Holding Health: Comprehensive Analysis of the Company and Its Future in the

Holding Health was established as part of a comprehensive plan to develop the Saudi healthcare sector, within the framework of Vision 2030, which focuses on improving the quality of public services and enhancing the efficiency of government spending. The main impetus behind creating this entity was the need for a flexible and effective management model that allows for the transfer of some executive tasks from the Ministry of Health to an independent institution managed by private sector standards, without compromising state ownership of vital assets. This approach responds to successful international experiences in managing public facilities through holding companies, as seen in the education, housing, and civil aviation sectors. Holding Health aims to enhance integration among various components of the Saudi healthcare system by managing and operating health clusters that include hospitals and health centers across different regions. The company focuses on achieving several strategic objectives, including improving the quality of healthcare, reducing waiting times, enhancing human and operational resource efficiency, and ensuring sustainable financing. It also seeks to promote transparency and accountability through a modern administrative structure based on subsidiary boards of directors for each health cluster, allowing for greater flexibility in operational decision-making and performance monitoring. The significance of Holding Health also lies in its ability to attract private investments, whether through partnerships with the private sector in operating some facilities or through the future public offering of the company's shares. This contributes to achieving the goals of partial privatization of the healthcare sector and reducing the financial burden on the state while ensuring the continuation of free services for citizens within the national health insurance system. The establishment of the company reflects the Kingdom's commitment to building a globally competitive healthcare sector capable of meeting the growing needs of the population and responding effectively to various health challenges.

The administrative structure of Holding Health is based on a modern governance model that combines centralization in policy-making with decentralization in execution. The structure consists of a central board of directors overseeing the company as a whole, along with subsidiary boards or executive committees managing each health cluster or geographic area individually. This model aligns with the global trend towards managing health clusters to facilitate coordination among different levels of care (primary, secondary, and specialized) and achieve integration in service delivery. Each health cluster represents a relatively independent operational unit, comprising hospitals and health centers serving a specific geographic area. These clusters are administratively and financially accountable to the holding company, allowing for precise performance monitoring, continuous evaluation of service levels, and uniform application of quality improvement policies. This enables each cluster to benefit from central support in financial and technical aspects while retaining decision-making flexibility in daily matters. This model has already begun to be implemented with the transfer of the first three major health clusters (such as the Eastern Cluster and the Northern Cluster) to Holding Health's management in mid-2024, followed by the gradual transfer of the remaining clusters in the coming years. The administrative structure also includes specialized units for managing human resources, information technology, financial affairs, and strategic development, in addition to geographically distributed technical and administrative support units. This model is expected to facilitate the transition from traditional government management to a modern institutional management capable of addressing the complex operational and financial challenges facing the healthcare sector.

Holding Health is one of the pillars of the strategic transformation in the healthcare sector under Saudi Vision 2030, which aims to build a more efficient, attractive, and innovative healthcare sector. The vision focuses on transferring the operational management of healthcare from ministries to independent entities with a commercial nature, while the state continues to oversee and regulate. Through this model, Holding Health aims to achieve several vital objectives, including raising the quality of health services, ensuring sustainable financing, and improving the patient experience across all regions of the Kingdom. The existence of a holding company managing health clusters enhances the Kingdom's ability to respond quickly to health crises, develop medical infrastructure, and attract global and local talents. This model also stimulates private investment, whether through operational partnerships or through the future public offering of the company's shares in the financial market, supporting the vision's goal of increasing the private sector's contribution to GDP. Legally, transferring management tasks to Holding Health allows for the application of governance and accounting transparency standards required by the Saudi financial market, enhancing investor and community confidence in the company's ability to achieve sustainable results. This transformation is a significant step in building an advanced healthcare system that keeps pace with best international practices and responds to citizens' aspirations for high-quality health services throughout the Kingdom.

