Healthcare Global Enterprises Limited — Q3 FY26

Healthcare Global Enterprises Ltd Q3 FY2025-26 Earnings Conference Call https://www.youtube.com/watch?v=Fr3ueWB540U Published: 3 months ago

0:02 2 seconds Ladies and gentlemen, good day and welcome to the Healthcare Global Enterprises Limited earnings conference call. 0:11 11 seconds As a reminder, all participant lines will be in the listenonly mode and there will be an opportunity for you to ask questions after the presentation 0:19 19 seconds concludes. Should you need assistance during the call, please signal an operator by pressing star then zero on your touchstone phone. 0:27 27 seconds I now hand the conference over to Mr. 0:29 29 seconds Anuk Pjari from CDR India. Thank you and over to you sir. 0:36 36 seconds Thank you. Good afternoon everyone and thank you for joining us on Healthcare Global Enterprises Q3 and 9M FY26 0:44 44 seconds earnings conference call. We have with us Dr. Manish Matu, executive director and CEO of the company. 0:52 52 seconds We would like to begin the call with opening remarks from Manish following which we have the forum open for an interactive question and answer session. 0:59 59 seconds Before we start, I would like to point out that some statements made in today's discussion may be forward-looking in nature and a disclaimer to this effect 1:08 1 minute, 8 seconds has been included in the earnings presentation shared with you earlier. 1:12 1 minute, 12 seconds I would now like to invite Manish to make his opening remarks. Thank you Anu. 1:20 1 minute, 20 seconds Good afternoon everyone and thank you for joining us today. I hope you've had a chance to review our results presentation for the third quarter and 9 1:28 1 minute, 28 seconds months ending December 2025. We are pleased to be engaging with you once again following our recent strategy 1:35 1 minute, 35 seconds interaction as we continue to focus on strengthening's core oncology platform and driving consistency across clinical and 1:44 1 minute, 44 seconds financial outcomes. Over more than two decades, HCG has established itself as a focused oncology network with a panindia 1:52 1 minute, 52 seconds presence. Deep clinical expertise and a multid-disciplinary model of care. 1:57 1 minute, 57 seconds Consistent clinical outcomes supported by technology and tumor board led decision-m remain central to how the organization operates. 2:06 2 minutes, 6 seconds Building on this foundation, our strategy is centered on creating the most trusted outcomes oncology platform in India through a single specialty 2:14 2 minutes, 14 seconds model. Our emphasis remains on optimizing the existing network by deepening clinical programs, improving utilization and mix and strengthening 2:23 2 minutes, 23 seconds referral and patient engagement. Growth is expected to be driven primarily through existing centers supported by 2:30 2 minutes, 30 seconds brownfield expansion in high potential markets and calibrated green field additions over time. 2:37 2 minutes, 37 seconds This approach is underpinned by a calibrated capital allocation framework, a sustained focus on patient experience 2:44 2 minutes, 44 seconds and operating leverage as scale builds across the network. 2:49 2 minutes, 49 seconds Before we get into the financials, I want to briefly highlight the clinical capability that underpins HCG's performance and long-term mode. 2:59 2 minutes, 59 seconds SCG operates a comprehensive cancer care model and our strength lies in managing high complexity cases at a large scale. 3:09 3 minutes, 9 seconds In the last quarter, this capability was demonstrated across specialtities. As an example, in radiation oncology, we treated a tumor completely encircling 3:18 3 minutes, 18 seconds the optic nerve using most advanced version of cyber knife which achieved a tumor reduction without any loss of 3:25 3 minutes, 25 seconds vision highlighting the precision of our advanced radio surgery platforms. In medical oncology, we achieved a complete 3:33 3 minutes, 33 seconds response in a rare bracka 2 positive her two positive p 3CA mutated breast cancer 3:41 3 minutes, 41 seconds which is a subtype that typically responds poorly to treatment. This reflects our depth in molecular oncology and personalized treatment protocols. 3:50 3 minutes, 50 seconds From a governance and research standpoint, our KR hospital received NABH accredititation for its ethics committee, a highly selective 3:58 3 minutes, 58 seconds recognition that strengthens our credibility in advanced clinical trials and research-led care. In surgical oncology, our robotic platforms continue 4:07 4 minutes, 7 seconds to expand the boundaries of curative care. A 97 year old patient with advanced colon cancer treatment colon 4:15 4 minutes, 15 seconds cancer underwent robotic R0 resection and in another case a 10-hour robotic prostate surgery involving retinal 4:24 4 minutes, 24 seconds enforcement also received a R0 resection. In neuroononcology for example we performed diffusion sensor 4:32 4 minutes, 32 seconds imageguided awake brain surgeries in critical regions maximizing tumor removal while preserving neurologic function. 4:41 4 minutes, 41 seconds Alongside clinical excellence, we are also focused on sustainable and responsible oncology. We launched a green radiation oncology initiative to 4:49 4 minutes, 49 seconds reduce energy consumption and carbon footprint and introduce lowd dose restorative radiotherapy for inflammatory and degenerative joint 4:58 4 minutes, 58 seconds conditions, opening up new evidence-based applications of radiation therapy. Importantly, this clinical strength is now being efficiently monetized through our digital engine. 5:10 5 minutes, 10 seconds In quarter three, digital revenue grew 26% year-onear despite a meaningful reduction in paid media spend. Our own 5:18 5 minutes, 18 seconds channel strengthened materially. The website remained the primary contributor at 67% of the overall digital contribution. 5:28 5 minutes, 28 seconds While the mobile app scaled four and a half times to contribute 13% to our digital revenues. Campaign efficiency 5:35 5 minutes, 35 seconds improved sharply with campaigned revenue growing 38% year-onear and increasing its share from 20 to 27%. 