Latest news with #BassamChahine
Gulf Business
4 days ago
- Business
- Gulf Business
Innovation, expansion, IPO: SMC Healthcare's Bassam Chahine charts its ambitious growth
Image: Supplied As Saudi Arabia intensifies efforts to diversify its economy under Vision 2030, the healthcare sector emerges as a pivotal focus. The company recently initiated plans for an initial public offering (IPO) on the Saudi stock exchange, collaborating with banks such as EFG Hermes and SNB Capital to facilitate the process. This strategic move aims to bolster SMC's expansion, including the development of three new hospitals in northern Riyadh, thereby more than doubling its current bed capacity. In this interview with Gulf Business , CEO Bassam Chahine discusses the company's growth strategy, digital innovations, and its alignment with the kingdom's evolving healthcare landscape. SMC's IPO marks a major milestone in your 25-year journey. What strategic goals are you looking to achieve through this listing, and how does it support your expansion into Northern Riyadh? The IPO is a natural evolution of our 25-year legacy in Riyadh and marks a pivotal chapter in our growth journey. Since launching as a single-day surgery centre, we have transformed into one of the leading multi-specialty healthcare providers in the kingdom. This listing will allow us to accelerate our expansion plans, particularly in Northern Riyadh — one of the capital's fastest-growing corridors. Our three new hospitals are strategically locate in rapidly developing neighbourhoods tied to giga-projects such as New Murabba, NHC suburbs and North Pole. Once operational, they will more than double our capacity to over 1,275 beds, significantly strengthening our footprint in Riyadh's fastest-growing healthcare corridor. The IPO will help us execute this roadmap efficiently, ensuring we are well positioned to meet future demand and remain at the forefront of healthcare delivery in the capital. Read: With three new hospitals under development and the capacity set to more than double, how is SMC preparing to meet the operational demands and talent needs of this significant scale-up? We are scaling with discipline. We have centralised key operational functions such as revenue cycle management, procurement, HR, and IT, which reduces overhead duplication as we grow. From an infrastructure perspective, we've invested early in systems and workflows that allow us to integrate new facilities seamlessly. On the talent front, SMC Healthcare has a long-standing reputation for attracting world-class clinicians and specialists. Our fixed salary model incentivises long-term commitment, and we complement this with robust professional development programmes. We are also investing in automation and AI tools to streamline clinical and administrative processes, which allows our staff to focus on patient care. The company has posted impressive financial performance, with profit margins more than doubling in three years. What are the key levers driving this growth, and how do you plan to sustain it post-IPO? Our margin expansion—from 5.3 per cent in 2021 to 12.9 per cent in 2024 — has been driven by three deliberate strategic levers. First, we've shifted away from long-term care to higher-margin acute specialties like cardiology, orthopedics, and pediatrics. Second, we've doubled down on outpatient services, which are more scalable and structurally profitable. Third, our digital infrastructure — including our proprietary mobile app and AI-integrated systems, has improved operational efficiency across the board. Post-IPO, we will continue this strategy by optimising our specialty mix, driving higher patient volumes through new outpatient clinics, and maintaining a lean, tech-enabled operating model. As our new hospitals are coming online, we expect to unlock further operating leverage. SMC has embraced AI, digital tools, and telemedicine early. How central is digital transformation to your patient care model and competitive edge in a rapidly evolving healthcare landscape? Digital transformation is integral to our care model and a key differentiator for SMC. Our in-house developed mobile app has over 83,000 users and accounts for 62 per cent of bookings. It handles everything from registration, payments, online check in up to prescription access. This has halved patient waiting times and improved patient throughput. We are also among the first in the kingdom to integrate AI into diagnostics and lab result interpretation. This enhances diagnostic accuracy, speeds up clinical workflows, and supports personalised care delivery. Our tech-first approach not only boosts operational efficiency but ensures that we continue to lead in patient experience, which is increasingly central to competitive healthcare. With the kingdom's Vision 2030 pushing public-private healthcare partnerships, how do you see SMC's role evolving in this new ecosystem — and what opportunities do you see beyond Riyadh? Vision 2030 is unlocking significant opportunities for private healthcare providers. We're already a frontrunner — SMC Healthcare was selected as the preferred bidder to operate the kingdom's first mental health facility under a PPP model in partnership with Dr Ebel Kliniken, and HealthGate. This underscores our capability and credibility as a strategic partner to the government. Our immediate focus remains Riyadh, where demand continues to surge. Northern Riyadh alone will need thousands of new hospital beds by 2035. We're addressing this head-on by becoming the largest private operator in that region. That said, the PPP framework opens new doors across the kingdom — and when the time is right, we will evaluate opportunities in other high-growth cities with the same disciplined, data-driven approach that has defined our growth so far.
