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June 2011
DisclaimerThis presentation may not be copied, published, distributed or transmitted. The presentation has been prepared solely by the company. Any reference in this presentation to Fortis Healthcare (India) Limited shall mean, collectively, the Company and its subsidiaries. This presentation has been prepared for informational purposes only. This presentation does not constitute a prospectus, offering circular or offering memorandum and is not an offer or invitation to buy or sell any securities, nor shall part, or all, of this presentation form the basis of, or be relied on in connection with, any contract or investment decision in relation to any securities. Furthermore, this presentation is not and should not be construed as an offer or a solicitation of an offer to buy securities of the company for sale in the United States, India or any other jurisdiction. Securities may not be offered or sold in the United States absent registration or an exemption from registration. Any public offering in the United States may be made only by means of an offering document that may be obtained from the Company and that will contain detailed information about the Company and its management, as well as financial statements. Any offer or sale of securities in a given jurisdiction is subject to the applicable laws of that jurisdiction. This presentation contains forward-looking statements based on the currently held beliefs and assumptions of the management of the Company, which are expressed in good faith and, in their opinion, reasonable. Forward-looking statements involve known and unknown risks, uncertainties and other factors, which may cause the actual results, financial condition, performance, or achievements of the Company or industry results, to differ materially from the results, financial condition, performance or achievements expressed or implied by such forwardlooking statements. Given these risks, uncertainties and other factors, recipients of this presentation are cautioned not to place undue reliance on these forward-looking statements. The Company assumes no responsibility to publicly amend, modify or revise any forward-looking statements, on the basis of any subsequent development, information or events, or otherwise. Unless otherwise stated in this presentation, the information contained herein is based on management information and estimates. The information contained herein is subject to change without notice and past performance is not indicative of future results. The Company may alter, modify or otherwise change in any manner the content of this presentation, without obligation to notify any person of such revision or changes. By attending this presentation you acknowledge that you will be solely responsible for your own assessment of the market and the market position of the Company and that you will conduct your own analysis and be solely responsible for forming your own view of the potential future performance of the business of the Company. Neither the delivery of this presentation nor any further discussions of the Company with any of the recipients shall, under any circumstances, create any implication that there has been no change in the affairs of the Company since that date.
2
AgendaA. Healthcare Industry in India B. Company Overview C. Recent Developments D. Financials
Healthcare Sector: Favorable industry dynamicsHealthcare Services remains attractive to both public and private market investorsStrong Cash Generation Characteristics Increasing Public Outsourcing Scalable Business Models Favorable Underlying Demographics
Increasing Private Payers
Healthcare Sector
Healthcare without Binary Risk
Scarcity of Quality Assets
Defensive Growth Characteristics Considerable Consolidation Opportunities
Rise of Independent Providers
4