5:44 5 minutes, 44 seconds While traffic declined due to external disruptions in Google ads, outpatient volumes grew 26% and inpatient volumes 5:51 5 minutes, 51 seconds grew 37% clearly indicating higher conversion, better case mix and superior demand quality. We also reduced 5:59 5 minutes, 59 seconds aggregator dependence with share their share declining from 12% to 9% improving revenue quality and long-term margins. 6:08 6 minutes, 8 seconds Taken together, this reflects a repeatable systemdriven model where clinical excellence creates trust and digital capability converts that trust 6:16 6 minutes, 16 seconds efficiently into high quality volumes and dominant market share in core catchments. 6:22 6 minutes, 22 seconds Turning now to our Q3 financial and operating performance. 6:28 6 minutes, 28 seconds The third quarter is typically seasonally softer for the healthcare services industry. Despite this, FCG 6:35 6 minutes, 35 seconds delivered revenues of 633 crores, representing a year-on-year growth of 13.4%. 6:43 6 minutes, 43 seconds Excluding the fertility business, SCG delivered revenues of 6 618 crores supported by healthy patient volume 6:51 6 minutes, 51 seconds growth of 8% year-on-year, underscoring resilient demand for oncology care across the network. 6:58 6 minutes, 58 seconds In addition to volume momentum, revenues benefited from improving utilization across centers and a steady mix of 7:05 7 minutes, 5 seconds complex cases. This demonstrates continued progress in strengthening clinical programs and expanding service 7:13 7 minutes, 13 seconds depth across hospitals particularly in larger and more mature clusters. During our strategy disc discussion I had 7:21 7 minutes, 21 seconds mentioned that our existing network has achieved about 60% of its revenue potential and there continues to be 7:28 7 minutes, 28 seconds headroom to grow within these hospitals which we are seeing in our quarteronquarter performance. 7:35 7 minutes, 35 seconds Average revenue per patient, including our fertility business during the quarter, stood at 84,000, marking a year-on-year increase of 5%. 7:46 7 minutes, 46 seconds The RPP trends were influenced by casem mix dynamics and regional pair mix variations alongside the ongoing scale up of services across the network. 7:56 7 minutes, 56 seconds Adjusted EITA for the quarter was 111 crores reflecting a 20% year-on-year growth with EITA margins expanding to 8:05 8 minutes, 5 seconds 17.5% from 16 1.5% in Q3 of FY25. 8:12 8 minutes, 12 seconds Margin expansion during the quarter was driven by operating leverage as the utilization of the hospitals improved. 8:18 8 minutes, 18 seconds This was achieved through continued investments in clinical talent, technology, and infrastructure, which remain essential to supporting long-term 8:26 8 minutes, 26 seconds growth going forward. Margin expansion at HCG is expected to be driven by scale benefits and a gradual improvement in case. 8:37 8 minutes, 37 seconds From a regional perspective, performance across clusters remained healthy. In the south, the cluster delivered a 9% 8:44 8 minutes, 44 seconds year-on-year growth. year on your revenue growth driven by continued momentum at our Bangalore cluster 8:52 8 minutes, 52 seconds and WISA despite temporary disruptions in Andhra Pradesh related to the state sponsored scheme. These disruptions 9:01 9 minutes, 1 second impacted volumes during the quarter but were resolved within Q3 and the region is now back on track. Excluding Andhra 9:09 9 minutes, 9 seconds Pradesh, the south cluster grew volumes at 11% year-on-year in Q3 FI26. 9:16 9 minutes, 16 seconds During this period, the case mix continued to improve supported by a higher contribution from highend medical 9:23 9 minutes, 23 seconds oncology work including imunotherapy and carti cell therapies particularly at the center of excellence in Bangalore. In 9:31 9 minutes, 31 seconds addition, a relatively favorable pair mix with lower exposure to scheme volumes in Andhra Pradesh supported ARP 9:39 9 minutes, 39 seconds growth for the cluster. On the growth front, preparations for launch of our North Bangalore and Widefield green 9:46 9 minutes, 46 seconds projects are progressing well. The North Bangalore facility with a planned capacity of over 120 beds is expected to 9:55 9 minutes, 55 seconds commence operations by the end of Q4 Q4 FI26. 10:01 10 minutes, 1 second With clinician hiring largely completed, it will be the first in Bangalore to offer MR renac technology creating a 10:10 10 minutes, 10 seconds strong clinical and technology-led differentiation. 10:13 10 minutes, 13 seconds Additionally, we will also be adding about 20 beds to our existing center of 10:21 10 minutes, 21 seconds excellence in Bangalore by reconfiguring the specs of the hospital and we believe this would further add to our profitable growth. 10:30 10 minutes, 30 seconds In the west, the cluster delivered strong revenue growth of 17% year-on-year, supported by robust 10:38 10 minutes, 38 seconds patient inflows across hospitals in Gujarat and Maharashtra. 10:43 10 minutes, 43 seconds Performance was led by healthy demand across centers and continued strengthening of our regional footprint. 10:52 10 minutes, 52 seconds Volume growth in the quarter stood at 11% year-on-year driven by the expanded capacity in Ahmedabad. addition of key 11:00 11 minutes clinicians and focused sales and marketing initiatives. These factors together supported higher throughput and 11:08 11 minutes, 8 seconds improved utilization across hospitals contributing to the overall momentum in the cluster. 11:16 11 minutes, 16 seconds Moving to east, the cluster reported a 12% year-on-year revenue growth driven by strong patient inflows in Katak and 11:25 11 minutes, 25 seconds Ranchi alongside the continued ramp up of operations in Kolkata. 11:31 11 minutes, 31 seconds Volume growth during the quarter stood at 16% yearonear supported by sustained demand and expanding reach across 11:40 11 minutes, 40 seconds catchment areas. ARP however declined by 3% yearonear primarily due to transition 11:48 11 minutes, 48 seconds in the Odisa state government scheme and a case in exchange. However, this impact was largely offset by a strong volume 11:56 11 minutes, 56 seconds growth during the quarter. Cluster leadership in the east was further strengthened with the appointment of a new regional 12:05 12 minutes, 5 seconds business head bringing over three decades of experience in East India markets which is expected to support 12:12 12 minutes, 12 seconds execution and performance consistency going forward. I'm also happy to announce that in line with our earlier 12:19 12 minutes, 19 seconds communication of downfield expansion in existing high potential centers, we will be adding about 60 beds to our Katak 12:27 12 minutes, 27 seconds hospital which is expected to be operationalized by the end of FI27. 