June 2011

Disclaimer
This presentation may not be copied, published, distributed or transmitted. The presentation has been prepared solely by the company.
Any reference in this presentation to Fortis Healthcare (India) Limited shall mean, collectively, the Company and its subsidiaries. This
presentation has been prepared for informational purposes only. This presentation does not constitute a prospectus, offering circular or
offering memorandum and is not an offer or invitation to buy or sell any securities, nor shall part, or all, of this presentation form the basis of,
or be relied on in connection with, any contract or investment decision in relation to any securities. Furthermore, this presentation is not and
should not be construed as an offer or a solicitation of an offer to buy securities of the company for sale in the United States, India or any
other jurisdiction.
Securities may not be offered or sold in the United States absent registration or an exemption from registration. Any public offering in the
United States may be made only by means of an offering document that may be obtained from the Company and that will contain detailed
information about the Company and its management, as well as financial statements. Any offer or sale of securities in a given jurisdiction is
subject to the applicable laws of that jurisdiction.
This presentation contains forward-looking statements based on the currently held beliefs and assumptions of the management of the
Company, which are expressed in good faith and, in their opinion, reasonable. Forward-looking statements involve known and unknown risks,
uncertainties and other factors, which may cause the actual results, financial condition, performance, or achievements of the Company or
industry results, to differ materially from the results, financial condition, performance or achievements expressed or implied by such forwardlooking statements. Given these risks, uncertainties and other factors, recipients of this presentation are cautioned not to place undue
reliance on these forward-looking statements.
The Company assumes no responsibility to publicly amend, modify or revise any forward-looking statements, on the basis of any subsequent
development, information or events, or otherwise. Unless otherwise stated in this presentation, the information contained herein is based on
management information and estimates. The information contained herein is subject to change without notice and past performance is not
indicative of future results. The Company may alter, modify or otherwise change in any manner the content of this presentation, without
obligation to notify any person of such revision or changes.
By attending this presentation you acknowledge that you will be solely responsible for your own assessment of the market and the market
position of the Company and that you will conduct your own analysis and be solely responsible for forming your own view of the potential
future performance of the business of the Company.
Neither the delivery of this presentation nor any further discussions of the Company with any of the recipients shall, under any circumstances,
create any implication that there has been no change in the affairs of the Company since that date.

Agenda
A. Healthcare Industry in India
B. Company Overview
C. Recent Developments
D. Financials

Healthcare Sector: Favorable industry dynamics

Healthcare Services remains attractive to both public and private market investors
Strong Cash
Generation
Characteristics
Increasing Public
Outsourcing

Increasing Private
Payers

Scalable Business
Models

Healthcare
Sector

Healthcare without
Binary Risk

Scarcity of Quality
Assets

Defensive Growth
Characteristics

Rise of Independent
Providers
Considerable
Consolidation
Opportunities

Favorable
Underlying
Demographics

Hospitals: Proxy for Indias Healthcare Boom

The Healthcare delivery market in India pegged at around US$ 45 billion in 2010

While globally healthcare is typically provided through a largely government-funded public system, the
Indian healthcare industry is dominated by the private sector

India has ~17% of the world's population, but one of the poorest healthcare infrastructures among growing
economies and the lowest spend on healthcare (~4.5% of GDP)

Demographic changes, improving income levels, changing lifestyles, and rising insurance penetration etc
will result in a rise in discretionary spending on healthcare

Accessible, reliable and affordable healthcare

continues to be a challenge

Opportunity in healthcare being significantly

leveraged by private healthcare providers

Expected to generate employment opportunities for

9 million people by 2012

Source: Analyst Research

Indian Healthcare Market (US$bn)

CAGR: 12%

Indian Healthcare Delivery

20%

80%
Others
7%
Population
Pvt.
Sector
30%
Govt.
Sector
70%

Hospitals in the Country

6

Govt.
22%

Insurance
1%

Out of
Pocket 70%

Healthcare Expenditure

Evolution of Healthcare in India

Very Low Healthcare Spend as % of GDP

High Disease Burden & Insufficient Facilities

20%

8%

8%

9%

6%
1%
Disease
burden

Significantly Low Hospital Beds Per 10,000 Population

139

72
39

34

32

31

30

24

22
9

Japan

France

UK

CanadaSingapore

US

Source: WHO, FICCI, Ernst & Young, Analyst Research

China

Brazil Thailand

India

Beds

Doctors

Nurses

Community &
Lab
health workers technicians

Changing Age Profile of Indian Population

Current Status Of Global Healthcare

There is a wide discrepancy in the world with regards to the amount of health expenditures both relative to GDP and in absolute terms
Health Expenditure (% of GDP)
Developed Countries

