IPO of Al-Dawaa Medical Services: A Comprehensive Overview

An Initial Public Offering (IPO) is the stage where non-listed companies transition to the Saudi stock market by offering a portion of their shares for subscription to investors. In Saudi Arabia, this process is overseen by the Capital Market Authority, which imposes a set of regulatory conditions and requirements to ensure transparency and protect investors. Among these requirements is the preparation of a "prospectus" that provides all financial and operational information about the company, such as profit and loss statements, management structure, expansion plans, risks, and more. The IPO of Al-Dawaa Medical Services is part of a wave of new IPOs in the Saudi market, particularly in vital sectors like healthcare services. The primary aim of the IPO is to broaden the shareholder base, secure new funding resources to accelerate growth, and increase the company's presence in the market. The IPO process goes through several stages: starting from obtaining the authority's approval, moving to building the order book and determining the price range, then allocating shares among institutions and individuals, and finally listing the stock on Tadawul. The success of the IPO is typically linked to the level of demand, coverage ratio, and the strength of the sector in which the company operates. In recent years, IPOs have become a focal point for investors seeking new opportunities, especially with the Saudi government's support for developing financial markets under Vision 2030.

Al-Dawaa Medical Services was established in Saudi Arabia to be a key player in the healthcare and pharmaceutical sector. The company focuses on operating and managing a vast chain of pharmacies spread across various regions of the Kingdom, in addition to providing diverse preventive, educational, and health services. Al-Dawaa offers a wide range of pharmaceutical products and medical supplies, targeting a broad consumer base through its branches and medical centers. The company is distinguished by a strong infrastructure that includes warehouses, transportation and distribution services, and investments in health technology. It also adheres to strict quality policies in line with the requirements of the Saudi Ministry of Health, keeping pace with digital transformations by launching applications and electronic services to facilitate the purchase and remote ordering of medications. Al-Dawaa's expansion has not been limited to pharmacies alone; it has also entered into partnerships with health centers and secured contracts with health insurance institutions, enhancing its market position. Prior to the IPO, the company enjoyed a good reputation among investors due to its geographical spread, product diversity, and efficient management. Its listing in the financial market provided a new impetus for continued expansion and improvement of operational capabilities, while adhering to governance and transparency standards.

The process of Al-Dawaa Medical Services IPO went through a series of precise regulatory steps, starting from the company's preparation for the IPO, obtaining official approvals, and culminating in the actual offering of shares in the market. The company received approval from the Saudi Capital Market Authority at the end of 2021, after meeting governance and financial and operational efficiency requirements. Subsequently, the company prepared a detailed prospectus in collaboration with the financial advisor (GIB Capital), during which the management structure was defined, historical financial data was disclosed, and future growth plans were presented. The next phase was building the order book, where subscription requests from investment institutions were received within a specified price range. The process showed significant interest from funds and banks, ending with a coverage exceeding 53.8 times the total shares offered. The final offering price was set at 73 SAR per share. The company then moved to the individual subscription phase, which took place from February 27 to March 1, 2022. A total of 2,550,000 shares were allocated to individuals (10% of the total shares offered), while the larger portion went to institutions. All these stages were closely monitored by regulatory authorities to ensure the integrity and transparency of the process.

The total number of shares offered in the IPO of Al-Dawaa Medical Services was 25,500,000 ordinary shares. The company ensured a balanced distribution of shares between individual and institutional investors to guarantee ownership spread and attract various investor segments. A total of 2,550,000 shares were allocated to individuals, representing 10% of the total shares, which is the maximum usually allowed for individuals in Saudi IPOs. This ratio reflects the regulatory authorities' commitment to involving citizens and small investors in new growth opportunities. The larger portion (90%) was allocated to investment institutions, such as investment funds, banks, and financially capable companies. This distribution pattern is common in the Saudi market, where institutions play a key role in providing liquidity and stabilizing the stock post-offering. After the completion of the individual and institutional subscriptions, final allocations were made according to mechanisms set by the supervising financial authority, with excess amounts returned to subscribers in case of increased demand. This mechanism emphasizes transparency and fairness in distribution, ensuring the effectiveness of the Saudi stock market and attracting more investors in the future.

The final offering price for Al-Dawaa Medical Services shares was determined based on the "Book-Building" mechanism, one of the most commonly used methods in recent IPOs in the Kingdom. In this phase, investment institutions submit their offers to purchase shares within a pre-defined price range, and the final price is selected based on the volume of orders and the quality of participating investors. For Al-Dawaa, the order book building process ended with a record coverage of 53.8 times the total shares offered, with demand exceeding 100.2 billion SAR, reflecting high confidence from institutional investors in the healthcare sector and the company itself. The final share price was set at 73 SAR, which reflects the fair valuation of the company based on financial performance indicators, competitive landscape, and future growth expectations. This price was not arbitrary but resulted from a thorough study of cash flows, assets, expansion opportunities, and comparisons with similar companies. Choosing this price enabled the company to raise significant capital to fund its expansion plans while ensuring that the valuation remained attractive to investors in the post-listing phase.

More than two years after its listing on the stock market, Al-Dawaa Medical Services has made significant progress in its financial and operational performance. Preliminary data for 2024 indicates continued revenue growth due to the expansion of its branch network and increased demand for health services. The company recorded an increase in quarterly sales and enhanced its investments in inventory and logistics technologies. In terms of assets, total assets rose due to the opening of new branches and improved warehouses, with a noticeable increase in working capital. Regarding profits, the company maintained a good operating profit margin compared to the average in the Saudi healthcare sector, despite economic challenges. The company had not announced cash dividends by mid-2025, indicating that operational policies prefer reinvesting profits during early growth stages. The stock continued to fluctuate within a range influenced by the overall performance of the healthcare sector and market conditions, with relative stability in market value due to consistent local demand for health services. To track precise financial indicators such as the price-to-earnings (P/E) ratio or earnings per share, it is always advisable to refer to quarterly reports published on the "Tadawul" website or directly through the company.

