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Edited Transcript of MPARK.IS earnings conference call or presentation 8-Nov-19 1:30pm GMT

Nine Months 2019 MLP Saglik Hizmetleri AS Earnings Call

Nov 21, 2019 (Thomson StreetEvents) -- Edited Transcript of MLP Saglik Hizmetleri AS earnings conference call or presentation Friday, November 8, 2019 at 1:30:00pm GMT

TEXT version of Transcript

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Corporate Participants

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* Burcu Öztürk

MLP Saglik Hizmetleri A.S. - CFO

* Deniz Can Yücel

MLP Saglik Hizmetleri A.S. - Strategy and IR Director

* Muharrem Usta

MLP Saglik Hizmetleri A.S. - Chairman, CEO & President

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Conference Call Participants

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* Hanzade Kilickiran

JP Morgan Chase & Co, Research Division - Analyst

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Presentation

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Deniz Can Yücel, MLP Saglik Hizmetleri A.S. - Strategy and IR Director [1]

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Hello, everyone. My name is Deniz Can Yücel, Head of Investor Relations. Welcome to MLP Care's 9-Month 2019 Results Conference Call and the Webcast.

I would like to remind you our disclaimer about the forward-looking statements. The disclaimer is available on the second page of this presentation.

Financials with footnotes are also available on our website.

We also would like to thank you for all your support on Institutional Investor's Emerging EMEA Executive Team 2019 research. We have been listed as one of the most honorable companies with the investor relations practice. We were also included in the best CEOs, best CFOs, best IR professionals and the best IR program. Thus, having received the highest score, we ranked at the top of the list of all the industries as well as the medtech services category. We are proud of it being such a great success even after a short period of public offering. This provides a valuable feedback for us and inspiration to improve ourselves.

Now I'm leaving the floor to our CEO, Mr. Muharrem Usta, for his comments.

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Muharrem Usta, MLP Saglik Hizmetleri A.S. - Chairman, CEO & President [2]

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[Interpreted] Thank you, Deniz. I would like to welcome you to the MLP Care 2019 Q3 and the First 9 Months Results Teleconference and Webcast.

I would like to now briefly summarize our performance in Q3 of 2019 and the first 9 months. In spite of the macroeconomic factors and certain regional conflicts globally and in Turkey and also in spite of the negative effect on the foreign tourism, our revenues continued to grow rapidly.

In Q3 of 2019, our revenues grew by 14% and by 21% in the first 9 months. That has resulted in real growth that is substantially above the 9% inflation level over the last 12 months. And the adjusted EBITDA for the first 9 months and Q3 of 2019, without including the effects of other revenues and the FX impact on the other expenditures, has recorded a growth of 29%, which is much higher than the inflation.

I would like to briefly touch upon the factors that were instrumental in this strong growth in spite of the ever-increasing costs in the industry due to high inflation. The first factor is the rapidly increasing capacity usage rates in the newly opened hospitals and to the fact that their business have been turned to positive, and the savings that we have ensured by a way of carrying out a very meticulous control of each cost item. And all the positive results that we have achieved is due to the efficiency initiatives that we have taken in regards of expenditures and revenues.

And the net debt-to-adjusted-EBITDA ratio, also including the IFRS 16 effect in the first 9 months of 2019, came in at 2.6x, and Burcu will be giving you more details on that later. We expect this downward trend to continue in line with the trends -- the reducing trends in the interest rates and reach even lower levels.

And in the first 9 months of 2019, we were also able to convert our free cash flow to positive with TRY 78 million. Value stood at minus TRY 15 million, so it was negative in the first 9 months of 2018.

I would like to give you a brief overview of our group and our operations. We continue to serve in 17 cities of the country with some 20,000 employees and more than 2,000 doctors. And total bed capacity with the new ramped up hospitals has increased 6,000. And we are not seeing the rapid increase of beds as we saw in the previous periods. And we prefer to attach more importance on increasing our capacity in existing hospitals instead of ramping up our capacity. And with the capacity utilization, we have also concentrated on operational improvements in different areas.