12:34 12 minutes, 34 seconds Overall, the company exited December on a strong footing across clusters with a 12:40 12 minutes, 40 seconds 9-month FI26 revenue at 1,893 crores and a year-on-year growth of 16%. 12:49 12 minutes, 49 seconds And adjusted EITA of INR 346 crores with a year-on-year growth of 20%. The EITA 12:57 12 minutes, 57 seconds margin for the YTD period is 18.3% an improvement of 60 basis points versus 13:04 13 minutes, 4 seconds the same period last year. We expect operating momentum to continue into the March quarter supporting solid fullear performance. 13:14 13 minutes, 14 seconds In terms of returns, pre-tax Rosi stood at 13.3% for the 9-month period in 20 in FI26. 13:24 13 minutes, 24 seconds We expect Rosi to continue to trend higher over time as incremental growth can be achieved with relatively limited 13:31 13 minutes, 31 seconds capital deployment enabling returns to improve as fixed costs are absorbed more efficiently. Our focus remains on 13:40 13 minutes, 40 seconds achieving the full potential of our existing network, disciplined capital allocation and a faster ramp up of newer 13:48 13 minutes, 48 seconds centers which together provide a clear pathway to sustained improvement in returns. I would like to reiterate that 13:56 13 minutes, 56 seconds there is sufficient headroom and incremental growth in existing centers to improve Rosi. Also in the near to 14:04 14 minutes, 4 seconds medium-term a number of centers will reach threshold size enabling this margin and roy expansion. 14:12 14 minutes, 12 seconds From a broad broader perspective it is important to emphasize that while quarterly performance can vary with 14:18 14 minutes, 18 seconds differences in scale, utilization and seasonality, the structural drivers of the business remain firmly intact. 14:26 14 minutes, 26 seconds Demand for highquality cancer care continues to grow faster than supply and the resilience we have seen even during 14:34 14 minutes, 34 seconds a seasonality softer quarter in a in a even during a seasonally softer quarter reinforces our confidence in the underlying strength of the business. 14:45 14 minutes, 45 seconds To summarize, Q3 represented a steady financial and operating execution, continued progress across regional 14:53 14 minutes, 53 seconds clusters and improving scale and clinical depth. We remain focused on scaling responsibly, strengthening 15:01 15 minutes, 1 second clinical leadership and improving operating leverage over time while staying anchored to our core objective of delivering superior outcomes for 15:09 15 minutes, 9 seconds patients. With that, I will conclude my opening remarks and would request the moderator to open the floor for questions. Thank you. 15:19 15 minutes, 19 seconds Thank you very much. We will now begin the question and answer session. Anyone who wishes to ask questions may press star and one on the touchstone 15:27 15 minutes, 27 seconds telephone. If you wish to remove yourself from the question, you may press star and two. Participants are requested to use handsets while asking 15:35 15 minutes, 35 seconds questions. Ladies and gentlemen, we will wait for a moment while the question queue assembles. 15:43 15 minutes, 43 seconds To ask questions, please press star and one. 15:54 15 minutes, 54 seconds Ladies and gentlemen, if you'd like to ask questions, please press star and one to join the question queue. 16:08 16 minutes, 8 seconds The first question is from Aliasgar from Motilos Mutual Fund. Please go ahead. 16:14 16 minutes, 14 seconds Yeah, thanks for the opportunity. Hi Manish. Uh thank you so much for uh the detail and your explanation of the quarter and you know outlook. Uh I have 16:23 16 minutes, 23 seconds three questions. Uh first question is on growth. uh now you know in the previous call in the analyst uh uh call that you 16:30 16 minutes, 30 seconds did you had indicated that you know you would aim to grow at about 15%. 16:35 16 minutes, 35 seconds uh now I when I break it up uh you know there are three four levers in which you are you know uh exploring growth point number one you mentioned even today that 16:44 16 minutes, 44 seconds the potential of the existing facility is only 60%. So there is a lot of scope to grow from here. Right. Second thing 16:52 16 minutes, 52 seconds is we have a plan to add about 1,000 bed from I think close about 2,500 600 beds. 16:57 16 minutes, 57 seconds So cumulatively if I see the operational bed where we are probably 2,000 odd to the you know overall bed capacity that we will increase to probably about 3,500 17:06 17 minutes, 6 seconds that could be about close to almost uh you know over 3 to four years a kagger of approximately you know high teens 17:13 17 minutes, 13 seconds growth that we can get from here plus uh you know ARPB growth as you have mentioned about 5 7%. So when I you know 17:20 17 minutes, 20 seconds add all of this I see that you know there's a potential to grow at probably about 22 25% annually you know for the 17:28 17 minutes, 28 seconds next 3 4 years. So when you are guiding 15% growth you know is it that we are a bit uh conservative over year or are 17:35 17 minutes, 35 seconds there any risks in the business because of which you are building lower growth that we are not able to see if you can just you know throw some light here. 17:55 17 minutes, 55 seconds U thanks for that question. I think um our of course ambition is obviously to grow higher than what we have you know 18:02 18 minutes, 2 seconds committed but looking at um you know historical trajectory looking at the competitive intensity and all of it you know the expansion will not happen at 18:11 18 minutes, 11 seconds once I mean it'll be in a phased manner uh looking at the pricing sensitivity around cancer care and all uh we believe 18:18 18 minutes, 18 seconds 15% plus growth should definitely be achievable but of course we'll gone for you know our you know ambition is of course aspiration is to do more than 18:27 18 minutes, 27 seconds Got it. So I'm not asking probably from a short term but from a three-year uh point of view certainly growth could be much higher right with the capacity addition that we're doing and the potential in our existing facility. 