Reading between the lines in the 2Q26 Management Discussion and Analysis of KT Medical Service Public Company Limited (KTMS): Revenue up 1.4%. Net profit down 42.4%. And a subsidiary covenant breach detailed in 1Q26 that is not referenced in 2Q26.
The numbers
Dialysis grows, project businesses shrink
KT Medical Service runs hemodialysis clinics and hospital-based units, with subsidiaries in water purification, dialysis concentrates and pneumatic tube installation. In 2Q26, total revenue rose 1.4% YoY to Bt176m. Hemodialysis grew 9.2% YoY to Bt157m, lifting its share of the total to 89.2% from 82.8%. Water purification revenue fell 28.5% YoY, and pneumatic tube revenue fell 59.6% YoY.
Administrative costs rise again; net profit falls 42.4%
Gross margin was 17.3% in 2Q26, down from 17.8% in 2Q25, as cost of sales rose 2.0% while revenue grew 1.4%. Administrative expenses rose 23.7% YoY to Bt21m. Net profit fell 42.4% YoY to Bt6m, a net margin of 3.2% against 5.7% in 2Q25.
Liabilities rise on payables for new-branch machines
Total liabilities rose 6.8% to Bt317m from Bt297m at end-FY25, following a decline in 1Q26. The largest movement disclosed was a Bt30m increase in trade and other current payables, which the MD&A attributes to hemodialysis machines supporting the opening of new branches. Property, buildings and equipment rose Bt24m over the same period, also to support new branches.
What the numbers don’t show
Comparing the 2Q26 MD&A with 1Q26, much of the filing follows the same structure and wording. The business descriptions, the collateral change on restricted deposits, and most of the administrative cost explanation carry over from 1Q26. The one branch and 16 machines added fell within the 1Q26 guidance of 1–3 branches and 8–32 machines. One detail is worth noting.
A subsidiary covenant breach detailed in 1Q26 is not referenced in 2Q26
The 1Q26 MD&A disclosed that a subsidiary did not meet any of the three financial covenants in its bank loan agreements, which are assessed on annual audited statements. Its D/E ratio was 2.37x against a 1.50x ceiling, its current ratio 0.21x against a 1.00x floor, and its debt service coverage ratio 0.07x against a 1.10x floor. The company stated this was not an event of default.
The company attributed the breach to the subsidiary’s past operating losses, noting that it had begun returning to operating profit in 1Q26. It added that the subsidiary had no overdue installments and was expected to return to compliance in the future. The 1Q26 filing does not name the subsidiary.
Because testing is annual, no new ratios would be due mid-year. The 2Q26 MD&A’s liabilities section discusses payables and loan repayments but makes no reference to the covenant position or the subsidiary’s progress toward compliance.