And in line with our long-term strategies, we continued to put emphasis on the utilization of technology. And we are undertaking some very important activities in cooperation with the Istinye University in the field of digitalization and artificial intelligence. We continue to conduct activities internally and also as a global brand due to the size of our group and due to the amount of big data that we possess.

I am to give you a small example. I did tell you that we have big data -- extensive big data in our group, in further sense, thanks to some 10 million data in the field of radiology. And if we consider that a doctor can analyze a total of 1,500 films per month, and I can tell you that thanks to the use of artificial intelligence, now we are able to analyze the 1,500 films in a matter of 10 seconds so this has given us that flexibility. And we are doing this together with the company working in the field of AI in the U.S. Of course, while we carry out this work, we always stay within the framework of the law and the protection of personal data.

So we do carry out many similar AI projects, and we also take new steps in the field of digitalization and robotics. In a very short time, we will all be able to see our group leading the way in the field of digitalization and field of AI.

Now I would like to briefly talk about the issue of turnovers and revenues. As you have followed, we were able to have double-digit growth in all of the revenue groups excluding SSI. And the mix is also changing due to the increase of the capacity. We've had a 4% growth in the SSI income in the first 9 months. And PMI, top-up and the contracted institutions, our growth was at 40%. Medical tourism grew by 47%. And in the self-pay category, also including the elective procedures, we have had a growth of 16%. Our revenues in other activities grew by 24% in the first 9 months of 2019 year-on-year growth. A factor in this was the increase of the management's revenues that we obtained from the university hospitals that we manage.

We have continued to very strongly grow in the field of top-up health insurance segment in the first 9 months. We have a very dominant position, i.e., we obtained about 40% of the shares that is paid out by these insurance companies to health care institutions. As I said before, we continued to grow in the field of foreign health tourism segments, and our growth was at 47%. We were considering entering new markets as far as foreign -- medical tourism is concerned. And thanks to the digital marketing activities that we will launch as of next month, we will also be more active in that field.

Now I'd like to turn it over to our CFO, Burcu.

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Burcu Öztürk, MLP Saglik Hizmetleri A.S. - CFO [3]

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Thank you, Muharrem bey. I'm on Page 10. In the third quarter and first 9 months of 2019, our revenue growth rate exceeded the inflation rate, and we realized a real revenue growth by around 6% in our revenue numbers.

If you look at the first 9 months of 2019, our revenues grew strongly by 21%. And private medical insurance including top-up, as mentioned by Muharrem bey, self-payers as well as medical tourism segment supported our successful revenue growth for the first 9 months of '19.

Our adjusted EBITDA without the impact of operational FX gains and losses increased by 29% in both Q3 2019 and the first 9 months of 2019. This growth was supported by the successful growth of our mature hospitals as well as the quick ramp-up of our new hospitals that were opened in 2018 including Pendik and Mersin hospitals. We only recorded TRY 0.4 million quarterly positive EBITDA for the first time in Q3 2019 from these 2 new hospitals, which shows that we recorded a quite successful ramp-up for those 2 new openings in 2018.

Our adjusted EBITDA including the IFRS 16 impact growth increases to 17.5% in 9 months 2019.

All 3 revenue streams including domestic revenues, medical tourism and ancillary business revenues recognized strong growth in 9 month '19. And revenue from our other ancillary business decreased slightly in Q3 due to the nonrenewal of our tender for one of our laboratory businesses with the preference of our group.

And our domestic revenues, on the left-hand side, increased by 17% in 2019. And this strong growth was a result of both out and inpatient revenue growth. As we discussed in our previous webcast, our strong pricing for the outpatient revenues continued in the third quarter of '19 and this was also supported by the slightly higher volumes for the outpatients. And our unit price growth for the inpatient revenues was also strong in the last quarter of 2019. Lastly, if you also add the managing university hospitals to these numbers, hospitals' domestic revenue growth would increase to 19% for the first 9 months of 2019.

