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Edited Transcript of MPARK.IS earnings conference call or presentation 9-Aug-19 1:30pm GMT

Half Year 2019 MLP Saglik Hizmetleri AS Earnings Call

Aug 21, 2019 (Thomson StreetEvents) -- Edited Transcript of MLP Saglik Hizmetleri AS earnings conference call or presentation Friday, August 9, 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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Presentation

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Operator [1]

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Ladies and gentlemen, good afternoon. Welcome to MLP Care First Half 2019 Results Announcement Conference Call. I will now hand over to your first speaker, Mr. Deniz Can Yücel, IR Director. Sir, please go ahead.

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Deniz Can Yücel, MLP Saglik Hizmetleri A.S. - Strategy and IR Director [2]

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Welcome to MLP Care's first half results conference call and the webcast. I would like to remind you our disclaimer about forward-looking statements. The disclaimer is available on the second page of this presentation. Before I leave the floor to our CEO, Mr. Muharrem Usta, I would like to thank you for your support in the Extel Survey 2019. MLP Care ranked 8th for the Corporates Best for Investor Relations in Medtech & Services. And I would like to take this opportunity to thank you for your precious support, which will further encourage us to improve ourselves and adopt the best-in-class IR practices.

Now I would like to leave the floor to Muharrem Usta for his comments for the first half results.

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Muharrem Usta, MLP Saglik Hizmetleri A.S. - Chairman, CEO & President [3]

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[Interpreted] Thank you, Deniz. I would like to welcome you to this teleconference and webcast presentation, where we will be discussing the results for the 2019 half year.

In the second quarter and in the first half of 2019, we realized real growth, which was above inflation in both the revenue items and in EBITDA. And I would like to briefly summarize our performance for the second quarter and the first half of 2019.

Our revenues continued to grow in spite of the macroeconomic factors that are in place globally and in Turkey. And there was a growth of 23% in the second quarter of 2019 and 24% in the first half. And when we also add the 3 university hospitals, which are managed by our company, which are not consolidated in the financials, the growth has been [25.5%] in the second quarter of 2019 and 26% in the first half.

And our adjusted EBITDA grew by 21%, both in the second quarter and in the first half. And when we exclude other income and expense items, the EBITDA growth in the first -- in the second quarter was 50%; and in the first half, it was recorded at 38%.

And our net debt-to-adjusted EBITDA ratio, thanks to the positive effects of the hedging activities that we have undertaken last year and in spite of the FX rate increases in the first half of 2019, reached 2.5. And when we include the IFRS 16 effect, which were added to our financials in this period, this was -- this resulted in 2.6.

And we succeeded in turning our free cash flow to positive, and so the conclusion was TRY 123 million in the second quarter of 2019. In the first quarter, the same figure was at minus TRY 14 million.

We have concluded an agreement with Bupa Acibadem insurance group on 8th of April 2019. We have slowly started seeing the positive effect of this cooperation on our revenues.

Let us look at the MLP Care group very briefly. In the second half of 2019, MLP Care is active in 17 cities of Turkey, with around 20,000 headcount and more than 2,000 doctors and continues to serve and increase its operational efficiency.

And together with the hospitals that we have opened in 2018, the total number of hospitals has increased to 31. And our total bed capacity, including the observation beds, has exceeded 6,000.

And in 2019, we have taken steps to increase our operational efficiency in order to combat the effects of macroeconomic parameters. And in 2019, we have also taken steps in line with our long-term strategy in order to become more digitalized and be more active in the field of AI. As one of the companies shaping the health industry, we believe that our activities in this field will put our country [ahead in the] pioneering health trends and that [they] will inspire the rest of the industry.

Revenue growth reached 23%, which was above the average of the last 4 years in the second quarter of 2019. And for the first half of 2019, this increase reached 24%. So our real growth was significantly above the inflation rate of 16%.

When we look at the managed university hospitals, this brings revenues, with revenue increasing 25% in Q2 and 26% in the first half of the year. And we continue to work with great [condition] in order to continue these trends in the second half of 2019.

And in Q2 of 2019 and in the first half of the year, our adjusted EBITDA has increased more than 20%, [up 20%], which was a real growth of inflation. And the total negative EBITDA effect that we saw in the first half of 2019, which was due to the new hospitals which were opened in 2018, went down to TRY 1.4 million.

And excluding other revenues and expenses, the EBITDA increased by 50% in Q2 of 2019 and 38% in the first half of the year. And I can briefly outline the factors which were instrumental in realizing this very strong growth, which we were able to realize in spite of the increasing costs and high inflation.