Hospitals: Proxy for Indias Healthcare Boom The Healthcare delivery market in India pegged at around US$ 45 billion in 2010 While globally healthcare is typically provided through a largely government-funded public system, the Indian healthcare industry is dominated by the private sector India has ~17% of the world's population, but one of the poorest healthcare infrastructures among growing economies and the lowest spend on healthcare (~4.5% of GDP) Demographic changes, improving income levels, changing lifestyles, and rising insurance penetration etc will result in a rise in discretionary spending on healthcare Accessible, reliable and affordable healthcare continues to be a challenge Opportunity in healthcare being significantly leveraged by private healthcare providers Expected to generate employment opportunities for 9 million people by 2012Source: Analyst Research
Indian Healthcare Market (US$bn)CAGR: 12%
5
Indian Healthcare Delivery
20%
80% Others 7% Population Pvt. Sector 30% Govt. Sector 70% Govt. 22% Insurance 1%
Out of Pocket 70%
Hospitals in the Country 6
Healthcare Expenditure
Evolution of Healthcare in IndiaVery Low Healthcare Spend as % of GDP High Disease Burden & Insufficient Facilities20%
8% 6%
8%
9%
1% Disease burden Beds Doctors Nurses Community & Lab health workers technicians
Significantly Low Hospital Beds Per 10,000 Population139
Changing Age Profile of Indian Population
72 39 34 32 31 30
24
22 9
Japan
France
UK
CanadaSingapore
US
China
Brazil Thailand
India
Source: WHO, FICCI, Ernst & Young, Analyst Research
7
Current Status Of Global HealthcareThere is a wide discrepancy in the world with regards to the amount of health expenditures both relative to GDP and in absolute terms Health Expenditure (% of GDP) Developed Countries Developing Countries
Health Expenditure Per Capita (US$) Developed Countries Developing Countries
Source: The World Pharmaceutical Markets Fact Book 2009 from Espicom Business Intelligence; CIA World Factbook
Lifestyle Changes Driving Diseases Which Require HospitalisationChanging Disease ProfileNumber of people (in million)
Expected No. of Cardiac Patients in India72.1
Lifestyle Diseases
45.0
Acute Diseases
2008
2018E
Estimated No. of Diabetes PatientsNumber of people (in million)
Cancer and Cardiac Grows widely in the lifestyle segment
49.4 39.0
Lifestyle diseases are set to assume a greater share of the healthcare market Lifestyle diseases such as cardiac diseases require hospitalization and are more expensive to treat hence increasing the in-patient revenuesSource: CII-McKinsey, CRISIL Research
2008
2018E
9
India: Potential to Become the Global Healthcare DestinationOverview Medical value travel is one of the most lucrative segments of the healthcare sector and is expected to grow into a US$ 1.5 billion industry by 2012Heart Surgery100,000 1,60,000 250,000 300,000 48,000 38,000 41,726 30,000 292,470 200,000 50,109 18,000 14,250 10,500 62,500 75,000 8,000 10,000 15,312 13,000 150,000 140,000 25,000 12,000 6,000 6,000 30,000 45,000 6,000 6,000
Cost of Important Procedures (US $)US UK Thailand Singapore India
Potential to contribute US$ 1.2 2.4 billion additional revenue for up-market tertiary care hospitals by 2012, and will account for 3 5% of total healthcare market
Heart Valve Replacement Bone Marrow Transplant Liver Transplant Knee Replacement Hip Replacement
Key Drivers For The Growth Quality healthcare at fraction of the cost Availability of skilled doctors & hospitals Good reputation of Indian doctors Upsurge of lifestyle diseases
Issues Inadequate healthcare infrastructure Unstructured medico legal jurisdiction Indians hospitals standards below par against the global benchmarks of care Lack of accredited hospitals and follow up care
10
Health InsuranceGrowing Share Of Urban Middle Class Households100% 80% 60% 40% 20% 0% 2001-02 US$ 12,800 52.5% 42.3% 34.5% 3.3% 5.2% 7.0%
Health Insurance Market Size (US$ mn)7,000 6,000 6,207
44.2%
CAGR: 32%
52.5%
58.6%
5,000 4,000 3,000 2,000 1,000 0 2006 2007 2008 2009 2015E 494 713 1,127 1,472
Health insurance market in India is expected to grow at a CAGR of 32% to reach a market size of US$ 6.21bn by FY15
One of the fastest growing free economy Ranked 4th largest economy in the world in terms of purchasing power parity Higher service mix, increasing urbanization
Overall penetration at 2%. Growth driven by: a) increasing awareness, b) soaring healthcare costs and c) demographic profile of the people
Source: CRISIL Research
11
AgendaA. Healthcare Industry in India B. Company Overview C. Recent Developments D. Financials
The Fortis Edifice..VisionTo create a world-class integrated healthcare delivery system in India, entailing the finest medical skills combined with compassionate patient care
