KIMSNSENovember 12, 2022

Krishna Institute of Medical Sciences Limited

7,906words
94turns
8analyst exchanges
4executives
Management on call
Bhaskar Rao Bollineni
FOUNDER AND
Abhinay Bollineni
EXECUTIVE DIRECTOR
Vikas Maheshwari
CHIEF FINANCIAL
Rahul Jeewani
IIFL SECURITIES LIMITED
Key numbers — 40 extracted
51%
Kingsway Hospital at Nagpur has become a subsidiary of KIMS Hospital following our acquisition of 51% stake, you'll be happy to know that it is a first hospital outside the state of Telangana and And
rs,
rthopaedics, paediatrics and oncology, and they are also in line, which has started by a few doctors, one of the industrialist. So because we have been aligned with that, that's why we have been they
13.8%
April '22 and Kingsway, Nagpur from September 2022. Consolidated revenue from operations grew by 13.8% quarter-on-quarter basis to INR 5,461 million. Ex- Nagpur grew by 11%. Consolidated adjusted EBITD
INR 5,461 million
om September 2022. Consolidated revenue from operations grew by 13.8% quarter-on-quarter basis to INR 5,461 million. Ex- Nagpur grew by 11%. Consolidated adjusted EBITDA, excluding other income, IndAS adjustment
11%
ue from operations grew by 13.8% quarter-on-quarter basis to INR 5,461 million. Ex- Nagpur grew by 11%. Consolidated adjusted EBITDA, excluding other income, IndAS adjustment and an old case of luxury
14.5%
d EBITDA, excluding other income, IndAS adjustment and an old case of luxury tax payment, grew by 14.5% on a quarter-on-quarter basis to INR 1,502 million. Ex-Nagpur grew by 13.4% to INR 1,488 million.
INR 1,502 million
adjustment and an old case of luxury tax payment, grew by 14.5% on a quarter-on-quarter basis to INR 1,502 million. Ex-Nagpur grew by 13.4% to INR 1,488 million. Consolidated adjusted EBITDA margin stands at 26.6
13.4%
tax payment, grew by 14.5% on a quarter-on-quarter basis to INR 1,502 million. Ex-Nagpur grew by 13.4% to INR 1,488 million. Consolidated adjusted EBITDA margin stands at 26.6% and ex-Nagpur stands at
INR 1,488 million
ent, grew by 14.5% on a quarter-on-quarter basis to INR 1,502 million. Ex-Nagpur grew by 13.4% to INR 1,488 million. Consolidated adjusted EBITDA margin stands at 26.6% and ex-Nagpur stands at 27.1% quarter-on-qua
26.6%
lion. Ex-Nagpur grew by 13.4% to INR 1,488 million. Consolidated adjusted EBITDA margin stands at 26.6% and ex-Nagpur stands at 27.1% quarter-on-quarter improvement of 0.6%.
27.1%
to INR 1,488 million. Consolidated adjusted EBITDA margin stands at 26.6% and ex-Nagpur stands at 27.1% quarter-on-quarter improvement of 0.6%. The group continues to have
0.6%
d EBITDA margin stands at 26.6% and ex-Nagpur stands at 27.1% quarter-on-quarter improvement of 0.6%. The group continues to have a very strong balance sheet along with h
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Guidance — 20 items
Rahul Jeewani
opening
“From last July, Manavata Hospitals at Nasik has become a subsidiary of KIMS Hospitals, which is undertaking a greenfield project of the hospital.”
Rahul Jeewani
opening
“The work of Sunshine Hospital and Begumpet is progressing well, and it will be started by April 2022.”
Rahul Jeewani
opening
“The project April 23, the project undertaken at Bangalore, semi brownfield is moving ahead and expected to be operational by March '24.”
Rahul Jeewani
opening
“Quicktome to further bolster our infrastructural facilities, popularly known as tumor mapping, it allows surgeons to opt for the safest trajectory to target that needs surgical treatment inside the brain.”
Rahul Jeewani
opening
“And during the quarter, we performed as many as 137 organ transplants, including both heart and lung transplants, which is the biggest project biggest achievement in Asia under the leadership of Dr.”
Rahul Jeewani
opening
“One of the appreciation I will be able to put forward in front of you.”
Chintan Shet
qa
“If you can briefly update where are we, in terms of capex, and how will be the capex outlay likely to pan out over the course of next two to three years?”
Chintan Shet
qa
“And second is on the ARPP and ARPOB declined this quarter, as you mentioned in the initial remarks, how should we read about it, in terms of whether the trajectory will likely to stay, obviously, it will be driven by case mix and there are other factors as well, but if you can address incrementally give us some trajectory going forward?”
