Release Date: August 06, 2024
For the complete transcript of the earnings call, please refer to the full earnings call transcript.
Positive Points
- Narayana Hrudayalaya Ltd (BOM:539551, Financial) reported the highest ever quarterly revenue at INR13,410 million, reflecting a growth of 8.7% year on year and 4.8% quarter on quarter.
- The company achieved a consolidated EBITDA of INR3,274 million with a margin of 24.4%, up from 23.2% in the same quarter last year.
- The new hospital, Health City in Camana Bay, was inaugurated in July, with patient inflow expected to start before the end of the second quarter.
- The balance sheet remains strong with group cash and liquid investments of over INR13.2 billion against a gross borrowing of INR14.75 billion, resulting in a net debt position of INR1.55 billion.
- Significant advancements in clinical operations, including the successful performance of complex surgeries and the launch of AI systems for discharge summaries and early warning signals in the nursing app.
Negative Points
- Despite the revenue growth, the quarter was seasonally weak due to summer holidays, Eid, and the impact of general elections.
- The new hospital in Camana Bay is expected to incur initial operational losses and margin dilution.
- Inpatient volumes in India have not been growing for the last three quarters, partly due to reconfiguration of beds and facility upgrades.
- The company faces challenges in maintaining debtor days, which deteriorated by about seven to eight days compared to the previous quarter.
- The insurance business, although launched, is still in its early days and is expected to incur a cash burn before it becomes profitable.
Q & A Highlights
Q: What is the expected occupancy for the new hospital in Camana Bay?
A: The hospital will start in a couple of months with about 50 beds. We hope to be occupied from the early quarters, but it's hard to project exact occupancy levels. The location is good, and we expect it to meet our expectations.
Q: Can you provide the CapEx breakup for the Bangalore and Kolkata expansions?
A: For the Kolkata greenfield project, the first phase will cost around INR950 crores for 350 beds. The Bangalore land cost is around INR500 crores, with the bed capacity yet to be finalized.
Q: How do you plan to ramp up operations at the new Cayman facility, and what initial losses do you expect?
A: The new facility will focus on daycare procedures, short-stay surgeries, and services not currently offered. Initially, there will be operational losses and margin dilution due to high fixed costs, but we expect these to stabilize over time.
Q: What is the update on the insurance business commencement in Mysore?
A: Narayana Health Insurance was launched in Mysore in late June with the Aditi product, offering INR1 crore coverage for surgeries. All systems and processes are compliant with regulations, and the initial customer response has been positive.
Q: Can you provide an update on the Kolkata facility commissioning?
A: We are currently seeking approvals for plans from the authorities. We expect approvals by October and hope to start construction towards the end of Q3 this year.
Q: What are the debtor days and payer days trends, and how will they move in the future?
A: Debtor days typically worsen in Q1 due to government budget cycles and elections. We expect to catch up in the next quarter. Payer days are expected to normalize to 60-90 days after some ERP migration issues are resolved.
Q: What is the expected revenue growth for the India business in the next few years?
A: We focus on quality revenue growth rather than aggressive revenue growth. The next major inflection point will come when new capacities in Calcutta and Bangalore come online in the next three years.
Q: What is the impact of Ind AS 116 on EBITDA and PAT numbers?
A: Ind AS 116 increased EBITDA by INR148.7 million and decreased PAT by INR19 million for Q1 FY25 on a like-to-like basis.
Q: What is the proportion of revenue coming from Bangladesh, and have you seen any reduction in flows?
A: About 7.6% of our revenue comes from international patients, largely from Bangladesh. There has been some disruption during the election and festival seasons, but we are moving towards a focus on domestic patients.
Q: What is the expected leverage and debt levels for the next three years?
A: We expect leverage to increase as we take on debt to fund our CapEx plans. About 80% of the indicated CapEx will come through debt, and we will manage this with our internal cash flows and borrowings.
For the complete transcript of the earnings call, please refer to the full earnings call transcript.