Globally respected healthcare organization known for Clinical excellence and Distinctive Patient care
Achieved by
Talented people
Strong value system
Efficient systems
Responsibility towards stakeholders
Foundation of 13
Trust
Fortis Healthcare: The first decade of growth
Incorporated in 1996, Fortis is second largest healthcare chain in India built on a focused organic and inorganic strategy 56* healthcare delivery facilities
31 operating hospitals, 17 satellite and heart command centers and 8 hospitals under development
Listed on Indian stock exchanges with a market capitalization of c.USD1.5bn (May 2011) International and Nationally accredited facilities by JCI, NABH, NABL along with quality certifications by ISO Standards 9001 / 14001 Acquired 10 hospitals from Wockhardt Hospitals in 2009 and gained pan India presence and had recently acquired a ~25.3% stake in Parkway Holdings (Southeast Asias leading healthcare service provider with a network of 20** hospitals with more than 3,400 beds throughout Asia) and has chosen to exit considering higher valuationsAcquired Escorts chain of hospitals Acquired Malar Hospitals, Chennai Took a significant step in establishing Fortis as a Global Healthcare Brand by its attempt to acquire Parkway Holdings Ltd Asias finest healthcare provider, but exited considering high valuations of the asset Acquired Strategic stake in Super Religare Laboratories (SRL)
Started first hospital at Mohali
Enters Delhi Commences operations at Noida
Listed on BSE and NSE with a market cap of USD543mn Starts hospital at Jaipur
Rights Issue Acquired 10 hospitals from Wockhardt
Have signed 5 O&M contracts till date and progressing towards ongoing projects in tier II cities
Revenues grow 4x with strong presence in NCR
Company achieves profitability on consolidated basis
Commenced two Greenfield facilities at Shalimar Bagh, Delhi and Anandpur, Kolkata; Launched an Oncology block at Mulund, Mumbai* Includes projects under development
14
Key Differentiators Success DriversStrong IT system Brand Differentiated Model Doctor engagement, Deep penetration Strategy, Pan India presence
Execution capabilities M&A deals, Integration and turnaround
Key Differentiators
People focus
Stress on Quality, Patient Centricity
Operational Synergies FOS, TRM, PSM
15
Organisational ChartManaging Director
Chief Financial Officer
President Strategy, Organisational Development & Projects
Chief Executive Officer
Vice President Corporate Affairs
Head Growth & Business Planning
Chief People Officer
HeadInformation Technology
Chief Financial Controller
Chief Sales
DirectorMarketing & Corporate Communications
Director-Medical Operations Group
Regional / Zonal Directors*
Head Internal Audit
* The business is bifurcated into three regions headed by Regional Directors (RDs) for respective regions.
16
Driving EfficienciesBranding & Marketing Conveying Value Proposition
Operating Efficiency ARPOB, ALOS, Occupancy Gross Margins, EBIDTA Bed to Nurse ratio Supply Chain Management Best practice benchmarking DSO/ Inventory Days Surgical : Non Surgical Shared Service Centres FOS, MOS, Patient Satisfaction Index Capital Efficiency Optimize Capex Cheap Finance Model of Growth Outsourcing Off Balance Sheet Turn key/ PPP/ Leased Premises Technology Management : COE
Maximizing Return on Invested Capital
Processes IT system, Protocols, SOPs, Governance, Trust and Transparency , Integration Capability, Project Execution
People Motivated, Trained and Engaged Staff: Service Excellence, Academics & Research, HR Processes
17
Deep Pan India PresenceTotal Capacity Operational Beds No. of Hospitals
Category wisePresence across - 15 States - 30 CitiesOwned Managed Projects Grand Total 4,716 1,576 1,945 8,237 2,941 800 3,741 22 26 8 56
Region wiseNorth South West East International 4,538 1,469 1,270 840 120 8,237 1,977 663 685 306 110 3,741 29 10 6 8 3 56
Focus AreasOwned Facility Managed Facility Heart Command Centers (HCCs) Projects
Grand Total
Maturity wiseMore than 5 years 3 to 5 years 1 to 3 years Less than 1 year Projects Grand Total 766 2,806 851 1,919 1,945 8,237 542 1,908 616 675 3,741 45 27 8 9 8 56