First of all, there's the positive effect of the new hospitals adding to the growth. And there was also a decrease in the negative EBITDA effect. And we have also taken steps to reduce our costs by looking at every cost item and taking steps in the fields of digitalization and efficiency. So I can say that in spite of the broad macroeconomic factors, the first half of 2019 was a very successful period in terms of operational efficiency.

We've had a double-digit growth in all of the income and revenue groups, excluding the SSI. And our SSI revenues increased by 4% in the first half of the year. And in PMI, top-up and contracted institutions, we have had a 40% growth.

And our medical tourism revenues increased at around 70% in the first half of 2019, which is in line with our end-of-year target. And the growth in the self-pay category was at around 15% to 16%.

Our revenues from other operations increased by 50% year-on-year in the first half of 2019. Important factors were: first of all, the TRY 11 million increase in the management fees of the university hospitals; and also the TRY 26 million growth in the field of laboratory services.

The rapid growth in the area of top-up health insurance continued in the first half of the year. And thanks to the agreement that we have concluded with Bupa Acibadem insurance group in April 2019, we expect this positive factor to improve. And the number of people using top-up insurance now in the first half of 2019 exceeded -- grew by 28% and exceeded TRY 1 million.

And the medical tourism segment is the most rapidly growing revenue segment. And the increase in this -- in the revenues of this category was at more than 60% in the second quarter of 2019 and 70% in the first half.

And we have started reorganizing our structures when we -- and we -- taking into consideration the effects of the new hospitals with higher capacity and the effect that this will have in the medical tourism sector. So in summary, we expect growth that will be even higher than these figures in the field of medical tourism in the future.

Of course, the important factors in this growth was the number of increase in inpatient and outpatient numbers and also the FX-denominated hospital. It has known very strong growth. And the number of in and outpatient numbers in the first half of 2019, the number of protocol has increased by 21% and the number of visits have grown by 17%.

Our target is to further increase the share in our revenues, which are especially FX-denominated by carrying out effective marketing activities in international markets and by increasing the number of our business [associates].

And thank you for your attention. Now I would like to turn the floor over to our CFO, Burcu.

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Burcu Öztürk, MLP Saglik Hizmetleri A.S. - CFO [4]

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Thank you, Muharrem bey. In the second quarter and first half of 2019, we successfully realized yield growth above inflation in both our revenue and EBITDA figures. If you look at H1 2019, our revenues grew strongly by 24%. Medical tourism, private medical insurance, specifically top-up insurance, as well as childcare segment has exceeded this growth by 25% in our revenues. Our revenue growth further increased to 26%. If we also consolidate revenues or managing (inaudible) figures, sales figures into these numbers.

Our adjusted EBITDA continued its double-digit growth trend by around 21% growth rate in both Q2 2019 and H1 2019 period. Our EBITDA, excluding one-offs and also other income expense items increased by 50% in the second quarter of 2019. Our EBITDA performance was supported by the successful performance of our mature hospitals as well as peak ramp-up of our new hospitals that opened in 2018. We only recorded TRY 1.4 million negative EBITDA in comparison to TRY 11.5 million negative EBITDA from these newly opened hospitals in 2019.

With the adopted IFRS 16 lease adjustments in our June 2019 financial statements. If you look at on a like-for-like basis, these impacts of the tranche adjustments are [our] adjusted EBITDA growth increased to 22% in H1 2019 in comparison to the 21% growth rate as we reported. So these adjustments basically gives another 1% incremental growth rate in our EBITDA figures.

Specifically, our three revenue streams, including domestic revenues, medical tourism revenues, as well as ancillary business revenues recognized growth in H1 2019. Our domestic revenues increased by 17% in H1 2019. This growth plan was a combination of [other] inpatient revenue increases. If you look at the outpatient revenue growth, our strong pricing strategy continued in the second quarter of 2019. And in total, this growth, a total of 17% growth rate for the outpatients.

On the inpatient side, our capability to increase unit prices of inpatient's revenue was stronger in 2019. And also, this was supported by the higher volume of inpatients in terms of revenue growth numbers.

Our foreign Medical Tourism revenues continued this stunning performance, with a growth rate of 70% in H1 2019.

