Release Date: August 08, 2024
For the complete transcript of the earnings call, please refer to the full earnings call transcript.
Positive Points
- HealthCare Global Enterprises Ltd (BOM:539787, Financial) reported an all-time high revenue of INR 526 crores for Q1 FY '25, reflecting a 17% growth year-over-year.
- The company achieved a significant milestone by acquiring an 85% stake in MG Hospital in Vishakhapatnam, which has a strong financial track record and a 35% EBITDA margin.
- Operational efficiency improvements led to a reduction in loss from 2.13% to 1.98%, and an increase in ARPOB by 12% year-on-year.
- The Kolkata center showed exceptional performance with a 73% year-on-year revenue growth, turning profitable and contributing to a positive group EBITDA.
- The company launched a customer app with unique functionalities, extending cancer care to almost 8,000 unit patient IDs and servicing over 58,000 orders on the e-pharmacy platform.
Negative Points
- Despite the strong financial performance, the company's EBITDA margin for established centers is expected to be between 19% and 20%, which is below the 20% target.
- The finance costs increased by INR 8 crores year-on-year and INR 7 crores from Q4 to Q1, partly due to new ROE additions and increased CapEx funding.
- The company's PAT for the quarter was INR 12 crores, representing a 59% growth but still relatively low compared to the revenue growth.
- There were technical difficulties and interruptions during the earnings call, which may have affected the clarity of the information shared.
- The company faces competitive intensity in the oncology hospital sector, which could impact its growth and margins.
Q & A Highlights
Q: What sort of margin profile do you expect in the existing business for the full year, excluding the acquisition? Do you think we can still get a 20% EBITDA margin for the full year?
A: Yes, we should expect a similar rate. Between 19% and 20% is what we expect for our established centers. (B S Ajai Kumar, Executive Chairman; Meghraj Gore, CEO)
Q: What sort of growth do you see in the existing hospitals or the established businesses for the full year?
A: The growth trajectory will continue as it is, which was established around 13% to 15%. Our current growth is 14%, and it may even increase to 13% to 15%. (B S Ajai Kumar, Executive Chairman)
Q: Is it fair to assume that if you see a 15% Y-o-Y revenue growth in Q2, there is a possibility of INR 100 crores plus EBITDA?
A: Historically, our Q2 performance over Q1 has been almost about 5% to 6% growth, and we are seeing similar or better growth. This should result in approximately 14% to 15% growth. (B S Ajai Kumar, Executive Chairman)
Q: When should this revenue growth reflect in PAT growing to a meaningful level?
A: Some of our subsidiaries, which are currently loss-making, are pinning down the PAT growth. As they turn profitable, we will also benefit from a better ETR. It will not be an immediate bump but will move steadily in the right direction. (Ruby Ritolia, CFO)
Q: Has there been any increase in competitive intensity for oncology hospitals?
A: As a single-specialty hospital, we have done well with margins close to 20%. We believe our focus on oncology and medical excellence will continue to drive growth and margins. (B S Ajai Kumar, Executive Chairman; Meghraj Gore, CEO)
Q: Could you throw some light on the lower ALOS (Average Length of Stay) in this quarter?
A: We focus on reducing ALOS, particularly with minimally invasive surgeries and day surgeries. This trend is moving towards limited admission required, which is a mark of excellence. (B S Ajai Kumar, Executive Chairman; Meghraj Gore, CEO)
Q: On consolidation, would you classify the Vizag acquisition as an established center?
A: Yes, it will be classified as an established center and will be positive for us all around. (B S Ajai Kumar, Executive Chairman)
Q: What could be the revenue expectations from the MG Hospital in Vizag in the next 3-4 years?
A: The current quarterly revenue is close to INR 30 crores with a 35% EBITDA margin. Together with our existing center in Vizag, we expect to grow about 10% to 12% going forward. (Meghraj Gore, CEO)
Q: Will there be any additional CapEx on the equipment side for the Vizag unit?
A: At this time, we are not planning any additional CapEx. The unit is fully equipped with necessary infrastructure, including a robotic unit. (B S Ajai Kumar, Executive Chairman)
Q: How are you seeing the international business growth?
A: This has been our highest ever quarter for international business. We are almost 2x of our pre-COVID international business, focusing on key cities like Bangalore, Mumbai, Kolkata, and Ahmedabad. (B S Ajai Kumar, Executive Chairman)
Q: Any outlook on further inorganic opportunities in the medium term?
A: We are evaluating inorganic opportunities and will inform the market as and when something materializes. (B S Ajai Kumar, Executive Chairman; Meghraj Gore, CEO)
For the complete transcript of the earnings call, please refer to the full earnings call transcript.