18:42 18 minutes, 42 seconds We continue to maintain our guidance of 15% plus but as I said you know our aspiration would be to do better than that but as of now the guidance stays the same. 18:51 18 minutes, 51 seconds Got it. Uh second question on margin again you know here as well uh the room to improve uh in terms of margin from 18:58 18 minutes, 58 seconds probably about the mid mid- high teams that we are to close to about you know where the competition is upward about 19:04 19 minutes, 4 seconds 25% is you know fairly high so while I understand that uh you know I mean there is a lot of existing capacity that we're 19:12 19 minutes, 12 seconds trying to fill but would you say that in the long term probably 3 to four years the potential to reach mid 25% is there 19:19 19 minutes, 19 seconds or you know inherently you think that standalone facility uh you know uh would have lesser uh potential for margin improvement. 19:33 19 minutes, 33 seconds So Ali uh you know as I've said earlier also you know if you see the trajectory this year also the fact is that we started at 17 and a half we are trending 19:40 19 minutes, 40 seconds at 18 and a half uh for for the year so far and the trajectory will you know will continue to be upwards. So our 19:47 19 minutes, 47 seconds aspiration of course is to be 23 24% plus in the 3 to 4 year period and uh we 19:54 19 minutes, 54 seconds are very confident of delivering that uh but comparing uh you know exactly like to like to multispe that's one way to 20:02 20 minutes, 2 seconds look at it the other way uh to see how the trajectory of the margin is you know from 17 and a half to go up to 24 25% I 20:09 20 minutes, 9 seconds think is uh quite steep which we are gunning for um and I think that trajectory is what I think should be interesting rather than the absolute 20:17 20 minutes, 17 seconds margin itself and you know I've said it in the past also our mature centers some of our mature centers are at 26 27%. And 20:24 20 minutes, 24 seconds they have delivered that margin consistently over the last couple of years and uh you know we are sure that eventually the organization will converge towards that 20:33 20 minutes, 33 seconds understood which is very clear and very useful. Last question sir. Uh you have uh announced board meeting for right issue. Uh now I'm just trying to 20:40 20 minutes, 40 seconds understand uh you know I mean our leverage position is very very comfortable and uh the growth plans also that we have uh I think you know should 20:48 20 minutes, 48 seconds be very well managed. So if I do the math probably about September we are about 6,680 crores right of net debt. Um 20:55 20 minutes, 55 seconds and probably if uh the kind of uh growth uh uh guidance that we have we should be landing at a pre-industa of upwards of 21:03 21 minutes, 3 seconds 500 crores probably next year. which is you know I mean less than one and a half times of net webida which should definitely take care of you know our 21:12 21 minutes, 12 seconds payments coming up for next year plus any maintenance capex and still leave you with at least two 300 crores of uh 21:18 21 minutes, 18 seconds you know uh cash available for uh further growth capex so I'm just trying to understand you know what is the 21:26 21 minutes, 26 seconds reason for this uh fund raise and u do we have any concrete uh plans to uh you know I mean um utilize these funds for growth. 21:38 21 minutes, 38 seconds So Ali uh you know we believe that an equity infusion at this stage u will strengthen the company's balance sheet 21:45 21 minutes, 45 seconds and you know the capital structure um and you know that's directionally why the rights issues there but at this point in time that's all I can diverge 21:53 21 minutes, 53 seconds but very shortly we will share the specifics after our board meeting understood words very clear thank you so 22:00 22 minutes much very helpful I come back in the queue thank Thank you. Thank you. 22:07 22 minutes, 7 seconds Before we take the next question, a reminder to participants that you may press star and one to join the question queue. The next question is from Nitan 22:15 22 minutes, 15 seconds Agaral from DAM Capital. Please go ahead. 22:19 22 minutes, 19 seconds Thanks for taking my question. Uh Manish on uh on our growth plans uh which are uh I mean when you think about uh you 22:27 22 minutes, 27 seconds know growth obviously apart from uh when you say talk about the brown field and the green field. So which are if you can probably just characterize what are the 22:34 22 minutes, 34 seconds s sort of areas in in the current unit in the current network where you would like to add capacities over the next say couple of years and where are the and 22:42 22 minutes, 42 seconds what kind of characteristically are the newer markets you probably would want to reach out to uh you know in terms of adding up new units. 22:55 22 minutes, 55 seconds Yeah thanks for your question. See I mean we are very very confident of our platform you know which is the US of a platform which is to deliver clinically 23:04 23 minutes, 4 seconds superior outcomes treat high you know complex cancer cases and deliver the best clinical outcomes in the country today as far as cancer care is concerned 23:13 23 minutes, 13 seconds and hence as I said marrying that with the existing capacity there is enough headroom for a for growth in our existing hospitals um at our current 23:22 23 minutes, 22 seconds utilization rates so the growth will happen across the centers whether it's south, east or west. The major cities 23:28 23 minutes, 28 seconds being Bangalore, AP, uh Bombay, Ahmedabad, uh Ranchi and Kolkata. Those will be our main drivers for growth. But 23:36 23 minutes, 36 seconds in addition to that, I've mentioned earlier also there are two very exciting green field projects coming up in Bangalore itself, which is our core 23:44 23 minutes, 44 seconds market and which has done