MLP Saglik Hizmetleri AS
IST:MPARK.E
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Ladies and gentlemen, welcome to MLP Care's Q1 2020 Results Announcement Webcast. [Operator Instruction] Dr. Muharrem Usta -- Today, our CEO, Dr. Muharrem Usta; CFO, Burcu Ozturk; and IR Director, Deniz Yucel are with us. Thank you for your attendance.
[Audio Gap]
conference and webcast for the first quarter. I would like to remind you our disclaimer, as usual, and the forward-looking statements. The disclaimer is available on our second page of this presentation, and you can find the financials with footnotes on our website. I'm leaving the floor to our CEO, Mr. Muharrem Usta, for his comments for the first quarter results.
[Interpreted] Thank you, Dennis, and hello to all of our colleagues. I would like to welcome you to our webcast and teleconference where we will be sharing the Q1 2020 results with you. This is indeed very interesting time. We are faced with a pandemic that has made an unprecedented impact on our world. As in many countries around the world, we have moved towards flattening the curve and hopefully, moving to a more stable time. Turkey, we believe, has been quite successful in its endeavors. There is one point that we would like to underline. One important fact is that we have a very strong and profound health infrastructure in Turkey. And it is a fact that both the private and the public sector hospitals have significant infrastructure. And maybe one of the most important success factors, in our case, was the high number of ICU beds. And now we have, with each day, a fewer number of patients, and we have a total of 723 patients in the ICU units, which is a significant drop in the numbers. And I think the various programs restriction of and confinement of the people above the age of 65 and younger than 20 was very instrumental and important in this. And I think other factors were the isolation and curfews that were implemented on specific time periods, while the economy was running in its pace. And of course, also the important factor which was the infrastructure of the health industry.
And as MLP Care hospitals, we have the highest number of ICU beds, reaching 2,500 around the country. And I believe that our group especially played an important role in this period. And only in our hospitals, a total of 1,005 ICU patients were treated.
And of course, during this time, as was the case around the world, we have had disruptions in foreign medical tourism. And I believe that in the following period, Turkey will, indeed, become an important destination in terms of medical tourism in the post-COVID-19 period. And the government has extended various support programs to our industry, including part-time employment payments, and one of the recipients of such support was the health industry in Turkey.
And we were able to control our costs by controlling our costs of human resources, which was obviously an important precaution in this period. And we did take many actions to support the robustness of our balance sheet and our cost structures, and Burcu will be speaking about these in detail in a moment. We were able to increase our revenues at a rate of 5% due to different revenue groups in the first quarter of 2020. And obviously, this first quarter, especially following the month of March, was very significant in terms of the effects of COVID-19. But in spite of this, we were able to increase our revenues by 5%. And also considering the drop in our revenues following the month of March, we focused in on many cost control measures. And in spite of the impact of the pandemic and the measures that we have taken, we were able to grow our adjusted EBITDA by 2%. And we were able to also improve the cost of borrowing as it stands in our balance sheet, and we will continue with other activities in the coming quarters. And in this difficult period, we were able to strengthen our cash flow and access to liquidity.
And throughout the first quarter, we continued with our investment expenditures in a controlled manner. And we acquired a third hospital in Ankara, which has a very high potential for the future. As I explained previously, we do not incur financial cost when acquiring such new hospitals. We employ the leasing method, and we expect a lot of potential from this new hospital.
As a result of all of these, we were able to close Q1 of 2020 with net profit.
You know our group well, but I will quickly go over the numbers. We are present in 16 cities, and we have 30 hospitals. And in the period of the COVID crisis, we had the additional advantage of spanning the whole of the country. And obviously, the COVID crisis hit Istanbul the hardest, so our hospitals in Istanbul were affected by the crisis, while other hospitals that we have in other parts of the country were affected at a lower rate.
If I am to give you an additional information, our revenues shrank by 21% in the month of March. And this was due to the effect that we had in the second half of March. So we closed the month of March with a drop in our revenues of 21%. And in April, we went down a further 23%. And in the month of May, we started to come back again, and we went up by 25% in our revenues. And if our hospitals had only been in the metropolitan areas, we believe that we would be affected at a higher rate. But because we also have hospitals in smaller towns around the country. This helped bring back -- bring us back to the recovery quicker.
If we are to look at the revenue breakdown, the SSI segment in the first quarter of 2020 grew by 3%. And there was an increase of 9% in self-pay. There was an increase of 20% in PMI. There was a drop of 6% in medical tourism.
