LALPATHLABNSEQ3 FY22February 25, 2022

Dr. Lal Path Labs Ltd.

8,904words
105turns
7analyst exchanges
6executives
Management on call
Lal Pathlabs Limited
-......
Arvind Lal
Executive Chairman
Om Prakash Manchanda
Managing Director
Bharath U
Chief Executive Officer
Ved Prakash Goel
Group Chief Financial Officer
Rajat Kalra
Company Secretary and Head of Investor Relations
Key numbers — 40 extracted
rs,
ccurate diagnostics with better patient experience. Given the onset of COVID over the past two years, there is a marked change that we have seen in people’s behavior with respect to health awareness an
6.6 million
Diagnostics, which became part of organization with affect 12th November, 2021. In Q3, we served 6.6 million patients, leading to a revenue of INR 497 crore representing a growth of 9.8%. COVID and allied te
INR 497 crore
with affect 12th November, 2021. In Q3, we served 6.6 million patients, leading to a revenue of INR 497 crore representing a growth of 9.8%. COVID and allied tests contributed to INR 59 crore, that is 12% of
9.8%
Q3, we served 6.6 million patients, leading to a revenue of INR 497 crore representing a growth of 9.8%. COVID and allied tests contributed to INR 59 crore, that is 12% of the overall revenue. The contr
INR 59 crore
to a revenue of INR 497 crore representing a growth of 9.8%. COVID and allied tests contributed to INR 59 crore, that is 12% of the overall revenue. The contribution of home collection to total sales in the qua
12%
crore representing a growth of 9.8%. COVID and allied tests contributed to INR 59 crore, that is 12% of the overall revenue. The contribution of home collection to total sales in the quarter is at 10
10%
2% of the overall revenue. The contribution of home collection to total sales in the quarter is at 10%, with significant contribution from our franchisee partners. Our non-COVID revenue of INR 438 cror
INR 438 crore
er is at 10%, with significant contribution from our franchisee partners. Our non-COVID revenue of INR 438 crore registered a growth of 28% over Q3 FY21. The strong growth in revenues led by patient volumes, wh
28%
ution from our franchisee partners. Our non-COVID revenue of INR 438 crore registered a growth of 28% over Q3 FY21. The strong growth in revenues led by patient volumes, which registered a growth of 2
25%
% over Q3 FY21. The strong growth in revenues led by patient volumes, which registered a growth of 25%. The higher growth is also favorably impacted by a lower base in last year due to COVID-19 pande
INR 452 crore
of the financial highlights for the quarter. Revenue for Q3 FY22 is INR 497 crore as compared to INR 452 crore in last year same quarter, a growth of 9.8%. However, non-COVID revenue increased by 28% in Q3 FY
24%
COVID and allied test in Q3 FY22 is INR 59 crore which contributes to 12% of total revenue against 24% in Q3 FY21, a decline of 47%. Realization per patient for Q3 FY22 is INR 747 as against INR 824 f
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Guidance — 18 items
Nishid Solanki
opening
“As a reminder, all participant lines will be in the listen only mode and there will be an opportunity for you to ask questions after the presentation concludes.”
Dr. Arvind Lal
opening
“Through this, we aim to ensure a seamless and convenient experience for our patients, allowing them to book tests and receive the reports at touch of their fingers on their smartphones or iPads or laptops, etc.”
Dr. O. P. Manchanda
opening
“Therefore, it will be important to do any analysis on annualized basis.”
Dr. O. P. Manchanda
opening
“We will be spending our energies on augmenting our brand infrastructure.”
Dr. O. P. Manchanda
qa
“So going forward, how should we assume this cost?”
Dr. O. P. Manchanda
qa
“There will be operating leverage here, there is opportunity for you to rationalize it?”
Shaleen Kumar
qa
“And Ved, on depreciation front, is there any onetime deprecation over here or again, this will be the way moving forward?”
Dr. O. P Manchanda
qa
“So, this will come because this is intangibles and goodwill which we have acquired in this acquisition largely for Suburban and this will be over a period of next five to seven years to be written off as per IndAS 103.”
