The company has a stronghold in North and East India. Share with us plans to expand in the rest of India and become a Pan-India player.
At Global Health Limited, as a philosophy, we believe in expanding where there is a need for delivering the highest standard of healthcare. We continue to evaluate opportunities in that respect on an ongoing basis. However at the moment, we believe we have an inherent advantage to expand services in the locations we are already present. We currently have six assets that are outlined in our DRHP, which includes five operating assets (Gurugram, Indore, Ranchi, Lucknow, Patna), and our sixth hospital which is under construction in Noida. We are focused on ensuring that we continue to scale and deliver on these existing operations, deliver the highest standard of care and continue to evaluate new opportunities.
In terms of our expansion capacity, the number of beds that can be added without major investments in infrastructure is 100 beds at Gurugram Hospital, and 400-500 beds at Lucknow Hospital. Upon operation of our Noida hospital in Fiscal 2025, we expect the number of total installed beds to exceed 3,500 across the six current facilities by the end of Fiscal 2025.
What are your company’s strengths versus its peers?
Global Health Limited is one of the largest private multi-speciality tertiary care providers operating in the North and East regions of India, operating under the brand ‘Medanta’. As at June 30, 2022, the Company’s operational hospitals occupy an area of 4.7 million square feet, have 2,467 installed beds, provide healthcare services in over 30 medical specialties, and engage over 1,300 doctors led by experienced departmental heads.
We believe that we have achieved this leadership position by focusing on high end tertiary and quaternary care, treating complicated cases under the guidance of skilled and experienced team of doctors. The same philosophy of clinical excellence is embedded in our culture across our hospitals. We focus on quality tertiary and quaternary care, treatment of lifestyle diseases, provision of value-based treatments and work on a high number of critical, complex cases. As a part of our ongoing efforts to deliver the best possible standard of care, we also have on-going research studies and are currently working with Qure.ai to develop artificial intelligence algorithms with the aim of increasing productivity and improving the accuracy and speed of medical diagnoses, particularly in radiology scans.
Further, our ‘doctor-led’ model ensures that our hospitals are driven by skilled and experienced doctors. Our senior doctors have been trained in some of the leading medical institutions in India and across the world, and comprise recipients of Padma Bhushan, Padma Shri, and BC Roy awards, in addition to numerous other accolades and awards from various State Governments and industry bodies. We believe that our infrastructure, technology and, most importantly, the doctor-driven culture of the organization have allowed us to attract and retain some of the clinical leaders in India.
We at Global Health Limited also have a track-record of delivering high operational and financial performance, through high patient volumes, cost efficiency and diversified revenue streams across medical specialties. The Company was able to achieve revenue of over Rs500 million in nine specialties indicating the diversified revenue streams across multiple specialties in Fiscals 2020, 2021 and 2022.
The Medanta hospital portfolio comprises (a) mature hospitals at Gurugram, Indore and Ranchi, which have reached economies of scale, a strong established brand, effectively managed operational risk and stable profit margins; and (b) developing hospitals at Lucknow and Patna, which are well invested and present significant room for medium-term growth and profit margin expansion. This well-balanced mix of hospital assets helped the Company delivered a total income of Rs2,205.8 crore and Rs626.5 crore in FY22 and Q1FY23 respectively. The Company also clocked an EBITDA of Rs489.8 crore and Rs141.6 crore for FY22 and Q1FY23 respectively. Profits for the period were Rs196.2 crores and Rs58.7 crores for FY22 and Q1FY23 respectively.
Help us understand the company’s growth strategy to capitalize on the opportunity landscape.
We have several defined strategies in place to drive the stage of our journey. To begin with, we believe we have an inherent advantage to expand services in the locations we are already present in, and that is one of our key strategies going forward.
