Canadian Medical Center ready to move to TASI backed by expansions, governance: Chairman

Khalid Al-Ammar, Chairman of Canadian Medical Center

Canadian Medical Center Co. (CMCER) announced its board of directors' approval to move to the Main Market (TASI), and hired Al Rajhi Capital to advise on the transition.

Chairman Khaled Al Ammar said that the company is gearing for a transition to the Main Market with a comprehensive development project that includes geographical expansions, entry into new sectors, and the provision of additional medical services.

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In an interview with Argaam, Al Ammar spoke about the details of the expansion plan and new services, and their implications on the company. He also clarified the reasons for the 2023 financial results and the impact of the expansions on cash dividends.

Here’s the full interview with Al Ammar:

Q: How was the company’s listing experience on Nomu? How did it benefit from this move?

A: Our listing on Nomu was very useful for us. We learned many things during this phase and significantly enhanced our operations. Our governance rules were distinctly developed during this phase. I admit that we do not give many press statements for several reasons, one of them is that our firm belief that good work takes time to pay off. Our valued shareholders are also seeking tangible outcomes rather than empty statements.

Another factor is that the medical sector in the Kingdom has undergone significant development over the past two years, propelled by the Ministry of Health, which has presented numerous ad new investment opportunities. We have aimed to keep pace with this development to seize some of these opportunities. Today, marks the beginning of positive outcomes that we have been working towards over the past two years. This encouraged us to prepare for a new developmental phase within the company.

The development project includes geographical expansion, entry into new sectors, and the introduction of new medical services that align with the Kingdom’s Vision 2030 and help it better invest in the boom experienced by the medical sector. Financially, the company’s revenues grew by 42% since debut on Nomu.

Q: Tell us about the most prominent features of your development project and the details of expansions, sectors and new products?

A: The development project comprised several aspects, including but not limited to, contracting a consulting company to develop the company’s future strategy and support its digital transformation plan. It also included geographical expansion. The year 2023 witnessed the opening of the company’s first branch outside the Eastern Province in Riyadh. Currently, we are gearing up to open Jubail branch to cover projects in Jubail and Ras Al-Khair. We are also working on opening Tabuk branch to follow up on our projects in NEOM and develop our business there.

On the other hand, we have developed a program to attract talents. Highly-skilled young cadres in the sector were contracted, and they are currently leading this development in the company.

Additionally, one of the features of the company’s development project is establishing a special Digital Transformation Department to automate the company’s internal systems, in order to keep pace with the qualitative shift that the Ministry of Health is going through, and be able to provide prime medical services to our customers.

Another feature of the company’s development project is activating and developing governance systems and to be more professional, transparent and strict.

Q: What is your market share of emergency medical services in the Kingdom?

A: We have a leading position in emergency medicine in the Kingdom since 2008, particularly in providing medical services to the oil and gas sector. We hold a significant market share and take pride in the confidence major international petroleum companies have placed in us for the quality of our medical services.

Notable clients include Johns Hopkins Aramco Healthcare Co., ADES Holding Co., Arabian Drilling Co., among others. The market is expansive and promising, and we continuously strive to boost our presence within it, as well as explore new sectors, as demonstrated by our entry into NEOM projects and others last year.

Q: The company recorded revenue growth in 2023; however, this did not translate into profit growth. What are the reasons?

A: The outcomes of development and diligent efforts within companies take a long time to pay off. Nevertheless, we have observed, in a short time an in numbers, the initial results of our developmental endeavors over the past period, resulting in revenue and profit growth over the past two years.

The future outlook is even more promising. For instance, in 2022, our revenue grew by 15%, followed by a 23% rise in 2023. Adjusting for provisions, our 2023 profit would have increased by 40% compared to 2022.

Q: What are the expected positive outcomes of geographical expansions on the company's results?

A: Thanks to the reputation of our high-quality services among major international companies, we can penetrate any sector and deliver substantial value in medical services.

After establishing a strong presence in the oil and gas sector, we embarked on expansion into new sectors in 2023. We inaugurated a branch in Riyadh and started to participate in giga projects across the Kingdom. The winning several projects, including ventures in NEOM, prompted us to pursue the establishment of a new branch in Tabuk in 2024 to enhance our operations in the region.

Now, we are gearing up to venture into the petrochemicals market, with plans underway to establish a branch in Jubail this year.

Furthermore, we are collaborating with the Ministry of Health to conduct workshops aimed at providing emergency medical services during Hajj and Umrah seasons, leveraging our expertise in this field.

Q: Can you explain the new medical services added by the company?

A: In the previous year, our range of medical services expanded to include medical care for events, home care, telemedicine, and physiotherapy, which will be one of the company's targets in the coming period due to our experience in this field. Additionally, we are enhancing outpatient clinics across all medical complexes. These expansions and services are expected to bode well in the coming years, starting from 2024.

Q: With these ongoing expansions, do you anticipate any impact on the company's dividends?

A: There will be no impact whatsoever. The board maintains a balanced policy between expansions and dividend distributions. It is unacceptable to us that a company experiencing robust expansion and profitability in a strong sector does not pay dividends.