Our foreign medical tourism revenues continued to increase with a growth rate of 47% in 9 month '19. Foreign medical tourism revenue grew by around 83% in the last quarter of -- in the third quarter of 2018. It was basically supported by 60% average FX rate increase against Turkish lira for the last years. However, if you look at this first quarter of 2019, on the contrary, there was a 5% negative impact coming from the depreciation of U.S. dollar against Turkish lira. Despite the negative FX impact and last year's high base of foreign medical tourism, we could still increase our foreign medical tourism revenues by 18% within the third quarter of 2019.

Our other ancillary business, lastly, grew by 24% in the 9 months results. And if you look at -- on a quarterly basis, there was a decline by 19% in Q3 2019. We increased our management fees from the university hospitals due to their -- basically due to their successful ramp-up. And 3 hospitals as part of our university hospital management growth a total of TRY 41 million management income. And currently, we do have 5 university hospitals whereas 3 of them are operated under management contracts.

In Q3 2019 and 9 months results, we successfully deployed strong pricing for both out and inpatient revenues. Therefore, our total domestic revenues of our hospitals grew by 17% in the 9 months results.

If you look at the outpatient revenues, our outpatient revenue was up by 19% in the 9-month numbers. This was ultimately driven by the strong pricing in our unit pricing for our operations. Similar to 2018, we still continue to target patients with higher income levels, and therefore, we adjust our unit prices as allowed to this strategy. And our outpatient unit prices were increased by 18%, well beyond the inflation rate in the 9 months results.

If you look at our inpatient revenues, our inpatient revenues increased by 16% within the first 9 months and this was basically a mix of higher patient volume as well as the unit price increases. Our average unit price for patients per protocol was 13% up in the 9 months results. And 2019 growth rate was way higher than our compound growth rate in the past 4 years. So this shows our success with regards to our patient satisfaction, and therefore, are able to increase our unit prices despite the competition in the market. And we expect to continue our strong pricing policy for the inpatients within the last quarter of 2019 as well.

Our effective management cost strategy continued in the third quarter of '19. And if you look at material consumption costs as a percentage of total revenues, this increased a little bit by 84 basis points in 9 months 2019 basically due to the government's inflation adjustment on the drugs by around 26% in February -- as of February 2019.

Turning to drugs. It accounts for around 30% of our total material costs. But thanks to our cost controls within 2019, our material costs as a percentage of sales started to decrease in the third quarter of 2019. And we realized a decline by around 78 basis points within the last quarter only with regards to material consumption and we expect this trend to continue within 2019 last quarter as well as 2020.

And doctor cost was an area that we employed many cost-saving initiatives. And doctor costs as a percentage of total revenues declined by 93 basis points to 21% in Q3 2019. And there was also a decline within the first 9 months results regarding the doctor costs. The decline in our doctor costs as a percentage of revenue was particularly related to the growth in hospital revenues as well as the doctor efficiency studies that we employed throughout 2019.

On the personnel cost side, we also recorded some successful decline against revenues and despite minimum wage increased by 26% at the beginning of 2019 as well as the salary increases that we made for the remaining personnel as of March 2019. Despite these 2 increases to the nominal personnel costs, if you look at our personnel costs as a percentage of revenues, we realized 1.5% decline in our personnel costs as a percentage of revenues, which was basically, again, similar to doctor costs basically related to the efficiency studies that we deployed as well as successful growth in our revenue numbers within 2019.

Rent expenses as a percentage of total revenue also declined. This was basically related to the conversion of FX into Turkish lira-denominated leases due to the change in the regulation within 2018 year-end as well as the negotiations with the landlords on the cost cuttings regarding rent costs.

Outsourced services purchases, which include laboratory, imaging, cleaning, catering-related services that we outsource from third parties, has a slight increase within 2019 due to the inflationary adjustment to the numbers. If you look at the outsourced services purchases as a percentage of sales, this was increased to 5.1% total revenues within the first 9 months results.