Dr. O. P. Manchanda
qa
“There are lot of these moving parts which are there, even for us it's becoming very difficult to predict the demand for this COVID going forward.”
Shaleen Kumar
qa
“Should we expect that in the fourth quarter?”
Risks & concerns — 15 flagged
The revenue from this test partly offset the decline that we had due to non-COVID business that was caused due to various disruptions.
— Dr. O. P. Manchanda
At the same time, one also saw the rising trend of RT-PCR volumes and decline in price for tests as notified by State Governments time to time.
— Dr. O. P. Manchanda
This trend got further accentuated due to gradual decline in realization for tests as well.
— Dr. O. P. Manchanda
We have recently opened labs in Bhagalpur in Bihar, and a very difficult terrain of Leh.
— Ved Goel
Revenue from COVID and allied test in Q3 FY22 is INR 59 crore which contributes to 12% of total revenue against 24% in Q3 FY21, a decline of 47%.
— Ved Goel
Normalized EBITDA after eliminating the impact of RSU, CSR and onetime acquisition expenses in Q3 FY22 is INR 142 crore as compared to INR 145 crore reported in Q3 FY21.
— Ved Goel
Normalized PBT after eliminating the impact of onetime acquisition expenses and notional depreciation as per IndAS 103, on consolidation of Suburban for Q3 FY22 is INR 113 crore as against INR 129 crore in Q3 FY21.
— Ved Goel
However, normalized PAT after eliminating the impact of onetime expenses on account of acquisition of Suburban and notional depreciation is INR 84 crore as against INR 96 crore in Q3 FY21.
— Ved Goel
When I was looking at your P&L, the margin compression is largely on account of employee cost and interestingly not on account of gross Classification: Restricted margin.
— Shaleen Kumar
However, in the short term, there will always be a challenge of recalibrating manpower costs, because some of these costs also got added because of COVID in the last six to seven quarters and Suburban COVID contribution is very high compared to what we have in DLPL.
— Dr. O. P. Manchanda
There are lot of these moving parts which are there, even for us it's becoming very difficult to predict the demand for this COVID going forward.
— Dr. O. P. Manchanda
So, it becomes very difficult to segregate whether that patient is a COVID patient or a non-COVID patient.
— Dr. O. P. Manchanda
Om and you said that it's difficult to look at non-COVID.
— Dr. O. P. Manchanda
The only challenge is whether COVID business is sustainable, we all know it is not.
— Dr. O. P. Manchanda
the competitive intensity will put pressure on pricing, which in any case, I've been saying for last three, four years.
— Dr. O. P. Manchanda
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Q&A — 7 exchanges
Q
A, bunch of questions. When I was looking at your P&L, the margin compression is largely on account of employee cost and interestingly not on account of gross Classification: Restricted margin. So how should we read this? Is it because of Suburban? Is there a change in strategy over here?
Ved Goel
. You're right, this is largely on account of Suburban. So that was not in the base. This year Suburban personnel cost is also added in this. So going forward, how should we assume this cost? There will be operating leverage here, there is opportunity for you to rationalize it? How should we see this from the modeling purpose, is there a chance you can decrease it? Yes, so definitely, because of COVID there are certain areas where we have infused certain manpower. As COVID is subsiding now, there is an opportunity where we have to look at the costs, and the areas where we can optimize this cos
Q
Yes, good evening and thank you for taking my question. Just the first one is on help us disaggregate these 6.6 million patients into COVID, non-COVID, please?
Ved Goel
So Shyam, we have done 5.6 lakh patients’ RT-PCR tests and rest are non- COVID patients. However, there are overlaps, where there are mix and match, along with the non-COVID patients, there are COVID tests also. But as a standalone pure RT-PCR is 5.6 lakhs. Got it. What is happening is that the waves, unlike the first wave and second wave, COVID tests are actually mixed up with non-COVID tests. So, it becomes very difficult to segregate whether that patient is a COVID patient or a non-COVID patient. So that’s why it’s becoming a little bit complex. But otherwise, what Ved just mentioned, those
Q
I have a couple of questions. I wanted to understand in INR 438 crore of non- COVID revenues, how much is through Suburban? Because I wanted to understand our own non-COVID growth. We have reported 28% of non-COVID growth year-on-year. I wanted to understand how much is due to our own DLPL?
