Nezar Bahabri, CEO of Middle East Healthcare Co. (Saudi German Health), said the decision of the Appeal Committee for the Resolution of Securities Disputes (ACRSD) published by the Capital Market Authority has no financial impact on the company and does not affect its ownership structure.
ACRSD has recently issued a ruling, convicting a number of the company’s board members and its audit committee.
Bahabri said in an interview with Argaam that the decision relates to accounting treatments and the method of presenting and recognizing certain revenues and financial claims in previous periods.
He added that the published decision does not include any allegations related to embezzlement or misappropriation of company funds.
The CEO confirmed that the accounting impact related to the historical period has been addressed and reflected in the financial statements. Management believes that the group’s current financial and operational position reflects a different phase based on controlled expansion, investment in value-added specialties and services, and enhancing revenue quality.
He also confirmed that the company proceeds with the transformation strategy launched in early 2026 according to approved plans, and it continues to work on strengthening internal control and corporate governance frameworks.
Here are details of the interview:
Q: What actions did the company take after the proven revenue inflation for the period 2018–2021?
A: It is important to emphasize first that the mentioned observations relate to a specific historical period between 2018 and 2021. The group dealt with them from the moment they were discovered with a high degree of seriousness and transparency, and in full cooperation with the relevant regulatory authorities.
The group also developed its Revenue Cycle Management (RCM) system, strengthened pre-review mechanisms for claims and invoices, and recruited specialists in medical coding to ensure the accuracy of insurance-related claims.
Some historical accounting practices and codes related to previous periods were also replaced, in addition to developing monitoring, collection, and operational control systems.
Today, management is clearly focused on establishing a more disciplined and sustainable operational and financial model, supported by a more advanced regulatory and technological framework, in line with the transformation the group has been undergoing in recent years.
Q: Does the CMA decision have any financial impact on the company or any change in ownership structure?
A: No. According to the published regulatory decision, the matter relates to accounting treatments and the method of presenting and recognizing certain revenues and financial claims in previous periods. The decision does not include any allegations of embezzlement or misappropriation of company funds, and it does not require any change in the company’s ownership structure.
The decision is not related to the current daily operations of the group’s healthcare services, as it concerns previous historical periods. The company continues to implement its plans to enhance governance and internal control to support the development and continuity of its operations.
Q: Does this decision affect the quality of services provided to patients or healthcare delivery?
A: The nature of this matter is limited to financial, accounting, and governance aspects only, and has no impact on the quality of medical care, continuity of healthcare services, or employee rights. All hospitals continue to provide their services as usual.
The group places the safety and stability of its medical and administrative staff as a top priority, and confirms that the status and rights of all employees remain stable, and that operations continue normally. Management also expresses its appreciation for the professional talent within the group and the efforts of its employees in ensuring business continuity and improving service quality.
The company also confirms that its transformation strategy launched in early 2026 is continuing as planned, including improving operational efficiency, developing governance and control systems, enhancing healthcare service quality, and improving financial and operational performance.
Q: Is there currently any material weakness in internal controls over financial reporting? How does management assess current governance compared to the pre-violation period?
A: The group continues to work on strengthening its internal control environment and corporate governance framework, and the regulatory framework has witnessed significant development compared to the historical period under review.
Since the current executive management took office, several key initiatives have been implemented to improve the efficiency and accuracy of financial reporting processes, including the development of ERP and revenue cycle management systems, as well as more integrated operational and control systems, which has improved transparency and oversight across financial and operational activities.
Improvements in billing and claims systems, enhanced pre-audit medical and technical reviews, and improved handling of rejected claims have all contributed to higher financial data quality and reporting accuracy.
The group now relies on more advanced control frameworks, a more effective role for internal audit, risk management, and the audit committee, along with higher levels of disclosure and compliance in line with modern regulatory requirements in the healthcare sector and capital markets. Management believes that the current governance framework is stronger and more mature compared to the past, while continuing to evolve as governance and transparency remain key pillars of long-term trust with investors and regulators.
Q: What is the final impact of the SAR 358 million revenue adjustment on retained earnings, equity, and operating cash flows?
A: The accounting impact related to the historical period has been addressed and reflected in the financial statements and related disclosures during 2021, and no longer represents a new operational development related to the group’s current performance.
Management is currently focused on growing core operating revenues, improving profitability, and enhancing collection efficiency and financial discipline within a more sustainable and efficient operating model.
Management believes that the group’s current financial and operational position reflects a different phase based on controlled expansion, investment in value-added specialties and services, and improving revenue quality and sustainability in the long term, without affecting the group’s ability to meet its obligations or continue executing its strategic plans.
Q: What is the level of provisions made for doubtful receivables?
A: The group adopts a conservative and systematic policy in provisioning in line with international accounting standards and regulatory requirements, and receivables are evaluated periodically based on specialized credit and operational models.
As of March 31, 2026, the group has made provisions for rejected claims in addition to expected credit losses (ECL) in accordance with applicable accounting standards, bringing total coverage to approximately 26.48% of total outstanding receivables.
This reflects the conservative approach adopted by management in managing revenue quality and receivables, alongside continuous improvements in the revenue cycle and collections, and enhancements in billing and insurance claims systems.
These measures have contributed to a gradual improvement in collection metrics and receivables management compared to previous periods, within a more advanced and disciplined operational and control framework.
Q: Does management expect any additional financial impact from potential individual or class-action lawsuits from investors?
A: At this stage, it is too early to anticipate any potential financial impacts related to any future legal proceedings, as this depends on developments and procedures that are currently outside the scope of precise assessment.
The group confirms its full commitment to cooperating with regulatory and judicial authorities and dealing with any developments within the applicable legal frameworks and with the highest levels of professionalism and transparency.
