- Consolidated Revenue: INR 1,680 crores, an 8% growth from INR 1,560 crores in Q3 FY '23.
- Operating EBITDA Margin: 16.9%, down from 17.7% in Q3 FY '23 and 18.6% in the trailing quarter.
- Hospital Operating EBITDA Contribution: Increased to 88% in Q3 FY '24 from 76% in Q3 FY '23.
- Profit After Tax (PAT) before Exceptional Items: INR 127 crores, compared to INR 131 crores in Q3 FY '23.
- Reported PAT: INR 134 crores, down from INR 142 crores in Q3 FY '23.
- Net Debt to EBITDA: 0.45x, compared to 0.41x in Q3 FY '23.
- Net Debt: INR 518 crores, up from INR 471 crores at the end of Q3 FY '23.
- 9-Month Consolidated Revenue: INR 5,107 crores, a 9.7% growth over the corresponding previous period.
- 9-Month Operating EBITDA: INR 887 crores, up from INR 830 crores in the same period of FY '23.
- 9-Month PAT before Exceptional Items: INR 429 crores, slightly down from INR 432 crores in the same period of FY '23.
- 9-Month Reported PAT: INR 442 crores, down from INR 495 crores in the same period of FY '23.
- Occupancy Rate: 64% in Q3 FY '24, down from 66% in Q3 FY '23.
- ARPOB (Average Revenue Per Occupied Bed): INR 2.23 crores, a 10.6% year-on-year growth.
- Hospital Business Revenue: INR 1,389 crores, a 10% growth from Q3 FY '23.
- Hospital Business Operating EBITDA: INR 251 crores, a 19% growth, with a margin of 18% compared to 16.7% in Q3 FY '23.
- International Business Revenue: INR 113 crores, flat compared to INR 114 crores in Q3 FY '23.
- Revenue from Digital Channels: Grew by 32% year-on-year, contributing 25.7% to overall hospital revenues.
- Revenue from Focused Medical Specialties: Increased to 61.4% of overall hospital revenue in Q3 FY '24 from 60.9% in Q3 FY '23.
Release Date: February 08, 2024
For the complete transcript of the earnings call, please refer to the full earnings call transcript.
Positive Points
- Consolidated revenues grew by 8% year-on-year to INR 1,680 crores.
- Hospital operating EBITDA increased to 88% in Q3 FY '24 from 76% in Q3 FY '23.
- ARPOB (Average Revenue Per Occupied Bed) grew by 10.6% year-on-year.
- The hospital business operating EBITDA grew 19% to INR 251 crores, reflecting a margin of 18%.
- Expansion strategy includes adding 2,200 beds over the next 4 years, with significant brownfield expansions.
Negative Points
- Consolidated operating EBITDA margin decreased to 16.9% from 17.7% in the previous year.
- Reported PAT (Profit After Tax) declined to INR 134 crores from INR 142 crores year-on-year.
- Occupancy rates dropped to 64% in Q3 FY '24 from 66% in the previous year.
- International patient revenue remained flat due to geopolitical issues in the Middle East.
- Net debt increased to INR 518 crores from INR 471 crores year-on-year.
Q & A Highlights
Q: Sir, on the hospital performance, the fact that we managed to keep margins flat despite the bed addition that we saw and seasonally weak quarter does indicate the point that you've mentioned that we've been able to do a lot of cost optimization and improvement in efficiency. One, if you could highlight how much of this is already captured in this 18% margin? I mean is there more scope for this to contribute to margins? And second, as we see occupancy improve from 9-month number of 66%, 67% on the existing beds, what is the trajectory? I mean, should we see margins crossing the 20% in the very near term? Or could that be a little more longer journey? Just trying to understand the gradient for the margin expansion that we should see in the hospital business.
A: Yes. Neha, I can take this question. Vivek, this side. So your margin as you rightly mentioned we are moving towards our target and the guidance given earlier of 20% margin by the year-end. So that we are expecting. And the main lever for our margin is obviously on the occupancy side. As you rightly pointed out, occupancy is slightly lower as against our expectation, and we are below 65% now. And as we're able to move from the occupancy side, I think this margin improvement will be. And plus, this divestment as Dr. Raghuvanshi mentioned about Malar, which is effected from 1 February '24 that will also help in improving the margin.