very well in the past. Uh one in North Bangalore and one in Whitefield. Between the two of them, we will be adding about 240 250 23:52 23 minutes, 52 seconds bets. Now besides that we are also looking at newer markets. Um you know there is there is a pipeline of cities 24:00 24 minutes that we're looking at uh in the west which is you know a growing territory for us and also some of them in the south too. Um and you know that was in 24:08 24 minutes, 8 seconds the investor debt. So I would say there are four five cities too beyond our existing markets where we feel we can grow. Um and the brownfield expansion as 24:16 24 minutes, 16 seconds I said uh will happen across the major centers in Ahmedabad in Bangalore in Katak um and in Bombay as well. 24:28 24 minutes, 28 seconds Okay. And if you can just give us a little bit more update on uh you know how the progress has been in the business uh in the in the Bombay and Kolkata markets because I think these 24:36 24 minutes, 36 seconds were two large uh metros where we went relatively recently and uh there has been always this question around you know what could be a competitiveness uh 24:44 24 minutes, 44 seconds you know versus the larger multi-p speciality players in the in the bigger cities. 24:51 24 minutes, 51 seconds You know the B market has done exceptionally well for us. we've grown uh uh quite strongly in the whole whole 24:58 24 minutes, 58 seconds of last year um at you know high teens uh and uh not just in revenue terms but in Eida terms as well uh it's been an 25:06 25 minutes, 6 seconds exponential growth for us and we feel Bombay market will continue to deliver for us in the years to come um so hence the brownfield expansion in that market 25:14 25 minutes, 14 seconds is on the cards uh in Kolkata uh I mean overall the east market has done well for us Kolkata you know we've kind of uh 25:22 25 minutes, 22 seconds consolidated position now um it will need infusion of additional clinical talent because we feel east market you know Kolkata being the center in eastern 25:31 25 minutes, 31 seconds part of the country uh has a lot of potential. We made a a change in the leadership there and we are confident that with that change we should be 25:40 25 minutes, 40 seconds really able to ramp up a Kolkata business too and and for our uh you know Mish on the 25:47 25 minutes, 47 seconds when you look through our network what proportion of the network if there is a way to characterize that uh I mean where we are probably significantly below our 25:56 25 minutes, 56 seconds uh you know what you call optimal ITA levels where there is a opportunity rather to really move up meaningfully so what proportion of our revenue would you 26:03 26 minutes, 3 seconds characterized would probably fall in that bracket. 26:10 26 minutes, 10 seconds So see both east and south clusters are doing very well for us as far as the bita is concerned delivering more than 26:16 26 minutes, 16 seconds 25% of a bit 26% beta. uh the west we've seen a significant ramp up in the happen in the last year or so which continues 26:25 26 minutes, 25 seconds to be slightly lower than our average a bit but I think uh in the with our growth plans our investment plans in that market we should be able to ramp it 26:34 26 minutes, 34 seconds up closer to our average company a bit even exceed that number and and lastly on you know once you sort 26:43 26 minutes, 43 seconds of have taken over the business while there are these unit level opportunities which are really there but are there any 26:50 26 minutes, 50 seconds uh any any sort of corporate level uh you know network level uh you know low hanging fruits that you know that that you can target in terms of profitability 26:58 26 minutes, 58 seconds improvement uh that you can that you can probably highlight. 27:04 27 minutes, 4 seconds Yeah, of course. Um, so we've started work on that already the last four, five months. We've started work on several value creation creation uh initiatives 27:13 27 minutes, 13 seconds around revenue leakage, you know, reducing revenue leakage, improving conversions. Uh there is work that's being done on procurement optimization 27:21 27 minutes, 21 seconds and we've seen that uh flow into our uh margin and EIA as well. We are working on enhancing our clinical density. Uh so 27:29 27 minutes, 29 seconds these are three four initiatives which we are driving from the corporate level and we are already seeing impact of that in our expanded IITA margins across 27:37 27 minutes, 37 seconds clusters. uh we have also across our network we have a large pool of data coming in from patients you know we see about 70 80,000 patients annually that 27:45 27 minutes, 45 seconds we treat our network which is a hu huge pool of data we are using that um you know to drive more data analytics and AI 27:54 27 minutes, 54 seconds improve our uh outcomes and that's another initiative that we are driving besides the ones that I mentioned earlier 28:02 28 minutes, 2 seconds thank you so Thank you. 28:12 28 minutes, 12 seconds Participants who wish to ask questions, please press star and one. 28:17 28 minutes, 17 seconds The next question is from Dvang Patel from Samia Capital. Please go ahead. 28:22 28 minutes, 22 seconds Hi sir, could you dwell a bit into what factors led to slower growth in the southern cluster this quarter? And again 28:30 28 minutes, 30 seconds if I heard you correctly you mentioned excluding AP the growth was 11%. Uh whereas in first half the growth was 28:37 28 minutes, 37 seconds almost 19%. So uh would our growth excluding these one of factors be again similar to H1? 28:45 28 minutes, 45 seconds That's my first question. 28:53 28 minutes, 53 seconds So Dwang thank you for that question. As I [clears throat] mentioned, our growth excluding the normalizing for the AP effect was 11% yearonear. Bangalore 29:01 29 minutes, 1 second cluster did really well. Um the strike did impact our volumes because the wis market is a big market for us where we 29:08 29 minutes, 8 seconds are the dominant players. The strike continued for 20 25 days and it did impact the subsequent month volumes as well because you know for cancer that's 29:16 29 minutes, 16 seconds the kind of uh nuance we have. uh a for a YTD basis you're looking at a growth 29:22 29 minutes, 22 seconds of 16% volume growth uh year on year which also had a base effect of MG 29:29 29 minutes, 29 seconds coming in MG Visag MG hospital wise which we acquired last year um but uh going forward we expect the growth uh 29:36 29 minutes, 36 seconds that we've mentioned about 8 to 10% definitely happening in the subsequent quarters with uh VISAG ramping up and 29:43 29 minutes, 43 seconds Bangalore continuing to do Uh sorry I did not understand what kind 29:51 29 minutes, 51 seconds of uh continuing growth we would see in this cluster. 