Care’s Q1 misses estimates on lower revenue: Al Rajhi Cap

National Medical Care’s (Care) profits stood at SAR 25.6 million in the first quarter of 2018, missing Al Rajhi Capital’s estimate of SAR 32 million and consensus expectation of SAR 30 million, the brokerage firm said in a report.

“The reason behind the miss was lower than expected revenue due to lower utilization rate. Going forward, we believe growth will remain elevated…on the back of continued gains from better utilizations, and the completion of expansion projects in early 2018,” Al Rajhi Capital said.

Care’s revenue came in at SAR 207 million, lower than the estimates of SAR 239 million due to lower than expected utilization rate.

Gross margin for Q1 stood at 24.7 percent, compared to the estimated 25 percent.

Al Rajhi Capital maintained its Neutral rating on Care, with a revised target price of SAR 50 per share.

Going forward, growth is expected to remain elevated over the next couple of years, driven by revenues from the King Abdul Aziz Medical City contract win.

In addition, the company’s phase II expansion of the National Hospital expansion is expected to be fully completed by H1 this year.

“The gradual improvement in utilization of the new capacity would support top line growth in the coming years. This should also support operating profit margin improvement further in 2018,” the report said.