Abhinay Bollineni
qa
“As far as Telangana is concerned, Kondapur will be operational in the next 24 to 30 months as per the original time line.”
Abhinay Bollineni
qa
“And the total outlay for that project is going to be to the tune of INR 350 crores, but spread over the next three years.”
Risks & concerns — 5 flagged
Average revenue per operating bed and average revenue per patient has shown a slight decline of 3.2% and 3.1%, respectively, on a quarter-on-quarter basis, though there is an increase of 17.5% and 5.8%, respectively on year-on-year basis.
— Rahul Jeewani
Maybe hypothetical, difficult maybe to tell at this stage.
— Bhavya Gandhi
Especially in the beginning years, we want to be a little cautious and careful about the properties that we choose on the partnerships that we choose.
— Abhinay Bollineni
I don't think that's going to be a challenge because both Nagpur and SunShine had term sheets at much higher valuations.
— Abhinay Bollineni
So it becomes difficult to calculate at our end.
— Bhavya Gandhi
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Q&A — 8 exchanges
Q
Congrats on the good set of number and being a shareholder, we are happy to hear appreciation letter from our patient and kudos to the team. Sir, couple of questions. One is on the growth aspect, you mentioned Bangalore in March 24 and others. If you can briefly update where are we, in terms of capex, and how will be the capex outlay likely to pan out over the course of next two to three years? That is one, and the number of bed addition relative to that CapEx? And second is on the ARPP and ARPOB declined this quarter, as you mentioned in the initial remarks, how should we read about it, in te
Abhinay Bollineni
So as far as ARPOB is concerned, like we had mentioned multiple times in the past, I think we should always consider it in that range of 29,000 to 31,000, and every quarter based on the occupancy number of patients being discharged complexity of work, it could hover. But if you look at consistently over the last three, four quarters, we have been hovering around the same range. So when one looks at prospective quarters, we should assume that we'll safely be in the 29,000 to 31,000 kind of bracket. And it will change based on the numbers. As far as the expansion is concerned, I think, fortunate
Q
Congratulations on good set of numbers. Sir, I just wanted to understand how would the debt look like maybe one or two years down the line, assuming the merger is going to take place and Debt is going to come on our books on a full year basis. And also on the cash flow, are we going to take some external debt going forward for the capex? Or how is it?
Vikas Maheshwari
Thanks, Bhavya, it's a good question. As on date, we are only focused on two projects, which is Bangalore for which Dr. Abhinay has just briefed that we have completed the transaction and the work is going on. And the Nasik, one, which we have already done. So as on 30th September, after the closure of the Nagpur transaction, where we have infused INR 80 crores of the equity and some loan, we have given to the subsidiary for cleaning of the balance sheet, etc, etc. With that, the Nagpur subsidiary has INR 150 crores of the debt. So as on 30th September, as a net debt level, we are at around IN
Q
I had a few questions. So one is more, sir, in general to the business operation itself. When we say, for example, when we try to expand in Bangalore or, for example, will we try to maintain our market share in even Telangana market. I wanted to understand that what is our approach to the doctor engagement Say, for example, I think in FY '22, we had around 1,400 doctors, so how much would be on payroll and what is the one which we engage on the fee as a service model. And what would be the preference as we expand to the newer cities, how to build that doctor network? And that's my first questi
Abhinay Bollineni
So I think all the doctors that we engage are on the consulting model only. We don't have any of them on full time, sorry, on a fixed pay kind of a model. That's not how it was. And moving forward, in Bangalore also will continue to engage with them in the similar format But just more theoretical effect from a hospital point of view, but having doctors on payroll helps in better branding even though the costs are slightly higher. But it helps in ensuring a more prominent brand. So for example, in a place like Telangana also, does it make sense to keep doctors on a consulting basis or to have a
Q
Sir, if we now look at our occupancy at a group level, we are trending somewhere around 69%, 70%. So how do you look at occupancies going forward on the base business apart from the incremental capacity, which you are adding. So on the base occupancies, where can you be in, let's say, 18 to 24 months down the line?
Abhinay Bollineni
When you say base occupancy, Rahul, can you clarify a little, please? 70% occupancy on a consol level at H1 numbers. Dr. Abhinay, I was asking that if we look at your occupancies, we are at 70% on sensors beds, but the way some of your other peers disclose on operating bed, then on operating beds, our occupancies will be around 60%. So how are you viewing the overall occupancies to improve on the base business going forward, apart from the capacity additions, which you will be doing over the next 2 to 3 year period? Right. So I think we should -- we are comfortable to get to 70%, 75% on the op
Q
Question on Telangana cluster. So, if you see occupancy by most hospitals reported have gone up here in Telangana, it kindly -- it's kind of stable here while there are positive move. So any particular reason?
