Release Date: August 08, 2024
For the complete transcript of the earnings call, please refer to the full earnings call transcript.
Positive Points
- Krishna Institute of Medical Sciences Ltd (BOM:543308, Financial) reported a gross revenue of INR693 crores, reflecting a growth of 13.8% year-on-year and 8.7% quarter-on-quarter.
- EBITDA for the quarter stood at INR184 crores, showing a growth of 14.9% year-on-year and 13% quarter-on-quarter, with an EBITDA margin of 26.6%.
- The company achieved a PAT of INR95.1 crores, up from INR86.7 crores in Q1 FY24 and INR71.6 crores in Q4 FY24.
- Krishna Institute of Medical Sciences Ltd (BOM:543308) has successfully acquired Queen's NRI Hospital in Vizag, adding a 200-bed facility to its portfolio.
- The company has been recognized for its excellence in organ transplantation, receiving awards for its achievements in lung transplants and brain stem death certification.
Negative Points
- Occupancy rates have declined, with the company now reporting occupancy based on total bed capacity, which has shown a substantial decrease.
- The Average Length of Stay (ALOS) has been reduced, which may impact revenue per patient metrics.
- The company is facing challenges in maintaining high occupancy rates in some facilities, particularly in Andhra Pradesh.
- There is a notable promoter pledge of shares, which the company plans to address by the end of the next quarter.
- New hospital projects in Thane, Nashik, and Bengaluru are expected to add to the fixed costs and may initially impact margins.
Q & A Highlights
Q: Congratulations on the good set of numbers and the spikes we have taken on the transplant side. Can you explain the substantial growth in ARPOB despite a decrease in occupancy in the Telangana and Andhra region?
A: The growth in ARPOB is due to consistent growth in IP volumes and efforts to reduce the Average Length of Stay (ALOS). There has been a marginal improvement in the payer mix, with more revenue coming from cash and insurance payers, which typically have a shorter ALOS.
Q: You have changed the way you report occupancy. What would be the optimal capacity utilization or occupancy for your hospitals going forward?
A: Based on feedback, we now report occupancy based on total bed capacity. A healthy occupancy rate is around 65%-70%.
Q: Can you update us on the progress of your upcoming hospitals in Thane, Nashik, and Bengaluru? Are they on track to launch as per the timeline?
A: We are confident that the hospitals in Thane and Bengaluru will launch by the fourth quarter of the financial year. Nashik is fully commissioned and ready, pending the final occupancy certificate, which we expect post-August 15.
Q: What are the factors contributing to the reduction in ALOS, and can this reduction be sustained?
A: The reduction in ALOS is driven by a higher revenue mix from cash and insurance payers, and efforts to reduce the length of stay for scheme patients. We believe this reduction is sustainable.
Q: Can you provide more details on the Vizag acquisition, including current revenues and future projections?
A: The Vizag hospital currently generates around INR65-70 crores in revenue but has the potential to scale up to INR250 crores over the next three to four years. We plan to focus on cash and insurance patients, aiming for an ARPOB of 40,000-45,000.
Q: What are your plans for reducing promoter pledge, and when can we expect this to be resolved?
A: The Board has approved the reclassification of certain promoters, and we expect the main promoters in KIMS to have no pledge by the end of this quarter or the next.
Q: Can you elaborate on the impact of recent government steps regarding insurance premiums on KIMS?
A: The Union Minister has proposed removing the 18% GST on insurance premiums, which, if implemented, will make healthcare more affordable and increase insurance penetration, benefiting hospitals like KIMS.
Q: What is the expected ARPOB for the new hospitals in Nashik, Thane, and Bengaluru?
A: For Thane and Bengaluru, we expect ARPOBs similar to our Telangana cluster, around 60,000. For Nashik, we anticipate an ARPOB similar to Nagpur, around 35,000.
Q: How do you plan to manage the fixed costs and debt associated with the new hospital projects?
A: The total addition to the gross block for Bengaluru, Nashik, and Thane will be around INR700-800 crores. Fixed costs per center will be around INR6 crores, excluding doctors and consumables. We aim to keep our debt-to-equity ratio within 0.75 to 1.
Q: What is the strategy for doctor hiring for the new hospitals, and how does it compare to the Secunderabad hospital?
A: We are hiring a mix of doctors from both corporate and smaller hospitals. While the seniority profile may not match Secunderabad's 20-year-old hospital, we aim to have a similar skill set in the new facilities.
For the complete transcript of the earnings call, please refer to the full earnings call transcript.
