Narayana Hrudayalaya : Earnings Call Transcript Q4 FY 2023

"Narayana Hrudayalaya Limited

Q4 FY23 Earnings Conference Call"

May 22, 2023

MANAGEMENT: MR. VIREN SHETTY - EXECUTIVE VICE CHAIRMAN

DR. EMMANUEL RUPERT - CHIEF EXECUTIVE OFFICER &

MANAGING DIRECTOR

MR. R. VENKATESH - GROUP CHIEF OPERATING OFFICER

DR. ANESH SHETTY - MANAGING DIRECTOR, OVERSEAS

SUBSIDIARY HCCI

MR. NISHANT SINGH - VICE PRESIDENT, FINANCE, MERGERS &

ACQUISITIONS & INVESTOR RELATIONS

MR. DURGA PRASAD - SENIOR MANAGER, MERGERS &

ACQUISITIONS & INVESTOR RELATIONS

Mr. Nishant Singh: Good afternoon, everyone. My name is Nishant Singh. I head the Investor Relations function at Narayana Hrudayalaya. I welcome you all to the Q4 FY23 earnings call of the company.

To discuss our performance and address all your queries today, we also have with us Mr. Viren Shetty - our Executive Vice Chairman, Dr. Emmanuel Rupert - our CEO and MD, Mr. Venkatesh - Group COO, Dr. Anesh Shetty - MD of our overseas subsidiary, HCCI, Cayman, and Durga Prasad - Senior Manager from the team. Our group CFO - Ms. Sandhya, is not available for this call due to some unavoidable reasons.

We hope you have gone through the collaterals, which have been upgraded on the stock exchanges as well as on our website. As usual, before we proceed with this call, we would like to remind everyone that the call is being recorded and the transcript of the same shall be made available on our website as well as on the stock exchange at a later date. I would also like to remind you that everything that is being said on this call that reflects any outlook for the future or which can be construed as a forward-looking statement must be viewed in conjunction with uncertainties and the risks that they face. Post the call, should you have any further queries, please do not hesitate to get in touch with us. We would like to address them with the best of our ability.

With that now, I would like to hand over the call to Dr. Emmanuel Rupert - our CEO.

Dr. Emmanuel Rupert: Consolidated revenue for the current quarter stood at INR 12,216 million reflecting a year-on-year growth of 29.9% resulting in a consolidated fiscal revenue of INR 45,248 million at a year-on-year growth of 22.2%. NHL generated Consolidated EBITDA of INR 2,904 million in Q4 FY23 at a margin of 23.8% against 23.6% of Q3 FY23.

Our Cayman unit continues to contribute significantly to the overall performance. HCCI Q4 FY23 revenue increased to USD 29.3 million against Q3 FY23 revenue of USD 28.2 million. There are one timer income and expenses included in them and adjusted for the same. The Q4 underlying margin is 22.5% for the Group and 18.5% for India.

Our Industry leading average ROCE of over 28% and our targeted CapEx strategy focusing on judicious allocation of capital continues to deliver sharp returns.

I am delighted to share with you that we recently operationalized our New Bone Marrow Transplant Wing in Health City Campus in Q4 FY23 adding to our existing capacity making it one of the largest such facilities in India and also the Asia Pacific region. This unit completed 63 Bone Marrow Transplants in Q4 taking the total Bone Marrow Transplants performed in the unit over the last 1.5 decades to more than

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2,000 in India. This coupled with the advanced CAR-T clinical trials i.e. the Chimeric Antigen Receptor T-cell therapy trials in partnership with is an , which is an advanced immunotherapy and precision medicine in partnership with Immuneel with their GMP facility located within our campus makes us one of the very few centers in Asia with end to end treatment for advanced oncology under one roof. The clinical trials which we participated in, we performed more than 20 CAR-T cell therapy out of the 24 and they were successful and 40% of them are nearing their one-year follow up after their CAR-T cell therapy.

Our Leadership in Cardiac Care grew from strength to strength with Cardiac Hospital in Bangalore performing more than 2,250 Cardiac Surgeries and 5,500 Cath lab Procedures and more than 150 minimal access cardiac surgery this quarter. Minimal access cardiac surgery is growing in numbers and they are able to perform very complex valve repair surgeries and coronary artery bypass surgeries using very small incisions of around an inch to 1.5 inches. This continues to be one of the largest cardiac centers in the world. Our Mazumdar Shaw Cancer Center performed 75 robotic Onco surgeries in Q4 and we have been able to extend the sphere of complex work that we do across all our centers. We successfully performed Gujarat's first-ever Mitra Clip Procedure for a very end stage heart failure, repairing the Mitral Valve in very severe heart failure leading to severe Mitral Regurgitation.

The NH Ahmedabad unit also discharged Total Knee Replacement patient within 24hrs of the surgery. And this robust preoperative care is what we are trying to drive across our entire network converting many of the procedures into short stay procedures.