Following the listing of Al-Dawaa Medical Services on the Saudi financial market, investors were able to monitor the stock price daily through the "Tadawul" platform. Initially, the company's market value was approximately 1.86 billion SAR (at a price of 73 SAR per share and a total of 25.5 million shares), but this value fluctuates with changes in the stock price in the market. Among the key indicators that investors track post-listing are the price-to-earnings (P/E) ratio, earnings per share (EPS), daily trading volume, and liquidity ratios. In 2024, data showed that the stock price experienced relative stability compared to some other offerings, supported by the overall performance of the healthcare sector. The company had not announced dividends by mid-2025, indicating that most profits are reinvested in expansion and development. The stock is closely monitored by investors seeking growth opportunities in the healthcare sector, and it is always recommended to review official financial reports and study market indicators before making any investment decisions.

The pharmaceutical and healthcare sector in Saudi Arabia is experiencing steady growth driven by several factors: increasing population, rising health awareness, and expanded insurance coverage. With the Saudi pharmacy market reaching several billion SAR annually, major companies like Al-Dawaa and Al-Nahdi stand out as leaders in this sector. This growth is supported by government policies aimed at enhancing partnerships with the private sector and improving the quality of health services in line with Vision 2030. On the other hand, the sector faces regulatory challenges such as drug pricing, quality requirements, and shifts towards digital health. Competition among major chains compels companies to improve operational efficiency and invest in technology to meet consumer expectations. Al-Dawaa, thanks to its geographical spread and investments in logistics technology, has a strong foundation to face these challenges. However, continued success requires constant monitoring of regulatory and economic variables, with a focus on innovation and achieving a balance between growth and profitability.

Al-Dawaa Medical Services operates in a highly competitive market that includes several major players: foremost among them is Al-Nahdi Medical Company, which manages the largest pharmacy network in the Kingdom. In addition to Al-Nahdi, there are major local drug distribution companies, some emerging pharmacy chains, and logistics companies specializing in the transport and storage of medications. One of the main challenges Al-Dawaa faces is digital competition, as electronic health applications and home delivery services begin to impact traditional business models. Nevertheless, Al-Dawaa still retains a competitive advantage due to its branch network, efficient inventory management, and investments in developing digital services. Competition continuously drives the company to update its marketing strategies and improve customer experience to maintain and expand its market share in the face of new and existing players.

The IPO of Al-Dawaa Medical Services aligns with the Kingdom's direction to enhance the private healthcare sector and broaden the base of market participants. This IPO reflects the confidence of regulatory authorities and investors in the company's potential and ability for sustainable growth. Economically, the public offering provides the company with new financial resources that enable it to expand its branch network, invest in technology, and improve the quality of services provided. It also contributes to raising standards of transparency and governance in the healthcare sector by committing to regular disclosure of financial and operational data. At the level of the financial market, the listing of major healthcare companies contributes to diversifying listed sectors, providing investors with diverse opportunities and enhancing market stability in the long term. Successful IPOs like Al-Dawaa encourage other companies to take similar steps, supporting the dynamism of the Saudi market and achieving the goals of Vision 2030.

During 2024 and 2025, Al-Dawaa Medical Services continued to implement its expansion strategies and organize its administrative structures. Among the notable developments was the holding of an extraordinary general assembly in September 2025 to discuss the annual budget and expansion plans, an important step to enhance governance and transparency. The company also announced preliminary financial results for the fourth quarter of 2025, showing a continuous increase in revenues, despite not announcing cash dividends by that time. In terms of partnerships, the company began establishing a new subsidiary, "Madawe and Care Medical," aimed at implementing integrated medical projects and expanding its presence in the private healthcare sector. No significant mergers or acquisitions have been recorded so far, but the company focuses on collaborating with private hospitals and health centers to enhance its network and services. It is noteworthy that the healthcare sector has shown relative resilience against global economic fluctuations, supporting the company's continued performance in a relatively stable investment environment.

To keep up with the latest news about Al-Dawaa Medical Services and its stock performance in the Saudi financial market, it is always advisable to rely on official sources such as the "Tadawul" website, where all financial announcements, earnings reports, and board decisions are published. Specialized financial news websites like "Argaam" and "Al-Maal" provide continuous coverage of developments related to the stock and the company. For new investors, it is important to follow quarterly and annual reports to understand financial performance, operational indicators, and expansion plans. This data allows for analyzing financial ratios such as the P/E ratio, earnings per share, and liquidity ratios. It is also preferable to subscribe to market alerts or official notifications to track any changes in operational policies or cash distributions. For deeper insights, one can consult a licensed financial advisor to explain financial results and assess growth opportunities in light of market changes.

The IPO of Al-Dawaa Medical Services offers several important lessons for investors and companies looking to enter the Saudi financial market. First, it demonstrates that good preparation, transparency in disclosure, and choosing the right financial advisor are key factors for a successful offering. Second, strong demand and high subscription coverage reflect the importance of the healthcare sector and investors' interest in sustainable growth. Third, Al-Dawaa's experience emphasizes the importance of distributing shares between individuals and institutions to achieve a diverse ownership base and relative stock stability post-listing. Fourth, new companies must balance rapid expansion with profitability, considering operational policies and regulatory challenges. Finally, the IPO highlights the importance of continuously monitoring financial data and leveraging the expertise of financial advisors before making any investment decisions.