Not included in above map are international hospitals, and projects * Expansion of beds at Mulund hospital is a project, but does not add a new hospital to the total number of hospitals. Although, the beds considered as part of capacity in Project stage
18
Growth strategy
Focused and Aggressive Growth Strategy
Improving Operational Performance
Leveraging People and Technology
Reinforce presence in already present regions Flexible approach to expansion through Green Field, Brown Field, O&M agreements, Asset Light model and Public Private Partnerships (PPP) Replicate its North India model to establish a network of super-specialty Centers of Excellence and multispecialty hospitals delivering quality healthcare, to all regions Execution capabilities Greenfield projects, M&A deals, Integration and turnaround
Maximize efficiency through strategies such as common procurement unit for medical equipments and supplies Improve occupancy rates by expanding its reach and increasing community outreach programs to gain market share Increase its average income per bed in use by focusing on high-end healthcare services, reducing the average length of stay of in-patients Supply Chain Management, Shared Service Centers FOS, MOS,
Attract and retain clinical staff with reputations for clinical excellence in their communities Training and skill enhancement programs Adopting latest medical equipment and technology Focusing on evolving a robust IT platform for seamless integration of information Motivated, Trained and Engaged Staff: Service Excellence, Academics & Research, HR Processes
19
Typical Tertiary Care Model (200 Beds - Owned facility)500
Indicative Hospital Operating Model[1.3x 1.5x of CAPEX]Book Breakeven
4x
400Cash Breakeven
28%
Land Other Equip Medical Equip
13% 12% 25%
Revenues
300EBITDA Breakeven
23% 16%
17%
200x31% 33% 36%
20% 28% 28%
23% 30%
Building & Utilities
10050%
38% 38%
27% 31% 29%
0CAPEX
40%(16%)
Cost of set up is ` 60 90 lacs/ bed
30%
Occupancy
85%
Debt: Equity 1:1
(100) Year 1 Variable Year 2 Personnel Year 3 Year 4 SG&A Cost EBIDTA Year 5
ROCE = 26% ROE = 20%
20
Asset Light Model (200 Beds)500
Indicative Hospital Operating Model[1.3x 1.5x of CAPEX]
4xBook Breakeven
400Cash Breakeven
5% 28% 6%
Land Other Equip Medical Equip
13% 12% 25%
Revenues
300EBITDAR Breakeven
23% 8% 16% 11% 31% 33% 36% 30% 23% 28% 20%
17%
20018% 38% 38% 40%
28%
x
Besides elongated book breakeven period, Fortis to witness higher returns on its investment ROCE = 51% ROE = 39%
100Building & Utilities 50%
27% 31% 29%
0CAPEX
(16%)
Cost of set up is ` 60-90 lacs/ bed
Fortis to invest only on Medical and Other equipment (~37% of project cost).
30%(100) Year 1 Variable Year 2 Personnel
OccupancyYear 3 SG&A Cost Year 4 EBIDTAR*
85%Year 5 Rent
Debt: Equity 1:1
*EBITDAR is Earnings before Interest, Tax, Depreciation, Amortisation and Rent/lease
21
Focus on ARPOBSurgical vs. Non Surgical
Medical Program
Critical Care Beds vs. General Care Beds
Total Revenue
Pricing
Specialties Chosen
Average Revenue Per Occupied Bed (ARPOB)
=
Occupied Beds
Average Length of Stay (ALOS)
Patient Turnover
Volumes
Bed Utilization
No. of Procedures
A Hospital must grow its ARPOB, as when the occupancies go up it ensures that incremental beds are filled with high value added business
22
Fortis has Achieved Growth Both through Successful Acquisitions and Value Added ServicesRamp up at an acquired facility Fortis Malar, Chennai90.0 80.0 70.0 60.0 50.0 40.0 30.0 20.0 10.0 0.0
Extracting value from M&A: Escorts Delhi` Cr.90.0 80.0 70.0 60.0 50.0 40.0 30.0 20.0 10.0 Grown twice on quarterly basis since 2008
Acquired Fortis Malar in February 2008
83.3
67% CAGR64.1
78.0 69.9 54.5 41.4
` Cr.
33.2 14.0 4.1 FY07 17.9 4.2 FY08 9.4 1.1 FY09 EBITDA FY10 FY11 14.2
4.3 Q3FY08
10.9
13.6
13.4
Q3FY09
Q3FY10EBITDA
Q3FY11
Operating Revenue
Operating Revenue
Extracting value from M&A: Escorts Amritsar70.0 60.0 50.0` Cr. 33% CAGR
Performance of a Greenfield facility: Jaipur` Cr.25.06x growth on quarterly numbers 4x on annual basis since inception
61.6 50.1
20.7 16.7
41.2 25.9 14.6 9.7 2.9 FY08 FY09 Operating Revenue FY10 EBITDA FY11 15.4
20.0 15.0 10.0 5.0 (5.0) 3.6 (1.7)Q2FY08
40.0 30.0 20.0 10.0 0.0
9.0 5.9 3.4 (2.2)Q3FY08
4.5
(0.5)Q3FY09 Q3FY10EBITDA
Q3FY11
Operating Revenue
23
