Amal Holdings Reports Profit Decline and Rising Costs Despite Dividend Payouts

Amal Holdings, which went public in November last year, released its financial report showing disappointing results despite revenue growth. In the second quarter, the company’s operating and net profits declined, profitability eroded, and its core home care segment experienced a sharp profit drop. Administrative and financing expenses increased, and financial debt grew. Nevertheless, Amal declared a dividend payout of 20 million shekels.

The company, initially valued at 2.6 billion shekels and currently trading at 2.3 billion, announced the acquisition of a home care company for 72 million shekels. In Q2, revenues rose 4.2% to 576.9 million shekels, with gross profit increasing 6.6% to 109 million shekels. However, administrative expenses surged 15.4% to 60.6 million shekels, operating profit fell 2.2% to 49.1 million shekels, and net profit dropped 8% to 33.9 million shekels. Net financing expenses jumped 71% to 6.8 million shekels.

The home care sector, responsible for about 59% of group revenues, showed the most significant weakness. Its revenues slightly declined by 0.6% to 338.3 million shekels, while segment profit plummeted 26.5% to 22.9 million shekels, with profitability falling from 9.1% to 6.8%. The company attributed this to higher employee wages, more holidays, and fewer treatment hours sold.

For the first half of the year, revenues grew 4.4% to 1.127 billion shekels, but operating profit remained flat at about 96.7 million shekels. Net profit decreased 2.3% to 66.1 million shekels. Other segments, including nursing homes, mental health, and special populations services, showed revenue and profit improvements but could not offset the core segment’s decline.

Cash flow from operations fell 12.1% to 89 million shekels, cash reserves dropped to 7.3 million shekels, and net financial debt rose 17% to 259 million shekels. Despite these challenges, Amal distributed 45 million shekels in dividends in the first half and approved an additional 20 million shekels after the report. The company also expanded through acquisitions, including a property in Binyamina and a majority stake in a company named Kesher.

A significant risk remains in the new National Insurance tender for nursing care, as the National Insurance Institute accounts for about 52% of Amal’s revenues and 95% of total group revenues come from public sector clients. Amal submitted a bid in April, with the current contract extended until the end of 2026 or until the tender concludes. A recent court ruling requires the tender committee to reconsider a tariff component, making this a critical event for the company. Since its IPO, Amal’s share price has dropped 12%, disappointing new investors while early sellers profited.