HealthCare Global Enterprises (HCG) Q4 16/17 earnings summary

Executive summary

• FY17 consolidated revenue from operations rose 19.8% YoY to INR 7,001.1m; operating EBITDA increased 23.9% to INR 1,050.5m, and PAT after minority interest was INR 221.7m versus a prior-year loss of INR 14.6m.

• Growth reflected higher ARPOB, new and expanded centres, and stronger fertility services; 8 comprehensive cancer centres were under development, with operations expected by end-FY18.

Financial highlights

• Total revenue rose 20.7% YoY to INR 7,097.8m; revenue from operations increased 19.8% to INR 7,001.1m, including medical services of INR 4,781.8m and pharmacy income of INR 2,165.7m.

• Operating EBITDA reached INR 1,050.5m versus INR 847.6m; EBITDA margin improved 50 bps to 15.0% from 14.5%.

• PBT before exceptional items was INR 348.4m versus INR 63.4m; PAT after minority interest was INR 221.7m versus a loss of INR 14.6m.

• Finance costs fell 40.0% YoY to INR 230.0m, primarily after IPO proceeds were used to prepay debt; depreciation and amortisation rose 28.9% to INR 568.3m as medical assets expanded.

Outlook and guidance

• Eight majority-owned cancer centres were in development, targeted to start operations by end-FY18; planned projects included Mumbai, Nagpur, Kochi, Gurgaon, Jaipur, Kolkata, Bhavnagar and Nashik Phase II.

• Overseas expansion plans focused on a speciality cancer-centre network in Africa through partnerships and acquisitions; definitive agreements to acquire a majority stake in Nairobi’s Cancer Care Kenya received local approval in May 2017.

• Milann network expansion was planned through greenfield centres, partnerships and selective acquisitions; India IVF cycles were forecast to rise from 100,000 in 2015 to 260,000 in 2020.