2Q26: Convincing quarter for healthcare margins

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PureHealth

2Q26: Convincing quarter for healthcare

margins

Reiterate Rating: BUY | PO: 3.65 AED | Price: 2.26 AED

Revenue and profit beat driven by hospital segment

03 August 2026

2Q revenues of AED7.6bn are +8.5% YoY, which includes the consolidation of Hellenic

Healthcare Group, and are +1%/+5% vs. cons/BofAe. The beat vs. BofAe is driven by UAE

healthcare. Gross margin of 25.6% was +4/+2ppts above BoAe/cons, filtering to a

substantial net income beat (AED792m vs. 323m BofAe / 424m cons) from profitability

in healthcare. Gross, EBITDA (BofAe adj.), and net margins all expanded between 300400bp YoY. Evidence of sustainable margin-accretive M&A-driven growth would help to

combat the challenging investor sentiment, with evidence of M&A-driven accretion

being the main pushback to our recommendation. We reiterate Buy. Our new PO of

AED3.65/sh (+62% upside potential, -3% vs. prior) reflects cost of capital updates and

implies 18x P/E (27E) for 8% EPS CAGR.

Equity

Result implies reasonably resilient UAE performance

Healthcare revenues excluding Hellenic implies +2% YoY growth in 2Q26 for the UAE

and UK franchises. We estimate UAE healthcare revenues were flat to low-single-digit

down YoY, in a challenging conflict-impacted quarter, which assumes revenue growth in

Circle Health slightly moderated from its +9.5% YoY growth in 1Q26. This UAE estimate

would likely include one-time impacts from deferred inpatient and outpatient appoints

following Ramadan and Eid in 1Q26. Whilst this displaced demand likely partially

contributed to the margin uplift, management commentary attributes this to higher

contributions from margin-accretive M&A. Given that this margin accretion was not

present in 1Q26, we await further details on the earnings call to understand the drivers

and sustainability of this expansion.

PO implies 18x P/E for 8% EPS CAGR

Our new AED3.65/sh PO is -3% vs. prior and reflects model updates for the financial

result, margins (+1-2% to near-term EBITDA margins), and updated 13.2% WACC

(+44bp) reflecting latest market data for risk-free date. Our PO implies 18x P/E (27E) vs.

11x currently for 8% 5Y EPS CAGR.

Estimates (Dec) (AED)

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