Argaam
18-05-2025
- Business
- Argaam
SMC Healthcare executes largest hospital expansion in Northern Riyadh: CEO
Bassam Chahine, CEO of SMC Healthcare, said the company is executing one of the largest private expansion programs in the Kingdom, adding over 698 beds. In an interview with Argaam, Chahine said the company currently has three new hospitals, SMC 3, 4, and 5, at different stages of development, all located in high-growth Northern Riyadh districts. At the same time, SMC seeks to open over 60 new outpatient clinics by the end of Q2 2025. These long-term care beds are part of our strategic shift toward outpatient services. The improvement SMC saw in 2024, from 22.7% to 23.1% in EBITDA margin and from 12.3% to 13.8% in recurring net income margin, reflects the strength of our operating model, Chahine noted. Here are details of the interview: Q: SMC reported solid growth for the full year 2024. What were the key drivers of this performance? A: '2024 was a strong year for SMC, marked by both strategic and financial progress. Our revenues grew by over 5% year-on-year, demonstrating the resilience of our business model and the effectiveness of our strategic direction. On the inpatient side, we continued our transition toward high-performing acute specialties. Despite a decline in inpatient volumes (as we operated the full fourth quarter without long-term care beds, which were being repurposed into outpatient clinics as well as acute beds) we delivered growth in inpatient revenue. This reflects a notable increase in average revenue per inpatient, underlining the effectiveness of our continued focus on high-performing acute specialties and the transition away from LTC patients to acute patients generating higher revenues per bed. At the same time, we are progressively expanding our outpatient footprint (part of a broader shift toward more accessible and diversified care delivery). Outpatient visits rose by nearly 10%, and revenues grew by over 15%. This momentum is also being driven by the strategic repurposing of former long-term care space, which is now being utilized to roll out over 60 new outpatient clinics across our facilities. These developments underscore our ability to adapt to changing healthcare dynamics while continuing to deliver growth and value. Importantly, this translated into improved profitability, with EBITDA margins expanding from 22.7% to 23.1%, and recurring net profit margins increasing from 12.3% to 13.8% year-on-year. Notably, this margin improvement was achieved despite the significant reduction on LTC related revenue in Q4 and the increased costs related to the rollout of the new outpatient clinics.' Q: How do you see the company's performance over the coming years? A: We expect margin expansion to continue over the medium term. The improvement we saw in 2024, from 22.7% to 23.1% in EBITDA margin and from 12.3% to 13.8% in recurring net income margin, reflects the strength of our operating model, as well as the early benefits of our shift toward high-performing acute specialties and outpatient services, both of which are expected to support improvements in our margin profile. This strategic shift along with the transition away from long term patients has already begun to translate into tangible profitability gains. Looking ahead, as new clinics ramp up and our upcoming hospitals gradually come online, we anticipate further operating leverage. We've already built out our central functions (ranging from RCM, HR and procurement to finance and IT) so there's no duplication of overhead as we scale. Additionally, these new facilities will follow our outpatient-focused strategy, supporting structurally higher margin contribution over time. This structure allows us to absorb growth efficiently and drive margin uplift as volumes increase and new facilities mature. While there may be some short-term dilution during early commissioning phases, our experience with SMC 2 demonstrated our ability to ramp up quickly. Over time, we expect the margin trajectory to remain positive, supported by volume growth, mix optimization, and disciplined cost management. Q: The fourth quarter of 2024 was somewhat softer compared to last year. What explains this performance? A: While Q4 2024 net revenue may appear softer when viewed in isolation, it is important to highlight that overall performance remained solid. Both inpatient and outpatient segments continued to grow at the gross revenue level during the quarter. This underscores the strength of our core operations, even during periods of transition. The softer net revenue was largely driven by two temporary and expected factors. First, the quarter included the clearing of a review backlog from 2023, which led to a one-time increase in claim rejections and higher contractual obligations. This technical adjustment affected revenue recognition but does not reflect any weakness in operational performance. Second, Q4 marked the phase-out of our inpatient long-term