The process of transferring assets and health clusters from the Ministry of Health to Holding Health represents one of the largest restructuring operations in the history of the Saudi healthcare sector. This process officially began in mid-2024, with the announcement of transferring the first three major health clusters, namely the Eastern Cluster, the Northern Cluster, and a third cluster to be determined later. The transfer process is expected to eventually include all government hospitals under the Ministry of Health, numbering around 40 major hospitals, in addition to thousands of health centers and clinics spread across the Kingdom. The transfer process is conducted in studied phases, starting with assessing the assets and their financial obligations, followed by the gradual transfer of operational management and employees, while ensuring the continuity of health services without interruption. Coordination is taking place with the Ministry of Finance, the Capital Market Authority, and other regulatory bodies to ensure the highest levels of transparency and accountability during the asset transfer, accurately documenting accounting operations. The merger process represents a significant logistical challenge, requiring the transfer of thousands of employees, unifying administrative and medical information systems, and restructuring previous contracts and agreements. The process also includes a comprehensive review of the infrastructure and developing plans for investing in updating hospitals and facilities to meet global quality and safety standards. The success of the asset and cluster transfer process is a critical factor in achieving Holding Health's objectives and ensuring its ability to manage and operate the healthcare sector efficiently and effectively in the future.

The transition from Hail Cement Company to Holding Health represents a complex legal and regulatory step aimed at accelerating the new company's listing on the Saudi financial market (Tadawul). Hail Cement Company (symbol 3001) was chosen as a primary platform for Holding Health's activities, where ownership of the company and its associated assets was transferred from the Ministry of Finance to the new entity, changing the company's activity from cement production to managing and operating health clusters. This step is based on similar precedents in the Saudi market, where existing companies were used as legal vehicles to transform activities and facilitate listing procedures, rather than establishing a new company from scratch. This transformation involved transferring the government's shares in the old company to Holding Health in exchange for contributions of health assets that the company will manage in the future. A comprehensive review of the legal status was conducted during the process, amendments were made to the company's bylaws, and its name and activity were changed in official records. This was accompanied by a reshaping of the board of directors and the appointment of new representatives for health sectors to ensure the administrative structure aligns with the new activity. This transformation is expected to lead to a reassessment of stock value, as the market value will reflect the hospital and health center assets managed by Holding Health rather than the previous industrial assets. This step exemplifies the flexibility of the Saudi financial market in accommodating major transformations and facilitating the partial privatization of vital sectors.

Due to the recent establishment of Holding Health, detailed financial data for the company remains limited until the end of 2025. However, public health spending figures in the Kingdom can serve as preliminary indicators of the scale of operations and assets that the company will manage. Official estimates indicate that the Kingdom spends over 200 billion Saudi Riyals annually on the healthcare sector, representing about 5-6% of GDP. This spending is distributed among the Ministry of Health networks, university hospitals, emergency services, and health insurance funds. Once the transfer of health clusters to Holding Health is completed, the company will be responsible for managing vast assets of hospitals and health centers, including 40 major hospitals and thousands of health centers. No periodic data on profits, losses, or operational revenues related to the new activity has been issued yet, as the company is still in the process of preparing the organizational infrastructure and transferring operational assets from the Ministry of Health to its subsidiaries. Financial data is expected to gradually emerge once the merger and full operation of the health clusters are completed. This situation poses a challenge for analysts and investors, as accurately assessing the company's financial performance is currently difficult until the first detailed financial report reflecting the actual operating results of the new health assets is issued.

The share price of the company (which carried the symbol Hail Cement 3001) has experienced sharp fluctuations with the announcement of the transformation plan to Holding Health's activities. In late 2023 and early 2024, the market reacted to news of the transfer of health assets, leading to an increase in the share price from levels ranging between 10 to 20 Saudi Riyals, before stabilizing in the range of approximately 7-8 Riyals by mid-2024. This volatility reflects a state of anticipation and uncertainty regarding the actual value of the assets that will be managed by Holding Health, especially since the transfer of clusters has not yet been completed. As for the company's market value, it now represents the total equity of the new entity, with expectations of a significant increase once the transfer of hospital and health center assets is completed. It is noteworthy that the current market value only partially reflects the size of the new assets, as the picture will become clearer upon the disclosure of the initial financial data after the completion of the transfer. Regarding the price-to-earnings (P/E) ratio, calculating this indicator is currently not feasible due to the absence of stable operational profits for the new activity, and because the company's previous results pertained only to the cement activity. The stock is expected to officially trade under the name Holding Health after completing all legal and regulatory procedures and issuing the initial financial data that reflects the new operational reality of the company.

