Amal Holdings in the First Quarter: Profit Holds, Cash Is Absorbed by Acquisitions and Dividends
Amal opened 2026 with net profit of NIS 32.2 million and stable activity across most segments, but operating cash flow almost disappeared in a quarter that included a property acquisition, dividend declarations, and a new special-needs acquisition agreement. The quarter does not break the growth story, but it turns 2026 into a capital-discipline year rather than only an expansion year.
Amal Holdings did not publish a weak quarter, but it did publish a quarter that narrows the room for error. Revenue rose to NIS 550.5 million, net profit rose to NIS 32.2 million, and the home-care engine still generated operating profit similar to the parallel quarter. The problem is that this profit barely reached cash: cash flow from operating activities was only NIS 0.8 million, while the company bought a Binyamina property, declared a NIS 25 million dividend in March, declared another NIS 25 million dividend in May, and signed after the balance-sheet date an agreement to acquire 75% of another special-needs care company. At the same time, management has now given the market a clear number for the home-care tender risk: a possible annual hit of up to about NIS 20 million to the segment’s operating profit if the new tender economics take effect. The first quarter is therefore not a story of immediate operational slowdown. It is a story of a company that wants to keep growing, but is doing so while cash, core-segment regulation, and the special-needs margin all need faster proof.
The Company Is No Longer Just Home Care, but Home Care Still Sets the Risk
Amal is a social and healthcare services group: home nursing care, nursing homes, mental-health services, special-needs frameworks, and other activity. This is not a product company with inventory or a factory, but a labor-intensive services platform built on licenses, nationwide reach, and relationships with public payors. Its value engine sits on two simple but difficult operating tasks: maintaining the spread between tariffs and wages, and converting very large public-funded activity into timely cash.
The first quarter shows that business diversification is still moving forward, but it does not remove the old core. The National Insurance Institute still accounts for 52% of revenue, only slightly down from 53% in 2025. Public customers as a whole contributed NIS 523.7 million out of NIS 550.5 million of quarterly revenue, or about 95% of the total. That gives the company demand stability, but also makes tariffs, payment timing, and tenders the variables that shape earnings quality.
The previous annual analysis framed 2026 as a proof year: whether the diversification created after ADNM and the mental-health activity truly lowers home-care dependence, and whether the dividend consumes most of the company’s cash flexibility. The first quarter gives only a partial answer. Diversification is advancing, but the special-needs segment, which is meant to be the second growth engine, delivered growth with a sharp margin decline. And the dividend continues, but the quarter’s operating cash flow did not fund it.
Profit Holds, but Growth Quality Differs Sharply by Segment
The consolidated number is too stable to explain the quarter. Revenue rose 4.6% year over year, operating profit rose 2.2%, and net profit rose 4.5%. Under that consolidated line, each segment tells a different story.
Home care, the core engine, increased revenue to NIS 329.2 million from NIS 321.9 million, mainly due to tariff updates following minimum-wage adjustments. Operating profit was almost unchanged: NIS 26.3 million versus NIS 26.0 million. That means home care did not break in the quarter, but it also did not gain a new margin cushion. The tariff moved up, wages moved with it, and profit barely moved.
Nursing homes and mental health supplied the stronger side of the quarter. In nursing homes, revenue rose to NIS 67.0 million and operating profit rose to NIS 5.6 million, partly due to tariff increases from the Ministry of Health. In mental health, revenue rose to NIS 44.9 million and operating profit to NIS 8.1 million. These are smaller segments, but they matter because they show that the group has activity capable of expanding profit without relying on the home-care tender.
The weakness sits exactly where the market is supposed to see a growth engine. In services for special-needs populations, revenue rose 11.1% to NIS 106.4 million, but operating profit fell to NIS 6.3 million from NIS 8.9 million. The operating margin dropped from about 9.3% to about 5.9%. The company attributes the decline to temporary operational reorganization following the opening of a hostel, schools, and kindergarten therapy services, but the implication for investors is simpler: the growth exists, its quality still needs proof.
The Quarter Barely Produced Cash Before Capital Moves
All-in cash flexibility after the quarter’s actual cash uses is a better way to read this result than net profit alone. In the first quarter, cash flow from operating activities was only NIS 0.8 million, compared with NIS 37.8 million in the parallel quarter. The reason is not an operating loss, but timing and working capital: customer balances increased by NIS 27.6 million, including NIS 15 million tied to a payment received several days after quarter-end. Payables and other credit balances also declined by NIS 15.2 million.
