REG - Integrated Diag Hdgs - IDH launches Greenfield in KSA with Izhoor

Integrated Diagnostics HoldingsAnnouncement

31/10/2022 10:15

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RNS Number : 7328E  Integrated Diagnostics Holdings PLC  31 October 2022

THIS ANNOUNCEMENT CONTAINS INSIDE INFORMATION FOR THE PURPOSES OF ARTICLE 7 OF
THE UK MARKET ABUSE REGULATION

IDH and its Jordanian subsidiary, Biolab, to Launch Greenfield Diagnostic
Venture in Saudi Arabia in Partnership with Izhoor Medical, a company owned by
Fawaz Alhokair

Through this strategic partnership, IDH will enter the attractive Saudi
Arabian healthcare market, expanding the Company's geographic footprint and
patient pool further, and building a platform for exciting future growth
opportunities

31 October 2022

(Cairo and London) - Integrated Diagnostics Holdings ("IDH," "the Company" or
"the Group"), a leading consumer healthcare company with operations in Egypt,
Jordan, Sudan, and Nigeria, announces the signing of a Joint Venture ("JV")
Agreement with Al Makhbaryoun Al Arab LLC ("Biolab") and Izhoor Holding
Medical Company LLC ("Izhoor") to launch a new diagnostic venture in Saudi
Arabia. The new joint venture will be owned 50% by IDH Group (IDH and its
Jordanian's subsidiary Biolab) and 50% by Izhoor, a company owned by Fawaz
Alhokair, chairman of the renowned Saudi retail group, Fawaz Alhokair Group
(together, "the partners").

The management team of the new joint venture will be led by Dr. Amid
Abdelnour, Biolab's founder and CEO, with the day-to-day operations overseen
by the Biolab team who will look to transfer its operational expertise and
high quality standards to the new venture. Ultimately, the partners are
looking to develop a full-fledged pathology diagnostic services provider
offering a wide array of diagnostics services across a far-reaching branch
network in the Kingdom.

The proposed transaction has an estimated investment cost of USD 19.7 million
(SAR 73.7 million). IDH's equity investment into the venture is estimated to
stand at USD 4.7 million, of which USD 2.8 million will come from the holding
company and USD 1.9 million from Biolab. The new venture's operations are
targeted to begin within four to six months from the signing of the agreement
on 27 October 2022, subject to the receipt of all the necessary regulatory
approvals and licenses.

Founded in 2020 and fully owned by Fawaz Alhokair, Izhoor is a healthcare
platform providing innovative solutions to the Saudi market through strategic
partnerships with established international healthcare players. The company
focuses primarily on market segments with high entry barriers, and digital
transformation potential. Fawaz Alhokair Group is a Saudi-based franchiser and
entertainment centre operator, with a success track record spanning multiple
decades, and currently operating 22 malls in KSA alone and boasting
partnerships with over 80 brands through a network of around 1,700 stores.

Izhoor and its shareholders represent the ideal partners for IDH and Biolab,
bringing a deep understanding of the local business dynamics and rapidly
growing exposure to the local healthcare sector, as well as the access to
local resources to ensure the quick and effective ramp up of the new joint
venture. Moreover, IDH and Biolab will be able to leverage Fawaz Alhokair
Group's extensive location network of malls and stores to establish a
strategic branch network capable of accessing a wide customer base. At the
same time, IDH and Biolab bring unmatched expertise in the field of
diagnostics having successfully operated hundreds of branches across four
different countries for several decades. Most importantly, leveraging Biolab's
multi-decade experience in operating a network of over 20 branches in Jordan,
the new venture will aim fill the existing market gap for high-quality testing
in the country, bringing to the Kingdom the superior level of care that
Biolab's patients in Jordan have been enjoying for years.

Investment Rationale and Key Highlights

·    Entering one of the region's most attractive markets with solid
growth potential underpinned by favourable demographics, an increasingly
health conscious patient base, robust macroeconomic fundamentals, changing
healthcare sector dynamics in favour of private providers, and a supportive
regulatory framework.

·    The Saudi Arabian diagnostics labs market is set to be one of the
fastest growing in the Middle East and Africa (MEA) over the coming six years.
Faster growth is expected to be supported by several factors including robust
population growth fuelled by both Saudi and non-Saudi nationals, as well as
government efforts to increase the contribution from private sector labs.

·    With a population of 36 million (growing at c. 2% per year), Saudi
Arabia ranks third in the Middle East.

