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HEALTHCARE SERVICES
Performance analysis of the industry on
financial & operational parameters
CONTENTS
1. EXECUTIVE SUMMARY
2. INTRODUCTION
3. KEY DEMAND DRIVERS
4. INDUSTRY OUTLOOK
5. INDUSTRY STRUCTURE
6. RESEARCH METHODOLOGY AND FINDINGS
7. DEAL ANALYSIS
a) PE Deals
b) M&As
c) Exits
8. CLINICS
a) Dental Clinics
b) IVF Clinics
c) Derma/Skin Care Clinics
d) General Clinics
9. HOME HEALTHCARE
10. SINGLE-SPECIALITY HOSPITALS
a) Maternity and Child Care
b) Eye Care
c) Cardiac
d) Oncology
e) Others
11. MULTI-SPECIALITY HOSPITALS
a) Secondary Care
b) Tertiary Care
(i) Tertiary Care multi-specialty hospitals with revenue less than INR 200
million
(ii) Tertiary Care multi-specialty hospitals with revenue between INR 200
million and INR 500 million
(iii) Tertiary Care multi-specialty hospitals with revenue between INR 500
million and INR 2 billion
(iv) Tertiary Care multi-specialty hospitals with revenue more than INR 2
billion
12. CONCLUSION
EXECUTIVE SUMMARY
The healthcare sector is slated to be close to USD 280 billion by 2020. The sector
consists of Pharmaceuticals, Diagnostics, Hospital/Clinics (Care Providers),
Medical Equipment and Lab Supplies, Medical Insurance and Health Tech. The
healthcare service providers segment (which include clinical establishments like
hospitals, clinics, nursing homes) is expected to contribute about 32-33% to the
sector’s revenue ($90 billion by size in 2020) and continue to grow at a similar rate
as the overall sector.
People belonging to age group above 60 is likely to double from 100 million to 200
million by 2025 is a key growth driver for the industry. Rapid globalization and
urbanization have increased the risk of non-communicable diseases (NCDs or
lifestyle diseases) like heart disease, diabetes, cancer, mental illness and respiratory
diseases. Per capita healthcare expenditure is currently at USD 90 and growing at
>12% per annum. Health Insurance penetration is still very low with only 1 in 5 people
covered by health insurance. Health insurance sector is growing at 22-25% per
annum leading to more people have access to private healthcare.
The report discusses the performance of various segments and sub segments of
private healthcare services as structured below:
Home
Clinics Single-Specialty Multi- Specialty
Healthcare
Maternity & Secondary Care
Dental Child Care
Cardiac
Derma / Skin Care
Oncology
General Clinics
Others
3
A total of 385 companies were analyzed based on the financials available in FY16.
The revenue of these 385 companies accounted for INR 360 billion. Overall segment
level analysis: An overview of the key financial performance indicators for the
different segments and sub-segments has been summarized in the table below.
Sum YoY
Sub Revenue Range No. of EBITDA PAT ROCE FATO
Category Revenue Growth
Category (INR) Companies (Median) (Median) (Median) (Days)
(INR mn) (Median)
Clinics Dental 12 1,640 49.1% -3.7% -15.73% -10.46% 166
Clinics IVF 12 3,010 26.8% 12.9% 6.33% 40.67% 124
Clinics Dermatology 10 3,260 42.2% 5.4% 0.33% 2.01% 112
Clinics General 13 3,640 34.5% -9.6% -31.70% -50.83% 211
Home Healthcare 11 1,010 57.9% -92.3% -116.64% -57.51% 105
Single-Specialty Maternity 18 8,260 15.8% 15.0% 3.89% 12.49% 246
Single-Specialty Eye-care 21 6,700 22.6% 17.3% 3.50% 8.83% 242
Single-Specialty Cardiac 11 7,540 8.2% 21.5% 4.33% 21.66% 149
Single-Specialty Oncology 9 7,450 30.1% 16.2% 0.21% 9.57% 295
Single-Specialty Others 19 9,550 16.6% 19.7% 7.08% 24.66% 215
Multi-Specialty Secondary >200 million 13 3,970 10.2% 15.5% 4.94% 24.77% 181
Multi-Specialty Secondary 0-200 million 79 6,400 13.8% 13.3% 2.90% 10.90% 181
Multi-Specialty Tertiary 0-200 million 31 2,580 12.4% 16.7% 3.64% 9.11% 184
Multi-Specialty Tertiary 200-500 million 40 13,280 12.8% 18.1% 4.56% 18.17% 208
Multi-Specialty Tertiary 500 million -2 billion 56 58,740 14.0% 13.6% 3.38% 12.79% 239
Multi-Specialty Tertiary >2 billion 30 2,23,890 11.3% 12.8% 3.18% 15.28% 224
The table gives a quick snapshot of the financial performance of mature businesses
like multi-specialty hospitals and some of the new age business models like clinics
(organized branded, single-specialty). While the mature businesses have good ROCE
and EBITDA with stable growth, the newer models like home healthcare and clinics
are still in the early stages of the lifecycle curve experiencing high growth at the cost
of EBITDA and ROCE.
Dental Clinics: A segment whose recent growth has been driven primarily by funded
companies is now in a consolidation phase which has already seen two acquisitions.
Also, the funded companies are now focusing on improving profitability as against
growth. Future growth of this industry will be driven by penetration of dentistry to the
bottom of the pyramid and increase in % of preventive care.
4
IVF Clinics: One of the few segments growing at over 20% and EBITDA above 10%.
Primary growth drivers for the segment is increase in infertility and medical tourism.
Cost of IVF treatment for infertility in India is one-fourth as compared to the
developed countries. The IVF Market is likely to grow annually at 16.6% for the next
5 years and IVF clinics are bound to benefit the most. It could get further boost from
medical tourism depending on the regulations surrounding surrogacy.
General Clinics: A fast growing but loss making segment due to focus on growth.
Major hospital brands are trying to establish in this segment so that it serves as a
feeder to their tertiary care hospitals. The segment has seen several investments
and few M&As as well. Branded clinics chain is relatively a new concept in India and
hence the investments are high. Chains with good tertiary hospital in their network
as either group company or seamless partner hospital are likely to succeed
compared to standalone chains.
Maternity Hospitals: This is a segment which has been carved out of multi-specialty
hospitals to separate illness from the happy occasion of child birth. While the
segment is growing profitably, organized chains seem to be more prominent in
South India. There is no single chain at the national level. Clearly, there is space for
growth amongst the existing chain for the national level. Also, high end maternity
hospitals are very local, limited to cities. There is scope for a chain of high end
hospital like Birthplace. The largest opportunity in the segment is branded chains at
a low price point catering to middle class families who now either go to small tertiary
care hospitals or standalone maternity centers.
5
Eye Hospitals: Eye-care segment’s growth is driven by the aging population and
changing lifestyle (like excessive usage of smart phone, computer and smart phone
at young age). Advanced technology offers various modern equipment for eye-care
procedures. However, the challenge for the eye-care providers is to ensure capacity
utilization of such expensive equipment. Some of the chains have created hub and
spoke operating model where smaller outlets or the spokes can take care of 90% of
the procedure and the hub or the mother hospital has the expensive equipment for
more intensive procedures. This ensures high utilization of expensive equipment.
Cardiac Hospitals: One of the oldest single specialty hospital segment, the segment
has not been growing much in the last few years and hence there has not been many
investments in the segment. Standalone cardiac hospitals are giving way to
multispecialty hospitals with great cardiac facility as patients prefer comprehensive
care.
Oncology Hospitals: The segment is growing profitably and has huge potential with
very few organized players. Clearly, there is room for more organized players like
HCG. Since this segment needs high level of investments and technical knowledge,
either international players can enter Indian markets or set up JVs with multi-
specialty hospitals in India.
6
Tertiary care Multi-Specialty Hospitals: Compared to rest of the segments in
healthcare services, tertiary care hospitals is a much matured segment which is
evident from the lower EV/Revenue multiplier as focus is on profitability.