Dr. O. P. Manchanda
So, non-COVID from Suburban is 24.7 cr. Understood. So, we are still growing at a very healthy rate. Q-o-Q, our non- COVID has been a bit lower. Was it due to the disruption at the Dadar lab that we saw? Mumbai lab was shut for some like 8 to 10 days? Was it due to that or is there something else? You're talking about that 28% versus 21% of standalone LPL, that's what you are saying? No. I was asking about Q-o-Q? Like we have shown one chart on slide number 8, where our Q2 non-COVID is INR 448 crore and Q3 is INR 438 crore, so wanted to understand that Q-o-Q non-COVID degrowth of 3%? That’s be
Q
Yes. Hi, good evening. So, I just wanted to harp on the Suburban thing again. I just wanted to understand what is your broad next two, three year strategy on Suburban? And, if you could also give an idea whether the margins will see a turnaround or will it eventually catch up to the company level margins that you’ve maintained 25%, 26% going forward? So first is as we mentioned, right now, as we talk Suburban as an asset is sitting on a very high turnover of COVID. And we don’t know how it’s going to pan out going forward. In all probability, it’s going to sharply decline. So that’s one fact w
Dr. O. P. Manchanda
Scale. We are entering into a market where we don't have that size sort of shift. We'll focus on scale. Understood. So, the numbers that I've mentioned, is that possible? Is that the kind of growth possible? See, now if you look at 12th November data, is says INR 49 crore we've added right; you can see that for the quarter, it’s roughly about INR 100 crore. Now INR 100 into 4 is INR 400. Now only problem is half of it is COVID. So, we'll have to probably do adjustment, but it's possible right, why not we'll aim for that as we go along. No. I was majorly talking from the non-COVID portion only.
Q
One question on Suburban’s assets. After you've taken over, has it been a good amount of price increase taken on several of the tests for the company?
Dr. O. P. Manchanda
In Suburban? Yes. No, not to our knowledge. See, it’s not after we've acquired. Okay. And the second question is on your preventive test program, the Swasthfit program. After all, these aggregators have really ramped up on these preventive tests, have you seen some impact on the volumes for this segment for yourself? No, no, not at all. There'll be a question, but I don't think you've seen it. No, no, no. Our Swasthfit program continues to grow at a handsome rate. Okay, thank you. Thank you. The next question is from the line of Prashant Nair from Ambit capital. Please go ahead. Hi, good eveni
Q
So, I just want to check whether do you see higher contribution from the bundled packages like Swasthfit, with increasing awareness, just like the way you see stickiness of digital adoption, even after COVID wave is decreasing. So, do you see the same kind of higher contribution of Swasthfit going ahead?
Dr. O. P. Manchanda
Our contribution from Swasthfit is actually more or less steady. So, because overall table for the business goes up or down, the current contributions from Swasthfit is varying between 15% to 16%, all through at least last six, seven quarters. So, I'm not seeing any sharp either jump or decline in Swasthfit. It's a very steady trend that we're observing. I think if I got it right, your question is, as the COVID wave is receding, will we see an impact on this number? Classification: Restricted Yes, sir. Yes. My answer is probably no, because even pre-COVID, also we had the similar sort of a con
Q
Thank you. This is a transcription and may contain transcription errors. The Company or sender takes no responsibility for such errors, although an effort has been made to ensure high level of accuracy. Classification: Restricted
Management
Speaking time
Dr. O. P. Manchanda
43
Ved Goel
8
Nikhil Chaudhary
8
Moderator
7
Shaleen Kumar
7
B. Uppiliappan
6
Pooja Bhatia
5
Shyam Srinivasan
4
Vinayak Mohta
4
Anubhav Agarwal
4
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Opening remarks
Nishid Solanki
Ladies and gentlemen good day and welcome to the Dr. Lal PathLabs’ Q3 FY22 Earnings Conference Call. As a reminder, all participant lines will be in the listen only mode and there will be an opportunity for you to ask questions after the presentation concludes. Should you need assistance during the conference call, please signal an operator by pressing ‘*’ then ‘0’ on your touch-tone phone. Please note that this conference is being recorded. I now hand the conference over to Mr. Nishid Solanki of CDR India. Thank you, and over to you Sir. Thank you. Good afternoon, everyone and welcome to Dr. Lal PathLabs’ Q3 FY22 earnings conference call. Today we are joined by senior members of the management team, including (Hony) Brig. Dr. Arvind Lal – Executive Chairman, Dr. Om Prakash Manchanda – Managing Director, Mr. Bharath U – CEO, Mr. Ved Prakash Goel – Group CFO, along with Mr. Rajat Kalra – Company Secretary and Head of Investor Relations. I would leave you with our standard disclaimer her