A couple of things helped grow our Medical Tourism business. First one is increased patient volumes, with an impact of 28% in H1 2019 due to the strong brand name in the international renal medical [partners] . Secondly, revenue mix was higher in these [Medical Tourism] operations also helped us increase our revenues. And lastly, euro and dollar pricing impacts also supported us in this revenue boost on Medical Tourism. For the remainder of 2019, we will be continuing to focus on increasing our FX-based revenues by expanding our footprint in the international arena.

Our other ancillary business revenues grew by 50% in H1 2019. Two factors helped us in this revenue growth. We have increased our contribution of management fees from the university hospitals due to the successful ramp-up of these hospitals. As a reminder, 3 hospitals that we operate under management university hospitals [wrote] a total of TRY 27 million growth in H1 2019 revenues.

Currently, we have 5 university hospitals, and 3 of them are under university hospital management contracts.

Secondly, strong growth of our laboratory business also contributed to the other revenue stream growth rates. We successfully deployed strong pricing policy for both out and inpatients in 2019. In this respect, domestic revenue, [total revenue increased] by 17% in H1 2019 in total. If you looked at the outpatient revenues, our outpatient revenue was up by 18% in H1 2019. This was also driven by the strong growth in unit pricing.

Similar to 2018, we will be targeting patients with higher income levels, and we will continue to adjust our unit prices [to align] to this strategy. Therefore, our outpatient prices were, per protocol, increased by 17% in 2019, whereas outpatient volume remained stable for the same period of H1 2019 period.

On the inpatient side, our revenues increased by 16% in H1 to 2019. This was due to the higher inpatient volume as well as unit prices [used] by increases in the inpatient revenue. Our average revenue per inpatient per protocol, growth was 12% in 2019. If you look at the 2019 growth rate, this is way higher than our historic growth rate. Our compound growth rate over the past 4 years for the inpatient is only 3%. And in 2019 only, we realized 12% growth in terms of average revenue per protocol of inpatients.

We expect to continue our strong pricing policy in terms of in and outpatients in the next quarter of 2019.

From a cost perspective, we accomplished to continue our effective cost management in 2019 first half results. And therefore, we could minimize the increasing effects of inflation on our EBITDA profitability. If you look at it on a component basis, material consumption as a percentage of total revenue increased by 166 basis points in H1 2019, basically due to the inflation adjustment for drugs by 26% by the government in February 2019. Drug costs only accounts for 30% of our total material costs. Additionally, the increasing share of lab revenues in our total revenues also led to an increase in material costs.

On the factory side we realized many efficiency [studies] , and asset cost as a percentage of total revenues declined by 200 basis points to 20% -- 20.7% in H1 2019. This improvement in doctor costs was due to the increase in hospital revenues as well as efficiency initiatives that we adopted in 2019. We will be continuing to keep the factory costs as a percentage of revenue efficiency [steady] in the -- for the remaining quarters of 2019.

For personnel cost as a percentage of total revenue, our personnel cost declined by 140 basis points to 17.5% in H1 2019. This was again related to efficient headcount management. Our digitalization efforts within the hospital operation processes also started to decrease our headcount numbers since 2019 beginning. We expect this trend to continue in an accelerated fashion for the remainder of 2019 due to the digitalization and paperless hospital processes that we started with.

Rent expenses as a percentage of total revenue was flat in both 2018 and '19. As a reminder, the rent costs are converted to Turkish Lira and rent costs are escalated based on inflation.

Outsourced medical services purchased. This expense item includes laboratory, imaging, cleaning, catering and security types of services that's being outsourced. And again, these expenses as a percentage of total revenue increased in parallel with the increasing share of [tax] services in our total revenue number.

Overall, in summary, we expect to keep our profitability rate for the remainder of 2019 despite the increased inflationary environment in Turkey, and we will be keeping and sustaining our profitability through different efficiency studies that we adopted.

In June 2019, our open net debt position stands at TRY 73 million. It's behalf of aging transactions made in 2018. This number stands at around TRY 70 million for 2018 and '19 period. Our net debt increased to TRY 1.4 billion June 2019 in comparison to TRY 1.2 billion as of year-end 2018. This increase was due to the increased interest cost by TRY 75 million within the first half of 2019, as well as the non-cash FX losses that we had to record due to the [automatic] position with a total of TRY 50 million.