That is not necessarily a structural problem in one quarter. But for a company that distributes cash and keeps acquiring activities and assets, collection timing quickly becomes a funding question. Investing activity consumed NIS 40.0 million, mainly due to NIS 41.5 million of property and equipment purchases. That includes the acquisition of the Baron Park property in Binyamina, a property used in the special-needs activity and leased to a third party, for NIS 33.7 million plus VAT. The move may support the activity’s infrastructure, but it also turned accounting profit into cash that left the company.
Financing activity provided NIS 28.7 million net, after short-term credit, loan proceeds, loan repayments, interest, and lease principal repayments. Without that financing, the cash decline would have been much deeper. Even with it, cash fell from NIS 18.6 million at the end of 2025 to NIS 8.2 million at the end of March. Net financial debt rose to NIS 277.2 million, compared with NIS 232.2 million in the parallel quarter, and by about NIS 55 million compared with year-end 2025.
That is where the dividend reads differently. In March, Amal declared a NIS 25 million dividend, paid in April. In May, after the financial statements were approved, it declared another NIS 25 million dividend. In less than two months, the company declared NIS 50 million of distributions while the quarter itself barely generated operating cash. There is no immediate liquidity-distress signal here, but there is a clear capital-allocation choice: shareholders receive cash now, while the company also funds a new property, a possible acquisition, and higher debt.
Two Items Will Set 2026: The Home-Care Tender and the Special-Needs Acquisition
The home-care tender moved from a general question to a quantified one. After the Supreme Court rejected appeals in April, the company submitted its proposal for the new National Insurance Institute tender on April 29. The current engagement was extended until December 31, 2026, or until the tender process is completed and contracts with winners are signed, whichever comes first. Management expects the effects to show during 2027 and estimates that the possible annual hit to the home-care segment’s operating profit could reach up to about NIS 20 million, based on 2025 activity and the steps the company plans to take.
That number matters because it puts the risk in proportion. The home-care segment generated NIS 106.5 million of operating profit in 2025, and the group generated NIS 195.3 million of consolidated operating profit. A hit of up to NIS 20 million would not erase the group, but it could erase a meaningful part of the profit improvement of recent years, especially if labor costs keep rising and volume does not grow enough. This is exactly the point raised in the previous tender analysis: the risk is not immediate loss of the entire activity, but damage to the unit economics of the core engine.
The second move is in special needs. On May 19, the company signed an agreement to acquire 75% of a private company that provides care services for people with special needs. The acquired company’s 2025 sales were above NIS 80 million. The consideration includes NIS 22.5 million to the sellers and an undertaking to inject NIS 10 million into the acquired company. The transaction is still subject to approvals from the Competition Authority, the Ministry of Welfare and Social Security, and additional conditions.
Strategically, the deal makes sense: it increases exposure to exactly the field that has become the group’s second growth engine. Economically, it still does not prove what investors need to know. There is no disclosed profitability for the acquired company, no return on the capital to be injected, and no answer yet to whether the weak first-quarter margin in special needs is truly temporary. After the segment’s revenue rose and profit fell, another acquisition in the same field is both an opportunity and a proof burden.
Conclusions
The first quarter for Amal reinforces the conclusion that the company has become a broader services platform, but it does not yet give a full answer on growth quality. The home-care core is holding, nursing homes and mental health are improving profit, and special needs keeps growing. Still, special needs suffered margin compression exactly as the company seeks to increase exposure to that field, and operating cash almost disappeared in a quarter in which the company kept distributing cash and pursuing growth moves.
The current read is cautiously positive, but not clean. There is no operational break here, but three numbers should follow the next reports: whether operating cash flow returns to a level that covers a meaningful part of investments and distributions, whether the special-needs margin returns toward 7% to 8%, and whether the possible up to NIS 20 million hit from the home-care tender remains manageable rather than becoming recurring erosion in profit. If those three items line up, 2026 will look like a healthy transition year toward a broader platform. If not, the first quarter will look in hindsight like the quarter in which profit still concealed the cash cost of growth and distributions.
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