Abhinay Bollineni
So I think in Telangana, we have two assets, which is in KIMS in Secundrabad and in Kondapur. Kondapur currently, the occupancy is quite high and we don't have that capacity to accommodate more number of patients. So, until the new facility comes, there will be some restricted growth there. As far as Secundrabad is concerned, we have seen the occupancy move up. The overall volumes for the Telangana cluster has moved up by almost 10%. I think we're fairly happy with the volume movement that has happened from quarter 1 to quarter 2. And there's a dip in ALOS by almost 10%, which is resulted in A
Q
Sir, one of the aspects, which is work for well -- worked well for us in the past is in AP Telangana, particularly is the doctor partnership model. Now we have done a couple of similar tie-ups in Maharashtra as well based on your experience so far, is the incoming interest from doctors who are running hospitals in these other states, be it Maharashtra, Karnataka or maybe any other state, Tamil Nadu as well to partner with KIMS as high as what we have seen in AP Telangana?
Abhinay Bollineni
Yes. In fact, in Maharashtra, we have got close to 10 opportunities, but we didn't take all those opportunities forward in the doctor partnership model, especially after we signed Nasik, Nagpur and the stocks that we are doing something in Bombay, the people are doctors are understanding that we will be able to create a larger network in Maharashtra. But again, there is definitely good interest in Maharashtra but we're a little choosy and picky on the size and of hosting that we wanted to. Especially in the beginning years, we want to be a little cautious and careful about the properties that
Q
One question only on the September pledge that increased slightly promoter pledge. This is related to the nursing hospital from the promotor and the incremental increase in pledge is also related to the acquisitions we are making currently? And what will be the outlook for that? Bhaskara Rao Bollineni: Only one time, I think we are going to release the -- what we have been project for the medical school that is going to released once they do the balance sheet and ratings. I think by next year, I think it will come down
Chintan Sheth
Come down and then over the next couple of years, it will likely to. So the increase, I just wanted to know the increase is related purely to the nursing hospital? Or is it related to the new acquisitions or the -- we are making for which we might require additional funding. So is this business related or promoter business related? The whole pledge here to break into two parts, what is promoter and other is the promoter group. -- the promote a very sizable Infra and the real estate business. And if they go and borrow from the market for their own business of infra, real estate, the rate is hig
Q
Sir, just a clarification with respect to our share of EBITDA consol level right now, we are at INR 150-odd crores for this quarter. So if you could just provide our share of EBITDA assuming our 51% stake and maybe across different or?
Vikas Maheshwari
So Bhavya this is a good question. As we told earlier in the first half basis, roughly 14% of the EBITDA belongs to the minority. If it is less 14% would be our share, right? Simply put it up like that? Yes. 86% belongs only to 14% of the EBITDA based on the various subsidiaries. The minority shareholding is 14% of the minority interest. Small request, if we can put that across maybe an investor presentation going forward because now we have a couple of different acquisitions at different share, right? So it becomes difficult to calculate at our end. And on prior… We take this point and will i
Speaking time
Abhinay Bollineni
26
Vikas Maheshwari
14
Moderator
11
Harshit Toshniwal
11
Rahul Jeewani
10
Chintan Shet
6
Bhavya Gandhi
6
Prakash Agarwal
4
Alankar Garude
3
Chintan Sheth
2
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Opening remarks
Rahul Jeewani
Hi. Good morning, everyone. I'm Rahul, from IIFL Institutional Equities, I welcome you all to the Second Quarter Earnings Conference Call of KIMS Hospitals. From KIMS, we have with us today, Dr. Bhaskar Rao Bollineni, Founder and Managing Director, Dr. Abhinay Bollineni, Executive Director and CEO, and Mr. Vikas Maheshwari, CFO. Over to you, sir, for your opening comments. Bhaskara Rao Bollineni: Good morning, and a warm welcome to our dear investors. We met last on 11th August 22, and I am now here today to appraise you of the latest development and financial results of quarter 2 of the finance year '23. You are aware of our earlier acquisitions of Sunshine Hospitals and Manavata Hospitals at Nasik by taking the major stake. Again, I have a great pleasure in informing you about yet another acquisition made by KIMS in the state of Maharashtra. From 1st September 2022, SPANV Medisearch Lifesciences Private Limited, known as Kingsway Hospital at Nagpur has become a subsidiary of KIMS Hos
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