continued to improve supported by our group wide efforts to boost operational efficiency and keep spending at bay a major focus area over the last 15 months has been digitalization where we have continued integrating advanced data tools and analytics into our internal platforms, procurement systems, and financial planning to enhance decision-making and improve cost discipline. These efforts, combined with stronger operation leverage and better resource allocation, helped drive meaningful improvements in efficiency, with both CORDS and FG&A as a share of revenue declining versus last year. In parallel, we are also keenly focused on keeping costs down. Our efforts here have translated in a 9 percentage point drop in our total cost to revenue ratio for the period compared to last year. More specifically, our COGS to revenue ratio improved to 57% in 9 months 25, down from 62% in the same period of last year, supported by disciplined inventory management and stronger purchasing processes. The most notable improvements came within raw materials, which decreased to 19.6% of revenue, down from 21.9% last year, reflecting our scale advantages and smarter procurement practices. At the same time, total wages and salaries and a share of revenue remained broadly stable, underscoring our balance between supporting our staff with appropriate salary adjustment while continuing to optimize headcount. As you can see in the bottom right chart, these efficiency gains translated directly into a stronger profitability with gross profit margin expanding to 43% from 38% last year and EBITDA margins rising to 35% from 30% in 9 months 2024. On the SG&A front, spending remains were contained with SG&A as a share of revenue declined to 15%. The main increase within SG&A was in advertising and marketing expenses, which continued to support the ramp-up in Saudi Arabia and targeted promotional initiatives in Egypt and Jordan. Moving to our bottom line, we reported a net profit of £9,604 million in 9 months 2025, up 33% year-on-year. As highlighted earlier, last year's reported net profit included substantial forex gains, which bestowed direct comparisons. When controlling for those forex gains, adjusted net profit increased more than 119% year-on-year with an associated adjusted net profit margin of 17% versus 11% last year. As always, we maintain a disciplined approach to work in capital management as we support driving demand while preserving strong liquidity. Similarly, we saw our cash conversion cycle improve further to reach 127 days in September 2025 versus 155 days at the end of 2014. It is also important to mention that, as expected, we saw a decline in days inventory outstanding stronger sales momentum and more efficiency inventory turnover during the second and third quarters of the year following the seasonal Ramadan slowdown in March. Finally, as 30th of September 2025, our total cash reserve stood at 1.8 billion Egyptian pounds with a net cash balance of 271 million pounds. Thank you for your attention. We now welcome any questions you may have. Thank you.

Thank you very much. To all participants on the call, if you wish to ask questions, either send them through the chat or you can use Ray's handphone. There is one question in the chat on whether you're at a position right now to disclose the planned price increases in Egypt that would start from January of 2026.

We're still in the process of preparing the budget and it's too early to comment on this, but of course will be a price increase for next year.

Understood. The second is on whether you can disclose a timeline for the break even for Saudi operations. And if you have a targeted revenue contribution over, let's say, three, five, or even longer than that, as a percentage of total revenue.

For the EBITDA, we are expecting a break even by end of 2026.

Understood. And is there something on the revenue contribution as well?

Revenue continue to grow year over year and contribution to the top line still less than 1%, but by time gradually will increase. Still Egypt represent 82% and Jordan represent 14%. 84% for Egypt and 14% for Jordan. Jordan.

Alright, two questions from Johannes. Can you talk us through the change of ownership of the active stake and what you expect from Alit? That's one. The second is what is your dividend policy at the moment?

So, I mean, the access stake has been bought by Elliott as a part of a bigger deal. We don't really have any visibility on this right now. And regarding the dividends, as usual, you know, any money that we have which are not used for investment and for the, you know, We give it back to investors as dividends. As long as we are able to do that.

Thank you. A reminder to everyone, because at this stage we haven't received any further questions, you can either send them through the chat or you can use the recent one. Right. We'll take questions from the line of Darren, please. I'm using cell phone.

Good afternoon. Good morning. Thanks for the time, Dr. Hind and team. Dr. Hind, you commented that the act of sale is part of a bigger deal. What does that mean exactly? Do you have any other color there you can share?

I know that Actis has added private equity and they sold their shares in IDH and other companies to Elliott, but I don't know exactly, I don't have the exact details of this deal.

Okay, understood. So you're saying there's other businesses that have been sold to Elliot. And the management team hasn't had any correspondence with Elliot at all? They haven't reached out to you or you guys haven't reached out to them to get a sense of what their plans are?

I've seen them when I was in London. I've met with them. But this was like an introductory meeting, no specifics.

And do you have a sense, is it their intention just to be passive shareholders? Is it a purely financial investment or is there something more strategic? My understanding is they have, I think, interest in another Egyptian diagnostics business, if that's correct.

No, this I don't know. Which other diagnostics business?

I think it's a much smaller one that they were part of a transaction in last year, I believe. But I can't remember the name of the firm. But anyways.

I haven't heard. Okay. And they didn't mention it, no.

All right. Thank you very much.

Thank you.

We received two questions in the chat. I'll take them one by one. First one is how much capex have you got planned for Saudi operations and expansions?

For Saudi, we have a plan for the next five years with a capex of $20 million.

All right, this is 2025 included or when you say five years, this is 2026 and beyond? This starts from 2026. Starts from 2026, okay. Two more questions in the chat. The first one, Harry Wellington from Virgin. Please, can you share your expectations on growth beyond this year in terms of volume and value? And can you also comment on market-specific growth expectations?