Fortis Approach to Industry ChallengesKey Challenges Focus on CME, research and accolades Aligned compensation structure, ESOPs Foothold in more than one hospital Nursing school and DNB programs Competence to strike deals, invest in green field hospitals, acquire hospitals, and O&Ms High start up costs and capex requirements Partnership with government for PPP projects Centralising of common services to achieve economies of scale Concept and designed to reduce capex per bed Innovative models to finance medical equipments Lack of standardization / quality Technological obsolescence Accreditation of hospitals, laboratories, and blood banks by national and international authorities Focus on best practices and continuous review by a strong team Innovative tie ups Center of Excellence Approach helps recycle technology around the network Centralized Specialist group owning technologies across network Medical Advisory Board; Accreditation committee at each hospital Executive counsel taking call on key hospital discussions Code of Ethics; Whistle blower policy Fortis Approach Shortage of skilled medical professionals
Maintaining medical ethics
24
AgendaA. Healthcare Industry in India B. Company Overview C. Recent Developments D. Financials
SRL Acquisition & RationaleAcquisition of strategic stake in SRL Indias leading diagnostic companyAcquired 42.7 million equity shares representing 82.2% of the paid up capital as on April 14, 2011 Post PE investment (AVIGO and Sabre), it would represent 71.5% of expanded capital
Total purchase price of ~Rs 803.7 Crore on cash basis; valuation based on arm length price paid by AVIGO for minority stake of 8.9% and lower than 4.2% by Sabre capital Fortis-SRL deal valued at 2.2x Sales and 12x EBITDA (FY12E); compares favourably to SRL - PDSPL deal and Dr Lal Pathlab TA Associate deal To become an integrated healthcare player with presence in all major verticals To participate in high growth segment of healthcare industry with huge potential SRL offers a strong fit due to: Geographical Complementarities Pan India presence Strong talent pool Well established brand and strong logistics network Synergistic with the hospital business 26
Two-way Synergy Many New UpsidesPatient footfalls in Unified Fortis Network Increased opportunity from repeat customers of Fortis and SRL 25 % of the Path and Radiology testing is followed by hospital accessions OPD/IPD conversions Favorable demographic and macroeconomic trend Fortis to leverage on SRLs presence and leadership in 400 cities for its tier II and tier III expansion plan Highly skilled talent pool to help take the hospital diagnostic excellence to the next level To result in enhanced Patient safety and better Clinical outcome Fortis and SRL to cross leverage on SRLs comprehensive offering of ~3,300 tests and its strong all-modaility experience and expertise in radiology for better managing in-hospital diagnostics. Combined entities will access the large unified customer/patient/doctor database and significantly increase their ability serve the nationwide patient population.
Geographical Complementarities
Quality Improvement
In-house Radiology & Pathology
Large Database for CRM, Research and Reach
27
Established and Wide Geographical PresenceGeographical Presence Present in ~400 cities in India Has won FICCIs award for OperationalNorth India Reference Labs Pathology Labs Radiology Labs Wellness Centers Collection Centers 1 27 1 4 339 East India Reference Labs Pathology Labs Radiology Labs Wellness Centers Collection Centers 1 18 1 218
Excellence (2010), Frost & Sullivan Award for Excellence in Diagnostics (2008 , 2009) and
rated the most innovative diagnostic company by Business TodayIndia Reference Labs Pathology Labs Radiology Labs Wellness Centers Collection Centers 6 164 17 15 (3) 865 Internation al 2 (1) 23 Total 8 164 (2) 17 15 888 (2)West India Reference Labs Pathology Labs Radiology Labs Wellness Centers Collection Centers 3 50 13 5 194
South India Reference Labs Pathology Labs Radiology Labs Wellness Centers Collection Centers 1 69 3 5 114
Source: Company 1 Includes 1 reference lab in Nepal and a service agreement for a reference lab in Dubai Healthcare City. 2 Includes 25 pathology labs run through franchisees and 875 collection centers run through franchisee. 3 12 Wellness Centers are in existing labs.
