- Consolidated Revenue: INR6,893 crores, a growth of 9.5% over FY23.
- Hospital Business Revenue: INR5,686 crores, up 11.3%.
- Diagnostic Business Revenue: INR1,372 crores, a marginal growth of 2%.
- Consolidated Operating EBITDA: INR1,268 crores, up 15.1%, with a margin of 18.4%.
- Hospital Business Operating EBITDA: INR1,058 crores, margin improved to 18.6% from 16.9%.
- Diagnostic Business Operating EBITDA Margin: 15.3% versus 17.7% in FY23; adjusted margin 19.5%.
- Consolidated Reported PAT: INR645 crores, compared to INR633 crores in FY23.
- Q4 Consolidated Revenue: INR1,786 crores, a growth of 8.7%.
- Q4 Hospital Business Revenue: INR1,490 crores, up 10.3%.
- Q4 Diagnostic Business Revenue: INR338 crores, a marginal growth of 2%.
- Q4 Consolidated Operating EBITDA: INR380 crores, margin of 21.3% versus 16.5% in Q4 FY23.
- Q4 Hospital Business Operating EBITDA: INR333 crores, margin of 22.4% versus 16.4% in Q4 FY23.
- Q4 Diagnostic Business Operating EBITDA Margin: 14.0% versus 14.9% in Q4 FY23; adjusted margin 15.9%.
- Q4 Consolidated Reported PAT: INR203 crores, up 46.9%.
- Net Debt: Reduced by INR76 crores to INR264 crores, net debt-to-EBITDA of 0.17x.
- Hospital Business Occupancy: 65% compared to 67% in FY23.
- ARPOB: INR2.22 crores, growth of 10.8%.
- Medical Travel Revenue: INR479 crores, up 12%, contributing 8% to total revenue.
- Agilus Diagnostics Revenue: INR1,372 crores, up 2%.
- Agilus Diagnostics Non-COVID Revenue: Increased by 6% in FY24.
- Agilus Diagnostics Operating EBITDA: INR209 crores, margin of 15.3%; adjusted margin 19.5%.
- Agilus Diagnostics Average Realization per Test: INR342 for FY24.
- Agilus Diagnostics Average Realization per Patient: INR836 for FY24.
Release Date: May 24, 2024
For the complete transcript of the earnings call, please refer to the full earnings call transcript.
Positive Points
- Fortis Healthcare Ltd (BOM:532843, Financial) reported a consolidated revenue growth of 9.5% for FY24, driven by an 11.3% increase in hospital business revenues.
- The company's consolidated operating EBITDA increased by 15.1% to INR1,268 crores, with hospital business EBITDA margins improving from 16.9% to 18.6%.
- Fortis Healthcare Ltd (BOM:532843) reduced its debt by INR76 crores, resulting in a healthy net debt-to-EBITDA ratio of 0.17x.
- The company added 246 beds during FY24 and plans to add more beds in key facilities, indicating ongoing expansion and capacity growth.
- Revenue from medical travel grew by 12% in FY24, contributing 8% to the total hospital business revenue, highlighting the company's strong international presence.
Negative Points
- The diagnostic business showed only marginal growth, with revenues increasing by 2% in FY24, and operating EBITDA margins declining from 17.7% to 15.3%.
- Occupancy rates in the hospital business decreased from 67% in FY23 to 65% in FY24, indicating a slight drop in utilization.
- The company incurred one-time expenses of INR58 crores related to rebranding and provisioning for the diagnostic business, impacting overall profitability.
- Certain hospitals, such as those in Mumbai and Bangalore, did not achieve desired occupancy levels, affecting overall performance.
- The company faces ongoing legal costs related to legacy issues, amounting to INR30 crores to INR50 crores annually, which could impact future profitability.
Q & A Highlights
Q: My first question is on the hospital business. We have gotten to 22% margin in this quarter. I understand there's some one-off. First, if you could quantify what the one-off was? And second, given our exit margins in the quarter, is it fair to assume that we build on this margin in FY25 because initially we guided to getting to 22% margins probably in '26. So I just want to understand the trajectory from here.