In the first 2 months of the quarter, we grew in the category of medical tourism by 20%. And in the same period of last year, this percentage was 70%. So it was an additional 20% growth. But of course, due to the impact of the COVID crisis in March, this -- the figures went significantly down.
In March, something good happened, which in effect, affects our operations. There was an increase in the SSI pricing scheme. But obviously, this was overshadowed by the COVID crisis. And the SSI increased the fees for outpatient and examination categories and for university and research hospitals at a percentage of about -- around 30%. And the consolidated effect of this, for us, was 15 -- between 15% to 17%. And most of this would have been, under normal circumstances, an increase -- a direct increase in our revenues, but of course, due to the effect of COVID crisis, this didn't materialize as expected.
We believe that with the beginning of the month of June, we will be at a level that will be 10%, 15% lower than the rate for the same period last year.
And hopefully, as of June, we will start seeing the effect of the price increase of the social security institution.
And as I explained before, the government took 2 important decisions to support the industry in Turkey. The first was the part-time payment, which was extended to the industry. And secondly, there was a 100% increase in the fees for the ICU units. And the government also increased the various inpatient unit fees, which was a great support, especially in this period of crisis.
Let me say a few things about the top-up and PMI categories. We grew the most in the category of PMI in Q1 of 2020. And we have had significant growth in this category. The growth has been more than sixfold since 2016. And we saw the same trend in Q1 of 2020.
And the number of people insured under top-up insurance reached -- increased by 38%, reaching 1.2 million people.
And as you know, Bupa acquired Acibadem insurance in Turkey, and we had made an agreement with them during the last quarter of last year.
And we had revenues of TRY 25 million in Q1 of 2020. And so there will be this important additional impact of Acibadem to our growth throughout 2020.
Let me take a closer look at medical tourism. We continued to grow at a very fast pace in the first 2 months of 2020 before the pandemic. And as I said, we have a very ambitious target in the foreign medical tourism category. Back in 2016, the share of medical tourism in our total revenues was only 5%. And with a compound annual growth rate of 57% in 3 years, we were able to bring our revenues in this category to TRY 435 million in 2019. And therefore, its share in the total revenues reached 12%. In the long term, we would like to bring this to 20%.
And as I said before, although we grew at a rate of 26% in the first 2 months of 2020 for medical tourism due to the effect of the pandemic and with the flight restrictions that were introduced, there was a contraction of 6%. But year-on-year, for the same period last year, the growth was 79%.
And while we're talking about the medical tourism category, we had some collections to be made from Libya. And I'm sure Burcu will mention these. And we were collecting these arrears from time to time. And the Libya Committee is currently in Istanbul, and they started their discussions in order to finalize these payments. We are currently negotiating, but I think Burcu is not settling for what they are offering. But hopefully, we will reach an agreement in the coming days. Really, it's now the negotiation is based on a couple of million dollars, but I think in the end we will finally be able to [ sign ]. One of the companies has already agreed on the amount to be collected, but [ Medipole ] and ourselves, we are still negotiating with them.
On the next page, you see the hospital that we have acquired in Ankara. This was a hospital that was very suitable for our purposes, exactly the size that we wanted and exactly at the right location. There's no need for additional CapEx investment. It's a new hospital, a year old. And as I said, we are leasing it. And the company that sold the hospital to us have resolved their financial problems with the banks, thanks to their contract with us.
And we have acquired a similar hospital in Maltepe, Istanbul in the last quarter of last year. And currently, we're very happy with the performance of this hospital that we acquired last year. And hopefully, we're going to see some very good results in the Ankara hospitals in a very short period of time.
We have another hospital in the pipeline in Gaziantep. We were preparing to open that in Q2. However, that has been pushed to the last quarter due to impact of the pandemic. And we have made no financial investments in this hospital, as I said before. It was built by the owner in a turnkey project, and it was turned over to us in a leasing model.
In new hospitals, such as this one, the biggest item for expense is usually the lease payment or rent.
And there is no fixed amount of rent to be paid. The agreement was made on the basis of a certain percentage of the turnover once the hospital was opened. So there is no cost of a later opening. And this is, indeed, a good model because the percentage will be based on the turnover and our expenditure, so it is quite a favorable model indeed.
We were preparing to open another Liv Hospital in Istanbul. I had told you about this before.
And the model is the same as in Gaziantep here. We will not be having any CapEx investment, and we are not paying anything for the building. And we have postponed the opening of this hospital also due to the crisis, but as I said before, this will not bring an additional financial burden.