The remaining expenses basically including energy, foreign and domestic medical marketing expenses, increased by 280 (sic) [289] basis points in the third quarter of 2019. This was related to the increase in energy costs within Turkey, the inflationary adjustments to the energy unit cost as well as the increased level of marketing spending with regards to the foreign medical tourism within our total revenue.

All in all, despite the inflationary adjustments and despite the increasing costs within the sectors, we could obtain to keep our profitability at similar levels in comparison to 2018 and we plan to keep this profitability rate within the year-end 2019 and '20 as well.

In 9 months 2019, our open position, open FX position stands at EUR 83 million -- EUR 82 million. And as of September 2019, our net debt increased to TRY 1.5 billion basically due to the increased interest costs by around TRY 85 million. Since August 2019, we see a declining trend in interest rates in the market. In comparison to last year, 2018 results, we had around 10 basis points increase within the policy rate of Central Bank of Turkey. Given that our interest rates are variable, we started to enjoy the declining interest rates in our interest cost numbers, so we expect our leverage ratio as well as nominal net debt number to come down throughout 2019 and 2020 due to the decrease in the current market interest rates in Turkey.

And if you look at our gross debt including bank loans and financial leases that are denominated in FX, the gross number stands at EUR 144 million. And we had around 70% of this FX-based debt for 2019 and 2020. This means that, overall, for the next 15 months, our cash flow from an FX standpoint is almost fully mitigated or covered through a hedging transaction. All in all, including the whole euro-denominated bank debt, 27% of our total FX-denominated debt is currently hedged.

And after including the IFRS 16 on our numbers, as we declared within the last webcast, there is no material difference in our IFRS 16 included net debt-to-EBITDA number versus the reported numbers. Our net debt-to-EBITDA number stays at 2.6x so there is no material difference in between IFRS 16 versus without the IFRS 16.

And for the full year, due to the declining interest rates and due to the better operational cash flow result, we expect our net debt number to come down for the 2019 and last quarter of 2019, basically.

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Deniz Can Yücel, MLP Saglik Hizmetleri A.S. - Strategy and IR Director [4]

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Dear participants, I have a heads up. Some of you seeing the previous presentation, please refresh the link, you will see the new one. Just to give you a heads up. Thank you.

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Burcu Öztürk, MLP Saglik Hizmetleri A.S. - CFO [5]

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Okay. On Page 16, on the FX position of income statement, our euro- and dollar-priced foreign medical tourism continues to help us regarding our open position in our net income level, and we do have a long position in our EBITDA calculations. Overall, around 50% of our EBITDA is denominated in hard currency, which means that 12% of our revenue is FX-based medical tourism, whereas the FX-based cost only stands for 4% of our revenues. On a net basis, our EBITDA has a long position, and we generate a fixed-based EBITDA. Almost half of our EBITDA is denominated in FX currency currently.

And as we just explained in the previous slide, due to the hedging transaction, we already increased our FX -- we'll look to increase our exposure to FX, and therefore, we could increase our -- decrease our FX-based debt service. Therefore, the FX losses that you see in our numbers will be pertaining to a noncash FX losses related to debt service of 2021 and onwards.

On the CapEx side, our effective cost management is also relevant for the CapEx spending management. And maintenance CapEx-related spending as a percent of revenues decreased to 1.5% within the third quarter of 2019. And all in all, within the first 9 months, we successfully decreased our CapEx spending rate as a percentage of revenue to 1.6% only. And our efficiency studies as well as initiatives that we took in CapEx management in light of our CapEx spending for 2019 also helped us decrease our leverage ratio as well.

And the operating cash flow increased from 15 million negative numbers in Q3 2018 to 12 million positive within Q3 2019. This was basically a result of the improvement in the cash cycle. All in all, within the 9 months of 2019, we had some declines in our vendor payment terms due to the liquidity crisis in Turkey. And with that, we had to decrease our maturity payment to suppliers.