The NSH Howrah completed more than 200 Robotic Onco surgeries in a little over a year.

Our newly acquired Department of Orthopedics, Spine & Trauma in Health City campus has successfully performed a complex Hand Reimplantation Surgery in the quarter. This young person had his forearm severed in an industrial accident and the team of plastic & reconstruction surgeons along with Orthopedicians painstakingly implanted the severed forearm. The unit has been progressing well with the clinical spectrum and does more than 200 procedures a month.

After implementing athmâ, our LIS - Lab Information System across our labs, we have experienced a noteworthy enhancement of 20% in the turnaround time and up to 36% in the Top 5 tests. This improvement in efficiency is across a substantial volume of over 24,000 samples per day. We can now provide our patients and doctors with precise

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results in a significantly shorter period.

Athmâ has successfully achieved the prestigious NABH-QCI certification. This recognition granted by the National Accreditation Board for Hospitals (NABH) in collaboration with the Quality Council of India (QCI) and the National Health Authority (NHA) recognizes athmâ as a trusted partner that upholds with the highest standards of interoperability, quality, and safety. It reinforces our commitment to providing our patients and doctors with a reliable and secure platform.

We are transforming our business to offer comprehensive healthcare services by becoming more patient oriented, digitally native and operationally efficient to offer high quality health care at an affordable cost. While continuing to consolidate our operations, we would simultaneously pursue growth opportunities both in India and overseas that derive synergies from our existing operations and maximize value for all our stakeholders.

I would like to hand over to Viren Shetty to share updates on some of our new ventures. Over to you, Viren.

Mr. Viren Shetty: Thanks, Doctor Rupert. When we started Narayana Hrudayalaya in 2000, we sought to transform health care by making high-quality care accessible to all. Nobody said it was possible at that time. But looking back, we are proud to have played a part in putting India on the path to disassociate healthcare access from affluence. At the same time, the medical research field is spending billions of dollars developing cutting edge treatments for diseases that were once considered inoperable. We shouldn't deny our people access to the latest and most expensive treatments but this is only possible when everyone's covered with Comprehensive Health Insurance. The IRDAI has been encouraging new entrants to develop innovative models of health insurance that cover the missing middle and NH would like to play a role in this new landscape.

Our existing health insurance system operates on a fee-for-service model. It will pay you when you get sick, does nothing for you when you're healthy and runs in the other direction if you have a preexisting disease. Large developing countries with low tax collection like ours cannot afford free universal health care on a fee for service model. So, as NH we would like to experiment with managed care where the interest of patients, payers and providers are fully aligned in an integrated manner. So, in this model care and coverage are seamlessly integrated and healthcare is delivered in a narrow network and the focus is on providing optimal levels of care and keeping your

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	customers healthy.
	This is a logical next step in our journey to create an affordable, globally benchmarked,
	quality driven healthcare services model. At NH, we've always believed in getting
	closer to patients and bringing the promise of quality, affordable healthcare to the
	doorstep of the country's millions.
	So, to this effect, we've incorporated a new company Narayana Health Integrated Care
	(NHIC) and have undertaken a slump sale to transfer our existing clinic assets. The
	value may not be that significant, about Rs.10 crores, but we will slowly build scale,
	competency and domain expertise in order to be a market leader in this space.
	NHIC has a strong leader in Ravi Vishwanath who joins us with 25 years of experience
	across HDFC Argo, Apollo Munich, Tata AIA Life and Reliance General.
	These are the early days of our journey but our initial results have been very promising.
	We strongly believe that an integrated care model based on whole person care,
	providing comprehensive coverage for all market segments is the need of the hour.
	We will share updates on the progress over the coming quarters.
	We now open up the floor to your questions. Thank you. I would request everyone to
	now use the raise hand feature to start posing the questions and we try to address
	them in this forum.
Mr. Nishant Singh:	Thank you, Viren. I would request everyone to now use the 'raise hand feature' to start
	posing their questions and we will try to address them in this forum.
	Yes, Nirali, you may go ahead.
Ms. Nirali Shah:	Yeah. Firstly, congratulations on a good set of numbers. My first question is, could you
	provide an update on the EBITDA margins for Mumbai in Q4 like in Q3, to be precise,
	in January Mumbai had had come to a breakeven. So, I would like to know EBITDA
	margins for Mumbai in Q4. Additionally, I'm also interested in understanding the
	current EBITDA margins for our relatively new hospitals in Gurugram and Dharamshila.
	And have we achieved a double digit margin in these two locations? I understand that
	Mumbai being a new one and we have just come across breakeven, so double digit is
	not possible for Mumbai but the other two, have we reached there? Have we achieved
	it?
Mr. R. Venkatesh:	Yeah, I will take this call. I am Venkatesh. So, your question on Mumbai.
Ms. Nirali Shah:	Yes, Mumbai.

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