The last point I would like to talk about is, of course, the new period of digitalization, which was accelerated due to the corona crisis. I personally was very interested in digital systems, digital platforms, AI algorithms for the last 2 to 3 years. And I was really trying to push our group as a whole towards more digitalization, and the corona crisis in a way helped this endeavor. And we had the chance to continue with the tailor-made solutions and the development of the various digital platforms based on robotics softwares. And the digital transformation office that I had established a year ago really played a very important role in this period.
Currently, we have fully digitalized the critical HR functions, covering human resource base of 20,000 people, and we are moving ahead with new robotic software in this. We have also carried all our procurement activities to the digital platforms, and now we are holding e-tenders. Again, we are concluding digital agreements, and we have fully digitalized platforms to follow these. We currently have an RPI system in place with the private insurance companies, and that is fully operational.
And I'd like to say that none of this happened during the corona period. We have been really struggling towards this end for the last 2, 3 years. But I have to say that the corona crisis helped accelerate these processes, and now every single part and individual in our group, even at the periphery, are able to connect to these systems through the digital networks.
I'll say a final word, and then I will turn it over to Burcu. I think we can clearly say that we were the first hospital group to employ the telehealth system using a fully digitalized telehealth infrastructure. We have, during this period, launched a system where every single physician can use the integrated softwares to carry out medical examinations and procedures by being connected to the system through these digitalized platforms. In the month of April, we were able to realize a total of 3,000 examinations through telehealth systems, and the number for this in the previous month, in the month of March, was zero.
Now I'd like to turn it over to Burcu.
Thank you, Muharrem Bey. So some of you have noticed that we changed the platform. So after the corona effect, we are more connected than ever with our team, including the HQ team as well as the hospital. So we wanted to be face-to-face with our investors, and that's why we changed the platform. I hope you enjoy it -- and you enjoy watching us during the presentation.
So I will be walking you through the Q1 financial statements, and then I will be walking you through on the COVID update and what we've done in terms of precautionary impact and what we've done to improve the financial performance of the company.
So on the first slide, you see that our Q1 '20 numbers. And our revenues increased by 5%, on the back of our continued growth in our domestic patients. Despite funding impact, we could still grow our revenues. We had a very, very successful 2 months' performance right before the pandemia within the first -- January and February results. And if you look at January and February cumulative numbers, our revenue grew by 21%. And in Q1, especially private medical insurance and particularly top-up insurance helped us grow our revenue numbers. On the right-hand side, you see that 5% revenue growth jumped into 7% revenue growth, if you also consolidate the revenues of our managed hospital business.
If you look at the adjusted EBITDA numbers. Our adjusted EBITDA could still grow by 2%, despite the fact that our cost efficiency studies only started effective from April. And I will first elaborate on the important details from our cost efficiency studies that we adopted right after the corona, within the end of the presentation. If you take out the positive impact of operational FX gains and losses, our adjusted EBITDA slightly declined by 1% within the first quarter of 2020. Within the reported EBITDA numbers, we have 4 hospitals that are in the ramp-up stage. Those hospitals represent, 2 of them are greenfield hospitals and 2 of them are acquired hospitals. Those hospitals recorded a total of TRY 5 million of positive EBITDA. So is there a problem with my voice?
Yes.
Okay, hold on. I will be connecting to the...
[Technical Difficulty]
So if you take out the positive impact of operational FX gains and losses, our adjusted EBITDA number has slightly declined by 1% in Q1 '20. So we have 2 hospital -- 4 hospitals that are in the ramp-up process within our Q1 numbers. 2 of them are greenfields that we've opened late 2018, and 2 of them are acquired hospitals that were opened, 1 of them was opened in December '19, and 1 of them has opened recently in 2020. So despite the ramp-up in progress and as well as the COVID effect within the mid-March period, we could still recognize positive EBITDA from these hospitals.
Can you make -- next slide. Yes. Our domestic revenues increased by 10% in Q1 '20, and this was basically driven by the strong growth in inpatient and outpatient unit prices. If you look at the January and February results, our domestic revenue growth was 20%, which is well above the inflation rate. And on the mid block, you'll see that our foreign medical tourism successfully increased by 26% within the 2-month operating results. However, with the start of COVID impact on flight restriction that started in March, our tourism revenues, in total, declined by 6% in comparison to the previous year. On the right-hand side, you see that our other ancillary business revenues decreased by 24%. Our management fees, which are reported under other ancillary revenues, increased by 25%, which is very successful and due to the growth of the revenues of the managed university hospitals. On the other hand, as a management decision, we decided not to take part in one of the laboratory tenders in 2020. That's why you see that other ancillary business revenues is declining. But on the other hand, this base impact will be reversed within the Q3 of 2020.