·    Overall, the country currently records some of the highest per-capita
spending on healthcare in the region, with the number set to rise further in
the coming years.

·    In line with the country's 2030 Vision, reforming and growing the
country's healthcare sector is a top priority for the Saudi government. On the
reform side, a lot of focus has been put on the sector's privatisation, with
nearly 300 hospitals and more than 2,250 healthcare centers to be privatised
by 2030. This is expected to create ample opportunities for growth for new and
existing private players.

·    The government has been investing significant resources in the
sector, with 14.4% of the 2022 budget being spent on healthcare (KSA accounts
for 60% of total healthcare spending in GCC). Despite this, growing demand has
seen public facilities rely increasingly on private sector outsourcing,
including in the diagnostic testing space.

·    Growth in the private sector is expected to be boosted by the
introduction of mandatory health insurance for private sector employees
(provided through their employers) and the removal of regulations on
laboratory tests covered under private health insurance.

·    The new venture will benefit from the access and resources of Mr.
Fawaz Alhokair and the wider Fawaz Alhokair Group, as well as the technical
know-how in the delivery of high-quality diagnostic services brought by IDH
and Biolab.

·    Under the agreement, four of the eight seats on the new company's
board will be held by the Group with the other four held by Izhoor. Meanwhile,
with the Group holding two of three seats on the company's executive
committee, the new joint venture to be fully consolidated on IDH's accounts.

Structure and Financing of the Proposed Transaction

·    The new joint venture will be owned 50% by IDH Group (30% controlled
by IDH and 20% controlled by Biolab), with the remaining 50% owned by Izhoor.

·    Over the coming four years, total investments in the venture are set
to reach USD 19.7 million (SAR 73.7 million).

·    Completion of the transaction is subject to the receipt of a number
of key regulatory approvals and licenses which the Company expects to receive
within four to six months of the signing of the JV Agreement (27 October
2022).

Dr. Hend El Sherbini, IDH CEO, said: "I am pleased to announce the signing of
this landmark partnership, and I am excited to add Saudi Arabia to our
existing footprint. The Kingdom represents an attractive new market for IDH
with ample room for future growth, and provides us with an opportunity to
positively impact the lives of hundreds of thousands of patients over the
coming years. This deal is directly in line with our long-term regional
expansion strategy which sees us pursue high-growth markets where our platform
and proven expertise are well-suited to deliver high-quality care to as many
patients as possible. We are also particularly delighted to be partnering with
Izhoor, a company with which we share many common values and a shared
long-term vision. I am certain that together with our partners, we bring the
complementary strengths and experiences needed to guarantee the long-term
success of our new Saudi Arabian venture."

Dr. Amid Abdelnour, Biolab's founder and CEO, added: "This deal represents an
important opportunity for Biolab to replicate our success in Jordan in another
high potential market like that of Saudi Arabia, and it is with great pride
that we take on the operator role in this new venture. Over the last two
decades, we have built a reputation for providing high quality services to
millions of patients, and we are eager to leverage our on-the-ground expertise
to play a frontline role in plugging the existing supply gap for high quality
diagnostics services in the Kingdom. When combined with the resources and
knowledge brought by IDH and Izhoor, I am confident that we have all the
necessary ingredients to ensure that we deliver on our promises to
shareholders while generating long-term, sustainable value to Saudi Arabia's
people and economy."

Fawaz Alhokair, Izhoor's founder and chairman, commented: "We are delighted to
team-up with IDH and Biolab to expand into the Saudi medical diagnostic
sector. This transaction represents a significant milestone for our newly
launched healthcare initiative, and a key step in the development of our
unique healthcare ecosystem. We believe the combination of Biolab/IDH's
operational and medical capabilities with our successful track record in
developing and expanding retail concepts in the Kingdom are key success
factors. Our ambition is to disrupt the medical diagnostic sector by bringing
a successful concept into the Saudi market, with the focus to provide better
service and customer experience to the Saudi patient."

Advisors

IDH and Biolab have appointed Khalifeh & Partners to act as their legal
advisors on the transaction. Meanwhile, Izhoor have appointed The Law Firm of
Wael A. Alissa in association with Dentons as their legal advisors.