care beds as part of our strategic shift toward outpatient services. These LTC floors, which were still operating in previous quarters, are now being repurposed into more than 60 new outpatient clinics. Most of these clinics are scheduled to open by the end of Q2 2025, meaning the temporary drop in inpatient volumes was not yet offset by the corresponding outpatient ramp-up. This transition will begin to positively impact our results in the second half of 2025. Overall, we remain confident in the strength of our fundamentals. Demand remains healthy, our care model is evolving in line with market needs, and the steps we're taking today are laying the groundwork for sustained growth and improved margins moving forward. Q: How will the implementation of the DRG system affect SMC's business and what adjustments have you made operationally? A: While the broader sector is anticipating the introduction of DRG with some concern and expectations that margins will come under pressure, we believe that SMC is well-positioned to manage the transition as we expect to remain well-insulated due to our early preparation and the strength of our operating model. We took early action to prepare for the transition by fully integrating coding protocols, claim validations, and automation tools within our systems. Operationally, we are already aligned with many of DRG's core principles. Moreover, DRG applies only to inpatient services, which today represent less than 50% of our revenue. Our outpatient-driven model, demonstrated by the rollout of new clinics, combined with efficient inpatient practices such as short lengths of stay and a readmission rate of around 1 percent, has positioned us well under the new framework. So while we view DRG as a positive step toward value-based care, it will have a limited financial impact on our business. Q: Could you share an update of the company's expansion projects? How you are managing the associated financing / leverage? A: Our expansion strategy is central to our long-term vision and to reinforcing our position as one of the leading private healthcare providers in Riyadh. We currently have three new hospitals, SMC 3, 4, and 5, at different stages of development, all located in high-growth Northern Riyadh districts where healthcare capacity remains limited. SMC 3 has completed excavation works, and construction is set to commence within the next several weeks. SMC 4 is in the final design phase, with construction expected by Q3 2025, while SMC 5 has secured its site and is in early planning. Together, these facilities will more than double our inpatient bed count and significantly expand our outpatient network, aligning with Riyadh's urban expansion and growing demand for insured healthcare services. Importantly, while we are pursuing ambitious expansion plans over the medium to long term, our short-term growth is very much de-risked. The new outpatient clinics we are currently rolling out, over 60 in total, require minimal capex and are being launched in locations with strong patient footfall. The specialties have been carefully selected based on existing demand patterns within our network. As such, any temporary impact from the LTC transition between Q4 2024 and Q2 2025 is expected and already budgeted for. We are confident that this outpatient-led growth will begin to reflect in our financial performance from the second half of 2025 onward. The funding strategy for these projects is already in place, with approximately 80% of the expansion expected to be financed through debt. At the same time, we are actively using internal cash flows wherever possible to limit reliance on external funding. We fully recognize that leverage will increase during the construction phase, but we are committed to maintaining a net debt to EBITDA ratio below 3 times. To support this target, we will manage our dividend distributions with flexibility, using them as a toggle if necessary to ensure we remain within our leverage thresholds. Q: Given rising competition and capacity additions in the Riyadh market, how is SMC positioning itself competitively in the healthcare landscape? A: Despite rising competition, SMC Healthcare holds a distinct position in Riyadh's healthcare landscape. We are one of the few operators serving the full breadth of the mid-to-high insured segment, currently the fastest-growing segment in the market. This positioning allows us to cater to a broad and expanding patient base, compared to the VIP-focused offerings of many of our peers. Crucially, we are one of the few healthcare players offering direct exposure to Riyadh's real growth story. We are Riyadh-focused, and our expansion is concentrated in Northern Riyadh, where the city is rapidly expanding and demand for quality healthcare services continues to rise. While others in the market are exploring multiple geographies or service verticals, which often comes with execution challenges, our roadmap is built on deep market insight and