For companies with revenue over INR 2 billion, EBITDA is seen increasing with
growth rate peaking at a growth rate of 15-18% to an EBITDA of 25-26%. Any rate of
growth beyond 25% comes at the cost of EBITDA. It was observed that revenue per
bed decreases with bed capacity with two broad groups due to either factors of
lower occupation and higher duration of stay. Based on the data analysed, fixed
asset turnover days (FATO) of 200-220 days (annual asset turnover of 1.6-1.8) with
an ROCE of 18-20% seems to be a good hospital operations case. Challenge that
remains with hospitals is how they can ensure faster recovery and hence fast
discharge of patients so as to maintain lower nights per case to maximize the
revenue per bed.
(The report includes pointers on key players in the segment, firms who raised most
funding, major investors in the segment, major M&As, no. of deals and EVs in each of
the segments wherever data was available.)
The report analyses the investments in the segment in three buckets: PE/VC
investments, M&As and Exits.
PE Deals –
A clear peak in the number of deals and deal value during the 2012-14 periods, was
driven by a sudden surge in interest in the multi-specialty segment and good number
of small sized deals observed in clinics (newer segment for investments). In line with
the sudden surge in the number of deals and the deal value, 2012-14 has also seen
companies get the best EV/Income multipliers, showing the rising interest of the
investment fraternity in the industry during that period. The period from 2012-14 also
saw interest from PE funds in new age business models like clinics (multi and
single), home healthcare and a few single-specialty hospitals.
7
Clinics Home Healthcare Single-specialty Multi-specialty
2017
2016
2015
2014
2013
Year
2012
2011
2010
2009
2008
0 100 200 300 400 500 600 700
Value of Deals (USD milion)
8
Clinics Home Healthcare Single-specialty Multi-specialty
0 10 20 30 40 50 60 70 80 90
Number of Deals
(Similar analysis were done on M&A and Exits which is in the full report)
9
INTRODUCTION
The healthcare sector was a USD 100 billion sector in 2015 and is slated to be close
to USD 280 billion by 20201. The sector consists of Pharmaceuticals, Diagnostics,
Hospital/Clinics (Care Providers), Medical Equipment and Lab Supplies, Medical
Insurance and Health Tech.
10
KEY DEMAND DRIVERS
The demand for healthcare service providers has been on the rise and growing
consistently at over 17-18% 1 over the last few years. The good companies have
managed to consistently grow at 25-30%. Growth is expected to continue or
probably even increase over the next 7-10 years. This strong growth in the sector
is being driven by multiple factors – some macroeconomic, some technological,
some policy driven and some because of the changing face of the healthcare
sector.
Some of the key demand drivers for healthcare providers going forward are as
follows –
c. Growth in per capita income – Income levels are growing annually at 7.5% and
will be USD 2,200 by 2018 5,6; this is >4x growth in the income levels seen at the
turn of the century. This has meant an increase in per capita health care
expenditure at USD 90 and growing at >12% per annum. 5,6
11
last 10 years and with support from the policymakers, the sector will continue
to grow ensuring more people have access to private healthcare.
12
OVERALL OUTLOOK
With a good outlook for the healthcare services sector, there are certainly a few
obstacles or bottlenecks that may potentially affect growth. The chief among
these is the availability of quality man-power – both in terms of doctors and
support staff (nurses, ward boys etc.)
Currently a constant shortage of the above, especially doctors, has led to a
burgeoning informal healthcare sector, especially in the smaller towns. The
government will need to strengthen policy to ensure crackdown on the informal
sector, while also invest more to help develop skills to serve the healthcare
services sector. This shortage of skilled support staff has led to a number of
private players investing in skill building schools (nursing schools). Though this is
a good thing, there is a need for ensuring and standardizing the quality of people
coming from these private institutions.
Another aspect of healthcare very unique to India is the low penetration of health
insurance. Though penetration has been increasing steadily over the last few years
because of opening up of the sector for private foreign players, the accessibility of
such insurance policies will continue to remain low for the majority (65% of
population live in rural India who are dependent on farming and unorganized
sectors). This again is an area of concern that the government will need to address
for continued growth of the healthcare services sector. The government has
already started taking steps in this direction by announcing the Universal Health
Coverage plan.
Private investments in research – to help develop medicines and technology
specific to Indian context and diseases are very important. That said, the
government has an equally important role to play in terms of creating sufficient
skilled man-power to participate in quality research, creating strong IP protection
laws and providing the right incentives for these companies to invest in research
in India.
The ability of the private sector and the government to work together to overcome
these obstacles will define the growth of the healthcare services sector over the
next few years.
___________________________________________________________________
13
HEALTHCARE INDUSTRY STRUCTURE
Healthcare Services
Private Healthcare
Public Healthcare Services
Services (Organized/Formal)
Central
Institutions – E.g. Army Clinics
Government – State Government – E.g. BMC
Hospitals
E.g. AIIMS
Home
Sub-Centres Healthcare
Community Health
(CHC) Multi-
Specialty
District + Sub-division
Hospitals
Home
Clinics Single-Specialty Multi- Specialty
Healthcare
Maternity & Child Secondary Care
Dental Care
Cardiac
Derma / Skin Care
Oncology
General Clinics
Others
The segmentation of the industry exercise was undertaken taking care to ensure
only similar companies are compared. For e.g. a clinic segment is very different
14
from a super-specialty in terms of fixed assets, man power, business model,
growth plans and patient needs. Hence, to compare the financials for a clinic with
that of a single-specialty hospital and draw conclusion would be very wrong.
Every company which is part of the data set or analysed has been classified into
one of the above segments and then into a second level sub-segment. Financial
and operational analysis has been done after the extensive classification exercise.
15
RESEARCH DATA SET AND
METHODOLOGY
1. A total of 500+ private held companies were a part of the data set used for
analysis
2. Segmentation of the companies, their financial analysis, and the conclusions
or finding from the various analyses was obtained via a combination of –
i. Secondary Research
ii. VCCEdge Database (for data)
iii. Expert interviews and discussion
iv. Management interviews/Primaries
3. All analyses have been done by our in-house analysts and have been vetted by
industry experts
4. Only private companies that have filed with ROC in FY16 or FY15 have been
considered. Also, only companies where the total income for the year is greater
than INR 2.0 million have been considered; there are a total of 385 such
companies
Sum YoY
Sub Revenue Range No. of EBITDA PAT ROCE FATO
Category Revenue Growth
Category (INR) Companies (Median) (Median) (Median) (Days)
(INR mn) (Median)
Clinics Dental 12 1,640 49.1% -3.7% -15.73% -10.46% 166
Clinics IVF 12 3,010 26.8% 12.9% 6.33% 40.67% 124
Clinics Dermatology 10 3,260 42.2% 5.4% 0.33% 2.01% 112
Clinics General 13 3,640 34.5% -9.6% -31.70% -50.83% 211
Home Healthcare 11 1,010 57.9% -92.3% -116.64% -57.51% 105
Single-Specialty Maternity 18 8,260 15.8% 15.0% 3.89% 12.49% 246
Single-Specialty Eye-care 21 6,700 22.6% 17.3% 3.50% 8.83% 242
Single-Specialty Cardiac 11 7,540 8.2% 21.5% 4.33% 21.66% 149
Single-Specialty Oncology 9 7,450 30.1% 16.2% 0.21% 9.57% 295
Single-Specialty Others 19 9,550 16.6% 19.7% 7.08% 24.66% 215
Multi-Specialty Secondary >200 million 13 3,970 10.2% 15.5% 4.94% 24.77% 181
Multi-Specialty Secondary 0-200 million 79 6,400 13.8% 13.3% 2.90% 10.90% 181
Multi-Specialty Tertiary 0-200 million 31 2,580 12.4% 16.7% 3.64% 9.11% 184
Multi-Specialty Tertiary 200-500 million 40 13,280 12.8% 18.1% 4.56% 18.17% 208
Multi-Specialty Tertiary 500 million -2 billion 56 58,740 14.0% 13.6% 3.38% 12.79% 239
Multi-Specialty Tertiary >2 billion 30 2,23,890 11.3% 12.8% 3.18% 15.28% 224
16
THE FINDINGS
Overall segment level analysis: An overview of the key financial performance
indicators for the different segments and sub-segments has been summarized in
the table on previous page.