Developing Countries

Health Expenditure Per Capita (US$)

Developed Countries

Developing Countries

Source: The World Pharmaceutical Markets Fact Book 2009 from Espicom Business Intelligence; CIA World Factbook

Lifestyle Changes Driving Diseases Which Require

Hospitalisation
Expected No. of Cardiac Patients in India

Lifestyle
Diseases

Number of people (in million)

Changing Disease Profile

72.1

45.0

2008

Acute
Diseases

2018E

Cancer and Cardiac

Grows widely in the
lifestyle segment

Lifestyle diseases are set to assume a greater share of the healthcare

market
Lifestyle diseases such as cardiac diseases require hospitalization and
are more expensive to treat hence increasing the in-patient revenues
Source: CII-McKinsey, CRISIL Research

Number of people (in million)

Estimated No. of Diabetes Patients

49.4
39.0

2008

2018E

India: Potential to Become the Global Healthcare

Destination
Overview

Cost of Important Procedures (US $)

Medical value travel is one of the most lucrative segments of

US

UK

Thailand

Singapore

India

Heart Surgery

100,000

41,726

14,250

15,312

6,000

Heart Valve Replacement

1,60,000

30,000

10,500

13,000

6,000

revenue for up-market tertiary care hospitals by 2012, and

Bone Marrow Transplant

250,000

292,470

62,500

150,000

30,000

will account for 3 5% of total healthcare market

Liver Transplant

300,000

200,000

75,000

140,000

45,000

Knee Replacement

48,000

50,109

8,000

25,000

6,000

Hip Replacement

38,000

18,000

10,000

12,000

6,000

the healthcare sector and is expected to grow into a US$ 1.5

billion industry by 2012

Potential to contribute US$ 1.2 2.4 billion additional

Key Drivers For The Growth

Issues

Quality healthcare at fraction of the cost

Inadequate healthcare infrastructure

Availability of skilled doctors & hospitals

Unstructured medico legal jurisdiction

Good reputation of Indian doctors

Indians hospitals standards below par against the global

Upsurge of lifestyle diseases

benchmarks of care
Lack of accredited hospitals and follow up care

10

Health Insurance
Growing Share Of Urban Middle Class Households
100%

3.3%

5.2%

7.0%

Health Insurance Market Size (US$ mn)

7,000

6,207

6,000

80%

44.2%

52.5%

60%

58.6%

CAGR: 32%

5,000
4,000
3,000

40%
52.5%

20%

42.3%

2,000
34.5%

0%

1,000

494

713

2006

2007

1,127

1,472

0
2001-02
<US$ 2,100

2006-07E
US$ 2,100 - 12,800

2010-11E

2008

2009

2015E

>US$ 12,800

Health insurance market in India is expected to grow at a CAGR of 32% to reach

a market size of US$ 6.21bn by FY15

One of the fastest growing free economy

Overall penetration at 2%.

Ranked 4th largest economy in the world in terms of

Growth driven by:

purchasing power parity

Higher service mix, increasing urbanization

a) increasing awareness,
b) soaring healthcare costs and
c) demographic profile of the people

Source: CRISIL Research

11

Agenda
A. Healthcare Industry in India
B. Company Overview
C. Recent Developments
D. Financials

The Fortis Edifice..

Vision

To create a world-class integrated healthcare delivery system in India, entailing the

finest medical skills combined with compassionate patient care

Globally respected
healthcare organization known for
Clinical excellence and Distinctive Patient care

Achieved by

Foundation of
13

Talented
people

Strong value
system

Efficient
systems

Trust

Responsibility
towards
stakeholders

Fortis Healthcare: The first decade of growth

Incorporated in 1996, Fortis is second largest healthcare chain in India built on a focused organic and inorganic strategy

56* healthcare delivery facilities

31 operating hospitals,

17 satellite and heart command centers and

8 hospitals under development

Listed on Indian stock exchanges with a market capitalization of c.USD1.5bn (May 2011)

