Healthy Q1 For Fortis Healthcare

NDTV Profit

Watch Healthy Q1 For Fortis Healthcare - NDTV Profit on Dailymotion

Transcript

00:00Dr. Raghuvanshi MD and CEO who now joins us to talk about what business looks like and what the outlook is. Dr. Raghuvanshi

00:08Congratulations, you've

00:10Successfully turned the corner in literally just five years where you've changed the face the name of

00:16Fortis healthcare from a loss-making entity struggling with identity crisis to now a profitable one that you're managing

00:23Up until now, of course, everything was looking well until I realized that two weeks ago in a very recent development

00:29After trying very hard in the last few years

00:32Ageless is back on the books of Fortis healthcare your private equity investors are looking to check out

00:39I know you are looking to list this part of your business, but haven't managed to do so

00:43What does this do now?

00:45Do you go have you gone back to the drawing room because up until now the focus was to improve and increase the revenue?

00:51contribution from hospitals

00:52But now with each list back on the front

00:55For Fortis what happens?

00:59Thank you, thank you for having me and thank you for your kind words

01:04The organization has some innate strength in its and that is what has resulted in the recovery

01:10Which we have seen in the last five years now as far as when we come to agilis

01:15It's our contractual obligation to provide an exit to the three P's which is about

01:2231% of agilis Fortis does own a significant amount of

01:28Control over agilis by owning 54%

01:32So now we have to commit

01:36Sort of fulfill our commitment to buy back this in they have put the put option on us

01:45We could not list it and there were several reasons for it mainly commercial

01:50we felt that you know because of the brand change we had to do a lot of

01:56Marketing initiatives which was sort of lacking and that resulted in some optimal performance of the company for

02:04Last one one year or so

02:07July last year was when we changed the branding. So we are in the process of

02:14Completing this transaction. Of course, it is subject to the shareholder approval and other

02:21statutory approvals

02:23Post that we would want to

02:26consolidate this business, we believe that there is a lot of opportunity here and there is a

02:32lot of work to be done in order to get the performance at the level of the industry peers and

02:39We believe that the kind of presence geographical presence agilis has across the country we can

02:47Definitely create huge value for the shareholders over there

02:51And that is what is what we are doing now at the same time as you said that the hospitals are

02:58focus area and we continue to

03:01to expand on that front last year, for example, I will tell you that we spend about

03:08890 crores on the hospital side in Capex for upgradation and additional Capex for

03:16Adding beds, etc

03:17And we will continue almost in the same quantum for next three years or so

03:22So that funds are tied up with internal accruals. We will be able to achieve that growth in the beds

03:29So we are not going to be affecting our hospital segment growth

03:34because of this

03:36acquisition of the

03:38Remaining equity which we are planning to do. Dr. Raghuvanshi. Thank you for you know simplifying that for me

03:44But I mean the pool of money is limited and I believe you're gonna have to shell out close to 1,500 crores

03:50To honor that put option from your private equity investors first question. How do you plan to you know fund this?

03:58stake buy or buy back that you're doing for agilis and

04:02Second like while I said the pool of money is limited. Does that mean that?

04:07With this additional fundraise there may be a little bit of a delay on the expansion in hospitals

04:12I'm not saying that it won't happen

04:14But I would imagine that would get pushed back a little bit right and also how do you plan to fund this 1,500 crores?

04:21Yes, absolutely as you would see our balance sheet

04:24We have a very healthy balance sheet our EBITDA to debt ratio is only 0.39

04:30net debt of only about 308 crores, so we have a huge ability to

04:36Deliver it and

04:37We would definitely be doing

04:41This through a debt instrument

04:44The acquisition of this agilis equity and that will not impact the other

04:50Expansion which we have planned as you might be aware that we had planned about 2,000 beds of brownfield expansion

04:58so that is on stream most of the constructions are going on and

05:03In next three years, we would see continuously about this year

05:07We would see about 700 additional beds

05:09But in the following years, we will see about 400 and then followed by a slightly higher number the following year

05:16So that all is on track and that will be mainly taken care of through internal accruals

05:24Because of this we have confidence because this is brownfield acquisition brownfield expansion. So this would