A good part of the growth that the industry per se has experienced, especially the
new age businesses, has been due to funds infused into this sector by Private
Equity players. The report going forward will get into details of each of the above
segment’s financial performance and a discussion on how individual companies
constituting the sector have performed on various financial and operational
parameters. We will also try to throw some light on the various business models in
the segment/sub-segment (rental vs owned facility, commission vs salary
specialists).
17
DEAL ANALYSIS
Deals have been clubbed into 3 major buckets – PE/VC investments, M&As and
Exits. Key points to note –
a) PE Deals
800 35
Value of Deals (USD Million)
700 30
600 25
Number of Deals
500
20
400
15
300
200 10
100 5
0 0
2008 2009 2010 2011 2012 2013 2014 2015 2016 2017
Year
2016
2014
Year
2012
2010
2008
0 100 200 300 400 500 600 700
18
<=2007 11.4 23
2008-11 7.9 40
2012-14 9.3 74
2015 5.4 19
2016-17 6.8 14
0 10 20 30 40 50 60 70 80 90
Number of Deals
A clear peak is observed in the number of deals during the 2012-14 periods, where
the total deal value has also surged. This peaking in total deal value has been
driven by a sudden surge in interest in the multi-specialty segment, but there have
also been a number of small sized deals observed in clinics (newer segment for
investments). In line with the sudden surge in the number of deals and the deal
value, 2012-14 has also seen companies get the best EV/Income multipliers,
showing the rising interest of the investment fraternity in the industry during that
19
period. The period from 2012-14 also saw interest from PE funds in new age
business models like clinics (multi and single), home healthcare and a few single-
specialty hospitals.
There is also a clear trend in the way EV/Income changes with the size of deals.
Smaller deals typically seem to get higher EV/Income. This is probably because a
lot of the smaller sized deals happen in new-age business segments like clinics
and home healthcare (early stage investments) as seen in chart 4.
b) M&As
600
500 12
Number of Deals
10
400
8
300
6
200 4
100 2
- -
2008 2009 2010 2011 2012 2013 2014 2015 2016 2017
Year of Deal
A lot of M&A activity was seen during the 2012-14 period, with a large majority
being driven by the multi-specialty segment. Within the multi-specialty segment,
the activity seems to be driven by large hospital chains (like Apollo and Fortis)
buying smaller secondary/tertiary standalone facilities in the cities and smaller
towns.
20
Clinics Home Healthcare Single-specialty Multi-specialty
2016-17
2015
Year of Deal
2012-14
2008-11
<=2007
Over the years, multi-specialty has been the focus of healthcare M&As, but clinics
(especially IVF and Dental) have seen a few M&A activities in the recent years.
Unlike the PE deals, M&A deals EV/Income multiplier has stayed more less range
bound and steady (about 4-5X the income) and typically lower than the PE deals
EV/Income. This stability in EV/Income multiple across the years, with consistently
lower valuations is an indicator of the fact that M&A investments to a large extent
are value driven investments, which may not necessarily be the case in PE
investments.
21
Clinics Home Healthcare Single-specialty Multi-specialty
A lot of M&A activity is seen in the $2.5-10 million deal value bracket, with a
majority of the deals happening in the multi-specialty space. Many of these M&As
are 100% buy-outs by larger chains of 50-100 bed hospitals that are doing well in
a particular city/region.
22
c) Exits
Exits in this industry have typically happened via multiple avenues for an investor
– IPO, buy-back or even a secondary sale (to a bigger investor)
Only two companies have seen an IPO in the data set we have considered –
Narayana - Hryudayalaya and Healthcare Global (total investors who have exited
are 5). Multiple exits have happened mostly through the open market sale (for
investors invested in listed companies like Fortis, Apollo) or via the secondary sale
to a larger investor. As expected, the more mature multi-specialty segment has
seen the major number of exits happen.
2016-17
2015
Year of Deal
2012-14
2008-11
<=2007
There is a definite peaking in the number of exits that have happened during the
bullish years of 2012-15. A majority of the exits have happened in the multi-
specialty segment and have happened via secondary sale, i.e., a number of smaller
investors got good exits by selling to larger PE’s in this period when EV/Income
multiples (valuations) were generally higher. This is seen by the subsequent chart
(that excludes exit via secondary sale) – though the trend across years has
23
remained similar, the overall investment values (and number of deals) have both
reduced by 40%
A large number of exits have happened in the exit value range of $10-50 million.
This is significantly higher (the deal range) than both PE investments (peak deal
range is $0.5-2.5 million) and M&A (peak deal range is $2.5-10 million)
24
CLINICS
25
a) Dental Clinics
Dental clinics is one of the fastest growing segments in the healthcare industry,
the primary driver behind the revenue growth being increasing awareness. While
the 12 sample companies analysed had a stunning median growth of 49% in FY16,
they also had poor median EBITDA of -4%. The factors driving negative EBITDA are
high marketing expenses and opening of new outlets which are yet to break even.
However, most of the companies confirmed that they have broken even in FY17
and will be making positive PBT in FY18. FY17 happened to be the year when most
of the chains focused on profit than on growth.
-100%
-150%
Star Dental
117%, -211%, 158 INR mn
-200%
There are three major categories of dental chains in the pool analysed:
1. Premium players like Dentzz (SJ Healthcare) who cater to HNIs and medical
tourists. While the EBITDA of 13% is comparable to few other profitable chains,
the ROCE of 60% is way above the rest of the chains. With just 6 clinics, average
revenue per clinic per month of Dentzz is estimated to be over INR 30 lakhs
(based on FY16 revenue).
2. Large chains like Sabkadentist, Clove Dental and Axiss who focus on the crowd
in the metros and tier 1 cities. That is a crowded market with players competing
26
for the same set of customers. Most of the chains have been growing rapidly
by acquiring existing practices. These chains make an average revenue of INR
3 - 5 lakhs per clinic per month which is also the breakeven revenue for a typical
clinic in a metro city. The biggest challenge for these chains is to achieve this
revenue in every clinic while maintaining reach for customer within 3 - 5 kms.
3. Regional players like Partha and Finefeather (Vanamo) from Andhra and
Gujarat respectively. Both are profitable and growing.
Total Income
Name Trade Name YoY Growth PAT %
(INR Million)
Total Dental Care Pvt. Ltd Sabkadentist 501 19% -45%
S J Healthcare Pvt. Ltd Dentzz 219 25% 6%
Partha Dental Care India Pvt. Ltd 204 55% 7%
Today's Healthcare India Pvt. Ltd Clove-Dentys 165 44% -71%
Star Dental Centre Pvt. Ltd Clove 158 117% -228%
Axiss Dental South Pvt. Ltd Axiss 136 -7% -10%
Axiss Dental Pvt. Ltd Axiss 129 14% -39%
Signature Smiles Dental Clinic Pvt.
Signature Smiles 70 30% -2%
Ltd
Vanamo Care Pvt. Ltd Finefeather 35 66% 0%
Doux Dentistry Pvt. Ltd Mobident 13 384% -21%
Smilechain Panacea India Pvt. Ltd Smilekraft 9 54% 2%
Free 3 Health Care Services Pvt. Ltd Smile Merchant 8 92% -48%
The segment saw peak investments in the initial years of 2011 to 2015. Based on
the available data, total investments (PE and M&As) in the segment is estimated
to be around USD 43 million with a median revenue multiplier of 11.45.
27
SabkaDentist (Total Dental Care Pvt. Ltd.) has attracted the most funding (USD 19
million) followed by Axiss Dental (USD 9.46 million).
Industry consolidation started from the year 2013 when Axiss Dental acquired NH
Dental to establish their presence in the South. The latest acquisition being in 2017
when Star Dental (Clove) acquired Todays Healthcare (Dentys).
Future Outlook
While the industry is consolidating and the major players are focusing on profit
more than growth, there is no denial that India’s dental market is quite untapped.
Future growth shall be driven by the following levers:
28
b) IVF Clinics
IVF clinics is one of the few healthcare provider segments which is growing over
20% per annum and has EBITDA of over 10%. The other two segments meeting the
two criteria are Eye-care and Oncology.
The IVF industry in India was estimated to be around INR 20 billion7 in FY16.