Overall, we don't expect any impact of this nonrenewal of the laboratory business on the EBITDA numbers. In Q1 '20, we successfully achieved very strong pricing growth. If you look at the numbers of outpatients and inpatients, our outpatient revenue grew by 9%, basically, thanks to our growth in our outpatient reprices. On the other hand, our outpatient volume decreased by 10%. This is primarily related to the pandemic impact. On the inpatient side, we had a very successful unit price growth. Compared to the last 5 years compound growth rate of only 5% unit price growth. In our inpatient in 2020, our unit prices quadrupled to 19% unit price growth in the first quarter of 2020. So we believe that once the patient volumes rebound right after the pandemic effect, our strong unit pricing in both outpatients as well as the inpatients will help us quickly cover our revenues within the remaining quarters of 2020. We do have a well-managed cost structure in place, which also continued within the Q1 results despite the pandemic impact in March. So if you look at the EBITDA profitability, there is a slight decline from 24% -- 24.7% to 24% in Q1. And if you look at it on a cost bucket basis, material consumption as a percentage of revenue improved by 240 basis points. This is basically related to the decline in the share of laboratory business in 2020, which had a higher base cost in comparison to patient treatment. As I said, this is related to the nonrenewal of one of the laboratory contracts, and this will have a positive impact on our profitability level. And on the doctor side, there is a slight increase in the doctors as a percentage of revenue. This is related to the new hospital acquisition as of the year-end of 2020 -- sorry, 2019. And in 2020, in February, we had another half of acquisition. So those hospitals during their ramp-up dates, they have high deductive cost as the first on revenue. But throughout the whole year, we don't expect any increase in our deducted cost ratio. If you look at the personnel costs, there's a slight increase in personnel costs as a percentage of revenue. Similar to our doctor costs, of course, the newly acquired hospitals at the beginning of their ramp-up stage as a slight increase on our cost base as a percentage of revenue. And basically, new hospital acquisitions, once their revenue ramp-up and then their cost ratio will improve. On the other hand, there was a rate increase by 15% regarding the minimum rate at the beginning of the year.
So related to the decline in the revenue side, with the COVID impact, our personnel cost as a percentage of sales increased in March. But as mentioned by Muharrem Bey, there is a personnel cost incentive by the government that we've been utilizing. So as of April and throughout the second quarter of 2020, this increased impact in our personnel cost will definitely improve and relate in our profitable numbers.
On the outsourced services purchases, this number includes laboratory, cleaning, catering and those types of or imaging services that we outsource from third party. It is an increase in the outsourced services as a percentage on revenues. This is primarily related to the increase in the share of such services in our total revenues. So this trend will continue throughout the year. If you look at the other expenses, all other expenses are primarily including the energy and [indiscernible] medical reason related marketing and representation expenses. And these expenses as a declining in line with the decline in the medical tourism as well as the cost management strategies that we adopted right at the end of March. So all other expenses has a declining trend, partially related to the medical tourism decline. On the net debt position, as of March '20, our net debt position stands at EUR 85 million. And you'll see that there is some big increase in our net debt position or from position in comparison to the year-end. This is related to the decline in the euro-denominated cash balances. If you look at it on a gross debt basis, you'll see that our gross debt from a euro-denominated perspective has declined by EUR 4 million. So we decided not to keep the cash in euro-denominated terms due to the COVID impact. So we said, there is an increase in the on-net debt position. But on the other hand, our strategy of not withdrawing any kind of FX denominated. That is still continuing. So we haven't withdrawn any type of euro or dollar generated cash. So whatever we withdraw or we have a new bank loan. It's all nominated in Turkish lira. So there is no change to that strategy. And on the hedging side and on our FX exposure, regarding the 2020 debt service, including principal and interest payments, around 70% of our denominated debt service is already hedged. So for this year, there is no big impact on the cash flow regarding the devaluation of Turkish lira. So whatever we recognized in our P&L, it's going to be almost fully non-cash loss regarding the devaluation of Turkish lira.