However, if you look at the current decline in interest rates, we expect to increase our maturity date for the vendors. That's why we expect to increase our operational cash flow conversion in that plan, and we will be gaining back our maturity days with the suppliers is -- for the remainder of 2019 as well as 2020. All in all, there won't be -- we don't expect any cash burn coming from the decrease in the outlier payment terms.

Now I will hand over to Muharrem bey for the outlook and prospects.

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Muharrem Usta, MLP Saglik Hizmetleri A.S. - Chairman, CEO & President [6]

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[Interpreted] We have to go back to our targets for 2019. We expect to finish the year with a 35% increase in medical tourism revenues. We are making significant efforts to ramp up our new newly opened hospitals, especially the last 2 hospitals that we opened last year, and we will start seeing the effects of this increase in the coming period.

As I explained before, we are concentrating more on digitalization and the AI activities in the health sector. And through this, we aim to maximize our efficiencies in many different areas. We also aim to pay back our FX-denominated debt, which will help us deleverage our balance sheet and reduce our FX risk. In the last 12 months, we have had some negative effects in this area as have seen the other companies. And we would like to keep our net debt-to-EBITDA ratio at 2.5 at the end of the year.

The interest rates continue to show a downward trend. We believe that this will have a positive effect on our ratio. We expect our ratio to result in 30% due to the activities that we undertake. And we also expect to increase our free cash flow in the year. And we do not have a plan to acquire a new hospital or open new hospitals until the interest rates reach reasonable levels.

As you know, we have 5 university hospital affiliates, and with our 31 hospitals serving the country, we continue to be best-in-class in providing the top level of health care to our patients.

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Deniz Can Yücel, MLP Saglik Hizmetleri A.S. - Strategy and IR Director [7]

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Operator, now we can take the questions.

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Questions and Answers

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Operator [1]

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(Operator Instructions) We have a question by phone by [Jamal Dmitrish] from [Artemis].

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Unidentified Analyst, [2]

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My first question is related to our revenue stream. I see some decline in other ancillary business and it's -- maybe it's related to renewable of the tenders. I would like to understand the reason behind that.

And on the inflation effects on all those things. Your revenue growth looks like limited, maybe lower than maybe initially we thought. How do you see the outlook in that sense?

And the other thing is about your balance sheet and all the numbers. I see that your adjusted EBITDA numbers look strong. But when we look at the full picture, your EBITDA in 9 months is -- sorry, is not enough to cover your interest expenses. And the first 9 months was not bad actually. We need to see the improvements, but in most of the companies, we saw that -- we see improvement. But in your numbers, I didn't notice and I would like to understand whether we would be seeing some ratings improvements unlike the others? You do some hedgings, et cetera. So maybe you could give us some -- at least a clear idea how we are going to get into a profitable bottom line, when we are going to see reasonable net income at the bottom line.

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Burcu Öztürk, MLP Saglik Hizmetleri A.S. - CFO [3]

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[Jamal] bey, so let me answer your questions. Regarding the other ancillary business, we -- from time to time, we do receive some bits from -- regarding the regulatory business. Not all businesses are not very much profitable in comparison to a regular hospital business. That's why in order to kind of squeeze our business line, make sure that we focus on our just hospital operations. We decided not to enter into those government TIPS. It is only on a monthly basis, this nonrenewable has only an impact of around TRY 3 million. So in comparison to our total revenue of around TRY 3 billion revenues, this is really going to be a negligible number. And at the end of the day, we say it's quite important for us and those businesses are not bringing very much profit or EBITDA at the end of the day, that's why we decided to exit from such businesses. And it's one tender only, so we don't believe that it's going to be having an impact on our total numbers.

Regarding your second question on the interest expenses, when I look at interest expenses without the IFRS 16 impact, which also includes the rent expenses, our interest expense stands at TRY 250 million.