Treatment is delivered through multi-specialty hospitals (both tertiary and
secondary), maternity hospitals and IVF clinics. The sample of 12 entities analysed
have a cumulative turnover of close to INR 3 billion with a median revenue growth
of 26.8% and median EBITDA of 12.9%. The sample’s median PAT is 6.3% and fixed
asset turnover of 123 days.
10% Rotunda
104%, 11%, 69 INR mn
0%
0% 10% 20% 30% 40% 50% 60% 70% 80% 90% 100% 110%
-10%
Morpheus Life Sciences YoY Growth
-20% 28%, -21%, 94 INR mn
Nova pulse IVF Clinic Pvt. Ltd. is the largest player in the segment with INR 1,030
million turnover in FY16 and growing at 42% in FY16 over FY15. However, it is still
in negative EBITDA. Of the samples analysed, Prashant Fertility Research Centre is
the most profitable with INR 930 million revenue and 29% EBITDA though growing
only at 12% which is below median. Sadguru is a relatively smaller venture with INR
170 million turnover but growing at 71% and EBITDA of 27%, both of which is way
above the median of the sample.
29
Total Income YoY
Name EBITDA % PAT %
(INR million) Growth
Nova Pulse IVF Clinic Pvt. Ltd 1,033 42% -32% -50%
Prashanth Fertility Research Center Pvt. Ltd 935 12% 29% 12%
Ankur Healthcare Pvt. Ltd 316 5% -6% -13%
Sadguru Healthcare Services Pvt. Ltd 175 71% 27% 14%
N. G. Industries Ltd 169 10% 18% 9%
Nova Medical Centers Pvt. Ltd 132 -84% 71% 65%
Morpheus Life Sciences Pvt. Ltd 94 28% -21% -51%
Rotunda Center For Human Reproduction Pvt. Ltd 69 104% 11% 7%
GBR Clinic and Fertility Centre Pvt. Ltd 51 46% 15% 3%
Shrikhande Hospital and Research Centre Pvt. Ltd 23 25% 45% 18%
Ganesh Test Tube Baby Centre Pvt. Ltd 9 30% 6% 1%
Sunflower Hospital Pvt. Ltd 8 3% 9% 6%
Rise in the incidence of obesity, stress, and delayed pregnancies are leading to
increased infertility. In addition, the cost of IVF services in India is very low as
compared to other developed countries. India is becoming a preferred destination
for medical tourism owing to low service cost and availability of skilled work force.
According to the Government of India’s Medical Tourism Department, cost of IVF
treatment for infertility in India is one-fourth as compared to the developed
countries.
The segment has had relatively lesser investment activities compared to others.
Nova Medical Centers Pvt Ltd. attracted the most funding of USD 75 million,
followed by Ankur Healthcare (USD 7.32 million) and Sadguru Healthcare Services
Pvt. Ltd. (USD 5.95 million). Based on the data available, median EV/Income for
the segment is 26 which is primarily driven by high valuation of Nova in the past
(ranging from 20 to 58).
The one significant M&A in the segment is Manipal Health Enterprises investment
of USD 7.32 million for a 51% stake in Ankur Healthcare Pvt. Ltd at an EV/Income
multiple of 5.33 and a whopping EV/EBITDA of 21.
30
Future Outlook
The IVF Market is likely to grow annually at 16.6%7 for the next 5 years and IVF
clinics are bound to benefit the most. It could get further boost from medical
tourism depending on the regulations surrounding surrogacy.
31
http://www.business-standard.com/content/b2b-pharma/ivf-market-in-india-to-
reach-775-million-by-2022-117050200507_1.html
c) Derma/Skin-care Clinics
Dermatology clinics is a relatively new but fast emerging segment in the healthcare
sector. The segment has three categories of clinics: haircare, skincare and
cosmetic surgeries. Majority of the players in the segment have their own personal
care product range branded with the clinic’s name and form a good share of their
overall revenue.
The sample of 9 entities analyzed had a cumulative turnover of INR 2,200 million
with a median revenue growth of 43.7% and a median EBITDA of 4.4%. The
sample’s median PAT was 0.4% and fixed asset turnover of 112 days.
20% Dr.Anjali
Dr. Tvacha 195%, 8%,
181%, 8%, 44 INR mn 19 INR mn
10% Median EBITDA
0%
EBITDA %
-50%
-60%
Richfeel Health and Beauty Pvt Ltd is the largest by revenue amongst the pool of
companies analysed. The 30-year old firm clocked a turnover of INR 1,120 million
in FY16. It is primarily a hair treatment clinic but also has its own range of personal
care products and spa treatment services. Present in 28 cities with a total of 81
clinics, they are funded by Brand Equity Treaty and Fulcurm India Venture Fund.
32
Dr. Anjali Shere Hair Science Pvt. Ltd registered the highest growth of 195% in
FY16. It is a 13-year-old hair transplant company using robotics extensively. They
have clinics in Mumbai, Pune and Kolhapur. Dr. Tvacha Pvt Ltd. registered the
second highest growth of 181% in FY16. It is a 5-year-old company into laser
cosmetic surgery services only in Mumbai with 8 branches. Brand Equity Treaty
has invested in them very recently.
Total Income
Name YoY Growth EBITDA % PAT%
(INR million)
Richfeel Health and Beauty Pvt. Ltd 1,124 21% 20% 4%
Future Outlook
33
d) General Clinics
General clinics is another fast growing segment in the healthcare sector. The
sample of 13 entities analyzed had a cumulative turnover of close to INR 3,640
million with a median revenue growth of 34.5% and a median EBITDA of -9.6%. The
sample’s median PAT is -34%% and fixed asset turnover of 211 days.
Condis India
7%, 45%, 121 INR mn Ramakrishna
25% 75%, 6%, 344 INR mn
White Cross
171%, 1%, 34 INR mn
-75%
Apollo Specialty Hospitals
506%, -57%, 1,245 INR mn
-125%
Wellspring Healthcare
109%, -164%, 277 INR mn
-175%
Apollo Health and Lifestyle is the clinics division of Apollo. Apollo Clinics is the
largest of the organized chains with INR 1,240 million revenue in FY16, growth of
21% over FY15 and EBITDA of -6%. The second largest chain Apollo Specialty
Hospitals who operate a chain of day care centres under the brand name of Apollo
Spectra is a 100% subsidiary of Apollo Clinics. It is the erstwhile Nova Super
Specialty Hospitals. Apollo Health and Lifestyle Ltd bought the Nova entity for USD
21.25 million in the year 2015. Wellspring Healthcare (brand Health Spring) is a
fast growing chain of clinics cum home healthcare provider. It had grown at the
rate of 109% in FY16 over FY15.
34
Total Income
Name YoY Growth EBITDA % PAT %
(INR million)
Apollo Health and Lifestyle Ltd 1,347 21% -6% 14%
Apollo Specialty Hospitals Pvt. Ltd 1,245 506% -57% -92%
Ramakrishna Hospitals Pvt. Ltd 344 75% 6% 0%
Wellspring Healthcare Pvt. Ltd 277 109% -164% -178%
Condis India Healthcare Ltd 121 7% 45% 44%
Manappuram Health Care Ltd 95 34% -10% -29%
Trinity Sunrise Health Care Pvt. Ltd 70 3% -19% -32%
Modern Family Doctor Pvt. Ltd 68 23% -92% -81%
White Cross Health Initiatives Pvt. Ltd 34 171% 1% 0%
Suvitas Holistic Healthcare Pvt. Ltd 23 - -113% -139%
Nova Medical Centers NCR Region Pvt. Ltd 14 -93% 65% 65%
Two major investors in this segment are International Finance Corporation (USD
68 million) and Columbia Pacific Advisors LLC (USD 41 million) in Apollo Clinics
and Wellspring respectively. The segment attracted total funding of USD 147
million based on the 12 deals analysed, which included 2 M&As. The median
valuation for the 12 deals is 26 times revenue though M&A had a valuation of only
6.5 times revenue.
Apollo Clinics attracted the most funding (total of USD 72 million) followed by
Wellspring (total of USD 45 million).