Continue to invest in bed capacity expansion in existing facilities and develop further super-specialities, employ new technology and focus on preventive healthcare
We are continually looking for value-accretive opportunities while strengthening our presence in our key growth markets. In terms of our expansion capacity, as an example, the number of beds that can be added without significant further major investments in infrastructure is 100 beds at Gurugram Hospital, and 400-500 beds at Lucknow Hospital. In particular at Gurugram Hospital, we have a remaining floor area of more than 100,000 square meters available at the Medicity plot as well as an additional land bank of 13 acres available for ancillary services (i.e., residential and guest house). The permitted usage at this additional land bank provides us with flexibility in complementing our core business. As a result, upon operation of our Noida hospital in Fiscal 2025, we expect the number of total installed beds to exceed 3,500 at the end of Fiscal 2025, which will cater to domestic and international patients as part of our strategy to capitalize on medical tourism.
Continue to attract, engage and train prominent, skilled doctors and other healthcare professionals
High-quality medical professionals are key to our success. We believe that hiring surgeons and other physicians who have established a reputation in their respective field is crucial for the successful implementation of our strategy to develop and operate our healthcare facilities. We intend to strengthen our integrated human resources management system to further enhance the recruitment, training and retention of high-quality medical professionals. We also opened the Institute of Chest Surgery, Chest Oncology and Lung Transplant at 232 Gurugram in Fiscal 2021 and Obstetrics and Neonatology at Lucknow in April 2022. We will continue to leverage the experienced specialists from our high-quality medical professional team, we aim to boost our brand recognition and reputation in order to attract more patients.
Enhance clinical capabilities and improve operating efficiencies
A key component of our growth strategy is enhancing clinical capabilities and improving operating efficiencies. We intend to improve occupancy rates and equipment utilization at our hospitals by continuing to maintain and recruit new medical professionals of high calibre in specified fields and focus on clinical excellence. We also plan to reduce our average length of stay in hospitals (ALOS) by continuing to improve our clinical practices and use of technology. We will also look to optimize operations through improving employee productivity and streamlining technology and processes. We also intend to apply principles of lean management across all of our administrative and management layers, and optimize the use of technology to build greater efficiencies in our ways of working. Extend clinical services outside the hospital and across the lifetime of the patient. We intend to extend our clinical services outside the hospital by growing our home care business across sample collection, medicine delivery and all possible aspects of care at home. We plan to carry out this strategy across all cities and regions where we currently operate and may leverage technology and other asset light business models to expand these services into new territories.
Leverage technology to improve patient experience and grow our digital health services
We will continue to seek to add key technological advancements in healthcare and surgical products at our facilities. We expect this will further enhance our total speciality healthcare services. We also plan to further strengthen our collaboration with domestic and international clinical development experts and institutions to continually implement advanced technology to improve our hospitals’ offering. We will endeavor to equip our health-care facilities with latest equipment, which we believe is essential in increasing automation wherever appropriate, and ensuring reliability as well as cost competitiveness. We will leverage technology in our operations with the goal of improving the quality of patient experience and cost efficiency. In addition to our home care services business, we intend to grow our digital health services by further developing our website and online communication platform to educate the public on various health topics to help solidify our brand as the ‘go-to’ source for medical knowledge.
Build on our thought leadership through increased focus on academics and research
Training our doctors and other medical professionals in best practices and keeping up with medical advancements is critical to our leading position as a premier hospital in India. We intend to increase further our academics and research, which will help us to enhance the talent and expertise of our doctors to effectively treat our patients and thereby support our business growth. In addition, further investments in academics and research will enable our doctors and other healthcare personnel to improve themselves through focused learning opportunities. We also aim to maintain our strategic partnerships with internationally renowned institutes to further enhance our research efforts.
As quality healthcare becomes increasingly expensive, it is becoming inaccessible to low-income people. What is the company doing to drive inclusiveness and greater good through its business?
At Global Health, we strive to deliver advanced healthcare by establishing institutes of excellence that integrate medical care, teaching and research all while providing affordable medical services to patients. Dr Trehan’s vision for Medanta has always been to deliver the highest standard of healthcare at affordable prices where it is not available.