International and Nationally accredited facilities by JCI, NABH, NABL along with quality certifications by ISO Standards 9001 / 14001

Acquired 10 hospitals from Wockhardt Hospitals in 2009 and gained pan India presence and had recently acquired a ~25.3% stake in
Parkway Holdings (Southeast Asias leading healthcare service provider with a network of 20** hospitals with more than 3,400 beds
throughout Asia) and has chosen to exit considering higher valuations

Started first hospital at

Mohali

Acquired Escorts chain of hospitals

Enters Delhi
Commences operations at
Noida

Revenues grow
4x with strong
presence in NCR

14

Acquired Malar Hospitals,

Chennai

Listed on BSE and NSE

with a market cap of
USD543mn
Starts hospital at Jaipur

Took a significant step in establishing Fortis

as a Global Healthcare Brand by its attempt
to acquire Parkway Holdings Ltd Asias
finest healthcare provider, but exited
considering high valuations of the asset

Rights Issue
Acquired 10 hospitals from Wockhardt

Company achieves
profitability on
consolidated basis

Acquired Strategic stake in

Super Religare
Laboratories (SRL)

Have signed 5 O&M contracts till

date and progressing towards
ongoing projects in tier II cities

Commenced two Greenfield facilities at

Shalimar Bagh, Delhi and Anandpur,
Kolkata; Launched an Oncology block at
Mulund, Mumbai
* Includes projects under development

Key Differentiators Success Drivers

Strong IT system
Differentiated Model
Doctor engagement, Deep
penetration Strategy, Pan
India presence

Brand

Execution capabilities
M&A deals, Integration and
turnaround

Stress on Quality, Patient

Centricity

15

Key
Differentiators

People focus

Operational Synergies
FOS, TRM, PSM

Organisational Chart
Managing Director

Chief Financial
Officer

President Strategy,
Organisational
Development &
Projects

Chief Executive Officer

Vice President Corporate

Affairs

Head Growth &

Business Planning

Chief People
Officer

HeadInformation
Technology

Chief Financial
Controller

Chief Sales

DirectorMarketing &
Corporate
Communications

* The business is bifurcated into three regions headed by Regional Directors (RDs) for respective regions.

16

Director-Medical
Operations
Group

Regional / Zonal
Directors*

Head Internal
Audit

Driving Efficiencies
Branding & Marketing
Conveying Value Proposition

Operating Efficiency

ARPOB, ALOS, Occupancy

Gross Margins, EBIDTA
Bed to Nurse ratio
Supply Chain Management
Best practice benchmarking
DSO/ Inventory Days
Surgical : Non Surgical
Shared Service Centres
FOS, MOS, Patient Satisfaction Index

Processes
IT system, Protocols, SOPs, Governance,
Trust and Transparency , Integration
Capability, Project Execution

17

Capital Efficiency

Maximizing Return
on Invested
Capital

Optimize Capex
Cheap Finance
Model of Growth
Outsourcing
Off Balance Sheet
Turn key/ PPP/ Leased Premises
Technology Management : COE

People
Motivated, Trained and Engaged Staff:
Service Excellence, Academics &
Research, HR Processes

Deep Pan India Presence

Total Capacity Operational Beds No. of Hospitals

Category wise
Presence across
- 15 States
- 30 Cities

Owned

4,716

2,941

22

Managed

1,576

800

26

Projects

1,945

Grand Total

8,237

3,741

56

North

4,538

1,977

29

South

1,469

663

10

West

1,270

685

East

840

306

International

120

110

Grand Total

8,237

3,741

56

766

542

45

Region wise

Focus
Areas

Maturity wise
More than 5 years

Owned Facility

3 to 5 years

2,806

1,908

27

Managed Facility

1 to 3 years

851

616

Less than 1 year

1,919

675

Projects

1,945

Grand Total

8,237

3,741

56

Heart Command
Centers (HCCs)
Projects

Not included in above map are international hospitals, and projects

* Expansion of beds at Mulund hospital is a project, but does not add a new hospital to the total number of hospitals. Although, the beds considered as part of capacity in Project stage

18

Growth strategy

Focused and
Aggressive
Growth Strategy

Reinforce presence in already present

regions

Flexible approach to expansion through

Green Field, Brown Field, O&M

agreements, Asset Light model and Public
Private Partnerships (PPP)

