HealthCare Global Enterprises (HCG) Q4 17/18 earnings summary

Executive summary

• FY18 revenue grew 18.7% YoY to INR 8,306.9 Mn; operating EBITDA rose 13.2% to INR 1,188.2 Mn, while EBITDA margin declined 70 bps to 14.3%, mainly from new-centre losses.

• Consolidated profit after tax was INR 169.4 Mn versus INR 230.4 Mn in FY17; profit attributable to owners was INR 205.2 Mn versus INR 221.7 Mn, and diluted EPS was INR 2.38 versus INR 2.69.

• Growth reflected network expansion, higher revenue at existing centres and new facilities; HCG centres contributed 92% of consolidated revenue and Milann 8%.

Financial highlights

• Revenue from operations increased 18.7% to INR 8,306.9 Mn; total revenue including other income rose 18.8% to INR 8,434.9 Mn.

• Operating EBITDA increased 13.2% to INR 1,188.2 Mn; margin fell to 14.3% from 15.0%, while existing-centre margin rose 110 bps to 18.7%.

• Consolidated PBT was INR 271.8 Mn, including INR 107.7 Mn of exceptional gains; profit before exceptional items and tax was INR 178.1 Mn, after INR 14.0 Mn share of associate/JV losses.

• Medical services revenue was INR 7,498.4 Mn, up 18.4%; pharmacy revenue was INR 684.1 Mn, up 11.4%.

• Standalone operating revenue rose 7.7% to INR 5,868.7 Mn; EBITDA before exceptional items was INR 887.3 Mn, with a 15.1% margin.

Outlook and guidance

• Plans called for six new comprehensive cancer centres in India to start operations by end-FY20, alongside capacity and service expansion at existing centres.

• Expansion priorities included India, selected African markets and selective opportunities in the Middle East and South and Southeast Asia, through new builds, partnerships and acquisitions.

• Ayushman Bharat was viewed as a potential demand driver, particularly given the tier 2/3 footprint; pricing, funding and implementation clarity remained key conditions.

• Milann planned further fertility-network expansion; IVF registrations and procedures continued to grow, while the segment remained underpenetrated in India.