28
Financials: 2010-11 (Scenario)*Fortis +SRL RevenueRs 1483 Cr Rs 507 Cr
Revenue***Rs 1960 Cr
EBITDARs 209 Cr Rs 88 Cr
Increases revenue by 32% while impacting profitability marginally
EBITDARs 297 Cr
PATRs 124 Cr Rs 4 Cr**
PATRs 128 Cr
*Financials have been annualized based on Q4FY11 for SRL and include FY11 for Fortis **PAT for SRL is after Interest costs of ~ Rs 45 Cr , which will substantially go down post IPO ***Net of inter-company revenue
29
29
Recent Deals1. O&M agreement with O.P. Jindal Hospital, Raigarh, Chhattisgarh 100 bed multi-speciality secondary care hospital Located within the campus of Jindal Steel & Power Limited 2. Reverse O&M agreement with Vivekanand Hospital Moradabad, Uttar Pradesh 150 bed multi-speciality secondary care hospital ; Premises also house a Nursing College and a Nursing School Located in Moradabad, North Eastern UP, the hospital was set up under a Trust in 1985. Constructed over a 6.3 acre land with a built up area of 198,000 sq ft 3. O&M agreement with East Coast Hospital in Pondicherry 100 bedded facility with a plan to expand it to a 250 bed facility To be operational by Q1FY12 4. Reverse O&M agreement with Lifeline Hospital, Alwar, Rajasthan 100 bedded facility with a plan to expand it to a 150 bed facility Constructed over a 3 acre plot with a built up area of 100,000 sq ft 5. Public Private Partnership with State of Uttarakhand To set up a 50 bed Cardiac Centre at Deen Dayal Upadhyaya (Coronation) Hospital at Dehradun To be operational by Q2FY12
30
Upcoming Greenfield HospitalsNo. Location Beds Area & Land Ownership Date of Commencement Estimated Capex (INR Cr) 24 Status
1.
Kangra
100
37,000 sq. ft., B. Lease
Q2 FY12
Civil and interior work completed Medical equipment have been ordered Facility being handed over to operations Civil construction work of the hospital building is complete Some delays in handing over premises Equipment ordered Work on interiors is on Medical equipment ordered Rs 235 Cr has been spent till March11. Construction in full swing. Casting of columns in progress Project on schedule Building construction work is delayed by landlord Approval from govt. authorities received; design work underway CLU permission awaited from authorities Approval from govt. authorities awaited
2.
Dehradun
50
27,000 sq.ft, Public Private Partnership
Q3FY12
15
3.
Gurgaon
450**
11 Acres, Owned
Q4 FY12
325
4. 5. 6. 7. 8.
Ludhiana 1 Peenya, Bangalore Ludhiana 2 Gwalior Ahmedabad Total
200 120 75 200 200 1,395
1,55,000 sq. ft., B. Lease ~70,000 Sq ft; B. Lease 60,000 sq ft. B. Lease 2.5 Acres, L. Lease 1,55,000 sq. ft., B. Lease
Q2 FY13 FY13 FY 13 FY14 FY14
50 18 20 72 50 574
** Only for Phase 1, total size of the project is 1000 beds
31
AgendaA. Healthcare Industry in India B. Company Overview C. Recent Developments D. Financials
Operating Revenue and PATINR Cr.
450.0 415.6 400.0 371.4 357.8 350.0 329.5 27.2 21.7 232.5 21.6 190.5 13.0 150.0 7.6 100.0 Q1FY10 Q2FY10 Q3FY10 Q4FY10 Q1FY11 Q2FY11 Q3FY11 Q4FY11 20.8 337.9 34.5 29.4
39.0
34.0
Revenues 124%
29.0
300.0
24.0PAT 3.9x
250.0
19.0
200.0
185.4
14.0
9.0
4.0
Operating Revenues
PAT
33 3
Revenue breakupSpeciality wiseGastro, 2% Onco, 5% Neuro, 6% Ortho, 8% Other, 16% MSH, 8% OPD, 19% Renal, 4%
Category wisePSU's, 10% TPA, 14%Pulmo, 2% Gynae, 2%
Corprates and Others, 4%
CGHS, 3% ECHS, 7% Cash, 58% International , 5%
Others, 10% Cardiac, 35%
International revenueFocus on key specialties Cardiac, Neuro, Ortho, Renal & Onco to continueOthers, 11% USA, 7% SAARC, 15%
Cash business is ~63% of overall business
Middle East, 27%
Africa, 40%
International patients contributes 5% to Fortis network revenue
34 34
Growth Driven by Steadily Increasing Occupancy Rates Leading to Improving Operating ParametersOccupancy80% 70% 63% 60% 50% 40% 68% 74% 72%
FY08
FY09
FY10
FY11
