Release Date: May 29, 2024
For the complete transcript of the earnings call, please refer to the full earnings call transcript.
Positive Points
- Shalby Ltd (BOM:540797, Financial) reported a 15% increase in revenue and a 23% increase in EBITDA for FY '24.
- The acquisition of a new hospital has expanded Shalby Ltd's network to 16 hospitals.
- The Implant business showed significant progress, generating INR258 million in Q4 FY '24.
- The company has a strong balance sheet with low gearing and positive net cash balance.
- Shalby Ltd's Home Care business grew by 48% in FY '24, serving over 30,000 patients.
Negative Points
- Sanar acquisition resulted in a negative EBITDA for Q4 FY '24.
- The company's PBT margin decreased from 9.2% in Q4 FY '23 to 8.7% in Q4 FY '24.
- There were delays in the Nashik and Mumbai Santa Cruz projects due to pending approvals.
- The Implant business faced supply chain issues, requiring new vendor onboarding and regulatory approvals.
- Q4 FY '24 EBITDA margins were slightly lower due to increased marketing expenses and doctor incentives.
Q & A Highlights
Q: My question is to Dr. Vikram Shah. How do you institutionalize your surgical expertise at Shalby to ensure exponential growth and higher market share?
A: Dr. Shah is currently in the OT, but it’s worth noting that only 20% of arthroplasty surgeries are now performed by him, with the remaining 80% done by other surgeons across our hospitals. This indicates successful institutionalization of his practices.
Q: Regarding the Sanar acquisition, why did we see a negative EBITDA for the last quarter despite high ARPUs and international business contributions?
A: Sanar was in a capstone situation when we acquired it. We are ramping up the business and have already reduced losses significantly. We expect positive EBITDA from the next quarter onwards.
Q: Are we on track to grow our implant business from INR100 crores to $100 million?
A: Yes, we are on track. We are focusing on building a strong foundation with efficient supply chains and cost structures. We aim to achieve this target within five years.
Q: What led to the 12% growth in ARPOB on a Y-o-Y basis? Did we take any price hikes?
A: The annual ARPOB growth has been about 2% to 3%. The significant Y-o-Y growth is due to changes in case mix rather than price hikes.
Q: What is the status and timeline for the Nashik and Mumbai Santa Cruz projects?
A: There have been delays due to pending approvals. We expect to receive approvals in the next couple of months, after which we will start the projects. Full-fledged facilities may take around three years.
Q: What will be the total CapEx in FY '25?
A: We plan to invest around INR36 crores for our hospital business and an additional INR60-65 crores for three new units.
Q: What is the outlook for the consolidated tax rate over the next two to three years?
A: The effective tax rate will remain around 34%-35%. Shalby will utilize MAT by the end of the next financial year and then move to the normal tax rate.
Q: What is the status of the supply chain issues in the US implant business?
A: We have identified and onboarded new vendors. The process of quality checks and regulatory approvals takes time, but we have seen improvements and are building a more robust supply chain.
Q: Are we looking to diversify into other specialized medical fields with future acquisitions?
A: Yes, we are focusing on high-end tertiary care work such as transplants. We will also grow our orthopedic numbers at the Delhi NCR hospital.
Q: What are the plans for scaling the FOSM and franchise models?
A: We have five operational franchisees and plan to add 30-50 more over the next three to five years. For the implant business, we aim for $16 million in revenue this year, split equally between the US and other markets.
For the complete transcript of the earnings call, please refer to the full earnings call transcript.