30:00 30 minutes So going forward volume growth of about 10% we are expecting uh from this market uh in the subsequent quarters. 30:08 30 minutes, 8 seconds Okay. Understood. Understood. Uh my second question was on and this is further discussion. Sorry to add sorry to add one more point. This 30:17 30 minutes, 17 seconds will further get augmented as North Bangalore gets operationalized the end of this financial year. 30:23 30 minutes, 23 seconds Okay. Okay. Uh my other question was on gross profit margin. In the previous uh uh two three years it it was hovering around 75%. 30:33 30 minutes, 33 seconds Uh uh and this quarter or last uh two three quarters it's been trending down and it's it's at 72% now. Could you uh 30:42 30 minutes, 42 seconds explain what is leading to lower gross profit margin? 30:49 30 minutes, 49 seconds So Dang, it's largely driven by a case mix change which is favoring medical oncology. The ramp up in medical 30:56 30 minutes, 56 seconds oncology and pharmacy costs has been slightly margin dilutive, but we are working towards increasing our case mix 31:05 31 minutes, 5 seconds and improving our pay mix which should offset that in the ensuing quarters. Um and but the benefit of medical oncology 31:12 31 minutes, 12 seconds is that we also draw operating leverage from it which in you know contributes positively to our EITA and our main focus is obviously to drive EITA margins 31:21 31 minutes, 21 seconds upwards and I there I feel it's it's net net a positive impact. 31:28 31 minutes, 28 seconds Okay. Uh just lastly I request that uh with the change in reporting format uh you know we've done away with uh bed or 31:37 31 minutes, 37 seconds occupancy related uh metric if you could just uh help us uh you know add that in the presentation to give us a sense of capacity utilization for every quarter. 31:48 31 minutes, 48 seconds Thank you. That's it from my side. Thank you so much. 31:52 31 minutes, 52 seconds Yeah. Yeah. So Dwang so we as as we had mentioned going forward we will stick on two metrics which is largely around 31:59 31 minutes, 59 seconds volume and ERP for cancer patients because they are you know uh they have a long-term association or dependence on 32:07 32 minutes, 7 seconds the hospital. So the long-term value realization is of more importance to us than the episodic treatment which gets captured in our pop. Hence you know we'd 32:16 32 minutes, 16 seconds like to stick to these metrics and we will continue to report progress on them every quarter. 32:23 32 minutes, 23 seconds Fine. Sorry. Thank you. 32:27 32 minutes, 27 seconds And of course there every potential net metric to which we have been reporting uh every quarter. 32:40 32 minutes, 40 seconds Thank you. 32:43 32 minutes, 43 seconds Participants who wish to ask questions, please press star and one. 32:47 32 minutes, 47 seconds The next question is from Gorav from Ambit. Please go ahead. 32:54 32 minutes, 54 seconds Yeah. Hi, good day. Uh so first question is uh have we seen any impact of you 33:03 33 minutes, 3 seconds know the new CGHS norms excluding uh covering treatment of some high value chemotherapy drugs into this quarter's 33:12 33 minutes, 12 seconds numbers and secondly also with the GST cut on a lot of these medications has that impact also been felt in this quarter on the revenues and ITA please? 33:25 33 minutes, 25 seconds Yeah, thanks question. So I I would say as far as GST is concerned, there was a marginal u you know impact on the top 33:34 33 minutes, 34 seconds line as well as margin but we were able to offset that by some initiatives that we took within the organization around pricing uh and consumption. So that's 33:43 33 minutes, 43 seconds been offset because of that. Uh as far as CGH is concerned, yes, there was some immediate impact but we've been able to offset that too by changing consumption 33:52 33 minutes, 52 seconds patterns in our hospitals. uh and also the fact that overall at an overall company level does not contribute much 34:00 34 minutes to our business for now. Um it's a it's a it's a neutral impact so to speak. A 34:07 34 minutes, 7 seconds lot of work has happened on these two fronts to make it make sure that it doesn't impact us forward as well. 34:16 34 minutes, 16 seconds [clears throat] 34:16 34 minutes, 16 seconds Got it. Got it. uh separately you know with this uh strike in Andra can you 34:25 34 minutes, 25 seconds just quantify you know how many days did that you know kind of affect the business and is that also you know that 34:34 34 minutes, 34 seconds that's had a adverse effect on you know the working capital will also being stretched uh at least for Q with you 34:42 34 minutes, 42 seconds know some uh receivable days going up and that uh payment should happening in the next few quarters 34:52 34 minutes, 52 seconds So it did have a material impact on our volumes because you know about we lost about 20 25 days of working and that did 35:00 35 minutes have an impact on the November volumes as well but now that that that growth is coming back to us I mean that effect has 35:07 35 minutes, 7 seconds been normalized as far as receivables are concerned um no in fact we've got a good uh flow of um coming money coming 35:16 35 minutes, 16 seconds in from that segment you know the fact that Q3 had a bidding of about 25 CR but we had a receivable net uh receivable 35:25 35 minutes, 25 seconds addition um benefit of 5CR. So netn net net there is a positive uh flow from the government side as far as receivables 35:33 35 minutes, 33 seconds are concerned and Q4 also looks very good from that perspective for us for that market. 