Profit decline, rise in administrative and general expenses - but disappointing Amal continues to distribute dividends
Amal Holdings' results since its stock market debut last November are disappointing. In the second quarter, the company faced a decline in operating and net profit, as well as eroded profitability amid rising administrative and financing expenses.
The results of Amal Holdings since it arrived on the stock exchange last November are disappointing - this is according to the report published today (Wednesday) by the company. Amal Holdings (formerly "Amal ve-Ma'avar") is indeed continuing to grow in revenue - but in the second quarter, operating profit and net profit decreased, profitability was eroded, the core business of home care presented a sharp drop in profit, administrative and financing expenses rose, and the financial debt increased. Despite this, the company continued to distribute dividends and announced a dividend of 20 million shekels.
Amal, which went public at a valuation of 2.6 billion shekels and is traded at a valuation of 2.3 billion, announced upon the publication of the reports the acquisition of a company (100%) for home care for 72 million shekels. This sector was particularly weak in the quarter and the sectoral profit in it decreased by 26%.
Amal's revenue in the second quarter rose by 4.2% to 576.9 million shekels, compared to 553.5 million shekels in the corresponding quarter. Gross profit rose by 6.6% to 109 million shekels, but the growth stopped there. Administrative and general expenses jumped by 15.4% to 60.6 million shekels, and operating profit decreased by 2.2% to 49.1 million shekels. Net financing expenses jumped by 71% to 6.8 million shekels, profit before tax decreased by 8.3% to 42.9 million shekels, and net profit fell by 8% to 33.9 million shekels, compared to 36.8 million shekels in the corresponding quarter. EBITDA rose by a moderate rate of 2.9% to 66.1 million shekels.
The most prominent weakness comes precisely from Amal's largest and central activity - home care. The sector's revenue decreased in the quarter by 0.6% to 338.3 million shekels, but the sectoral profit plummeted by 26.5% to 22.9 million shekels, compared to 31.1 million shekels in the corresponding quarter. The profitability rate in the sector fell from about 9.1% to about 6.8%. The company explains the damage by the rise in employee wages, a higher number of holiday days, and a decrease in the amount of care hours sold.
Looking at the first half, the picture is also not strong. Revenue did grow by 4.4% to 1.127 billion shekels, compared to 1.08 billion shekels, and gross profit rose by 3.9% to 212.6 million shekels, but operating profit remained effectively in place, 96.7 million shekels compared to 96.8 million shekels. Net financing expenses rose by 27% to 13.5 million shekels, profit before tax decreased by 2.8% to 84.3 million shekels, and net profit decreased by 2.3% to 66.1 million shekels. EBITDA also rose by a relatively negligible rate of 1.9% to 130.1 million shekels.
The home care business was weak in the half as a whole as well. Revenue in it rose by less than 1% to 667.5 million shekels, while sectoral profit fell by about 14% to 49.2 million shekels, compared to 57.2 million shekels. The operating profit rate in the sector fell from 8.6% to 7.4%. This is a particularly significant figure because home care is responsible for about 59% of the group's revenue.
On the other hand, the other three sectors provided the bright spots in the report. In nursing homes, revenue in the quarter rose by 11.4% to 70.8 million shekels and sectoral profit rose from 2.2 million shekels to 4.8 million shekels. In mental health, revenue grew by 7.1% to 49.2 million shekels and sectoral profit rose by 9.4% to 10.3 million shekels. In the field of services for special populations, revenue rose by about 14% to 115.5 million shekels and sectoral profit rose by about 53% to 10.1 million shekels. However, the improvement in these activities was not enough to compensate for the deterioration in the core business.
There are also troubling points in the cash flow and balance sheet. Cash flow from current operations in the half decreased by 12.1% to 89 million shekels, compared to 101.2 million shekels in the corresponding half. At the end of June, only 7.3 million shekels remained in the company's coffers, compared to 18.6 million shekels at the end of 2025. Working capital remained negative in the amount of about 118 million shekels, and net financial debt rose to about 259 million shekels, compared to about 221 million shekels in the corresponding period, an increase of about 17%. On the other hand, equity grew to 209 million shekels compared to 172.4 million shekels in June last year.
Alongside the rise in debt and the decrease in cash, Amal continues to transfer significant amounts to shareholders. In the first half, it distributed dividends in the amount of 45 million shekels, and after the publication of the results, the board of directors decided on an additional distribution of 20 million shekels. The company also continues to expand through acquisitions: it completed the purchase of a property in Binyamina for about 33.7 million shekels, signed the purchase of 75% of the Kesher company for 22.5 million shekels and a commitment to inject another 10 million shekels, and after the balance sheet date approved another acquisition of a company in the nursing field.
Another risk is found in the new tender of the National Insurance Institute in the field of nursing. The National Insurance Institute is Amal's largest client and is responsible for about 52% of its revenue in the half, and in total about 95% of the group's revenue comes from public clients. Amal submitted a bid in the new tender in April, when the existing engagement was extended until the end of 2026 or until the completion of the tender. In July, the court even ordered the tender committee to make a new decision regarding one of the tariff components. This is therefore a particularly material event for the company, due to its high dependence on the National Insurance Institute and the public sector.
FIMI of Ishay Davidi, Korkin, Poalim Equity and Migdal, who sold shares in the IPO in November for 1.3 billion shekels (half of their holdings), can smile about the exit back then. The investors who bought - less so. Since the IPO in November, the stock has fallen by 12%.
