SMC's non-recurring expenses hit SAR 10M in H1 2025

Hani Charani, CEO of Specialized Medical Co. (SMC)

Specialized Medical Co.’s (SMC) incurred non-recurring expenses of approximately SAR 10 million during the first half of 2025 due to brand restructuring costs and preparations related to the initial public offering (IPO), CFO Hani Charani told Argaam in an exclusive interview.

He emphasized that these are one-time expenses that will not be recurring in the second half of the year.

The CFO explained that the increase in revenue during Q2 2025 was driven by a 26% rise in outpatient revenues and a 5% increase in inpatient revenues, despite a loss of approximately SAR 43 million from long-term care services, whose contribution dropped from 8% to less than 2% of total revenue during H1 2025.

He added that 57% of the company’s revenue in the second quarter came from outpatient services, compared to 40% during the same period last year.

The official additionally noted that the company closed several floors previously designated for long-term care and converted them into clinics. A total of 41 clinics have been opened out of 60 planned so far, including 20 clinics in SMC Hospital 2 and 21 clinics in SMC Hospital 1, with 19 additional clinics expected to be completed before the end of 2025.

Charani further stated that the new clinics have already begun receiving patients and contributed to recording the highest number of visits in the company’s history during the month of May. He confirmed that the expansion utilized existing facilities, helping to reduce capital costs while retaining medical talent to ensure immediate operation upon opening. He expects the clinics to continue their gradual growth in the coming months.

The medical service provider is moving forward with its expansion plan, currently working on the construction of three new hospitals: SMC Hospital 3 on the Northern Ring Road, SMC Hospital 4 in Khuzam District, and SMC Hospital 5 in Al-Malqa neighborhood. These locations were strategically selected within Riyadh to shorten travel distances for patients and to cover newly developed residential communities, he revealed.

He added that SMC Hospital 3 has completed excavation work for five underground floors, noting that the contractor will be announced in the coming weeks.

Moreover, he noted that the Diagnosis-Related Groups (DRG) payment system, expected to be implemented within two to three years, will not negatively impact the company due to its heavy reliance on outpatient services, unlike other healthcare providers who depend more on inpatient care.

SMC continues to implement its strategy of transitioning from long-term care to outpatient and acute care services, in line with the Kingdom’s direction to enhance primary healthcare and with the global value-based care model, the CFO said.

He stated that the company has ambitious plans and looks forward to opening three hospitals within the next three to four years, progressing according to schedule.

According to Argaam data, SMC’s profits fell to SAR 66 million by the end of the first half of 2025, a 34% decrease compared to SAR 100.2 million during the same period in 2024. Second-quarter profits reached SAR 36.4 million.