35:42 35 minutes, 42 seconds Got it. Very encouraging. Uh last uh two clarifications. So uh I think uh first 35:50 35 minutes, 50 seconds one would be you know there was a uh within this quarter there was a announcement of you know one-time uh 35:58 35 minutes, 58 seconds amendment to the founders contract of 2 kores so is that uh one-time impact in the Q3 results and secondly uh you know 36:07 36 minutes, 7 seconds it's a resolute margin so this quarter despite these disruptions or banging impacts uh Q4 with the new Bangalore 36:16 36 minutes, 16 seconds green field coming on. Uh would that be a temporary drag that you see in Q4 margins versus Q3? 36:26 36 minutes, 26 seconds So to your first question, the impact of that amendment will come in Q4. We've not taken that in Q3. And to your second question, obviously Q4 is trending 36:34 36 minutes, 34 seconds better than Q3. Um you know uh and our hope is that uh uh it will be the best quarter for us this this this financial 36:42 36 minutes, 42 seconds year. The impact of North Bangor we'll only be able to see in Q1 coming in because from the time of operationalizing to the business impact will probably take us bottom. 36:55 36 minutes, 55 seconds Got it. Thank you so much. All the best. I'll join back to you. Thank you. Right. 37:01 37 minutes, 1 second Thank you. Next question is from Sumuk from Coleman Capital. Please go ahead. 37:08 37 minutes, 8 seconds Uh hey uh hi team. Am I audible? 37:15 37 minutes, 15 seconds Yes, you are. Please go ahead. Uh yes sir. So my uh question is on the operating margins and the ROC's sir. So 37:22 37 minutes, 22 seconds it's been historically row when I compare it to a multispy hospital. So is there anything structurally different in 37:30 37 minutes, 30 seconds uh cancer care specialy hospital because it's more equipment heavy and you have relatively smaller hospitals which is 37:38 37 minutes, 38 seconds leading to uh you know lower margins and allergies. 37:49 37 minutes, 49 seconds Yeah. So see traditionally if you see historically many of our centers of excellence have done extremely well when 37:56 37 minutes, 56 seconds it comes to ROC. They are clocking an ROC of 28 29%. Close to 30% also. So structurally I don't think there is 38:04 38 minutes, 4 seconds there's anything wrong. It's just that 50% of our centers if you see today are in that 8 to 10 year. They're around 8 to 10 years old. And that's where the 38:13 38 minutes, 13 seconds impact that we will see in the ensuing years as they mature and we see more operating leverage coming in the ROC will significantly improve and we've 38:21 38 minutes, 21 seconds stated that as well. So I feel it's not a question of any fundamental issues with the business. It's a question of the majority of our centers that is uh 38:30 38 minutes, 30 seconds you know impacting the ROC to this level. And second point is that uh you know with our capex outlay that we have planned now for the next four five years 38:38 38 minutes, 38 seconds after FI27 the rate aida growth rate will outpace the cap capex deployed capital deployed growth rate by a good 38:46 38 minutes, 46 seconds margin and that will flow directly into ROC. So we feel we are confident of delivering the ROC margins that we have 38:53 38 minutes, 53 seconds committed in our investor day um debt of about 20% in the next four to five years. 39:00 39 minutes Okay. Yes. And this 30% margin. So what at what maturity would the hospital ideally be achieving this? 39:19 39 minutes, 19 seconds So uh we have seen that when a center crosses you know 10 cr per month revenue the ROC impact improves significantly. 39:27 39 minutes, 27 seconds Um and uh we've seen that trend in the last year or as well. So going forward as more and more centers mature I feel 39:35 39 minutes, 35 seconds from a current 13 and a half% we should be uh progressively moving towards 20% margin at a company level. 39:43 39 minutes, 43 seconds Oh okay got it. That was my question. 39:45 39 minutes, 45 seconds By maturity I meant the revenue threshold not the age uh not the age of the hospital. Okay. 39:55 39 minutes, 55 seconds Yeah. Thank you. 39:59 39 minutes, 59 seconds Thank you. The next question is from Rajat Shriast from Tata Mutual Fund. Please go ahead. 40:08 40 minutes, 8 seconds Yeah. Hi, thanks for taking my question. 40:10 40 minutes, 10 seconds Uh Manish, my first question is that what percentage of your revenues is coming from patients who have probably had the first line of treatment or first 40:19 40 minutes, 19 seconds treatment in some multispeciality hospital and for whatever reason they were not happy with the treatment. So they have come to HCG for uh you know 40:28 40 minutes, 28 seconds and uh I just want to understand how much of your revenues is coming from those patients 40:36 40 minutes, 36 seconds because you claim that uh probably you are one of the best in cancer care. So I think that would address us. 40:45 40 minutes, 45 seconds Yes such a very interesting question. So actually a good chunk of our patients come in after having you know taken an 40:54 40 minutes, 54 seconds opinion at a multispeciality hospital. I would say that I can come back to you with the exact figures but my uh my my 41:02 41 minutes, 2 seconds estimate is around 45% patients come which is a large chunk. uh but going forward we want to kind of uh um focus 41:09 41 minutes, 9 seconds on the first opinions also strongly because that's a big pipeline that we see growing while uh our centers of excellence will get these second and 41:16 41 minutes, 16 seconds third opinions which is really the mode that we build on but I think going forward this will um come down a bit 41:23 41 minutes, 23 seconds while the overall pie will increase big uh all right and also what 41:32 41 minutes, 32 seconds percentage is medical tourism for you and probably if you can tell us what are you doing to promote that 41:39 41 minutes, 39 seconds because that turns out to be a big Indian healthare system right currently it's about 3 and a half% uh 41:48 41 minutes, 48 seconds rajat and our endeavor is to take it to about 7% in the next four years our you know uh you know the way that we are 41:55 41 minutes, 55 seconds thinking about is that there are traditional markets which have into hcg hospitals and today oncology comprises about 25 to 30% of our overall of the 42:04 42 minutes, 4 seconds overall medical value travel in the country. So it is the largest fastest growing specialtity on MVT uh on an 42:11 42 minutes, 11 seconds overall overall basis and we feel this segment is going to grow even further and hence we are deploying the resources 42:18 42 minutes, 18 seconds both people and infrastructure in our major six to seven markets to draw uh you know into this growth 42:27 42 minutes, 27 seconds but any reason Manish that this number is at 3% right now because I think for other hospitals it is closer to 10 42:34 42 minutes, 34 seconds already so was Is it not a focus area for us till now and it is now? Like can you elaborate on it? 42:43 42 minutes, 43 seconds Oh yes. Uh I mean uh for us domestic has done extremely well and that was the focus area but um you know we feel that 42:51 42 minutes, 51 seconds since oncology postcoid particularly uh has grown rapidly uh and hence our focus is now on leveraging on this channel as much as pos. 43:04 43 minutes, 4 seconds Sure. Right. 