Nezar Bahabri, CEO of Middle East Healthcare Co. (Saudi German Health), said the decision of the Appeal Committee for the Resolution of Securities Disputes (ACRSD) published by the Capital Market Authority has no financial impact on the company and does not affect its ownership structure.
ACRSD has recently issued a ruling, convicting a number of the company’s board members and its audit committee.
Bahabri said in an interview with Argaam that the decision relates to accounting treatments and the method of presenting and recognizing certain revenues and financial claims in previous periods.
He added that the published decision does not include any allegations related to embezzlement or misappropriation of company funds.
The CEO confirmed that the accounting impact related to the historical period has been addressed and reflected in the financial statements. Management believes that the group’s current financial and operational position reflects a different phase based on controlled expansion, investment in value-added specialties and services, and enhancing revenue quality.
He also confirmed that the company proceeds with the transformation strategy launched in early 2026 according to approved plans, and it continues to work on strengthening internal control and corporate governance frameworks.
Here are details of the interview:
Q: What actions did the company take after the proven revenue inflation for the period 2018–2021?
A: It is important to emphasize first that the mentioned observations relate to a specific historical period between 2018 and 2021. The group dealt with them from the moment they were discovered with a high degree of seriousness and transparency, and in full cooperation with the relevant regulatory authorities.
The group also developed its Revenue Cycle Management (RCM) system, strengthened pre-review mechanisms for claims and invoices, and recruited specialists in medical coding to ensure the accuracy of insurance-related claims.
Some historical accounting practices and codes related to previous periods were also replaced, in addition to developing monitoring, collection, and operational control systems.
Today, management is clearly focused on establishing a more disciplined and sustainable operational and financial model, supported by a more advanced regulatory and technological framework, in line with the transformation the group has been undergoing in recent years.
Q: Does the CMA decision have any financial impact on the company or any change in ownership structure?
A: No. According to the published regulatory decision, the matter relates to accounting treatments and the method of presenting and recognizing certain revenues and financial claims in previous periods. The decision does not include any allegations of embezzlement or misappropriation of company funds, and it does not require any change in the company’s ownership structure.
The decision is not related to the current daily operations of the group’s healthcare services, as it concerns previous historical periods. The company continues to implement its plans to enhance governance and internal control to support the development and continuity of its operations.
Q: Does this decision affect the quality of services provided to patients or healthcare delivery?
A: The nature of this matter is limited to financial, accounting, and governance aspects only, and has no impact on the quality of medical care, continuity of healthcare services, or employee rights. All hospitals continue to provide their services as usual.
The group places the safety and stability of its medical and administrative staff as a top priority, and confirms that the status and rights of all employees remain stable, and that operations continue normally. Management also expresses its appreciation for the professional talent within the group and the efforts of its employees in ensuring business continuity and improving service quality.
The company also confirms that its transformation strategy launched in early 2026 is continuing as planned, including improving operational efficiency, developing governance and control systems, enhancing healthcare service quality, and improving financial and operational performance.
Q: Is there currently any material weakness in internal controls over financial reporting? How does management assess current governance compared to the pre-violation period?
A: The group continues to work on strengthening its internal control environment and corporate governance framework, and the regulatory framework has witnessed significant development compared to the historical period under review.
Since the current executive management took office, several key initiatives have been implemented to improve the efficiency and accuracy of financial reporting processes, including the development of ERP and revenue cycle management systems, as well as more integrated operational and control systems, which has improved transparency and oversight across financial and operational activities.
Improvements in billing and claims systems, enhanced pre-audit medical and technical reviews, and improved handling of rejected claims have all contributed to higher financial data quality and reporting accuracy.
The group now relies on more advanced control frameworks, a more effective role for internal audit, risk management, and the audit committee, along with higher levels of disclosure and compliance in line with modern regulatory requirements in the healthcare sector and capital markets. Management believes that the current governance framework is stronger and more mature compared to the past, while continuing to evolve as governance and transparency remain key pillars of long-term trust with investors and regulators.
Q: What is the final impact of the SAR 358 million revenue adjustment on retained earnings, equity, and operating cash flows?
A: The accounting impact related to the historical period has been addressed and reflected in the financial statements and related disclosures during 2021, and no longer represents a new operational development related to the group’s current performance.
Management is currently focused on growing core operating revenues, improving profitability, and enhancing collection efficiency and financial discipline within a more sustainable and efficient operating model.
Management believes that the group’s current financial and operational position reflects a different phase based on controlled expansion, investment in value-added specialties and services, and improving revenue quality and sustainability in the long term, without affecting the group’s ability to meet its obligations or continue executing its strategic plans.
Q: What is the level of provisions made for doubtful receivables?
A: The group adopts a conservative and systematic policy in provisioning in line with international accounting standards and regulatory requirements, and receivables are evaluated periodically based on specialized credit and operational models.
As of March 31, 2026, the group has made provisions for rejected claims in addition to expected credit losses (ECL) in accordance with applicable accounting standards, bringing total coverage to approximately 26.48% of total outstanding receivables.
This reflects the conservative approach adopted by management in managing revenue quality and receivables, alongside continuous improvements in the revenue cycle and collections, and enhancements in billing and insurance claims systems.
These measures have contributed to a gradual improvement in collection metrics and receivables management compared to previous periods, within a more advanced and disciplined operational and control framework.
Q: Does management expect any additional financial impact from potential individual or class-action lawsuits from investors?
A: At this stage, it is too early to anticipate any potential financial impacts related to any future legal proceedings, as this depends on developments and procedures that are currently outside the scope of precise assessment.
The group confirms its full commitment to cooperating with regulatory and judicial authorities and dealing with any developments within the applicable legal frameworks and with the highest levels of professionalism and transparency.