Future Outlook
35
Branded clinics chain is relatively a new concept in India and hence the
investments are high. However, chains with good tertiary hospital in their network
as either group company or seamless partner hospital are likely to succeed
compared to standalone chains. The clinics are likely to be the spokes of the
hospital for more detailed procedures
HOME HEALTHCARE
36
HOME HEALTHCARE
Home healthcare can be defined as healthcare delivered at doorsteps. It is a very
small but growing segment and has been attracting a lot of investments in the
recent past. The sample of 11 entities analyzed had a cumulative turnover of close
to INR 1 billion with a median revenue growth of 58% and a median EBITDA of -
92%. The sample’s median PAT is -117% and fixed asset turnover of 105 days.
Saarathi Healthcare
Median YoY
75% 103%, 19%, 190 INR mn
Growth %
25%
-25%
-10% 10% 30% 50% 70% 90% 110% 130% 150% 170% 190%
YoY Growth
-75% Median EBITDA
EBITDA %
Healthcare at Home
-125%
23%, -76%, 170 INR mn
-175%
Medwell Ventures
-225% 185%, -253%, 102 INR mn
-275% Healthvista
150%, -276%, 425 INR mn
-325%
Healthvista India Pvt. Ltd (brand name Portea) is the largest in this segment with
INR 420 million revenue in FY16 with a growth of 150% over the previous year.
However, the EBITDA was -292%. Medwell Ventures (Nightingale Home Health
Services) is the fastest growing of the lot with 185% growth in FY 16. The pick of
the lot is Saarathi Healthcare who not only grew at 100% in FY 16 but also had a
positive EBITDA of 19%.
37
Total Income
Name YoY Growth EBITDA % PAT %
(INR million)
Healthvista India Pvt. Ltd 425 150% -276% -290%
Saarathi Healthcare Pvt. Ltd 190 103% 19% 12%
Health Care at Home India Pvt. Ltd 170 23% -76% -98%
Medwell Ventures Pvt. Ltd 102 185% -253% -270%
India Home Health Care Pvt. Ltd 70 58% -5% -6%
Tribeca Care Pvt. Ltd 18 16% -30% -35%
Meta Wellness Pvt. Ltd 8 41% -16% -17%
Homital Medcare Pvt. Ltd 7 45% -92% -117%
Aegis Care Advisors Pvt. Ltd 7 46% -914% -921%
Zoctr Health Pvt. Ltd 6 3378% -452% -459%
Indicare Health Services Pvt. Ltd 3 1317% -222% -225%
While there are records for a total of USD 51 million having been invested in this
segment, majority of the deals don’t have information on % stakes sought and
hence making it difficult to establish EV/Income ratio with the limited data points.
The data analysed does not include money invested in Medwell Ventures.
Accel India has invested the highest in this segment at USD 28 million (in Portea)
followed by IFC, Ventureeast, Qualcomm and SAIF at USD 7.28 million, USD 6.3
million, USD 5.3 million and USD 3.2 million respectively. Amongst the companies,
Portea attracted the most investment of over USD 47 million followed by Aegis
Care Advisors (USD 4.2 million).
Future outlook:
The segment was expected to do very well and hence attracted very high
investments in the past. However, the segment failed to be even EBITDA positive.
Given the mindset and habits of Indian customers, it has to be seen if the segment
will be able to carve a niche category of customers who can keep the segment
profitable.
38
SINGLE-SPECIALTY
HOSPITALS
39
a) Maternity and Child Care Hospitals
Maternity and Child Care is a segment which is growing steadily and profitably. 19
samples were analysed which accounted for over INR 10 billion. The median
revenue growth of the sample set in FY16 over FY15 was 16% and median EBITDA
was 13%. The sample set’s median PAT is 3.7% and fixed asset turnover of 246
days.
50%
Luthra
14%, 31%, Birthplace Healthcare
40% 60%, 33%, 154 INR mn
117 INR mn
EBITDA %
30%
Neotia Healthcare
20% 33%, 8%, 951 INR mn Rainbow
58%, 18%,
Median EBITDA
10% Surya Children's 2,491 INR mn
42%, 9%, 473 INR mn
0%
-10% 0% 10% 20% 30% 40% 50% 60% 70%
-10%
YoY Growth
-20% Rhea
Kids Clinic 71%, -11%,
-30% 23%, -24%, 527 INR mn
1,896 INR mn
-40%
Amongst the pure play Maternity and Child care hospitals analysed, Rainbow
Healthcare has been the largest with a turnover of close to INR 2.5 billion in FY16
and growth of 58% over FY15 with a healthy EBITDA of 18% in FY16. Rainbow
Hospitals operates out of Hyderabad, Vijayawada and Bangalore with an average
revenue per bed per annum of close to INR 5 million. The second largest hospital
chain Cloudnine (Kids Clinic India Pvt. Ltd) had a turnover of INR 1.89 billion in FY16
and a revenue growth of 23% over FY15 though with a poor EBITDA of -24%.
40
Total Income YoY
Name EBITDA % PAT %
(INR million) Growth
Rainbow Childrens Medicare Pvt. Ltd 2,491 58% 18% 7%
Kids Clinic India Pvt. Ltd (Cloudnine) 1,896 23% -24% -39%
Fernandez Hospital Pvt. Ltd 1,041 8% 17% 8%
Neotia Healthcare Initiative Ltd 951 33% 8% -5%
Edappal Hospitals Pvt. Ltd 843 16% 17% 6%
Rhea Healthcare Pvt. Ltd (Motherhood) 527 71% -11% -39%
Surya Children's Medicare Pvt. Ltd 473 42% 9% 0%
BACC Health Care Pvt. Ltd 400 10% 23% 12%
Apollo Bangalore Cradle Ltd 286 28% 5% -10%
Ganesh Hospital Pvt. Ltd 195 16% 17% 5%
Neonatal Care and Research Institute Ltd 165 145% -2% -9%
LifeSpring Hospitals Pvt. Ltd 164 12% 11% 1%
Birthplace Healthcare Pvt. Ltd 154 60% 33% 0%
Vasundhara Hospital Ltd 124 9% 18% 4%
Lineage Healthcare Ltd 120 23% -14% -71%
Luthra Hospitals Pvt. Ltd 117 14% 31% 10%
Mayflower Women's Hospital Pvt. Ltd 102 0% 13% 4%
Vidarbha Intensivist Pediatricians Group Pvt. Ltd 55 3% 11% 5%
Amrutaa Pediacare Pvt. Ltd 50 -2% 36% 9%
True North Managers have invested the most in the segment (USD 60 million in
Cloudnine) followed by CDC Group Plc (USD 31.5 million in Rainbow), Matrix India
(14.8 Million in Cloudnine) and Sequoia (USD 14.5 million in Cloud nine)
41
Future Outlook
42
b) Eye Hospitals
10% ASG…
Median EBITDA
0%
-10% 0% 10% 20% 30% 40% 50% 60% 70%
-10%
Dr. Agarwal's YoY Growth
-20% Healthcare 23%,
0%
-30% Median YoY Growth %
Key players like Arvind Eye Hospital, Sankara Nethralaya and LV Prasad Eye
Institute could not be considered in the analysis as their financial information are
not available in MCA. Due to data unavailability, Vasan Eye Care was also not
included in the analysis.
The largest and the oldest eye hospital chain in the sample set is Dr. Agarwal Group
which has two entities: Dr. Agarwal Eye Hospital Ltd and Dr. Agarwal Healthcare
Ltd which is the parent company of the former. In FY16 they achieved a standalone
turnover of INR 1.37 billion and INR 870 million respectively. The largest
standalone hospital chain is Centre for Sight (New Delhi Centre for Sight Private
Ltd) which had a turnover of INR 1.64 billion in FY16 growing at the rate of 65%
over FY15 and a healthy EBITDA of 20%.
Kolkata based Disha Eye Hospitals is the third largest with turnover of INR 1.04
billion and growing at 17% with an EBITDA of 23%.