India’s bed density (bed count per 10,000 population) of 15 beds (as of 2021) not only falls far behind the global median of 29 beds, but also lags behind other developing countries such as Brazil (21 beds) and Malaysia (19 beds). As a result, the Indian healthcare delivery industry is estimated to post a healthy 13-15% CAGR between Fiscals 2022 and 2026, driven by the long term structural factors, strong fundamentals, increasing affordability and potential of the Ayushman Bharat scheme, the national health insurance scheme launched in 2018 to provide access to healthcare for low income earners in India. The same CRISIL Report also notes some major markets as being under-served in terms of healthcare services i.e., NCR, Lucknow and Patna, which had 1.9, 3.3 and 4.3 beds per 1,000 people, respectively.
Thus, in line with its mission to deliver advanced healthcare to all, Global Health’s expansion beyond its flagship hospital in NCR has focused on under-served areas with dense population.
Share with us a snapshot of your company’s financial profile. What are the key margin drivers at your disposal?
Global Health Limited has a track-record of delivering high operational and financial performance, through high patient volumes, cost efficiency and diversified revenue streams across medical specialties. Our business has demonstrated sturdy financial performance over the last three Fiscals and weathered the challenges of COVID-19.
In terms of de-risking the business, since Fiscal 2020 we have focused on managing our operational efficiency and cost base and have been able to secure reductions in our operating costs by reducing employee benefit expense to revenue ratios from 35.91% in Fiscal 2020 to 32.23% in Fiscal 2021 and 26.21% in Fiscal 2022, and from 27.37% in the three months ended June 30, 2021 to 25.20% in the three months ended June 30, 2022. The Company was also able to achieve revenue of over Rs500 million in nine specialties indicating the diversified revenue streams across multiple specialties in Fiscals 2020, 2021 and 2022.
Further, our hospital portfolio comprises (a) mature hospitals at Gurugram, Indore and Ranchi, which have reached economies of scale, a strong established brand, effectively managed operational risk and stable profit margins; and (b) developing hospitals at Lucknow and Patna, which are well invested and present significant room for medium-term growth and profit margin expansion. Average revenue per occupied bed (“ARPOB”) of our mature hospitals was Rs50,302.80, Rs47,682.69, Rs54,272.99, Rs49,376.30 and Rs59,291.14 in Fiscals 2020, 2021 and 2022 and the three months ended June 30, 2021 and 2022, respectively. Our developing hospitals in under-served markets like Lucknow and Patna represent great potential to expand its healthcare offering and improve the healthcare infrastructure. Medanta’s Lucknow hospital started operations in 2019, and was able to meet EBITDA break-even in its first full year of operations.
This well-balanced mix of hospital assets helped the Company delivered a total income of Rs2,205.8 crore and Rs626.5 crore in FY22 and Q1FY23 respectively. The Company also clocked an EBITDA of Rs489.8 crore and Rs141.6 crore for FY22 and Q1FY23 respectively. Profits for the period were Rs196.2 crore and Rs58.7 crore for FY22 and Q1FY23 respectively. As a result of ramp-up in developing hospitals, and steady operational strength of mature hospitals, our PAT margin has improved from 8.9% in FY22 to 9.4% in Q1FY23. EBITDA margin has also increased from ~22% in FY22 to ~23% in Q1FY23.
Part of the IPO proceeds will be deployed towards prepayment of debt. What is the debt on the company’s books currently? What will it be after the prepayment?
As on June 30, 2022, Global Health Limited had outstanding borrowings of Rs8,422.78 million. The Company also has cash and cash equivalents and other bank balances of Rs5,182.06 million on its balance sheet. As a result, the net debt position of the Company is Rs3,240.72 million.
The Company plans to repay Rs3,750 million borrowings from the proceeds of the IPO, reducing its consolidated outstanding borrowings by the same amount. As a result, upon successful completion of the IPO and subsequent repayment of debt from the proceeds, the Company will became net cash positive.
What is the dividend payout policy of the company? Will it change after the IPO, if yes, elaborate
The Board of Directors of Global Health Limited has approved and adopted a dividend distribution policy on September 10, 2021 (the full policy document can be accessed on the Company’s website www.medanta.org)
The declaration of dividends, if any, in the future will depend on a number of factors that the Board deems relevant, including but not limited to the Company’s profits, capital requirements, rate of dividend distribution tax, contractual obligations, overall financial condition etc.