Holding Health has not yet announced any official policy for distributing cash dividends to shareholders, due to several reasons related to the establishment phase and strategic transformation the company is undergoing. Typically, companies managing large assets and undergoing significant restructuring prefer to reinvest potential profits in developing infrastructure, updating medical equipment, and training human resources, rather than distributing cash dividends in the early stages. It appears that Holding Health is following this approach, as it currently focuses on completing the transfer of health clusters, integrating accounting and administrative systems, and updating its affiliated hospitals and health centers. Experiences of similar companies in other sectors indicate that the post-establishment period usually sees a temporary halt in dividend distributions until the company achieves operational stability and sustainable profitability. It is worth noting that Hail Cement, prior to the transition, had announced dividend distributions in its final years, but this policy is no longer applicable after the activity shifted to the healthcare sector. In the future, Holding Health may decide to distribute part of the financial surpluses if stable operational profits are achieved and sufficient liquidity emerges to meet development and expansion needs. However, such a decision will be subject to official announcements from the board of directors and will depend on actual financial performance results in the coming years.

The healthcare sector in the Kingdom of Saudi Arabia is one of the largest and fastest-growing sectors, driven by increasing demand for medical services and improving infrastructure. The government currently controls the largest share of the sector through the Ministry of Health, in addition to other entities such as King Abdulaziz Medical City, the National Guard, and university hospitals. The sector is witnessing increasing competition from private hospitals and health insurance companies, driving innovation and improving service quality. With the entry of Holding Health, the competitive landscape is expected to change, as the company will manage extensive clusters of hospitals and health centers that were previously managed by the ministry. Holding Health's model differs from private companies in that it focuses on managing and developing public health facilities, with the possibility of collaboration or competition with private sector players depending on government policies, pricing, and quality. Competition includes listed healthcare companies such as the Saudi German Healthcare Group, Astra International, Al-Hamadi, Sabic, and insurance companies like Tawuniya and Wafa. Improving operational efficiency in Holding Health may elevate service levels and attract some beneficiaries from the private sector, especially if competitive pricing policies and enhanced patient experiences are implemented. At the same time, the company faces challenges in balancing quality and cost, ensuring sustainable financing amid rising healthcare costs and increasing demand for specialized medical services.

Between mid-2024 and late 2025, Holding Health witnessed a series of significant developments. In June 2024, the company's board of directors approved the new organizational structure and formed subsidiary boards of directors for each health cluster, in coordination with the Ministry of Health and relevant regulatory bodies. The transfer of the first three major health clusters to the company's management was announced, marking the beginning of a comprehensive plan covering all regions of the Kingdom. These developments were accompanied by processes to select the administrative and technical leadership responsible for managing hospitals and health centers in the new clusters, focusing on attracting national and international talents with experience in managing integrated health systems. The company also began collaborating with information technology and financial computing companies to unify hospital systems under one umbrella, facilitating financial and administrative operations and improving data quality and operational reporting. The company announced investment plans to update major hospitals, including selling or leasing some non-operational assets to enhance financial capacity and reduce operational burdens. The same period also saw collaboration with the Saudi Nuclear and Radiological Regulatory Authority to apply radiation safety standards in medical facilities and unify safety standards across future hospitals. These developments underscore Holding Health's commitment to building an integrated and efficient healthcare system capable of keeping pace with global developments in healthcare.

