Almoosa Health: Q3 Loss Driven by Non-Cash Accounting Impact of Derivative Valuation, While Core Operations Remain Profitable and Expansion Plans Stay on Track

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Almoosa Health Company reported a non-cash loss of SAR 81.9 million in the third quarter of 2026, resulting from the mark-to-market (MTM) valuation of its profit-rate hedging contracts, contributing to a reported net loss of SAR 31.8 million for the quarter.

The Company explained that interest rates in Saudi Arabia rose again in September 2026 amid broader global interest-rate movements and inflationary pressures associated with geopolitical and macroeconomic challenges. Under applicable accounting standards, financial derivative contracts must be revalued at prevailing market rates on a quarterly basis. Changes in interest rates affect the fair value of these instruments, with higher rates reducing their valuation and vice versa.

Impact on Financial Results

The valuation of financial derivatives shifted from a gain of SAR 14.2 million in Q3 2025 to a loss of SAR 81.9 million in Q3 2026. For the first nine months of 2026, movements in derivative valuations accounted for SAR 150.7 million of the SAR 170.7 million decline in reported net profit compared to the corresponding period of 2025. The remaining SAR 20.0 million was attributable to additional depreciation and ramp-up costs associated with the Company's ongoing growth and expansion phase.

The following table illustrates the impact of derivative valuations on the Company's reported and adjusted net profit:

Adjusted net profit is defined as reported net profit excluding non-cash gains or losses arising from the mark-to-market valuation of derivative financial instruments. This non-IFRS measure is intended to provide additional visibility into the Company's underlying financial performance, excluding the impact of fluctuations in derivative valuations.

Non-Cash Accounting Impact

Almoosa Health emphasized that the derivative valuation loss is a non-cash accounting item and does not affect the Company's cash position for the reporting period or its ability to finance ongoing operations and expansion plans.

The Company explained that most of the recorded loss represents an accounting estimate of future payments recognized in the current reporting period, rather than an actual cash outflow during the quarter. Furthermore, the valuation of these instruments fluctuates with changes in market interest rates. Accordingly, part of the recorded loss could reverse in future reporting periods if interest rates decline and return to the relevant ranges, as experienced in previous periods.

Core Business Remains Profitable

Almoosa Health continued to deliver growth in its core healthcare business in Q3 2026, with revenue increasing by 13.2% year-on-year to SAR 403.6 million, EBITDA rising by 14.6% to SAR 91.4 million and operating profit growing by 16.2% to SAR 64.6 million. EBITDA and operating profit margins reached 22.6% and 16.0%, respectively.

This performance was supported by a 28.6% increase in total patient volumes compared with the same quarter last year, the continued ramp-up of medical facilities, and the growing contribution of the Company’s integrated healthcare network. Pharmacy revenue also increased by 14.5%, while rehabilitation revenue grew by 23.0% compared with the same quarter last year.

Excluding gains and losses arising from the valuation of derivative financial instruments, net profit amounted to SAR 50.1 million for the quarter, representing a margin of 12.4%, and SAR 134.5 million for the first nine months of the year. The non-cash valuation loss has no impact on patient services, hospital operations or the Company’s ongoing growth and expansion plans, which continue as planned. Almoosa Health remains focused on delivering high-quality care, improving operating efficiency and building long-term value for shareholders.

Managing Strategy and Financial Reporting

Almoosa Health explained that the derivative contracts were originally entered into as part of its strategy to manage financing costs. Management continues to monitor these instruments closely and intends to report adjusted net profit alongside its statutory financial results, providing shareholders with greater visibility into the performance of the Company's underlying business.

Footnote: Adjusted net profit excludes gains and losses on derivative financial instruments and is not an IFRS measure. This summary contains forward-looking statements; actual results may differ depending on interest-rate movements outside the Company's control.