If you look at our EBITDA numbers, currently we generate around TRY 400 million. So we believe that our EBITDA number is quite sufficient to cover our interest expenses. And due to seasonality, from time to time, we may have some cash burn regarding working capital, but we do have enough bank limits to cover those working capital burns and -- to compensate for those cash burns. So regarding debt service, we don't see any problems in terms of compensating for the total debt service of the company. Currently, we are fully compliant with our covenant ratios.

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Unidentified Analyst, [4]

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I see your EBITDA is higher, but I'm talking about the EBIT part. So your cash flow is improving for sure, but I'm just trying to understand your income statements and we could see the reflection of the positive effect of the contribution from the EBITDA. Do you think we are going to see the reflection at the bottom line because cash flow might improve -- or improving, your EBITDA could be high, but are we going to see the profitability in the fourth quarter or next year? I just -- I have difficulty to grasp how this thinking will turn into profitability.

Actually I was expecting at least on profitability in the first 9 months and I compare, I'm not expert in your business, but then I am looking at the overall coverage of like Turkish companies, I've been trying to understand maybe this is the positive real change.

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Burcu Öztürk, MLP Saglik Hizmetleri A.S. - CFO [5]

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So definitely, fourth quarter is our worst quarter. This is due to the seasonality, the holiday period, the [eighth] Holiday as well as the back-to-school season impacts us a lot. Last quarter is the best quarter, that's for sure. So we will have the highest profitability and we will have the highest revenue as well as EBITDA numbers within the last quarter. So our cash flow from the operations as well as the overall EBITDA production capacity will definitely improve within the last quarter.

To your question on the net debt issue. Overall, the net income production, we expect to have break-even level EBIT -- net income at the end of the year, so leverage will come down. And if you look at our current trading performance within October, we had the best October, or let me say, we had this -- from a growth perspective in comparison to September results, we have the best October number right now. So our revenues really improved within October. So we expect to have a good profitable last quarter throughout 2019.

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Operator [6]

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(Operator Instructions)

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Burcu Öztürk, MLP Saglik Hizmetleri A.S. - CFO [7]

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There was one question, maybe let's start with that if there's none on the phone.

Could I just ask what interest rate level would you like to see before you go back to an expansion and acquisition mode.

So our priority is currently decreasing the leverage. Of course, interest rates have been quite high this years that's why we had some unexpected increases into our net debt level. So our priority is to decrease the leverage ratio first.

From an interest rate perspective, the interest rates should be around 10% to 12% to -- for us to increase our appetite for an expansion. But our priority, as I said, from a hierarchical perspective, our current issue is regarding decreasing the leverage. So within the next 3, 4 months, we will be again focusing on decreasing our leverage rather than expansion because, as we just discussed in our previous webcast, hospitals that we plan to acquire are going to be there and they would be there.

From a competition landscape, we are the only provider in the market that could acquire those hospitals due to the similarity of our business models, so that's why we are not in a hurry to acquire those hospitals. And we will be acquiring those hospitals without hurting our leverage. For the next year, we expect our leverage to come down to -- net debt-to-EBITDA ratio to come down to 2-ish. So that's why we will first decrease our leverage ratio and then move on with the expansion model.

Another question. Considering your high-capacity utilization segment, can we assume deleveraging would be fast in the absence of major CapEx starting with 2020?

And I said, currently, our leverage ratio or net debt-to-EBITDA stands at 2.6x. It will come down to 2.5-ish within the end of the year. And for the next year, with the CapEx spending for the existing hospitals as well as the growth of our EBITDA number, we expect to decrease our leverage ratio to 2 or below 2. So to your question, the decreased CapEx spending will also help us decrease the leverage of the company.

Any other questions? I guess there are more here from VTB Capital. What are your expectations on a net debt-to-EBITDA ratio by year-end 2019 and for the next years?

For 2019 year-end, we expect to have 2.5. And for 2020, it will be below 2 -- or around 2, let me say.

What are the final CapEx expectations for this year and 2020?