Replicate its North India model to

19

Improving
Operational
Performance

Maximize efficiency through strategies

such as common procurement unit for

medical equipments and supplies

Improve occupancy rates by

expanding its reach and increasing

community outreach programs to gain
market share

establish a network of super-specialty

Centers of Excellence and multispecialty hospitals delivering quality
healthcare, to all regions

Increase its average income per bed

Execution capabilities
Greenfield projects, M&A deals,
Integration and turnaround

Supply Chain Management,

Shared Service Centers
FOS, MOS,

in use by focusing on high-end

healthcare services, reducing the
average length of stay of in-patients

Leveraging
People and
Technology

Attract and retain clinical staff with

reputations for clinical excellence in their

communities

Training and skill enhancement

programs

Adopting latest medical equipment and

technology

Focusing on evolving a robust IT

platform for seamless integration of

information
Motivated, Trained and Engaged
Staff: Service Excellence,
Academics & Research, HR
Processes

Typical Tertiary Care Model (200 Beds - Owned facility)

Indicative Hospital Operating Model

500

[1.3x 1.5x of CAPEX]

4x

Book Breakeven

400

Land

13%

Other Equip

12%

Medical
Equip

25%

Revenues

Cash Breakeven

300
EBITDA
Breakeven

100
50%

16%

ROCE = 26%
ROE = 20%

20%

23%

28%

31%

38%

28%
30%

33%

27%
36%

40%

29%

31%

(16%)

CAPEX

Cost of set up is
` 60 90 lacs/ bed

Debt: Equity 1:1

17%

38%

20

23%

200
x

Building &
Utilities

28%

30%

Occupancy

85%

(100)
Year 1

Year 2
Variable

Year 3
Personnel

Year 4
SG&A Cost

Year 5
EBIDTA

Asset Light Model (200 Beds)

Indicative Hospital Operating Model

500

[1.3x 1.5x of CAPEX]

4x
Book Breakeven

5%

400

28%

Land
Other
Equip
Medical
Equip

Revenues

Cash Breakeven

13%
12%

300
EBITDAR
Breakeven

25%

8%
16%
11%

50%

33%

20%

28%

23%

31%

18%
38%

17%

23%

200

100
Building &
Utilities

6%

28%
30%
27%

38%
36%

40%

31%

29%

(16%)

CAPEX

Cost of set up is
` 60-90 lacs/ bed

30%

Occupancy

85%

(100)
Debt: Equity 1:1

Year 1
Variable

Year 2
Personnel

Year 3
SG&A Cost

*EBITDAR is Earnings before Interest, Tax, Depreciation, Amortisation and Rent/lease

21

Besides
elongated book
breakeven
period, Fortis to
witness higher
returns on its
investment
ROCE = 51%
ROE = 39%

Year 4
EBIDTAR*

Year 5
Rent

Fortis to invest
only on Medical
and Other
equipment (~37%
of project cost).

Focus on ARPOB
Surgical vs. Non Surgical

Average
Revenue Per
Occupied Bed
(ARPOB)

Medical Program

Critical Care Beds vs.

General Care Beds

Total Revenue

Pricing

Specialties Chosen

Average Length of
Stay (ALOS)

Patient Turnover

Volumes

Bed Utilization

Occupied Beds

No. of Procedures

A Hospital must grow its ARPOB, as when the occupancies go up it ensures that incremental beds are filled with high value added business

22

Fortis has Achieved Growth Both through Successful

Acquisitions and Value Added Services
Ramp up at an acquired facility Fortis Malar, Chennai
90.0
80.0
70.0
60.0

` Cr.

67% CAGR
64.1

50.0

33.2

40.0
30.0
20.0

17.9

14.0
4.1

10.0

14.2

9.4

4.2

1.1

0.0

FY07

FY08

FY09

Operating Revenue

FY10

Grown twice on quarterly basis since 2008

` Cr.

83.3

Acquired
Fortis Malar in
February 2008

Extracting value from M&A: Escorts Delhi

90.0
80.0
70.0
60.0
50.0
40.0
30.0
20.0
10.0
-

78.0
69.9
54.5
41.4

Q3FY08

FY11

Extracting value from M&A: Escorts Amritsar

` Cr.

` Cr.