We're still in the process of preparing the budgets, but we are aiming to targeting the growth across all the geographies we are working at, operating in.

Understood. is asking, how many ACTIS board representatives are on IDH's board? And any expectations on if and when those members will step down?

So there's only one board member from ACTIS, and he's also presenting, I mean, he's not stepping down. Because I think he's going to be also Elliot's representative.

You said... Can you comment on your expectations for branch additions in Egypt in 2026? Will it be at a similar level to 2025, higher or lower?

It is still also the same for the budget. We're still in the process, but we will see growth in the number of branches and our growing brand. an ongoing process of growth each year.

Farouk Meir is asking how will the growing contribution from Saudi impact group returns and margins when Saudi is in steady state?

After five years, for the five-year plan for Saudi to represent 7% from the group revenue.

Okay, and the question was more on how do you expect this, when it has a 7% revenue contribution, to impact your overall returns on margins. I think the question is trying to assess whether Saudi operations by itself is margin accretive or not relative to what you're generating right now, and at the same time return accretive or not.

Do you want me to repeat the question?

We're expecting it in the five years to be in the vicinity of the 30%. Yes. If this answers the question.

Yeah.

So we haven't received any further questions. A final reminder to everyone, if you wish to ask questions, please either send them through the chat or use Rui's handphone. All right. We haven't received any. No, we actually did one. Sorry.

Two questions.

What does the $20 million Saudi capex imply for the number of dams in Saudi 2030? 2030 vision. Sorry, one second, let me read the question. Actually, we'll skip this one and I'll go back to it. Are margins at 38% sustainable or do you think it's a function of the strong EGP effects taking place this year?

As long as we have a stable currency, I think this is sustainable. We're getting back to our 40% margins. And the strong FX has nothing to do with our improvement in margin. However, the stabilization of the currency is, of course, is helping in maintaining our margins.

All right. Back to Farooq's question. How does the $20 million Saudi capex imply for the number of branches by 2030? So by the end of the year plan, how many or by the end of the five years, how many total branches you have in Saudi? That's one. And the second is, is the Saudi strategy branch focused more? I think he means corporate or wholesale contract focus, because can you send the clarification on the second part of the question until they answer the branches part?

So we're expecting 45 branches by the end of the five years, and this is where the CapEx is going, together with, of course, the instruments and everything else. This in terms of CapEx. In terms of revenue, we're expecting a breakdown of 50% corporate and 50% walk-in.

Understood. Could you also please talk us through the outlook on margins for Jordan?

Jordan margin for the current kid in the range of 30%.

All right. Ali Nasser is asking, can you please provide details on the Cairo Ray acquisition? What was the investment size and what is the annualized P&L impact on the consolidated level? And lastly, how much did it impact third quarter results? total investment cost was around 400 million dollars dollars sorry egyptian pounds and the rest of the question please what is the annualized pnl impact and how much did it impact third quarter results

For the quarter it is minimum because we already consolidated for a small portion in Q3. The same will apply for Q4 and a more contribution will be done in the full year, next year.

Understood.

Zuhair is asking what is a stable long-term level for COGS and SG&A as percentage of revenue? How much more cutting or savings do you expect and the potential uplift to EBITDA launch?

For the Cox to revenue ratio, which already improved to 57% in the nine months, coming down from 62, we're expecting we can go down one or two more percent going forward. And also for the SG&E, it already went down from 21.9 to 19.6. And going forward, we can see one or two percent more advantage from recruitment and a lot of cost optimization that we are in process improvement year over year.

Marina is asking how do you see the contract and walk-in dynamic play out in Egypt over time let's say for the next three to five years do you expect contract volumes to continue growing faster than walk-ins and what does that mean for longer term markets so yeah we expect the contract contribution to

to grow. However, we're also seeing increase in the walk-in volumes. So both are increasing. And this, I mean, this is affecting, this is not really affecting our margins directly because in the corpits, we're seeing increased volumes. So the test per patient in the corporate side is much higher than in the walk-in side. And as this is an economy of scale, we always want both things, the increase in volume as well as the increase in pricing. So this is, I think, this dynamic we have been seeing for a few years now, and it hasn't affected our margins.

Understood. Clara is asking, volume growth in Egypt was solid at 9%. Is this primarily driven by the 103 new branches opened over the last year? Or are you seeing same store sales growth in the more mature branches?

We are seeing volume growth in both the new and the existing branches. On both sides, corporate and walk-ins.

Great. Ali has a question. Please unmute yourself and go ahead.

Hello, thank you for the call. Just a follow up on the question I asked about Kyra Ray. I don't think you answered that. Please again, I know you bought it for 400 million pounds, but I wanted to ask, but what is the revenue of this company? What's the EBITDA of this company? What's the net income of this company? on a trail 12-month basis or maybe 26 basis.

Our full year estimates on the top line is around 52 million Egyptian pounds and on the EBITDA level around 16 million Egyptian pounds. This translates to around 30% EBITDA margin.

Great, thank you.

Alright, I'll pass it back to you Dr. Hind, Sharif or Tareq for any concluding remarks.

Thank you everyone. If you have any more questions, we have our contact. We're happy to have a follow-up call and respond to any emails. Thank you everyone for attending today and thank you Ahmed for hosting the poll.

Thank you. Thank you, everyone.

Thank you, everyone. And to IDHS management as well. Have a good rest of the day, everyone. This concludes today's earnings call. Thank you.