Dr. Arvind Lal
Thank you very much. Good evening, everyone and welcome to Dr. Lal PathLabs’ Q3 & 9M FY22 earnings conference call. I will walk you through the key initiatives and share an update on the industry landscape. I'm glad to share that we have completed the acquisition of Suburban Diagnostics, Mumbai. With this, we have become one of the leading players in the fast-growing western region, and endeavor to take our share even further. The objective is to leverage the expertise and capabilities of both the companies to deliver accurate diagnostics with better patient experience. Given the onset of COVID over the past two years, there is a marked change that we have seen in people’s behavior with respect to health awareness and hygiene. People are taking more precautions, being vigilant and adopting healthier lifestyles. Diagnostics has played an important role in helping people keep a track of their health, while we have been actively engaged in providing our patients with high quality diagnost
Dr. O. P. Manchanda
Thank you Dr. Lal. As always thank you everyone for taking the time out for this call. I hope all of you are keeping safe and well. In my comments, I shall talk about strategic focus areas. However, before that, I want to reflect briefly on the last two years of progress. As you all know that we started Q1 FY21 with a lockdown that adversely impacted non-COVID business in that quarter. In the same quarter, we had introduction of a new test in the portfolio, that is RT-PCR. The revenue from this test partly offset the decline that we had due to non-COVID business that was caused due to various disruptions. Next, we experienced gradual recovery of non-COVID business throughout the FY21. At the same time, one also saw the rising trend of RT-PCR volumes and decline in price for tests as notified by State Governments time to time. Then came in a huge spike in Q1 FY22 due to severe COVID wave resulting in the highest ever revenue contribution by RT-PCR and also by a new group of COVID allied
B. Uppiliappan
Thank you all. Welcome to the call today. I honestly hope all of you and near ones are keeping healthy. I will take you through the business highlights including Suburban Diagnostics, which became part of organization with affect 12th November, 2021. In Q3, we served 6.6 million patients, leading to a revenue of INR 497 crore representing a growth of 9.8%. COVID and allied tests contributed to INR 59 crore, that is 12% of the overall revenue. The contribution of home collection to total sales in the quarter is at 10%, with significant contribution from our franchisee partners. Our non-COVID revenue of INR 438 crore registered a growth of 28% over Q3 FY21. The strong growth in revenues led by patient volumes, which registered a growth of 25%. The higher growth is also favorably impacted by a lower base in last year due to COVID-19 pandemic. I’m glad to share with you that our non-COVID business saw further acceleration and growth momentum as compared to Q2 FY22. This is in line with our
Ved Goel
We have recently opened labs in Bhagalpur in Bihar, and a very difficult terrain of Leh. During the quarter, we have successfully integrated artificial intelligence in prostate cancer reporting, leveraging FDFO technologies. This combines the strength of humans and machines to bring unparalleled patient care. Our ‘Swasthfit’ bundle program continues to do well and we are also making good progress in our high-end testing programs, notably Onco-pathology led by a combination of interventions across multiple departments and technologies, including the use of AI technologies. We remain committed to realizing the potential of healthcare through timely, accurate and quality solutions to patient needs. With that, I would like to invite Ved to take you all through the financial performance. Over to you, Ved. Thank you Bharath. Good evening, everyone and thanks for being on this call today. Firstly, I would like to mention that we have completed the acquisition of Suburban. Accordingly, results
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