And on the right-hand side, you see that our last 12 months were for medical tourism revenues, which are basically denominated in FX space, either Euro or dollar denominated revenues, already almost fully covered our net debt position. And even 1 year worth of revenues cover the total net debt position that will be amortized over a 4-year period. So as we always state, from a P&L perspective, we are fully covered. This is a natural hedge in our income statement. Once -- after the corona impact, once our medical tourism revenues starts to rebound, our P&L will be positively impacted with the devaluation of Turkish lira. So Central Bank of Turkey have been decreasing the policy rate over the past almost 1 year. This decrease has a big impact, positive impact on our interest cost. Around 65% of our interest costs are valuable interest. So as long as the Central Bank continues to decrease our -- decrease the policy we are enjoying that in our P&L numbers and interest costs. And one more update to the regulatory environment in the banking side. So the limitations on the refinance options of bank loans, they've been renewed by law. That's why we have more opportunity to refinance our existing bank loans which really limit those early payment penalties. So we've already refinanced 2 big bank loans at a total of TL 130 million, and those refinance transaction brought us a total saving of TL 40 million throughout the refinance transaction. And those refinance transactions were completed as of April at the beginning of April. So you'll see the positive impact on our numbers, starting from the second quarter of 2020 on our interest costs. On the other hand, there are further bank loans that we would like to refinance. And this will definitely bring down our interest costs. So there is a big refinance in place that we've been working on. We aim to complete the transaction throughout the end of second quarter. So we are currently drafting the bank loan agreements with the banks and lawyers. So with this transaction, there will be a definite decline in our interest cost. And this will be around TL 35 million additional savings per year. So we expect to decrease our markup on the TRLIBOR rate as well as the Euro-denominated loans, interest cost will be decreased. And secondly, the biggest aim of the refinance transaction is that we will be cutting our open FX position by around EUR 35 million. So the current EUR 85 million of open net debt position will be decreased or open gross debt position will be decreased to EUR 50 million. So we will be converting our Euro-denominated loans in Turkish lira with the refinance position. So this will -- this refinancing transaction will definitely decrease our open position and our FX losses will be recognized in our P&L as well as the Turkish lira denominated interest expenses will be definitely decreased.
On the CapEx side, as you may have assumed, we started to tighten the belt after the COVID impact, which I will walk you throughout the end of the presentation. But overall, if you look at the Q1 results, our maintenance-related CapEx as a percentage of revenues increased to 2% in comparison to 1.5% within last year. Our efficiency studies as well as the CapEx management initiatives, still continue. On the other hand, as mentioned by Muharrem, we expand IT-related CapEx on the digitalization side, that's why there's a slight increase in our CapEx spending as a percentage of revenue. And we will continue to do that. But overall, we are not planning on increasing our CapEx ratio over revenues throughout the whole year. So we will make sure that we don't go beyond the borders in terms of CapEx funding. And if you look at the operating cash flow, there is definitely a successful story here. The operating cash flow increased to TL 200 million in Q1 2020. In our last presentation, we talked about the vendor payments as well as the working capital cycle improvement initiatives that we adopted. That's why you see that the operating cash flow to EBITDA ratio increased to almost 90% within the 1Q results. So we expect to keep this improved cash flow cycle within the second and third quarters as well. If you look at the March 2020 and the pandemic impact to manage the working capital management in a better fashion, we set up a committee or planning customer collections as well as supplier payments. So we will be continuing to negotiate the customer collection terms, i.e. receiving advances from private medical insurance during the hard time of pandemia as well as getting some additional maturity dates from the vendor so that our liquid position is strengthened as much as possible.
Now I'll walk you through the actions that we've taken since the COVID pandemia was announced. We've almost taken all types of precautionary actions to make sure that our balance sheet as well as the position and EBITDA management is in place. And if you look at the cost side, regarding the personnel expenses, so the government incentive of short-time work management program is now utilized. You'll see the results of this incentive program as of April 2020. So this is a program basically announced for as of May and June. And depending on the current situation, the government will announce another plan, and we'll see how it's going to evolve. But currently, we are fully deploying and utilizing this government incentive plan. And so this is basically giving us around 40% decline in our fixed price and our cost base. And if you look at the deducted cost, almost all deducted cost are variable costs. So with that in mind, revenue decline in this regards to COVID cases also decreased nominal doctor spending. So this cost is already controlled throughout being valuable cost structure. If you look at the rent expenses, so we've asked for rent discount from all of the landlords within day one of pandemia and currently, out of 30 hospital 11 hospital buildings, we could get 50% discount during the pandemia period, which is currently April and May. So we will be continuing this effort as long as we see pandemia negative impact on our revenues. So currently, we are working on matching our cost base with our revenue base. That's why our landlords are very much collaborating with us in terms of decreasing our fixed cost base. So for the rent, we aim to get almost 100% decline or 100% coverage in 50% discounts. And on the material side, of course, we have some hygiene related products regarding the COVID cases and our material cost base increased in that plan. But on the other hand, the government controls the unit prices. So in that respect, we don't have any problem with respect to the minimal unit prices, and we are buying out or procuring the whole hygiene related products from the government similar to all private hospitals in Turkey. And other costs, we've done many, many initiatives on the other cost. So regarding maintenance, regarding the marketing and representation related expenses, we've got many different sources of discounts from the suppliers. So our goal aim is to decrease our unit cost base as well as the fixed cost base by minimum 50%. So we've already been very successful in that. So you'll see the results in our April and may figures basically. And as long as the revenue decline is continuing, we will be having decreases in our unit cost as well as the fixed cost base.