43
Total Income
Name YoY Growth EBITDA % PAT %
(INR million)
New Delhi Centre for Sight Ltd 1,639 65% 20% 4%
Dr. Agarwal's Eye Hospital 1,368 14% 13% 4%
Disha Eye Hospitals Pvt. Ltd 1,045 17% 23% 13%
Dr. Agarwal's Health Care Ltd 872 23% 0% -13%
Medfort Hospitals Pvt. Ltd 714 2% 16% -5%
ASG Hospital Pvt. Ltd 548 25% 0% -19%
Nethradhama Hospitals Pvt. Ltd 409 12% 18% 4%
Lotus Eye Hospital and Institute Ltd 317 5% 14% 0%
Sharp Sight Laser Centre Pvt. Ltd 233 25% 2% -10%
Sreedhareeyam Ayurvedic Eye Hospital 216 13% 19% 8%
Rajan Eye Care Hospital Pvt. Ltd 188 3% 17% 5%
Thind Eye Hospital Ltd 137 12% 47% 14%
Vasan Eye Care attracted the most investment of USD 120 million whereas Dr.
Agarwal Healthcare and Eye-Q Vision raised USD 45 million and USD 28 million
respectively.
GIC Pte Ltd has invested the most in the segment (USD 100 million in Vasan)
followed by ADV (USD 45 million in Dr. Agarwal), Matrix Partners India (17 Million
in Centre for Sight) and Helion (USD 11.5 million in Eye-Q Vision).
44
Future Outlook
45
c) Cardiac Hospitals
Cardiac hospitals are one of the reasonably old single-specialty hospital segments.
However, the segment has not grown much in recent years. In this segment, 11
companies were analysed which accounted for over INR 7.54 billion. The median
revenue growth of the sample set in FY16 over FY15 was 8% and median EBITDA
was 22%. The sample set’s median PAT is 4.3% and fixed asset turnover of 148
days.
Median YoY Growth %
40% Escorts
Median -
EBITDA %
0%
-20% -10% 0% 10% 20% 30% 40% 50% 60%
YoY Growth
-10%
Amongst the data analyzed, Escorts Heart Institute is the largest entity with a
revenue of INR 4.62 billion, growing at a rate of 7% per annum and EBITDA of 28%.
However, a small player like Usha Cardiac Centre based in Vijayawada has grown
61% in FY16 with an EBITDA of 18%. Similarly, Gujarat based Bankers Cardiology
has also above median growth of 29% and EBITDA of 22% at a revenue of INR 540
million in FY16.
46
Total Income YoY
EBITDA % PAT %
(INR million) Growth
Name
Escorts Heart Institute and Research Centre Ltd 4,623 7% 28% 13%
Frontier Lifeline Pvt. Ltd 746 9% 9% 4%
Bankers Cardiology Pvt. Ltd 540 29% 22% 10%
Avanti Institute Of Cardiology Pvt. Ltd 392 0% 29% 17%
BSR Super Specialty Hospitals Ltd 333 -17% 7% -19%
Metromed International Cardiac Centre Pvt. Ltd 276 17% 1% -11%
Usha Cardiac Centre Ltd 211 61% 18% -1%
Jeevak Heart Hospital and Research Institute Pvt. Ltd 167 8% 11% 5%
Innova Childrens Heart Hospital Pvt. Ltd 132 -34% 37% -2%
Divine Heart Hospital and Research Centre Pvt. Ltd 108 16% 29% 14%
C Heart Care Pvt. Ltd 13 -22% 32% -6%
Of the data available, Escorts Heart Institute attracted the most investment USD
133 million from Fortis in the year 2005 for 90% stake. The EV/Income at that point
was 3. Other major investments have been USD 8.4 million by Aureos South Asia
Fund in BSR Super Specialty Hospital and USD 2.8 million by RVCF in Frontier
Lifeline Hospitals.
47
d) Oncology Hospitals
Oncology hospitals is one of the few categories which is growing well and is quite
profitable as well. In this segment, 9 companies were analysed which accounted
for over INR 7.45 billion. The median revenue growth of the sample set in FY16
over FY15 was 30% and median EBITDA was 16%. The sample set’s median PAT
is 0.2% and fixed asset turnover of 295 days.
70%
50% International
HCG HCG Medi-Surge Oncology,
EBITDA %
YoY Growth
-30%
With a revenue of INR 5.85 billion, HCG is the largest of the pool and practically
defines the market size. It is a public company and has over 23 centres in 17 cities
across the country. HCG Medisurge is the second largest with INR 670 million
revenue. It is a 100 bed cancer hospital in Ahmedabad acquired by HCG.
Trivandrum based KIMS Cancer care is based in Trivandrum and is 100%
subsidiary of KIMS.
48
Total Income YoY
Name EBITDA % PAT %
(INR million) Growth
HealthCare Global Enterprises Ltd 5,854 12% 16% 0%
HCG Medi-Surge Hospitals Pvt. Ltd 670 30% 16% 8%
International Oncology Services Pvt. Ltd 472 45% 23% 7%
KIMS Cancer Care And Research Center Pvt. Ltd 183 22% 11% -3%
Dr. Krishnas Cancer Healer Center Pvt. Ltd 153 268% 2% 0%
Cytecare Hospitals Pvt. Ltd 55 83% 96% 62%
Guntur Cancer Care Centre Pvt. Ltd 53 -2% 43% 20%
Bangalore Cancer Centre Pvt. Ltd 9 37% -34% -160%
Manav Rakshak Cancer Hospitals Pvt. Ltd 5 -20% 50% 0%
Future Outlook
The segment is growing profitably and has huge potential with very few organized
players. Clearly, there is room for more organized players like HCG. Since this
segment needs high level of investments and technical knowledge, either
international players can enter Indian markets or set up JVs with multi-specialty
hospitals in India.
49
e) Others
Diabetic care, Nephrology, Orthopedic and Urology are the other single-specialty
hospitals analysed. Due to lack of data, only little analysis could be done on these
categories.
Based on the limited data available, Urology and Nephrology seems to be attractive
segment with good growth and EBITDA.
Urology player RG Scientific Enterprises Pvt. Ltd. raised a total USD 30 million out
of which USD 19.8 million was from India Equity Partners and US 10.43 million from
ICICI Venture Funds.
50
MULTI-SPECIALITY
HOSPITALS
51
a) Secondary Care hospitals
i. Secondary care multi-specialty hospitals with revenue less than INR 200 million
79 companies were analysed in this pool with a cumulative revenue of INR 6.4
billion in FY16 and median revenue growth of 14% with a median EBITDA of 13%.
EBITDA vs Revenue growth for secondary care hospitals with revenue less than
INR 200 million:
10% Carewell
101%, 11%,
112 INR mn
0%
-20% -10% 0% 10% 20% 30% 40% 50% 60% 70% 80% 90% 100% 110% 120%
YOY Growth
-10%
Be Well
64%, -18%,
161 INR mn
-20%
Well performing major players in secondary care hospitals with turnover <INR 200
million:
52
Total Income YoY
Name Location EBITDA % PAT %
(INR Million) Growth
Jain Neuro and IVF Hospitals Pvt. Ltd Delhi 139 30% 20% 8%
Kasturi Medical Centre Pvt. Ltd Kolkata 133 26% 28% 10%
Life Care Hospital Pvt. Ltd Indore 128 20% 37% 23%
Ruby Hall Clinic Services Pvt. Ltd Pune 106 16% 32% 2%
53
ii. Secondary Care hospitals with revenue more than INR 200 million
25%
Ganga Care Bristlecone
12%, 21%, 426 INR mn 58%, 25%, 226 INR mn
20%
EBITDA %
15%
Median EBITDA
10% Bhagat
19%, 13%, 360 INR mn
5%
0%
0% 5% 10% 15% 20% 25% 30% 35% 40% 45% 50% 55% 60%
YoY Growth
Hyderabad based Bristlecone Hospitals has both highest revenue growth (58%)
and EBITDA (25%).
54
Investments
Based on the 11 deals analysed which had all the information required, the
segment attracted a total investment of USD 41 million at a median valuation of
7.4 times revenue. Cygnus Medicare Pvt. Ltd. attracted the highest investment of
USD 15.3 million followed by Vaatsalya (USD 8.4 million) and Baroda Medicare Pvt.
Ltd (USD 5.7 million). Major investors in the segment are India Venture Trust Fund
(USD 5.7 million), Matrix Partners (USD 5.7 million) and Aquarius India Fund (USD
5 million).