-End-

 

 

About Integrated Diagnostics Holdings (IDH)

IDH is a leading consumer healthcare company in the Middle East and Africa
with operations in Egypt, Jordan, Sudan and Nigeria. The Group's core brands
include Al Borg, Al Borg Scan and Al Mokhtabar in Egypt, as well as Biolab
(Jordan), Ultralab and Al Mokhtabar Sudan (both in Sudan) and Echo-Lab
(Nigeria). A long track record for quality and safety has earned the Company a
trusted reputation, as well as internationally recognised accreditations for
its portfolio of over 2,000 diagnostics tests. From its base of 538 branches
as of 30 June 2022, IDH will continue to add laboratories through a Hub, Spoke
and Spike business model that provides a scalable platform for efficient
expansion. In 2021, across its four countries of operation, IDH served more
than 10.3 million patients and performed over 33.7 million tests. Beyond
organic growth, the Group's expansion plans include acquisitions in new Middle
Eastern, African, and East Asian markets where its model is well-suited to
capitalise on similar healthcare and consumer trends and capture a significant
share of fragmented markets. IDH has been a Jersey-registered entity with a
Standard Listing on the Main Market of the London Stock Exchange (ticker:
IDHC) since May 2015 with a secondary listing on the EGX since May 2021
(ticker: IDHC.CA). Learn more at idhcorp.com (http://idhcorp.com) .

 

Contact

Nancy Fahmy

Investor Relations Director

M: +20 (0)12 2255 7445 | nancy.fahmy@idhcorp.com
(mailto:nancy.fahmy@idhcorp.com)

 

About Al Makhbaryoun Al Arab LLC (Biolab)

Biolab Medical Laboratory is considered one of the pioneers in the field of
medical diagnostics and laboratory testing in Jordan, providing patients
across the country with access to a portfolio of more than 700 medical tests.
Today, Biolab is one of the largest private sector players in Jordan operating
a network of 21 branches, and in 2021 served over 1.6 million patients and
performed more than 3.6 million tests. Biolab's laboratories boast
accreditations with five international quality accreditation bodies, including
the College of American Pathologists (CAP), the Joint Commission International
(JCI), the Jordanian Accreditation System (JAS), the Health Care Accreditation
Council (HCAC), and the ISO 27001 certification for International Standard for
Information Security.

 

Contact

Reem El Saqqa

Chief Operations Officer

T: +962 6 590 7000 (ext. 103) | reem@biolab.jo

 

About Izhoor Holding Medical Company LLC

Izhoor Holding Medical Company LLC is wholly owned by Fawaz Alhokair. Izhoor
was established in 2020, with an aim to leverage the unique commercial
experience of its sister companies to fulfil the unmet need of the healthcare
consumer. Izhoor has established a range of partnerships with reputable
international players to develop a fully integrated healthcare ecosystem to
serve the Saudi population.

 

Along with its partners, Izhoor is engaged in telehealth consultation,
extended long-term care and rehabilitation, laboratories, derma, and special
needs for autism. These partnerships will establish a strong presence and
footfall in primary care via the outpatient, virtual, and home care settings
with integrated low-risk, high-value medical specialty verticals for the most
common issues in healthcare.

 

Contact

Maheur Mourali

Chief Investment Officer

M: +966 55 512 6475 | maheur.mourali@fawazalhokair.com
(mailto:maheur.mourali@fawazalhokair.com)

 

 

 

Forward-Looking Statements

This communication contains certain forward-looking statements. A
forward-looking statement is any statement that does not relate to historical
facts and events, and can be identified by the use of such words and phrases
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"may", "plans", "potential", "predicts", "projects", "should", "to the
knowledge of", "will", "would" or, in each case their negatives or other
similar expressions, which are intended to identify a statement as
forward-looking. This applies, in particular, to statements containing
information on future financial results, plans, or expectations regarding
business and management, future growth or profitability and general economic
and regulatory conditions and other matters affecting the Group.

 

Forward-looking statements reflect the current views of the Group's management
("Management") on future events, which are based on the assumptions of the
Management and involve known and unknown risks, uncertainties and other
factors that may cause the Group's actual results, performance or achievements
to be materially different from any future results, performance or
achievements expressed or implied by these forward-looking statements. The
occurrence or non-occurrence of an assumption could cause the Group's actual
financial condition and results of operations to differ materially from, or
fail to meet expectations expressed or implied by, such forward-looking
statements.

 

The Group's business is subject to a number of risks and uncertainties that
could also cause a forward-looking statement, estimate or prediction to differ
materially from those expressed or implied by the forward-looking statements
contained in this communication. The information, opinions and forward-looking
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arise in relation to the content of this communication.

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