a targeted expansion plan that prioritizes scale and tangible growth potential in the capital's most dynamic area. We are doubling down on Northern Riyadh with a clearly defined, outpatient-led strategy designed to capture the fastest-growing segment in the Kingdom's new up and coming urban zone. Our network is already strategically distributed across Riyadh, and we are now executing one of the largest private expansion programs in the Kingdom, adding over 698 beds, with a clear focus on Northern Riyadh. This region is undergoing one of the most ambitious urban transformations in the Kingdom, anchored by giga-projects such as New Murabba, Diriyah Gate, and the upcoming Riyadh Expo 2030, alongside major residential developments led by the National Housing Company (NHC). These projects are drawing in a growing base of residents and expatriates, driven by Vision 2030 initiatives and Riyadh's rising global profile. Northern Riyadh alone is expected to welcome over 1.5 million new residents by 2035. Northern Riyadh is where much of the city's future growth is concentrated, yet healthcare infrastructure remains underpenetrated. And while new capacity is coming online, it is still not enough to meet the scale of current and future demand. With state-of-the-art facilities under development, SMC will operate in areas with limited direct competition or where competition is targeting a different insurance segment, allowing us to capture a meaningful share of this rapidly growing market. Q: Looking ahead to FY 2025, what are the key priorities for the company both operationally and financially? A: In 2025, our focus will be on disciplined execution across several fronts. Operationally, we will continue expanding our outpatient footprint, with over 60 new clinics expected to become operational across our network. We are also moving ahead with our expansion pipeline, ensuring steady progress on SMC 3 and initiating construction of SMC 4. At the same time, we are strengthening our systems and teams to support this growth while maintaining our clinical and service standards. Financially, we expect further improvement in margins, supported by higher outpatient volumes and a continued shift toward more profitable high-performing acute specialties. At the heart of our financial strategy is a commitment to maintaining a healthy leverage profile. We are targeting sub-3x net debt to EBITDA, even at the peak of our construction cycle. We are also focused on sustaining strong cash flow generation to fund growth internally and ensure financial flexibility as we scale.
Zawya
05-05-2025
- Business
- Zawya
Specialized Medical Company to float 30% on Tadawul
Riyadh – Saudi healthcare provider Specialized Medical Company (SMC) intends to proceed with an initial public offering (IPO) and the listing of 75 million ordinary shares on the Main Market of the Saudi Exchange (Tadawul). On 26 March 2025, the Capital Market Authority (CMA) approved the company's application for registering its share capital and the offering of 30% of its total issued share capital. The offering price will be determined at the end of the institutional bookbuilding period, according to a press release. The IPO Shares will be offered for subscription to individual and institutional investors, including institutional investors outside the US. Meanwhile, the net proceeds from the IPO will be distributed to the selling shareholders, yet the company will not receive any part of the offering proceeds. CEO of SMC, Bassam Chahine, said: 'For over 25 years, SMC has been proud to serve the Riyadh community, building a legacy as one of the capital's trusted private healthcare providers. Our journey has been defined by clinical excellence, operational excellence, and a commitment to delivering world-class medical care tailored to the needs of our growing population.' Chahine added: 'Today, as Riyadh expands northward and Saudi Arabia's healthcare sector evolves under Vision 2030, we are entering an exciting new chapter.' The CEO noted: 'Our planned listing on the Main Market of the Saudi Exchange will enable us to accelerate our growth strategy – doubling our capacity with three new hospitals in Northern Riyadh, further strengthening our role in expanding access to high-quality healthcare in the Kingdom.' From his part, Hani Charani, the CFO of SMC, said: 'SMC has demonstrated consistent financial strength, marked by double-digit revenue growth, expanding margins, and prudent capital management. Our ability to grow sustainably while maintaining operational efficiency underscores the resilience of our business model.' The CFO added: 'The IPO will provide us with flexibility to accelerate our strategic agenda, invest in capacity, technology, and innovation, and strengthen our leadership in one of the region's most dynamic healthcare markets.' Charani concluded: 'We are entering the public markets with ambition, resilience, and clear visibility on long-term growth.' Source: Mubasher