Q3FY11

6x growth on quarterly numbers

20.7
16.7

15.0

25.9

9.0

10.0

14.6

15.4

9.7
2.9
FY08

5.0
-

0.0
FY09

FY10

FY11

(5.0)

5.9
3.6

3.4
(1.7)

Q2FY08

(2.2)
Q3FY08

EBITDA

4.5

(0.5)
Q3FY09

Operating Revenue

Operating Revenue

23

EBITDA

4x on annual basis since inception

41.2

20.0
10.0

Q3FY10

20.0

40.0
30.0

Q3FY09

25.0

50.1

50.0

13.4

Performance of a Greenfield facility: Jaipur

61.6

33% CAGR

60.0

13.6

Operating Revenue

EBITDA

70.0

10.9

4.3

Q3FY10
EBITDA

Q3FY11

Fortis Approach to Industry Challenges

Key Challenges

Shortage of
skilled medical
professionals

Fortis Approach
Focus on CME, research and accolades
Aligned compensation structure, ESOPs
Foothold in more than one hospital
Nursing school and DNB programs
Competence to strike deals, invest in green field hospitals, acquire hospitals, and O&Ms

High start up
costs and capex
requirements

Partnership with government for PPP projects

Centralising of common services to achieve economies of scale
Concept and designed to reduce capex per bed
Innovative models to finance medical equipments

Lack of
standardization /
quality
Technological
obsolescence

Maintaining
medical ethics

24

Accreditation of hospitals, laboratories, and blood banks by national and international authorities
Focus on best practices and continuous review by a strong team
Innovative tie ups
Center of Excellence Approach helps recycle technology around the network
Centralized Specialist group owning technologies across network
Medical Advisory Board; Accreditation committee at each hospital
Executive counsel taking call on key hospital discussions
Code of Ethics; Whistle blower policy

Agenda
A. Healthcare Industry in India
B. Company Overview
C. Recent Developments
D. Financials

SRL Acquisition & Rationale



Acquisition of strategic stake in SRL Indias leading diagnostic company



Acquired 42.7 million equity shares representing 82.2% of the paid up capital as on April 14, 2011

Post PE investment (AVIGO and Sabre), it would represent 71.5% of expanded capital

Total purchase price of ~Rs 803.7 Crore on cash basis; valuation based on arm length price paid by AVIGO
for minority stake of 8.9% and lower than 4.2% by Sabre capital

Fortis-SRL deal valued at 2.2x Sales and 12x EBITDA (FY12E); compares favourably to SRL - PDSPL deal
and Dr Lal Pathlab TA Associate deal

To become an integrated healthcare player with presence in all major verticals

To participate in high growth segment of healthcare industry with huge potential

SRL offers a strong fit due to:

Geographical Complementarities

Pan India presence

Strong talent pool

Well established brand and strong logistics network

Synergistic with the hospital business

26

Two-way Synergy Many New Upsides

Patient footfalls in Unified Fortis
Network

Increased opportunity from repeat customers of Fortis and SRL

25 % of the Path and Radiology testing is followed by hospital
accessions OPD/IPD conversions

Geographical Complementarities

Favorable demographic and macroeconomic trend

Fortis to leverage on SRLs presence and leadership in 400 cities
for its tier II and tier III expansion plan

Quality Improvement

Highly skilled talent pool to help take the hospital diagnostic

excellence to the next level
To result in enhanced Patient safety and better Clinical outcome

In-house Radiology & Pathology

Large Database for CRM, Research

and Reach

27

Fortis and SRL to cross leverage on SRLs comprehensive

offering of ~3,300 tests and its strong all-modaility experience
and expertise in radiology for better managing in-hospital
diagnostics.
Combined entities will access the large unified
customer/patient/doctor database and significantly increase their
ability serve the nationwide patient population.

Established and Wide Geographical Presence

Geographical Presence

Has

won

FICCIs

award

for

Operational

Excellence (2010), Frost & Sullivan Award for

Excellence in Diagnostics

East India

North India

Present in ~400 cities in India

(2008 , 2009) and

Reference Labs

Reference Labs

Pathology Labs

27

Pathology Labs

18

Radiology Labs

Radiology Labs

Wellness Centers

Wellness Centers

Collection Centers

339

Collection Centers

218

rated the most innovative diagnostic company

by Business Today
India

Internation
al

Total

Reference Labs

2 (1)

Pathology Labs

164

164 (2)

Radiology Labs
Wellness Centers

17
15 (3)

17
15

West India
3

Pathology Labs

50

Radiology Labs

13

Wellness Centers

Collection Centers

865

23

888 (2)

Source: Company
1 Includes 1 reference lab in Nepal and a service agreement for a reference lab in Dubai Healthcare City.
2 Includes 25 pathology labs run through franchisees and 875 collection centers run through franchisee.
3 12 Wellness Centers are in existing labs.