On the CapEx side, all kinds of discretionary as well as the growth related CapEx is currently suspended. So we are currently expanding on the IT and digitalization efforts. On the other hand, we tightened the belt, and we will have some more CapEx spending as long as revenue recovers and rebounds within the second quarter and third quarter. On the cash flow and liquidity management, once the corona was announced, we received a long-term loan of TL 330 million from our syndicate facility. And we wanted to be as liquid as possible in our balance sheet and cash flow management. And also, this loan was different from the other ones given the fact that it has a very attractive interest rate in comparison to our existing bank loans. So this is a 300 basis point decrease of this bank loan in comparison to our existing loans. So this shows our strength in terms of negotiating new bank loans and in terms of getting a big amount of bank loan from the syndicate facilities.
And on the working capital side, as I said, there is a big net working capital committee gets together almost every day to manage the customer collections as well as vendor payment. So we make sure that our position continues, and we make sure that we provide procurement or materials in an efficient manner in this COVID environment. And on the other hand, lastly, the government postponed all the tax payments, including VAT, withholding and payroll taxes up until October 2020. So this also gives us some room for liquidity management as well.
So this is basically a summary of our actions that we took as part of COVID. As mentioned by Muharrem, at the beginning, we are trying to do as much as and in the telemedicine side we are trying to create new revenue channels as much as possible. On the other hand, the decline in the revenue side is compensated through the cost base increases. So the finance teams as well as the procurement teams efforts for the cost containment studies, which have been quite successful so far. So we have enough cash in our balance sheet. To cover this COVID period and to cover the payments throughout the COVID period.
So now I will hand over to Khan. If there is any questions, we are happy to answer.
[Operator Instruction]. First question coming from Metin Esendal.
I got a couple of questions. Maybe I can start with your comments on the short-term work alliance -- allowance. So we expect this to extend beyond June? That's my first question.
Maybe I can take this. [ Foreign Language ]. Maybe I can take this question. So as long as the COVID impact continues, we assume the government will continue to provide this effort or this incentive program. On the other hand, if you look at our pricing out costs, this COVID impact allows us to get more insight about our personnel costs. And we have more time to benchmark our hospitals from one another. So -- and we have recently launched a big IT project regarding the HR cost management. So basically, all the personnel are deploying time sheet to make sure that we have a chance to compare each hospital from one another on a departmental even by person basis. So even though the incentive program doesn't continue or we don't have any new further incentive by the government. I believe that we will have more room for pricing our cost management because we have more insightful knowledge around our price and our cost. So we will be managing our pricing and cost in a more efficient manner in the future.
Okay. Understood. And regarding the pandemic status of the private hospitals, do you expect this will be changed, given that the number of cases are much lower compared to March?
Maybe Etsam, if you can translate and Muharrem Bey can answer this one?
[Foreign Language]
[Interpreted]
Well, we are expecting to see some change as of June. And of course, it will be the public opinion who will have the biggest impact. And already, we are seeing an increase of about 60% in number of examinations. So our people are really trying -- starting to act in a more relaxed manner as the markets are slowly easing. So I am expecting that, especially in the private hospitals starting in June, we will see an increase in the number of hospital visits and the hospitals will move out of being pandemic hospitals starting in June. And it is the fact that a lot of people had to postpone their regular procedures due to the pandemic, and we expect a surge following this period. And we have been seeing a lot of activity in the last 10 days, and we expect to see a real backlog in the next 2 to 3 months because people have been postponing and neglecting many of their therapies by not coming to the hospitals. But I expect that the ministry will also lift the designation as pandemic hospitals, which will, of course, increase traffic further.