05:33Be capacity will be absorbed rather quickly and will yield kind of

05:40Immediate returns and not like a greenfield facility. So we are pretty confident that the cash flows are

05:49Robust enough to support the expansion of the hospital as well

05:52Of course, if there is a large acquisition opportunity available on the hospital side, we will not shy from that

06:01Because

06:02At that point of time, we could think of some kind of a fundraise

06:07So in terms of now next steps right in this business

06:13What can we expect from you? When can this deal be closed out with agilis A, B

06:19I know that diagnostics is a tough business. We can't take that away

06:22I know there is conversation that you would be looking at rebranding

06:26Once this comes into your foray gives you a little more power to sort of move things around, you know re strategize

06:33Tell me what the plans are and how do you see it?

06:35And how much do you see it contribute to your revenue not immediately?

06:39But over the next two to three years because you've got to make good this like you have made good fortis in the last five

06:45years

06:46yes, so

06:48Essentially, you know, there are several operational things which we need to do compared to our peers

06:54you know our those spread is higher, but at the same time our lab to

07:00To the collection point ratio is slightly not very

07:06Sort of you know

07:08The way we would like it to be so a lot of rationalization on the operation side will be done

07:15At the same time we will have a lot of focus on specialized testing specially genomics, etc

07:21We have already got a division which is doing excellent work in that area

07:26And we want to expand on the specialized testing

07:30so we are not going to position ourselves as a run-of-the-mill the kind of

07:36Diagnostic provider but a specialized diagnostic provider which is

07:42addressing the needs of the clinical

07:44Fraternity more than then the wellness, of course, wellness will always remain a significant part of the business

07:51But essentially the focus would all be on specialized testing

07:57At the same time as far as the percentage of revenue for the overall

08:02Consolidated revenues concern. We expect it to go to about 25% of the total revenue over the next one or two years

08:10That makes sense rather than you know run of the mill blood tests, etc. Dr. Raghuvanshi. Good morning

08:17This is Tamanna here and good to speak with you after

08:20quite some time

08:21Let me come just to your hospital business for a minute because you know bulk of the revenues are also there

08:28I think margins were a little squeezed in q1 because of new hospitals. Give us the outlook here

08:36Your per bed revenues as well as where you see this boost coming from

08:41Yes, so as far as hospitals are concerned in the q1

08:45Typically there is a seasonality and the revenues are usually low in the first quarter

08:51So that's why if you compare the fourth quarter with the first quarter, there would be

08:56There was only a growth of about 4% in terms of revenue

09:00But if you compare to the last year, it was about 14% growth in revenue during this quarter

09:08Year on year. So we expect that trend to continue our occupancy in the first quarter was about 67%

09:16We expect that to go up to 70% in the running quarter

09:21And second quarter typically would be always better than the first quarter

09:27That is our expectation and since the

09:31Occupancy numbers have gone up. We expect that this momentum will continue through the year as well

09:37In in terms of you know, some of the turmoil we've been seeing in Bangladesh, etc

09:42Have you seen any impact at all? I think a fair number of

09:47Patients are also coming in from in and around India. What is the picture there?

09:53Absolutely, the international business

09:56In India is largely from Bangladesh and of course the Africa and Middle East as well

10:04So the Bangladesh business is certainly affected

10:07But overall in the larger scheme of things only 8% of our revenue comes from international patients

10:14And that is a kind of a mix of all the CIS countries

10:19Africa and other parts of the world. So it has not been affected in a major way

10:25But we are definitely seeing some degree of stress on the Bangladesh side of business

10:32But I don't expect that to last very long

10:36It is already sort of

10:38recovering that the

10:41Communication transport is already resumed and we don't expect that this will be a long-term

10:46However, when we talk about international business, though in absolute terms, it has grown

10:53But in relative terms, our India business has grown more

10:57And the percentage of international business has not really changed. It has remained about 8-9%

11:05over the years

11:06So we expect that this going forward also it is going to be like that

11:12All right. Thank you so much. Dr. Raghuvanshi for speaking to us

11:15CEO and MD of Fortis Health talking about the outlook and

11:19the current quarter, quarter two

11:21Expected to be better than quarter one, which is traditionally a little weaker for the hospital business

Recommended

Category

Transcript

Recommended