28

South India

Reference Labs

Collection Centers

5
194

Reference Labs

Pathology Labs

69

Radiology Labs

Wellness Centers

Collection Centers

114

Financials: 2010-11 (Scenario)*

Fortis +SRL
Revenue
Rs 1483 Cr

Revenue***
Rs 507 Cr

Increases revenue by
32% while impacting
profitability marginally

EBITDA
Rs 209 Cr

Rs 1960 Cr

EBITDA

Rs 88 Cr

Rs 297 Cr

PAT

PAT
Rs 124 Cr

Rs 4 Cr**

*Financials have been annualized based on Q4FY11 for SRL and include FY11 for Fortis
**PAT for SRL is after Interest costs of ~ Rs 45 Cr , which will substantially go down post IPO
***Net of inter-company revenue

29

Rs 128 Cr

29

Recent Deals
1. O&M agreement with O.P. Jindal Hospital, Raigarh, Chhattisgarh

100 bed multi-speciality secondary care hospital

Located within the campus of Jindal Steel & Power Limited
2. Reverse O&M agreement with Vivekanand Hospital Moradabad, Uttar Pradesh

150 bed multi-speciality secondary care hospital ; Premises also house a Nursing College and a Nursing School

Located in Moradabad, North Eastern UP, the hospital was set up under a Trust in 1985.

Constructed over a 6.3 acre land with a built up area of 198,000 sq ft
3. O&M agreement with East Coast Hospital in Pondicherry

100 bedded facility with a plan to expand it to a 250 bed facility

To be operational by Q1FY12
4. Reverse O&M agreement with Lifeline Hospital, Alwar, Rajasthan

100 bedded facility with a plan to expand it to a 150 bed facility

Constructed over a 3 acre plot with a built up area of 100,000 sq ft
5. Public Private Partnership with State of Uttarakhand

To set up a 50 bed Cardiac Centre at Deen Dayal Upadhyaya (Coronation) Hospital at Dehradun

To be operational by Q2FY12

30

Upcoming Greenfield Hospitals

No.

1.

Location

Kangra

Beds

Area & Land

Ownership

Date of Commencement

Estimated
Capex (INR
Cr)

Status

100

37,000 sq. ft., B. Lease

Q2 FY12

24

Civil and interior work completed

Medical equipment have been ordered
Facility being handed over to operations

Q3FY12

15

Civil construction work of the hospital

building is complete
Some delays in handing over premises
Equipment ordered
Work on interiors is on
Medical equipment ordered
Rs 235 Cr has been spent till March11.

2.

Dehradun

50

27,000 sq.ft, Public Private

Partnership

3.

Gurgaon

450**

11 Acres, Owned

Q4 FY12

325

4.

Ludhiana 1

200

1,55,000 sq. ft., B. Lease

Q2 FY13

50

5.

Peenya, Bangalore

120

~70,000 Sq ft; B. Lease

FY13

18

6.

Ludhiana 2

75

60,000 sq ft. B. Lease

FY 13

20

7.

Gwalior

200

2.5 Acres, L. Lease

FY14

72

CLU permission awaited from authorities

8.

Ahmedabad

200

1,55,000 sq. ft., B. Lease

FY14

50

Approval from govt. authorities awaited

Total

1,395

** Only for Phase 1, total size of the project is 1000 beds

31

574

Construction in full swing. Casting of

columns in progress
Project on schedule
Building construction work is delayed by
landlord
Approval from govt. authorities received;
design work underway

Agenda
A. Healthcare Industry in India
B. Company Overview
C. Recent Developments
D. Financials

Operating Revenue and PAT

INR Cr.