43:04 43 minutes, 4 seconds And and one more factor why we we we haven't done so well is that our centers except for Bangalore uh center are not 43:14 43 minutes, 14 seconds located in metros which typically get the drainage of these patients like Delhi um and uh you know Chennai for 43:21 43 minutes, 21 seconds example. Um so uh you know with now our expansion in Bombay for example uh and 43:27 43 minutes, 27 seconds uh uh and Kolkata uh expanding its footprint and increasing in size and Bangalore of course is our center of excellence. We we are confident of 43:35 43 minutes, 35 seconds increasing this um piece of business for the organization. Great Manish if I can squeeze one more. 43:44 43 minutes, 44 seconds So you mentioned that uh uh your best centers are operating at 25 26% able margin levels and probably closer to 30% 43:53 43 minutes, 53 seconds ROC's. Can you tell us how what what is the number of beds out of the 2,200 beds which we have currently? How many beds would be operating at that level? 44:13 44 minutes, 13 seconds So Raj if you can uh I can come back to you with the exact number but our investor tech has a reference to this so you may want to check that otherwise we 44:21 44 minutes, 21 seconds can come back to you with details more specific details I don't have that number off hand the exact number of beds then u 44:30 44 minutes, 30 seconds all right thanks Manish and all thank you the next question is from 44:37 44 minutes, 37 seconds Aditya Chetta from Incred asset management. Please go ahead. 44:43 44 minutes, 43 seconds Uh hi, good afternoon. Uh beyond the uh two facilities in Bangalore that those are mentioned in the investor presentation. Can you share some more 44:51 44 minutes, 51 seconds granular details on where we should expect the incremental beds to come from? 45:01 45 minutes, 1 second So Adita the incremental beds will come from across the organization as an example weak 45:09 45 minutes, 9 seconds Kolkata Katak I've mentioned Ranchi will have some bed expansion KR road which I said 45:16 45 minutes, 16 seconds Bangalore our flagship Ahmedabad Bhnagar and uh BI so I would say AC across seven 45:25 45 minutes, 25 seconds eight centers we will see bed expansion varying between uh 20 to 60 nets, 45:34 45 minutes, 34 seconds right? And my next question is uh but the large chunk will a chunk will come from Bangalore. The largest chunk 45:42 45 minutes, 42 seconds will come from Bangalore, right? Uh over the last 3 years uh incremental part of our revenue was from 45:50 45 minutes, 50 seconds the uh uh established centers and the mix was north of 80 85%. 45:56 45 minutes, 56 seconds uh on our outlook on uh uh directional improvement in margins. Uh you know how do we think about balancing growth and 46:05 46 minutes, 5 seconds uh margins going forward? Uh whether we should be uh uh balanced about the fact 46:12 46 minutes, 12 seconds that you know uh in there is going to be material growth in new beds which could uh impact a bit margin going forward. 46:23 46 minutes, 23 seconds So uh you know going forward about 80% of our margin expansion or growth sorry margin growth uh in absolute term is 46:32 46 minutes, 32 seconds going to come from existing centers you know about 10 odd percent is going to come from 10 to 12% is going to come from brownfield expansion in the centers 46:40 46 minutes, 40 seconds that I mentioned and about 5 to 6% will be come from will come from green field expansion which is going to be a very calibrated and prudent approach um as 46:49 46 minutes, 49 seconds far as capital allocation is concerned Got it. Those are my questions. Thank you. 46:57 46 minutes, 57 seconds Thank you. Participants who wish to ask questions may press star and one. The next question is from Aryan from Prudent Investment Managers. Please go ahead. 47:08 47 minutes, 8 seconds Uh yeah. Hi sir. So you had called out the 15% uh sales growth numbers. So can you maybe just uh break this down into 47:16 47 minutes, 16 seconds ARP growth and volume growth? That would be really helpful. uh and maybe if you could call out uh future capeex for FI27 and 28 that'll be uh really helpful. 47:32 47 minutes, 32 seconds So um our the breakup for the 15% plus is about 10% will come from volume growth and about 5% will come from ERP 47:41 47 minutes, 41 seconds uh growth. for capex. This year our expected closure is about 275 to 80 crores of capex and next year probably about 10 to 12% higher than that. 47:52 47 minutes, 52 seconds Okay. Sure. Thanks sir. Thank you. 47:57 47 minutes, 57 seconds Thank you very much. That was the last question in queue. I would now like to hand the conference over to the management team for any closing comments. 48:11 48 minutes, 11 seconds Uh thank you so much. I would uh you know uh thank everybody who participated and asked some very insightful questions. Um and it was a wonderful 48:19 48 minutes, 19 seconds interaction and hope that we continue to um u exchange these insights from time to time not just on these calls and look 48:27 48 minutes, 27 seconds forward to meeting you again uh next quarter. Thank you so much. Have a wonderful day. On behalf of teams we would like to thank you all. Thank you. 48:37 48 minutes, 37 seconds Thank you very much. On behalf of Healthcare Global Enterprise Limited, that concludes the conference. Thank you for joining us, ladies and gentlemen. 48:44 48 minutes, 44 seconds You may now disconnect your lines.