Saudi German Health extends digital transformation project by 5 more years

Logo of Middle East Healthcare Co. (Saudi German Hospital)

Middle East Healthcare Co.’s (Saudi German Health) board of directors approved, on June 2, the extension of the contract with Megamind IT Solutions Co. for the implementation of the comprehensive digital transformation project for its hospitals for an additional five years.

For more news on listed companies

In a statement on Tadawul, the company said that the extension includes the continued provision of IT management and operations services as part of the digital transformation plan.

The extension is in line with current market rates, the company’s operational and technical needs, and under the same original contractual terms and conditions, without any preferential terms or benefits.

The contract was initially signed on Jan. 10, 2021, with a total value of SAR 382.94 million. This includes the implementation of software systems over three years at SAR 264.68 million, an annual maintenance contract over five years at SAR 43.13 million and software license costs over seven years at SAR 75.13 million.

The company clarified that the previously announced value of SAR 264.68 million was mistakenly reported, and the correct total contract value is SAR 382.94 million.

Under the contractual arrangements, SAR 264.68 million will be paid directly to Megamind for the implementation of technical and operational work.

Moreover, the remaining SAR 118.26 million will be paid by Saudi German Health through Megamind to the third parties supplying licenses and services, in line with the contract’s cost breakdown.

The company added that part of the work has already been completed, and the remaining value of the contract to date stands at SAR 134.45 million.

Chairman Sobhi Abduljaleel Batterjee, Vice Chairman Makarem Sobhi Batterjee, as well as board members Khalid Abduljaleel Batterjee, and Sultan Sobhi Abduljaleel Batterjee have an indirect interest in Megamind.

The contract extension will be presented to the upcoming ordinary general meeting (OGM) for approval, with a commitment to disclose any material developments in due course.

The statement clarified that there will be no direct impact on the company’s financial statements, as the extension aims to complete the ongoing project.

According to data compiled by Argaam, Saudi German Health announced, in December 2020, that its independent board members recommended awarding the contract for the digital transformation of its hospitals to Megamind IT Solutions, a related party.