MENA Healthcare "2Q26 preview; will volumes rebound?" Estefanous

Research evidence excerpt

MENA Healthcare "2Q26 preview; will volumes rebound?" Estefanous

Global Research

21 July 2026ab

MENA Healthcare Equities

Emerging Markets2Q26 preview; will volumes rebound?

Healthcare

Alexander Estefanous, CFA

KSA Healthcare; sector trading at a 40% discount to the 5Y avg FY2 PE Analyst

The Saudi healthcare sector remains under pressure heading into 2Q26 despite alex.estefanous@ubs.com

continued robust revenue growth. The sector currently trades at c.15x FY2 P/E +44-20-7567 0508

(Bloomberg), a c.40% discount to its five-year average, reflecting investor concerns

around the unprecedented capacity expansion cycle under way, particularly in Riyadh.

Significant new supply is weighing on profitability through pre-operating expenses,

higher financing costs and rising competitive intensity within the VIP/A segment. While

revenue growth remains healthy, margins and earnings are expected to remain under

pressure as operators absorb the costs of expansion and ramp up new facilities. This

contrasts with the pre-2023 period, when limited capacity additions supported

utilisation gains, margin expansion and strong EPS growth. In addition, sector

performance in Q1 was affected by the timing of Ramadan and Eid, which led to the

deferral of procedures, surgeries and certain long-term care activity into Q2.

HMG; is this the margin inflection point or will pressure mount?

For HMG, the focus remains on improving operational efficiency and driving volume

growth, with pricing largely unchanged. The recent opening of six hospitals has

supported double-digit top-line growth, but weighed on profitability, contributing to Q1

margins approaching historical lows (17.1%). Encouragingly, four facilities have already

demonstrated strong volume growth, while the remaining two, which commenced