Saudi Arabia’s Middle East Healthcare company (MEAHCO), the owner and operator of Saudi German Hospitals, reported a drop in first quarter earnings for 2019, triggering a sharp drop in the company’s shares on Thursday.

The company reported a net profit after zakat and tax of 14.59 million Saudi riyals ($3.89 million) in Q1 2019, compared to 87.13 million riyals in Q1 2018, an 83.25 percent drop.

“Middle East healthcare 1Q19 results disappointed despite lowered expectations,” Asim Bukhtiar, head of research, capital markets at Saudi Fransi Capital told Zawya by email.

The company told the Saudi exchange that one of the reasons behind the drop in net profit was that patient traffic was affected by “renovations in some of the group hospitals,” which negatively affected revenues. It also said that it did not plan to distribute a dividend, stating that it needs to support current hospital expansion and renovation projects, and it is planning to upgrade medical equipment.

MEAHCO’s Q1 2019 revenue dropped 11.37 percent to 350.18 million riyals, compared to the 395.11 million riyals figure achieved in Q1 2018.

“The pain continues with no relief in sight," Bukhtiar added. "Patient numbers declined due to facilities renovations, however loss of business may be difficult to recover.”

The company’s stock was the most hit on Tadawul on Thursday, dropping 9.09 percent to 28 riyals, at 12:53 GST. It has fallen by 13.71 percent so far since the start of 2019.

(Reporting by Gerard Aoun; Editing by Michael Fahy)

(gerard.aoun@refinitiv.com)

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