For this year, for maintenance CapEx, we stand at 1.6% of revenues. That will be sustained for the last quarter of 2019 as well. For 2020, we expect to keep our CapEx spending as a percentage of revenue for maintenance around 1.26% to 2%. And for the full CapEx, including all in all, it will be around 3.5-ish.

Would you please comment on the approximate sales growth in October?

As I just mentioned, we had the best October from a revenue growth perspective in comparison to September. So our current trading performance has been doing quite well. And last quarter of 2019 will help us a lot in terms of EBITDA production for the full year results.

October, Muharrrem bey is adding, he's saying that October has been the best month out of the whole 10 months within 2019.

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Operator [8]

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It seems that we have another question from Hanzade Kilickiran from JPMorgan by phone.

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Hanzade Kilickiran, JP Morgan Chase & Co, Research Division - Analyst [9]

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I have a question on leverage. Do you have any plans to convert your euro debt to Turkish lira given that interest rates are coming down sharply in Turkey in 2020?

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Burcu Öztürk, MLP Saglik Hizmetleri A.S. - CFO [10]

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So regarding the conversion, currently, we do have open position on the net debt -- on net debt numbers, but this open position pertains to 2021 and onwards. We recently raised a new bank facility from our syndicate loan -- or syndicate bank facility. We issued a total of TRY 500 million additional bank loan facility. So since 2018, we haven't had any new additions of euro-denominated loans. So naturally, by the time we start to withdraw this new bank facility that is denominated in Turkey lira, that will be -- the bank that will be converted into Turkish lira naturally.

But to your question, if it is something immediately that we will do, we are not planning on anything like that given that around 7% of our debt service for the next 15 months is already covered from a cash flow perspective and FX perspective. And currently, our interest rates regarding euro-denominated loans is almost like 5.5%, which is one of the lowest interest rates in the market. So we will wait a little bit more to see how the Turkish interest rates continue. But overall, we don't have any sudden plans to convert.

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Hanzade Kilickiran, JP Morgan Chase & Co, Research Division - Analyst [11]

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I have also one more question on the top-up insurance. Is there any government initiative on this part of the business like initiating the companies to make top-up insurance a bit more option for their employee or a bit more compulsory system?

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Burcu Öztürk, MLP Saglik Hizmetleri A.S. - CFO [12]

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Currently, within the development plan on 2020, the government included incentives for top-up insurance within its government incentive plan. So that's definitely in the plan. So as private hospital players, we are currently working with private business association of Turkey to see us and we work with private medical insurance companies on how the incentive model will work out.

Definitely, the private players are also keen on increasing the penetration of top-up insurance because if you look at the private medical insurance, it's been at TRY 2.2 million like for the past 10 years almost. So the private medical insurance companies are also so willing to increase that rate. So there is a plan in place and we are currently working with the tax experts as well as the private hospital players on how the incentive plan will work out. So that's both in the agenda of private players, private medical insurance as well as the government. So something might come out soon.

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Operator [13]

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Well, it seems that we have no further question by phone. I give the floor back to the company for written questions.

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Deniz Can Yücel, MLP Saglik Hizmetleri A.S. - Strategy and IR Director [14]

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I think we can have the closing remarks from our CEO. Thank you.

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Muharrem Usta, MLP Saglik Hizmetleri A.S. - Chairman, CEO & President [15]

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[Interpreted] Although 2019 was economically quite a challenging year, we have been moving in line with our targets in the first 9 months of this year and we are seeing that there's some normalization in the economic environment due to the downward trends in interest and FX rates, especially compared to the last 12 months. And I expect that with further improvements at this environment, we will see -- continue to see better results.

As Burcu indicated before, we have had quite a good month in the first month of the last quarter. So we have 2 more remaining months in this year, and I have good results in those months as well. And we expect that we will complete 2019 in line with our targets and realizing our targets in spite of all the difficulties.

We thank you very much for your attention. And please have a good day.

[Portions of this transcript that are marked

Interpreted were spoken by an interpreter present on the live call.]