The last question will be on the covenants. Net debt-to-EBITDA was 2.6x. But as far as I remember, the covenant regarding around [ 2.5 ] can you tell us what's the current situation regarding this covenants?
So this is definitely a force majeure in Turkey and around the world. On the other hand, the refinance transaction. We are currently drafting the agreement. And within the agreement, we are -- we already put to the covenants calculation, a Q4 pandemia impact. So most probably, there won't be any covenant testing for 2020 year end. And because we are currently drafting this agreement during the pandemic impact. So to -- the banks are already knowledgeable around the idea of pandemic impact so that will be true for that already within the finance transaction.
I guess there is one more question.
[Interpreted]
The question is regarding the 5 -- the prospective 5 hospitals that were planned for 2020. One has been already opened 2 are in the pipeline ready to be opened. And the question is regarding whether there will be new openings in 2020?
[Interpreted]
I have been talking about our business model, which does not bring in an additional financial costs, but it foresees the opening of new hospitals. And to the fact that we are significantly completed because of the corona crisis, but we do see a lot of activity in the health industry, the health sector. And there was, for instance, another hospital that we were looking at. We were becoming interested in, Izmir. And so we were thinking about starting negotiations, and those could come to our agenda once the crisis is over. Because these types of consolidations, obviously, do not have a negative effect on our financial balance sheet. So we see them as being very favorable opportunities.
I think Hanzade has one question? If she can.
Please Hanzade. The floor is yours.
[Interpreted]
There was an increase of 25% in turnover in May, but you are -- you have explained that you are expecting a 15% drop in June. What is the reason for this?
[Interpreted]
Actually, the 15% that I mentioned about June had to do with something else. We do expect to continue our growth in June, but we expect to be 15% lower than our usual rate. Hopefully, in June, we will have recovered 85% of our turnover. And this is an important leap forward. And hopefully, in July, we will have caught the regular trends.
[Foreign Language]
Hanzade, I couldn't hear it properly. Can you repeat the second question?
[indiscernible]
So regarding the price adjustment that was announced in early March, it's definitely a sustainable adjustment. It's made for the outpatient. And once the volumes rebound, definitely, we will have some positive impact in our P&L. We've already seen some positive impact in our Anatolia Hospitals. At the beginning of the presentation, we've discussed the idea of having regional differences in our revenue portfolio within the COVID. For example, in Anatolia Hospital, because we still have a big decline in our patient volume or even revenues increased in some of our hospitals in Anatolia. So definitely, there will be a positive adjustment in our numbers once the volumes rebound. On the outpatient side, especially because the government price increase as of early March was related to the outpatient unit prices. So this will -- if you deduct the doctor cost from this price adjustment, it will definitely fully flow to our EBITDA numbers. And as we've discussed within our webcast in the previous one, so there was -- this number or price adjustment wasn't included to our budgeted figures. So there will be definitely a big improvement in our numbers -- revenue numbers regarding the government price adjustments. And on the other hand, as of early April, right after the COVID, the government increased unit prices of ICU intensive units as well as the COVID cases. So this is, again, positively impacting our numbers. The hospitals that are treating the COVID cases as well as the hospitals that already had some ICU patients are positively impacted with this adjustment. So we believe that it will continue within the remaining quarter of 2020.
And Ingo, I can assume 19% price improvement throughout the year, right?
That should be so because we haven't made any unique price adjustments to our prices after the COVID. So this strong pricing impact in our numbers within the first quarter of 2020 will be continuing over the course of 2020. So there is COVID already -- COVID only impacted our patient volumes. Once it rebounds, this 19% unit price growth definitely will be supporting us in our revenue growth. And also in the first quarter of 2020, we only have 1 month of SSI pricing adjustment. So January and February, we didn't have any pricing adjustments. Despite that fact, we still could grow our unit prices by 19%.
We have one more question from Metin Esendal.
I want to follow-up on 2020 guidance. Did you withdraw your guidance?
So currently, we are assessing that. We announced our guidance right after the first webcast, and '20 we are reassessing our guidance so we will be informing you on that. But if you look at the current situation of the whole world, including Turkey, it's very hard to predict what's going to happen. And that's why to us, June is very, very important because we've gone through the worst month of April, and May has been already for us one of the worst EBITDA production months due to Ramadan impact. So it's a good thing that COVID and Ramadan coincided in our numbers. And June is going to be quite important for us to see and forecast the year-end. So that's why once we see the June result and the patient volumes within June, we will be having more certainty or we will be having more insight about year-end results. So currently, we are reassessing the guidance numbers.