450.0

39.0
415.6

400.0

34.0
371.4
357.8

350.0

34.5

337.9

329.5

29.0
29.4

27.2

300.0

24.0

232.521.7

250.0

21.6

200.0

185.4

19.0

20.8

190.5

14.0

13.0
150.0

9.0
7.6

100.0

4.0
Q1FY10

Q2FY10

Q3FY10

Revenues
124%

Q4FY10

Q1FY11

Operating Revenues

Q2FY11

Q3FY11

PAT

33
3

Q4FY11

PAT
3.9x

Revenue breakup
Category wise

Speciality wise
Gastro, 2%
MSH,
8%

Onco, 5%

PSU's, 10%
OPD, 19%

Renal, 4%

TPA, 14%
Neuro, 6%
Other, 16%

Ortho, 8%

Pulmo, 2%
Gynae, 2%

Corprates
and Others,
4%

CGHS, 3%
ECHS, 7%

Others, 10%

Cash, 58%

Cardiac, 35%

International
, 5%

International revenue
Focus on key specialties
Cardiac, Neuro, Ortho,
Renal & Onco to
continue

Others,
11%
USA, 7%

Middle
East, 27%

34
34

SAARC,
15%

Africa, 40%

Cash business is ~63% of

overall business

International patients
contributes 5% to Fortis
network revenue

Growth Driven by Steadily Increasing Occupancy Rates

Leading to Improving Operating Parameters
Occupancy
80%

74%

72%

68%

70%
63%
60%
50%
40%

FY08

FY09

FY10

Average Revenue Per Operating Bed (Rs. Million)

8.10

8.30

FY11

Average Length of Stay (days)

8.10

4.30

7.65

4.20

4.10
3.70

FY08

35

FY09

FY10

FY11

FY08

FY09

FY10

FY11

Significant Increase in No. of Procedures with a Focus on

Key Specialty Areas (Cardiac, Neuro, etc.)
Cardiac
51,866

55,000
45,000
35,000
25,000

Ortho
4,482

39,651

+31%

8,000

10.767
7,083

7,013

6,000

3,662

4,553

26,830

4,000

20,851

2,000

10,777

15,000
5,000

6,924

9,777

-5,000

FY10

FY11

3,754

2,530

8,214

0
FY10

FY11

Knee Replacements
CTVS & Pediatrics

PTCA

CAG

Dialysis
4,928

62,315

+62%
60,000

4,000
3,000

THR & Others

Others

Neuro

5,000

50,000
2,709

44,096

40,000
30,000

2,000

20,000

1,000

10,000

0
FY10

36

+52%

FY11

FY10

FY11

+41%

Summary : Consolidated Profit and Loss FY 2010-11

FY11
Base operations
Particulars

Parkway
%

(Rs Cr.)
Operating Revenue

(Rs Cr.)

Total
(Rs Cr.)

1,482.8

94.1%

1,482.8

92.3

5.9%

366.6

458.9

Total Income

1,575.1

100.0%

366.6

1,941.7

Direct Costs

393.0

24.9%

393.0

Employee Costs

273.1

17.3%

273.1

Other Costs

607.6

38.5%

161.0

768.6

EBITDA

301.4

19.1%

205.6

507.0

Finance Costs

69.6

4.4%

180.4

250.0

Depreciation & Amortization

104.5

6.6%

104.5

PAT after minority interest and share in

associates

106.4

6.8%

18.0

124.4

209.1

14.1%

Other Income *

Operating EBITDA

Rs 85 Cr of the Other Income constitutes interest & such income from deployment of surplus funds
Note : The nos. have been restated and realigned to reflect profit from base operations separately

37
3

FY11 Comparative Financials Base Operations

Particulars

FY11
(Rs Cr.)

FY10
(Rs Cr.)

Growth (%)

Operating Revenue

1,482.8

100.0%

937.9

100.0%

58.1%

Direct Costs

393.0

26.5%

262.7

28.0%

49.6%

Employee Costs

273.1

18.4%

195.0

20.8%

40.1%

Other Costs *

607.6

41.0%

339.8

36.2%

78.8%

Operating EBITDA

209.1

14.1%

140.4

15.0%

48.9%

Other Income

92.3

6.2%

50.1

5.3%

84.2%

Finance Costs

69.6

4.7%

57.3

6.1%

21.4%

Depreciation & Amortization

104.5

7.0%

59.9

6.4%

74.4%

PAT after minority interest and share

in associates

106.4

7.0%

69.5

7.4%

53.1%

EPS for the period**

(Rs)