A: Hi, Neha. This is Vivek. So first of all, there is no one-off in the quarter. Only some of the accounting adjustment has happened in the last quarter pertaining to the full year. So there is no one-off type of expenditure. The normal thing like expected trade losses, provision write-back, and things like that. So those types of things, which is generally done at the year-end. So the EBITDA margin, excluding those entities also for the quarter is around 21%. And as regard to your other question on build-on the margins, during this financial year, we could demonstrate around 2% EBITDA margin improvement over the last year. I am expecting similar type or slightly better than this in the next financial year. So we are maintaining our guidance which we have given earlier.
Q: Just the first one, given the Supreme Court order on one of the NGO petition around standardized pricing, I just want to know what your take is in terms of how this could likely pan out. And a related question is on the ARPOB. So we have again seen another 10% kind of ARPOB growth for the quarter, maybe for the full year is also similar. So how should we look at ARPOB growth looking ahead? Is there any impact? Or are you trying to see whether the standardization will likely have an impact on how you price your services into fiscal '25? And also the split of ARPOB between price and mix, if you could highlight? That's my first question.
A: Yeah. So the first part related to the PILs and the Supreme Court, et cetera, I think the tenor of the affidavit filed by the government is very positive according to us. So we do not expect too much of an impact of it. On the other hand, what we are hearing is that the CGHS and other rates are going slightly to be revised upwards. So that would overall, not have too much of an impact on that. Regarding the question on ARPOB, we definitely had a good growth in the ARPOB and that was primarily led by the increase in the surgical volume by about 8% year on year, and that also is the case mix, which led to that change. Now going forward, I would request Vivek to add to this.
Q: And how many beds are we adding in FY25? Will it be 300 -- and where exactly will these beds be added?
A: So one is the Faridabad unit, which we are adding the beds, the expansion is almost completed, 50 beds we will be adding. Shalimar Bagh also, there 50 beds we will be adding, and this takes us to 100 beds for the current financial year. For Manesar facility, we are expecting to open by second quarter of this financial year, and we will be opening initially 100 beds, and we will see how the ramp-up goes on. Another facility in Kolkata, where we are adding 100 beds, two floors, we are operationalizing and all the approvals are in place. And in the first quarter itself, we should be starting those 100 beds. Then rest of the beds are at BG Road, which is in Bangalore where we are expecting some OC to come and that we are expecting by the second quarter end for the current financial year.
Q: Just the second question is on the Agilus. I know we had a DRHP out there. We had to withdraw it for whatever market conditions/whatever the performance of the company. So what's the medium-term outlook for either a listing or when should we look at it? Also, the related question is on the put option liability for the private equity. How are we going to navigate it? October 2024 is the date I remember, but I may be wrong. But in a case where some of them want to kind of exercise their put option, how will Fortis/IHH respond to that? Thank you.
A: Yes. I will take that question again. You have already mentioned, we have withdrawn, as you know, the DRHP and there is a put option lies with the private equity investors. So we are working with the private equity investors to come out with a solution for this particular thing. One option is for the revival of the IPO, where we are working with bankers along with the private equity investors for revival of the IPO. And parallelly, we are working on the various other options, which may be possible in case the revival of IPO is not possible. So from that angle, I think we have maybe a couple of months more to finalize these things. So, we are working on all the options that are still open, and we are working very closely with the private equity investors.
Q: Apologies for the last time. On Diagnostics, just wanted to understand how we are looking at revival of the business. We saw a negative volume growth, a number of test growth this quarter. Given the rebranding, should we expect a more slower recovery in that business?
A: Thanks, Neha. This is Anand here. In fact, for the overall year, we have grown the volumes. Non-COVID volumes have actually grown by 6.4%. And the volumes for the quarter have grown by just 0.6%. We are seeing a recovery on the growth on the volume as well. And also, if you see we have taken a price increase around the end of February. And so we expect that also to kick in. So we have taken a price increase of about 5% to 7% for the B2C business. So that also will be kicking in for this financial year. So we are seeing recovery on the volumes.
Q: And then just one other question on the entire Fortis business. What is an update on the high court? What is the next timeline that we should look out for or possible hearing on the high court case?
A: Yeah. So the hearings have been happening in the case. We expect the next hearing to happen on the 15th of next month. And that would probably be one of the final hearings, after which maybe some arguments will be made, and then we should see some resolution to the case, but we cannot really guess as to how much time that it will take. But it appears now that things are coming towards conclusion.
Q: I just wanted to kind of clarify a couple
For the complete transcript of the earnings call, please refer to the full earnings call transcript.