Since its establishment, Holding Health has sought to build a strong financial base that enables it to implement its ambitious plans for upgrading and developing healthcare infrastructure in the Kingdom. Reports indicate that the company aims to secure additional funding from local and international investment funds, primarily the Public Investment Fund and government pension funds. Comprehensive investment plans are being prepared, including updating major hospitals, developing health clusters, and attracting the latest medical and administrative technologies. Holding Health is exploring multiple options to attract capital, including partnerships with the private sector in operating some support service facilities or through the public offering of the company's shares (IPO) in the Saudi financial market. The plan also includes selling or leasing some non-operational assets, such as land and old buildings, to provide financial liquidity that contributes to financing expansion and modernization projects. Diversifying funding sources is a critical factor for the company's success in facing financial challenges associated with rising healthcare costs and increasing demand for specialized medical services. Holding Health places special emphasis on developing human resources through collaboration with local and international universities and training programs for medical and administrative personnel to ensure that expertise aligns with private sector standards. This approach reflects the company's desire to build an integrated investment system that ensures sustainable growth and achieves the strategic transformation goals in the Saudi healthcare sector.

Despite the significant potential that Holding Health possesses, the company faces several operational and organizational challenges that require innovative solutions and effective management. Among the most prominent challenges is the need to restructure financial and accounting systems to align with the standards of companies listed in the financial market and to unify administrative systems across all health clusters. This includes developing a unified accounting system and applying transparent governance standards that allow for accurate performance monitoring and periodic reporting. Managing human resources also poses a significant challenge, with the need to transfer thousands of employees from the Ministry of Health to the new entity and ensure their alignment with modern corporate work requirements. Additionally, there is a need to establish advanced technological systems for managing medical and administrative information and to unify databases between hospitals and health centers. The company also faces resistance to change from some departments and technical staff amid the transition from traditional government management to a more dynamic and competitive institutional environment. Other challenges include securing sufficient funding for renewing medical equipment and infrastructure, especially with rising healthcare costs and increasing demand for services. Holding Health is implementing robust plans to overcome these challenges through collaboration with regulatory bodies, building strategic partnerships with both public and private sectors, and adopting best global practices in management and operations.

The listing of Holding Health on the Saudi financial market (Tadawul) represents a qualitative event that opens new horizons for investment in the government healthcare sector. Through this offering, investors gain an unprecedented opportunity to participate in the management and operation of vast health assets that were exclusively managed by the state. This transformation reflects the Kingdom's direction towards enhancing transparency and governance in managing public facilities and attracting private, local, and international capital to support the growth of the healthcare sector. The listing of Holding Health is expected to increase market depth and diversify investment options available to investors, especially amid the rapid growth of the healthcare sector and rising demand for medical services. This offering also boosts investor confidence in the Kingdom's ability to efficiently and professionally implement national transformation projects. However, the evaluation of the company's performance remains contingent on its success in achieving its operational and financial objectives and the transparency of disclosing business results and financial reports. The listing of Holding Health serves as a model for privatizing vital sectors and enhances the position of the Saudi financial market as a leading investment destination in the region.

The future of Holding Health appears promising, given the significant government support and the strategic direction towards developing the Saudi healthcare sector. With the completion of the asset and health cluster transfer process, the company will be able to manage and operate a wide network of hospitals and health centers, granting it substantial operational and investment power. These capabilities provide extensive opportunities for improving the quality of healthcare and developing medical services provided to citizens and residents. Holding Health is also expected to contribute to enhancing innovation by adopting the latest medical and administrative technologies and developing training and qualification programs for human resources. With the prospect of a public offering of the company's shares in the financial market, significant opportunities arise to attract local and foreign investments and support expansion and modernization plans. At the same time, Holding Health must address challenges related to restructuring, ensuring financial sustainability, and achieving a balance between quality and cost. The company's success depends on its ability to achieve sustainable operational and financial results and adapt to rapid changes in the healthcare sector. Holding Health remains a living example of the Kingdom's ability to efficiently and professionally implement national transformation projects and open new horizons for development and investment in vital sectors.