3.23

2.61

*Increase in other costs is primarily due to doctor engagement model at newly acquired hospitals.
**EPS calculated on reported consolidate net profits for the relevant year

38
3

Maturity-wise Performance FY 11: Main Hospitals

Maturity

Revenue
Contribution

EBITDA
Contribution

Average
EBITDA
margin *

Average
Occupancy

Average
ARPOB (Rs
Cr)

5 Years and
Above
(Four hospitals)

24%

34%

26.0%

80%

1.00

3 years to 5
Years (Nine
Hospitals)

58%

62%

20.0%

78%

0.83

One to three
Years (Eight
Hospitals)

13%

9%

13.9%

57%

0.63

Upto one year

(Three Hospitals)

Average

51% of operating beds are 3 to 5

years of age and contributes 58% to
revenue

16% of operating beds are 1 to 3

years of age and contributes 13% to
revenue

5%

(5)%

(18.4)%

18.8%

* Average EBITDA margin has been calculated on Unit basis

39

14% of operating beds aged 5 years

and above contributes 24% to
revenue

37%

72%

0.34

0.81

18% of operating beds are up to 1

year of age and contributes just 5% to
revenue

Balance Sheet as at March 31, 2011

Balance Sheet
Shareholders Equity*

Rs Crore
3,313

Foreign Currency Convertible Bonds (FCCBs)#

446

Debt

642

Total Capital Employed

Goodwill

4,401

885

Net Fixed Assets (including CWIP of Rs 270 Crore)

1,910

Investments
- in Associates
- Deposits (including Inter-Corporate Deposits)
- Liquid and Mutual Funds

28
1,348
62

Cash and Bank Balances

86

Net Current Assets**

82

Total Fixed Assets

Net Cash Surplus***
* Shareholders Equity is inclusive of Revaluation Reserve and Minority Interest
** Net Current Assets includes Deferred Tax Assets
*** Net Cash Surplus excludes FCCBs
#Fortis issued US$ 100 million,5% convertible bonds due in May 2015 convertible at Rs 167 per equity share; redeemable on or after May 2013

40

4,401
854

Summing Up
Healthcare Sector poised to grow
Healthcare
Sector

Growth led by Lifestyle Diseases and Insurance Penetration

Government recognizes the need to partner with Private Sector
Healthcare expenditure estimated to be 6% of GDP by 2012 & employ around 9 million people

One of the largest private healthcare delivery player in India

Aggressively grown from 1 hospital in 2001 to a network of 56* hospitals in 2011 with ~ 8,000*
beds
Fortis
Healthcare

Leadership in Cardiac Sciences, Neuro Sciences and Orthopedics

Evolved the Business Model and high level of Brand Equity
Proven ability to acquire, integrate and turn around
Providing attractive value propositions to various segments of market

* Estimated number of hospitals and beds is including hospitals under projects stage

41

Analyst Coverage
Broker*

Analyst name

Comments

B&K

Vikash Singh

B&K maintains its positive outlook on Fortis due to

its focus on profitable growth, improvement in
realization and operational efficiency across its
facilities

Bank of America

Prasad Deshmukh

Centrum

Rahul Gaggar

CITI

Prashant Nair / Anshuman Gupta

Over the longer term, CITI forecasts sustained

growth & improvement in profitability as the new
hospitals scale up

Goldman Sachs

Balaji V Prasad / Rishi Jhunjhunwala

ICICI Direct

Rashesh Shah

Fortis constant growth focus and

strong management team supports our positive
outlook on the company

IDFC

Nitin Agarwal / Ritesh Shah

FHL continues to pursue its strategy to grow

aggressively with sustained focus on operational
parameters

JP Morgan

Princy Singh / Dinesh S. Harchandani, CFA

Asset light strategy to help Fortis scale up at a

faster pace and improve its capital return profile.

Morgan Stanley

Saniel Chandrawat / Sameer Baisiwala, CFA

Bullish on Fortis ability to execute aggressive

expansion plans

UBS

Ajay Nandanwar

Optimistic about Fortis opportunities ahead, its

ability to improve the operating performance of its
acquired hospitals

* In Alphabetical order

Expects strong growth in earnings as majority beds

will turn profitable going ahead
Positive on the companys growth prospects

THANK YOU

Fortis Healthcare (India) Limited