And then overall update onto the numbers. There is a decline in terms of the interest costs, especially with the NIM policy rate decline by the government. We started to realize interest rate declines. If you look at it from an average basis, in comparison to the start of the year, currently as of August, we realized around 6% -- 6 basis points -- 600 basis points decline in terms of the overall interest costs, our average interest costs. So for the remainder of 2019, we expect to have a minimum TRY 20 million decline in our interest costs, in comparison to the first half 2019. So we started to realize those interest cost declines since the beginning [of offers] , and we will be continuing to decrease our interest costs by negotiating these events. Again, our interest rates are almost fully variable, which means that as long as the market rates decline in Turkey, we will be benefiting from this decline within our financial expense numbers as well.

Again, in comparison to June 2019, the U.S. dollar and euro rates declined against Turkish Lira, so we will be benefiting from this [strength] of Turkish Lira against U.S. dollars in our numbers for the remainder of 2019 as well.

So our gross debt, including bank loans and financial leases that are denominated in FX amounts to EUR 146 million. And due to the current fluctuations in 2018, we have hedged around 70% of this FX-denominated hedge service regarding 2019 and 2020 period. This corresponds to around 28% of our total FX-denominated set.

In summary, for the currency lift, next 18-month period is almost fully mitigated from a cash flow perspective. Following the hedging transactions, returned FX portion of the total net debt decreased to 34% in H1 2019. We recently launched a new facility from the banks, and this facility, credit facility, is fully denominated in Turkish Lira. So since 2018 midyear, we have not been getting new euro or double denominated bank loans. Our management's strategy is to utilize bank loans fully in Turkish Lira, so this will be continuing for the following periods of 2019 and onwards. As I said, all the clinical facility that we recently launched is fully denominated in Turkish lira. You may expect to have Turkish Lira-denominated bank loan additions from now on, and this will be kind of compensating the euro-denominated bank loan payments.

Net debt to [RPM] adjusted EBITDA as of June 2019 stood at 2.5%. After including the obligations under operational leases related to IFRS 16, our net debt-to-EBITDA number stays at 2.6. In summary, the IFRS 16 adjustment doesn't have any impact on our leverage ratio. Our net debt-to-EBITDA ratio for the year-end is not to exceed any level above 2.5%. Therefore, we are not putting any greenfield investments [or] we are not increasing the CapEx spending levels. Our target is to deleverage the company as much as possible for the remainder of 2019. Our euro and dollar priced foreign medical tourism have a long position, a fixed position in our EBITDA numbers.

Overall, 44% of our EBITDA is denominated in hard currency, and 12% of our revenues is FX-based medical tourism revenues. And if you also include the FX-based costs, including material and medical tourism costs, which corresponds to around 4% of our revenue on a net basis, our EBITDA has a long position. We generate fixed based EBITDA figures in our operational results. As we just explained in the previous slide, hedging transactions helped us decrease our exposure to FX volatility. And [if it's based] at services around 71% hedged for the next 18 months. Therefore, FX losses coming from indebtedness is almost fully noncash and is going to be related to the direct service starting from 2021 and onwards.

Our effective cost management is also relevant for CapEx spending as well. Maintenance CapEx as a percentage of revenues decreased to 1.7% of revenues in H1 2019, in comparison to 2.9% for the previous year. Our efficiency initiatives in CapEx management worked out quite well in the second quarter and first half of 2019. Our operating cash flow against EBITDA ratio increased to 124% in Q2 2019 from the [ratio] of 15% within the first quarter of 2019.

The increase in (inaudible) operating cash flow in the second half of 2019 was a result of 2 factors. One of them is the impact of payments made [by] small-scale suppliers [were] shorter than the previous year's payment terms, but somehow released in our Q2 numbers. And secondly, growth in revenue by 23% in the second half of 2019 resulted in a new material increase in trade receivables, and therefore, we didn't have any decrease in our [operating cash flow] numbers for the second half of 2019.

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

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Muharrem Usta, MLP Saglik Hizmetleri A.S. - Chairman, CEO & President [5]

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Thank you, Burcu. I would like to outline our targets for 2019. We would like to bring the growth in medical tourism to 60% at the end of 2019, and the share of medical tourism in total revenues to 15%. In addition to efficiency in all areas, we also concentrate on the development and ramp-up of newly opened hospitals. And together with the 2 new hospitals that we opened last year, we continue to grow the business. We consider the developments in client facing technology and we take steps to also bring these innovations to our group through digitalization and activities in the field of artificial intelligence. And to this end, we have created a new infrastructure and a new structure in a separate location to bring more digitalization and more innovations to our operations. And thanks to these services that we have streamlined in this new center, we have improved our invoicing and collection operations. And we also aim at realizing headcount optimization through end-to-end integration of our software. And also, through our activities at the center, we aim to also reach more efficiency in the cost of our doctors by increasing their efficiency and by also [enhancing] efficiency in their appointment system.