Q: Vivek, I can be a little more specific here. If I have to say the 18% margin improvement, how much of it would come from Malar divestment. And how much of it would then come from, let's say, the other efforts that we are sort of implementing?
A: Yes. So I will say around 0.5%, 0.6% of EBITDA margin improvement because of this divestment. The ARPOB was already factored in this quarter so I'm not counting that. So that will be on the Malar divestment side. Rest will be majorly from the occupancy improvement and some improvement in the cost side. And as some of the hospital like Ludhiana we have operationalized only in the December. So this quarter, the result of that hospital will be also improve.
Q: Okay. So the Ludhiana impact will flow through in the March quarter, the new facility impact?
A: Yes.
Q: Okay. Understood. And my second question on the international patients, that was flat. I know you did mention in your opening comments that this is because of certain geopolitical issues. How do we now plan to grow this business, given what's going on in the Middle East, and we don't know when that situation improves. Can this number move up from what we are seeing?
A: Yes. So international business, Neha, this quarter is slightly less as compared to previous quarter. However, if you see year-to-date, we are doing quite okay. And in the month of January and February, we have seen that the international business has come back to its September quarter number. So we expect this will continue to provide a good lever for increasing the occupancy and profitability.
Q: Understood. And last, I don't know if you want to answer this question. But if I were to do a simple consol minus hospital, the residual diagnostic business seems to have seen significant pressure on margins. Is there any one-off cost there? Any color that we can provide there? Again, I don't know if you would give any color, but just trying my luck.
A: Yes. As Raghuvanshi has mentioned, we are not supposed to discuss about the financials of the diagnostic business. But I can -- this much I can say, it's some one-off in this. And the performance is impacted because of the one-off.
Q: So first question is on ARPOB. So this 10%, 11%, kind of growth can we sustain? And also, do we have levers further to improve on it given that a few beds additions are coming in FY '25?
A: Yes. So we could see a very good ARPOB increase during this quarter and for the year, also the number is similar. So we feel -- and I think mainly driven by the high-end cases, we are able to do, the more complex cases company is doing and as explained by Dr. Raghuvanshi in the initial stage. So we feel that may continue, but the ARPOB increase may not be 10%, 11% going forward because the base is already very high. So we expect ARPOB increase should be somewhere settle around 5%.
Q: Okay. And this bed addition will lead to some dilution in the payer mix for next year? That would be the assumption?
A: Not really because the payer mix, we are maintaining at below 20% for the scheme business. And we don't want to disturb that too much because we are having heavy bed addition program. And this payers come handy for filling up this beds. So we are not trying to play too much in this, but wherever is the opportunity we are trying to optimize.
Q: So looking at your bed expansion plan, next year you're looking to add quite a large chunk of the 2,200 beds, almost 1/3 of them 110 beds. So while we are looking to exit this year at 20% kind of EBITDA margin, I mean how are you looking next year this quarter because of bed addition you saw drop in occupancy. Next year we'll see a lot of bed additions. So does that mean that there will be a drop in margin next year?
A: Yes. So next year, you rightly said there is a big bed facility will be coming in. But having said that, this bed capacity one it will be coming at different point of time. Number two, we may not operationalize the full 110 beds and the bed operationalization will happen as per the occupancy ramp up thing because that will be most cost-effective way to achieve the bed ramp-up. So with that, I don't -- because we are not opening up entire beds and we will be realizing the bed operationalization based on the occupancy, so I will not see much impact on the profitability.
Q: And all -- most of these beds except the Manesar one, the new acquisition thing is coming in our existing hospital where as per our initial estimate, we should be -- they should start contributing from the day one. Because this was -- in the hospital where this bed addition is coming they are already operating at a very different occupancy level. So we don't see that
For the complete transcript of the earnings call, please refer to the full earnings call transcript.