55
b) Tertiary Care hospitals
In tertiary care multi-specialty hospitals, 157 companies were analysed with a wide
range of revenue from INR 2 million to over INR 5,0 billion. Hence, the sample was
divided into four groups based on revenue in FY16: <INR 200 million, INR 200-500
million, INR 500 million - 2 billion and >INR 2 billion.
i. Tertiary care multi-specialty hospitals with revenue less than INR 200 million
31 companies were analysed in this pool with a cumulative revenue of INR 2.58
billion in FY16, median revenue growth of 12% and a median EBITDA of 17%.
EBITDA vs Revenue growth for secondary care hospitals with revenue less than
INR 200 million:
70%
Median YoY Growth % Cauvery Medical Centre
38%, 67%, 51 INR mn
60%
50%
40%
Deepak Health and
People's Heritage
EBITDA %
GB Multicare,
20% 51%, 16%, 26 INR mn
Jeevan Rekha Median EBITDA
46%, 13%,
10%
100 INR mn
Palika Vinayak
66%, 8%, 45 INR mn
0%
-20% -10% 0% 10% 20% 30% 40% 50% 60% 70%
YoY Growth
-10%
56
It is evident from the trend that at a growth rate of 12-14% EBITDA peaks at around
25% whereas any growth beyond that comes at the cost of EBITDA. Cauvery
Medical Centre is an exception to this with a high growth of 38% at a very high
EBITDA of 67%. Given below are select well performing companies based on either
growth, EBITDA or revenue per bed
Revenue/ bed
Total Income YoY No. of
Name Location EBITDA PAT (INR million/ Comments
(INR million) Growth Beds
annum)
Palika Vinayak Hospital Pvt. Ltd Patna 45.5 66% 8% -1% 100 0.45 Growth
Cauvery Medical Centre Ltd Bangalore 50.7 38% 67% -1% 100 0.51 Profitable
City Clinic Pvt. Ltd Chandigarh 194.2 12% 28% 15% 100 1.94 Profitable
People's Heritage Hospital Pvt. Ltd Agra 89.4 21% 27% 8% 150 0.60 Profitable
Shri Balaji Super Speciality
Raipur 9.0 -85% 27% 5% 0 0.00 Profitable
Hospital Pvt. Ltd
Pawan Gandhi Health Care Pvt. Ltd Delhi 83.6 3% 21% 17% 15 5.57 Rev/Bed
Pranaam Hospitals Pvt. Ltd Hyderabad 137.1 26% 17% 6% 60 2.28 Rev/Bed
City Clinic Pvt. Ltd Chandigarh 194.2 12% 28% 15% 100 1.94 Rev/Bed
Aryan Hospital Pvt. Ltd Gurgaon 146.2 32% 9% 2% 100 1.46 Rev/Bed
Deepak Health and Wellness Ltd Jalna 154.1 41% 23% 4% 150 1.03 Rev/Bed
Surya Hospitals Pvt. Ltd Pune 111.9 4% 16% -1% 110 1.02 Rev/Bed
Bhandari Health Care Pvt. Ltd Jaipur 151.6 27% 9% -4% 150 1.01 Rev/Bed
The trend observed is that growth as well as profitability are high not only in non-
metro cities like Patna, Chandigarh and Jaipur but also smaller cities/towns like
Kashipur, Jalna and Raipur.
57
ii. Tertiary care multi-specialty hospitals with revenue between INR 200 million
and INR 500 million
40 companies were analysed in this pool with a cumulative revenue of INR 13.28
billion in FY16 and median revenue growth of 13% with a median EBITDA of 18%.
EBITDA vs Revenue growth for tertiary care hospitals with revenue range INR 200
-500 million:
40%
EBITDA (%)
10%
0%
-15% -5% 5% 15% 25% 35% 45% 55% 65% 75%
-10%
YoY Revenue Growth (%)
It is evident from the trend that at a growth rate of 13-15% EBITDA peaks at around
22% whereas any growth beyond that comes at the cost of EBITDA.
Moolchand Healthcare is the most profitable in the lot with an EBITDA of 64%
followed by Radiant Lifecare at 55% though both of them have below median
growth of 5% and -1% respectively. Ahmedabad Healthcare has had an outstanding
growth of 70% at EBITDA of 16%. So also Jodhpur based Sri Ram Super Surgical
Centre with a growth of 59% at an EBITDA of 14%.
Given below are select well performing companies based on either growth, EBITDA
or revenue per bed:
58
Revenue/ bed
Total Income YoY No. of
Name Location EBITDA % PAT % (INR Mn / Comments
(INR million) Growth Beds
annum)
Ahmedabad Healthcare Pvt.
Ahmedabad 230 70% 16% 10% NA 1.7 Growth
Ltd
Shri Ram Super Speciality
Jodhpur 250 59% 14% 0% 150 1.1 Growth
Surgical Centre Pvt. Ltd
Apollo Rajshree Hospitals
Indore 200 40% -18% -42% 180 1.2 Growth
Pvt. Ltd
Charnock Hospitals Pvt. Ltd Kolkata 290 28% 17% 6% 250 0.8 Growth
Rahman Hospitals Pvt. Ltd Guwahati 250 24% 19% 7% 300 1.0 Growth
Moolchand Healthcare Pvt.
Delhi 360 5% 64% 31% 350 0.4 Profitable
Ltd
Radiant Life Care Pvt. Ltd Delhi 290 -1% 55% 30% 650 2.2 Profitable
Sentini Hospitals Pvt. Ltd Vijayawada 330 4% 27% 5% 150 1.5 Profitable
Park Hospitals Gurgaon 370 15% 24% 17% 250 2.5 Profitable
Greater Kailash Hospitals
Indore 380 15% 23% 2% 150 6.6 Profitable
Pvt. Ltd
Midas Multispeciality
Nagpur 330 19% 19% 11% 50 5.6 Rev/Bed
Hospital Pvt. Ltd
Rigid Hospitals Pvt. Ltd Chennai 250 4% 19% 4% 45 3.6 Rev/Bed
Suguna Ramaiah Hospitals
Bangalore 290 11% 15% 5% 80 3.3 Rev/Bed
Pvt. Ltd
Pushpanjali Hospital and
Agra 330 14% 20% 4% 100 3.0 Rev/Bed
Research Centre Pvt. Ltd
Panacea Hospitals Pvt. Ltd Bangalore 310 2% 19% 2% 105 1.7 Rev/Bed
Non-metros cities seem to dominate the list in the growth and EBITDA dimension.
59
iii. Tertiary care multi-specialty hospitals with revenue between INR 500 million
and INR 2 billion
56 companies were analysed in this pool with a cumulative revenue of INR 58.74
billion in FY16 and median revenue growth of 14% with a median EBITDA of 14%.
EBITDA vs Revenue growth for secondary care hospitals with revenue range INR
500 million -2 billion:
40%
Heritage, Varanasi
55%, 36%, 973 INR mn
Saket Hospitals, Delhi
30% 28%, 25%, 560 INR mn
Median EBITDA
0%
-5% 0% 5% 10% 15% 20% 25% 30% 35% 40% 45% 50% 55% 60% 65% 70% 75% 80%
YoY Revenue Growth (%)
Continental, Hyderabad
-10% 56%, -5%, 1,060 INR mn
EBITDA is seen increasing with growth rate peaking at a growth rate of 23-25% to
an EBITDA of 25%. Any rate of growth beyond 25% comes at the cost of EBITDA.
Kolkata based Meridian Hospital has had a stunning growth of 75% followed by
Hyderabad based Sahrudaya and Continental with growth rate of 62% and 56%
respectively.
60
Revenue/ bed
Total Income YoY No. of
Name Location EBITDA % PAT % (INR mn/ Comments
(INR million) Growth Beds
annum)
Meridian Medical Research
Howrah 929 75% 4% -3% NA NA Growth
and Hospital Ltd
Sahrudaya Health Care Pvt.