We also take steps to create new digital revenue channels. There is a continuing volatility in FX rates in 2019. We aim to repay our FX-denominated debt and increase deleverage and also contain our currency risks.

And thanks to our hedging operations that we have realized last year, we were able to keep our net debt-to-EBITDA ratio at 2.5. And in spite of some increasing cost items, we aim to reach the EBITDA margins similar to the levels of last year and to increase our free cash flow. As we have said before, we plan no CapEx expansion as long as these financial costs are high. As a group, we were not affected by financial fluctuations, and we have opened a series of large-scale hospitals and their CapEx and their operational costs have already been reflected on our balance sheet. We feel that this is a better strategy to try to use this substantial capacity for several years to come. And even if we didn't open new hospitals or consolidate new hospitals in the next 2, 3 years, we have enough capacity to successfully carry out our operations.

And I can say that the following period, we'll see a drop in our indebtedness, an increase in our profits and an increase in our cash input. So I believe that it will be a fruitful period vis-à-vis our investors.

With 5 university hospitals and a total of 31 hospitals, we continue to be the biggest healthcare provider in Turkey. We will continue to bring the highest level of health service to our hospitals and to also concentrate on profitable growth.

Thank you.

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Deniz Can Yücel, MLP Saglik Hizmetleri A.S. - Strategy and IR Director [6]

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Operator, we can now take questions.

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Questions and Answers

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Operator [1]

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(Operator Instructions) Our first question comes from Nikolai Kulales from [BTB Capital].

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Unidentified Analyst, [2]

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I have 2 questions. My first question is on the cost management. And if I look at the expenses on doctors and personnel, I see a quite sizable decline from 1 to 200 basis points as a percent of revenue. So I would like to ask, what are the operational steps to improve the allocation of [real scope]? It's my first question, and the second question, I'm not sure like if you will be able to disclose, but if you can comment on the dynamics of the utilization rate for your mature and developing hospitals lately and the year-to-date, that would be also very helpful.

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

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Thanks for the questions. Regarding the first one regarding costs, yes, we did 200 basis points decline in doctor costs as a percentage of revenue. One of them is -- I mean, there are 2 reasons behind this efficiency realization. One of them is a technical thing. Given that our revenues grew by around 25%, once the doctors reach a certain level of revenue, their ratio of revenue compensation declines. So this is kind of a maximum limit of the doctors in terms of earnings power. In that sense, because our revenues grew by 25%, some of the doctors are earning less than the first [portion of it.] It is kind of a lesser -- I can say there is kind of a categorization payment choice. So the more revenues increased, the more doctor costs as a percent of revenues will decline. This is also relevant for the new hospitals. During the first 6, 9 months of the hospital's ramp-up period, usually doctors get a fixed rate to make sure that their compensation level is at a stable number. And once the revenues go up, [inversely] the percentage of revenue declines naturally. So given that we opened 2 hospitals in 2018 year, 2019 was an efficiency [realized used to the ramp] of all those hospitals. Secondly, we do have doctor score cards and you look at each doctor's revenue performance versus the hospital. The efficiency studies were realized by working on a doctor-by-doctor basis. So for each individual doctor, we look at the past performance and we wanted to make sure that we utilize doctors as much as possible. In that sense, we had some doctor reshuffling within the mature hospital portfolio. So due to that factor, doctor costs as a percentage of revenue declined in mature hospitals as well. So this is the summary, the explanation for the doctor cost decline. Regarding the utilization rate, we [play] utilization rate for end of each year because of the seasonality and because of the working day changes. There are changes within -- or the number of utilization rate changes across the years from hospital to hospital. That's why we declare it on a yearly basis. So overall, for example, tomorrow, we will be having a big holiday in Turkey, that's why the utilization rates will be declining. So because of this, the seasonality-related impact, we make sure that we give the right rates for a full year impact. So at the end of the year, we will be declaring utilization rates. But as Muharrem bey explained, there is no bottleneck in terms of utilization rates for the next 2, 3 years, even as we opened up large scale hospitals over the past 3, 4 years.

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Operator [4]

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(Operator Instructions)

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

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There is one question from [Marios] from [Leerink].

You mentioned that you will continue to target higher income patients. Does that mean that we should expect above inflation price increases for outpatients? Inpatient price increases are running below inflation, [we'll] discontinue. Do you foresee any increase in surprises from the government coming soon? Also, are you able to expand on the doctor cost efficiencies? And how are you going to go above this?