Okay. Last question on the receivables from Libya. I know -- I understand you are doing some kind of negotiation, but do we expect some kind of write-off in second quarter results.
Well, we are working towards not having any write-offs on the other hand, even though, let's say there is a write-off, this number pertains to revenues of 2014 which is almost 6 years ago. So we look at Libya as a case towards improving our liquidity and bringing in more cash and decreasing our net debt situation. So definitely, there will be a very good cash flow production through our collection on Libyan receivables. So as we said at the beginning of the call, if we wanted to collect, we could have collected as of now. But we are currently struggling and fighting with the Libyan officials to make sure that we collected the full amount of Libyan receivables.
There is one more question, I don't want to miss -- from one. I think all have asked their questions. so if there is no other question, I can read it and answer it.
Please.
Are you able to comment on the guidance for this year overall? And what you believe is achievable based on what you see today.
As I said, we will want to see June results and patients volumes of June. People are currently delaying their surgeries -- elective surgeries or surgeries that really need to be made immediately. So the lockdown impacted that a lot. So we'll see how the patient volumes will be impacted in June, and we will have more idea around the year-end forecast right after June.
So that's the first question. Let me read the second one.
Regarding the improvement you saw in May of 25% in revenues that Muharrem Bey -- I assume this is month-on-month, not year-end on year, but please confirm.
So this is basically 25% improvement is in comparison to previous months. So month-over-month throughout 2020. So we look at the numbers on a monthly basis. So maybe, Muharrem Bey, if you want to add anything on to that?
[Interpreted]
Of course, that was month-on-month, correct.
The reason I mentioned that was because we really saw rock bottom in April. And then there was a very quick, very fast, rapid recovery in the month of May.
And last question is also, do you mind explaining again why you decided to convert euro cash to Turkish lira in the current environment and increase the net FX position?
So on that strategy or decision, so we use our cash balance as a petty cash to use for payments and working capital side. That euro cash denominated in euro at the end of year-end was not an idle cash that was kept to balance off or to compensate for any euro-denominated loans. Basically, that number is at the beginning or right after the year-end at the beginning of the month of January, it converts into Turkish lira and you use that cash balance to make your payments for suppliers [indiscernible]. So every month, every month end, we convert into euro, the numbers to make sure that we see the impact. That's why this time throughout the end of March, we decided not to convert it because there are some so many ups and downs within the devaluation of Turkish lira. We didn't want to have any FX gains and losses. Throughout the conversion of the cash Euro cash into Turkish lira, once we wanted to make some payments. So basically, this is not an idle cash that we just keep it in balance sheet. It's the evolving base of cash used for working capital purposes.
[Interpreted]
I believe that was the end of the questions. I would like to thank you all for taking part in this webcast. I would like to underline one point before we close.
I think compared to many countries around the world, in Turkey, we were able to flatten the curve in the COVID crisis very effectively. And hopefully, we're back on track to a more normalized situation. And that is why I expect to see a very, very rapid recovery and growth in the month of June. And I think I would count Turkey together with Germany as one of the most successful countries in the fight against COVID-19. And I think this will further reinforce Turkey's position as an important destination in terms of medical tourism. And the Ministry of Health has issued a circular, which announces that medical tourism can start as early as 20th of June. And as you know, the Turkish airlines flies to all corners of the world. And various health organizations, institutions and companies have joined forces to collaborate in trying to bring in more medical tourism for our hospital.
I wasn't unable to note down all the countries, but Muharrem Bey listed a long list of countries, including: Iraq; Libya; Azerbaijan; Georgia; Turkmenistan; Kosovo; Albania; Romania; Serbia; Bulgaria; Moldova; Qatar; U.K.; and the Netherlands. And the Turkish Airlines will start flying to all of these destinations which collectively comprised 95% of our revenues from medical tourism.
Yes, it is true that the world is faced with an unprecedented crisis, but obviously, any situation of crisis brings along opportunities. And we are focusing in on these opportunities, and we will come out of this crisis with a lot more strength.
I thank you very much for your attention, and I wish you all very healthy days.
Thank you very much for your attendance, for your further questions and inquiries. You may contact us through our corporate e-mail address,investor@mld.com. Thank you so much.
[Portions of this transcript that are marked [Interpreted] were spoken by an interpreter present on the live call.]