Hyderabad 1,663 62% 0% -4% NA NA Growth
Ltd
Continental Hospitals Ltd Hyderabad 1,060 56% -5% -38% 750 1.4 Growth
Profitable
Heritage Hospitals Ltd Varanasi 973 55% 36% 6% 300 3.2
Growth
Dr. Ramesh Cardiac and
Multispeciality Hospital Pvt. Vijayawada 1,158 51% 9% -6% 560 2.1 Growth
Ltd
Delhi/
Park Medi World Pvt. Ltd 527 12% 27% 12% 1020 0.5 Profitable
Punjab
Yatharth Hospital and Trauma
Noida 720 23% 25% 4% 400 1.8 Profitable
Care Services Pvt. Ltd
Saket City Hospitals Pvt. Ltd Delhi 560 28% 25% -46% 250 2.2 Profitable
Ganga Medical Centre and
Coimbatore 1,260 11% 25% 13% 450 2.8 Profitable
Hospitals Pvt. Ltd
ALPS Hospitals Ltd Gurgaon 1,053 21% 22% 15% 74 14.2 Rev/Bed
Unimed Healthcare Pvt. Ltd Hyderabad 1,443 36% 11% -3% 130 11.1 Rev/Bed
Hyderabad Institute of
Hyderabad 1,644 9% 23% 9% 175 9.4 Rev/Bed
Oncology Pvt. Ltd
Hiranandani Healthcare Pvt.
Mumbai 1,397 11% 24% 15% 149 9.4 Rev/Bed
Ltd
Fortis Malar Hospitals Ltd Chennai 1,296 10% 5% 5% 180 7.2 Rev/Bed
As the revenue range is higher, hospitals based in the metros dominate the list of
well performing hospitals with the exception being Ganga Medical Centre of
Coimbatore and Heritage of Varanasi.
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iv. Tertiary care multi-specialty hospitals with revenue more than INR 2 billion
29 companies were analysed in this pool with a cumulative revenue of INR 224
billion in FY16 and median revenue growth of 11% with a median EBITDA of 13%.
EBITDA vs Revenue growth for tertiary care hospitals with revenue more than INR
2 billion:
50%
Apollo
18%, 15%,
40% Global Health (Medanta), Gurgaon
EBITDA (%)
54,780 INR mn
16%, 25%, 14,273 INR mn
30% Sarvejana,
Max, North India, Hyedrabad /
27%, 10%, Bhubaneshwar
20% 14,752 INR mn 39%, 13%,
2,177 INR mn
10% Median EBITDA
0%
-15% -10% -5% 0% 5% 10% 15% 20% 25% 30% 35% 40% 45% 50%
-10% AMRI, Kolkata /
YoY Revenue Growth (%)
Bhubaneshwar,
40%, 0%, 2,870 INR mn
EBITDA is seen increasing with growth rate peaking at a growth rate of 15-18% to
an EBITDA of 25-26%. Any rate of growth beyond 25% comes at the cost of EBITDA.
Kolkata based AMRI has had stunning growth of 39% followed by Hyderabad based
Sarvejana and Continental with growth rate of 62% and 56% respectively.
Apollo Hospitals Enterprises is the largest entity with a standalone revenue of INR
55 billion growing at 18% (in FY16 over FY15) with an EBITDA of 15%. Amongst the
large hospital chains with revenue over INR 10 billion, Max Healthcare has the
highest growth rate of 27% whereas Global Health (Medanta) has the highest
EBITDA of 25%. Medanta’s profitability is driven by the high revenue per bed of INR
11.4 million per annum which is the second highest amongst the pool analysed.
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Mumbai’s Breach Candy Hospital has the highest revenue per bed of INR 128
million per annum followed by Medanta and then Indraprastha Apollo with INR 10.9
million/annum.
Revenue /bed
Total Income YoY Estimated
Name Location EBITDA % PAT % (INR mn/ Comments
(INR million) Growth No. of Beds
annum)
Apollo Hospitals Enterprise Ltd. Chain 54,780 18% 15% 7% 6,263 8.7 Large
Fortis Hospitals Ltd. Chain 21,930 9% 6% -7% 3,786 5.8 Large
Large and
Max Healthcare Institute Ltd. Regional 14,750 27% 10% -1% 2,624 5.6
Growing
Narayana Hrudayalaya Ltd. Chain 14,740 12% 12% 5% 5,600 2.6 Large
Large,
Global Health Pvt. Ltd. Gurgaon 14,270 16% 25% 12% 1,250 11.4 Profitable and
High Rev/Bed
Aster DM Healthcare Ltd. Kochi 2,450 166% 6% -26% 670 3.7 Growth
AMRI Hospitals Ltd. Regional 2,870 40% 0% -19% 780 3.7 Growth
Sarvejana Healthcare Pvt. Ltd. Regional 2,180 39% 13% 3% 725 3.0 Growth
Paras Healthcare Pvt. Ltd. Regional 3,530 23% 16% 5% 995 3.5 Growth
International Hospitals Ltd. Gurgaon 3,320 5% 71% -18% 1,000 3.3 Profitable
Jupiter Lifeline Hospitals Ltd. Mumbai 2,530 13% 25% 12% 325 7.8 Profitable
Profitable and
Breach Candy Hospital Trust Mumbai 2,220 4% 22% 15% 173 12.8
High Rev/bed
Shalby Ltd. Regional 2,890 9% 21% 10% 524 5.5 Profitable
Indraprastha Medical Corpn. Ltd. Delhi 7,600 6% 10% 4% 695 10.9 Rev/bed
Artemis Medicare Services Ltd. Gurgaon 4,070 10% 12% 5% 380 10.7 Rev/bed
Apollo Gleneagles Hospitals Ltd. Kolkata 5,020 14% 17% 6% 510 9.8 Rev/bed
Revenue per bed vs. total bed capacity for hospitals with revenue >INR 2 billion
The revenue per bed decreases with bed capacity with two broad groups due to
either factors of lower occupation and higher duration of stay. Exception to this
trend is Apollo Hospitals whose revenue per bed is INR 8.7 million per annum.
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120%
100%
80%
60%
ROCE
40%
20%
0%
0 200 400 600 800 1000 1200 1400 1600
-20%
FATO days
ROCE vs Fixed Asset Turnover days for hospitals with revenue >INR 2 billion
Based on the data analysed, fixed asset turnover days (FATO) of 200-220 days
(annual asset turnover of INR1.60 - 1.80 million) with an ROCE of 18-20% seems to
be a good hospital operations case. If growth is objective, then FATO days is higher
leading to ROCE.
14.00
12.00
10.00
Rev/Bed/annum (INR Million)
8.00
6.00
4.00
2.00
0.00
0 500 1,000 1,500 2,000 2,500 3,000 3,500 4,000 4,500 5,000 5,500 6,000 6,500 7,000
No. of Beds
64
Investments in multi-specialty hospitals:
Of the investments in multi-specialty tertiary care hospitals, 86 deals had all the
required information. The 86 deals analyzed accounted for USD 3.4 billion with a
median revenue multiplier of 3.84.
Max Healthcare attracted the highest investment of USD 381 million followed
Quality Care India Ltd with USD 368 million and Fortis Healthcare at USD 328
million.
IFC tops the chart amongst the investor segment with USD 258 million followed by
Abraaj Capital, IHH healthcare and Life Healthcare with 251, 238 and 238 million
respectively.
Future outlook:
Chain of multi-specialty hospitals is the way forward with feeder network of general
clinics. However, the challenge that remains with hospitals is how they can ensure
faster recovery and hence fast discharge of patients so as to maintain lower nights
per case to maximize the revenue per bed.
65
CONCLUSION
The demand for healthcare services is growing strongly, there are certainly a few
obstacles or bottlenecks that may potentially affect growth. Lack of trained staff
leading to a burgeoning informal healthcare sector, especially in the smaller towns.
Also, there is a need for ensuring and standardizing the quality of people coming
from the private institutions.
Another aspect of healthcare very unique to India is the low penetration of health
insurance. Though there is a steady increase in penetration over the last few years,
it is more only in urban area. Rural segments and economically backward strata in
urban area don’t have access to health insurance easily. The government has
already started taking steps in this direction by announcing the Universal Health
Coverage plan. The ability of the private sector and the government to work
together to overcome these obstacles will define the growth of the healthcare
services sector over the next few years.
66