So regarding the first question, we made increases to the outpatient prices to make sure that, first, the traffic of the hospital is not crowded. And we realized around a 17% price impact growth in terms of outpatients. Yes, we expect to keep our unit price for the outpatients above inflation. So that's our target rate, which has been accomplished by another incremental number of around 1% to 2%, given that the current inflation rate stands at 15%. So we will continue to increase our outpatient revenues because this doesn't have any impacts on the volumes. And you may see that the volume was flat from 2018 to '19 although we made a 17% price increase. So we will be continuing to make price increases to the outpatient numbers.

Regarding the second question on the inpatient price increases are running below the inflation. If you look at the past 4 years, our inpatient revenue per protocol stood at only 3%. So this is our overall strategy because we would like to have the utilization rates, we would like to keep our hospitals full as much as possible. Given that there is this unit price for the inpatients that are almost 10x more than outpatient, our goal is to keep every single hospital admission or patients that come to our hospitals, and instead of in the surgery decision, we would like to keep that patient within the hospital. Therefore, we always want to be competitive in terms of unit pricing of inpatients. That has been the case over the past 4 years, and this is our strategy still. But the good news is that if you look at the past 4 years, the growth rate was only 3% whereas due to our strong brand name in the market currently, it could increase that to 12% for the inpatients for the first time in our [maybe] history. That's why we will be keeping the inpatient price growth competitive in comparison to outpatient prices. But still, we will be continuing to increase the unit price of inpatients as well.

Do you foresee any increases in [stock] prices from the government coming soon?

We've been going through elections over the past 6 months in Turkey. We know that this is in the agenda of the government because maybe in the last [quarter] we also mentioned that, there was one big meeting of the Private Hospitals Association in Antaria and the Minister declared that it will become good news for the stock prices. But then there was reelection on the municipality and the agenda changed in Turkey. But overall, we know that this is, for sure, within the agenda of government. But we don't know or we cannot commit when. If it happens, we have intelligence that there will be an inflationary mechanism to the stock prices. But overall, if you look at our revenue growth rate and if you look at our 2019 expectations, we never rely on the government's price increases on our EBITDA growth trend. So we will be continuing to grow our revenues from other channels, and we will be continuing to increase our EBITDA numbers through efficiency studies.

Are you able to expand on the market cost efficiencies? And how are you going to go about it?

As I just explained, the doctor cost efficiencies come from 2 things. One of them is faster efficiency studies on an individual doctor basis for the mature hospital. We will be continuing to do that. There is a systematic scorecard rationale behind this. And secondly, due to the ramp-up of the new hospitals, there is a natural decline in the doctor costs as a percentage of revenues. Of course, the -- as long as the ramp up continues, the doctor costs will continue to decline. So this is our expectation for 2019.

Another question on 1X. Could you please elaborate further on what are the one-off expenses? Please explain the difference between 21% adjusted EBITDA growth and 50% adjusted EBITDA growth, excluding one-offs for Slide 12.

So other income and expense, sorry, just one second. Other income and expense items include operational FX gains and losses within our reported numbers. These operational FX gains and losses basically come from the medical tourism-related operations. We believe that these FX incomes and losses are part of our operations, given that our revenues -- 12% of our revenues is medical tourism related. So we will continue to have FX gains and losses in our EBITDA numbers. But some of the analyst calculations do not include other income and expense. That's why we deviate, from time to time, within their EBITDA calculations due to the deviations in FX gains and losses. We take it into consideration in our calculation, that's why the difference, the big [outlier] difference comes from FX gains and losses, I can say.

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Deniz Can Yücel, MLP Saglik Hizmetleri A.S. - Strategy and IR Director [6]

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Operator, do we have any other questions? Otherwise, we can...

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Operator [7]

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Have no further audio questions. Back to you for the conclusion.

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Muharrem Usta, MLP Saglik Hizmetleri A.S. - Chairman, CEO & President [8]

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Investor and analysts, economically speaking, 2019 was quite a challenging year, but we have grown in line with our targets in the first half of the year, and we are convinced that we will be more successful in the second half of the year.

We thank you for your attention, and we wish you many healthful days.

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Burcu Öztürk, MLP Saglik Hizmetleri A.S. - CFO [9]

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Thank you.

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Operator [10]

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This concludes today's conference call. Thank you all for your participation. You may now disconnect.