Average Revenue Per Operating Bed (Rs. Million)8.10 7.65 8.30 8.10
Average Length of Stay (days)
4.30
4.20
4.10 3.70
FY08
FY09
FY10
FY11
FY08
FY09
FY10
FY11
35
Significant Increase in No. of Procedures with a Focus on Key Specialty Areas (Cardiac, Neuro, etc.)Cardiac55,000 45,000 35,000 25,000 15,000 8,214 5,000 -5,000 6,924 FY10 CTVS & Pediatrics PTCA CAG 9,777 FY11
Ortho51,8664,482
+31%
8,000 6,000
10.767 7,0837,013
+52%
39,6513,662
26,830 20,851 10,777
4,553 4,000 2,000 2,530 0 FY10 Knee Replacements FY11 THR & Others 3,754
Others
Neuro4,928
Dialysis+62%60,000 50,000 44,096 62,315
+41%
5,000 4,000 3,000 2,000 1,000 0 FY10 2,709
40,000 30,000 20,000 10,000 0 FY11 FY10 FY11
36
Summary : Consolidated Profit and Loss FY 2010-11FY11 Base operations Particulars (Rs Cr.) Operating Revenue Other Income * Total Income Direct Costs Employee Costs Other Costs EBITDA Finance Costs Depreciation & Amortization PAT after minority interest and share in associates 1,482.8 92.3 1,575.1 393.0 273.1 607.6 301.4 69.6 104.5 106.4 94.1% 5.9% 100.0% 24.9% 17.3% 38.5% 19.1% 4.4% 6.6% 6.8% % (Rs Cr.) 366.6 366.6 161.0 205.6 180.4 18.0 Parkway Total (Rs Cr.) 1,482.8 458.9 1,941.7 393.0 273.1 768.6 507.0 250.0 104.5 124.4
Operating EBITDA
209.1
14.1%
Rs 85 Cr of the Other Income constitutes interest & such income from deployment of surplus funds Note : The nos. have been restated and realigned to reflect profit from base operations separately
37 3
FY11 Comparative Financials Base OperationsParticulars FY11 (Rs Cr.) 1,482.8 393.0 273.1 607.6 209.1 92.3 69.6 104.5 106.4 3.23 % FY10 (Rs Cr.) 937.9 262.7 195.0 339.8 140.4 50.1 57.3 59.9 69.5 2.61 % Growth (%)
Operating Revenue Direct Costs Employee Costs Other Costs * Operating EBITDA Other Income Finance Costs Depreciation & Amortization PAT after minority interest and share in associates
100.0% 26.5% 18.4% 41.0% 14.1% 6.2% 4.7% 7.0% 7.0%
100.0% 28.0% 20.8% 36.2% 15.0% 5.3% 6.1% 6.4% 7.4%
58.1% 49.6% 40.1% 78.8% 48.9% 84.2% 21.4% 74.4% 53.1%
EPS for the period**
(Rs)
*Increase in other costs is primarily due to doctor engagement model at newly acquired hospitals. **EPS calculated on reported consolidate net profits for the relevant year
38 3
Maturity-wise Performance FY 11: Main HospitalsMaturity Revenue Contribution EBITDA Contribution Average EBITDA margin * Average Occupancy Average ARPOB (Rs Cr)
5 Years and Above (Four hospitals) 3 years to 5 Years (Nine Hospitals) One to three Years (Eight Hospitals) Upto one year (Three Hospitals)
24%
34%
26.0%
80%
1.00
14% of operating beds aged 5 years and above contributes 24% to revenue
58%
62%
20.0%
78%
0.83
51% of operating beds are 3 to 5 years of age and contributes 58% to revenue
13%
9%
13.9%
57%
0.6316% of operating beds are 1 to 3 years of age and contributes 13% to revenue
5%
(5)%
(18.4)%
37%
0.3418% of operating beds are up to 1 year of age and contributes just 5% to revenue
Average
-
-
18.8%
72%
0.81
* Average EBITDA margin has been calculated on Unit basis
39
Balance Sheet as at March 31, 2011Balance Sheet Shareholders Equity* Foreign Currency Convertible Bonds (FCCBs)# Debt Total Capital Employed Rs Crore 3,313 446 642 4,401
Goodwill Net Fixed Assets (including CWIP of Rs 270 Crore) Investments - in Associates - Deposits (including Inter-Corporate Deposits) - Liquid and Mutual Funds Cash and Bank Balances Net Current Assets** Total Fixed Assets Net Cash Surplus**** Shareholders Equity is inclusive of Revaluation Reserve and Minority Interest ** Net Current Assets includes Deferred Tax Assets *** Net Cash Surplus excludes FCCBs #Fortis issued US$ 100 million,5% convertible bonds due in May 2015 convertible at Rs 167 per equity share; redeemable on or after May 2013
885 1,910
28 1,348 62 86 82 4,401 854
40
Summing Up Healthcare Sector poised to grow Healthcare Sector Growth led by Lifestyle Diseases and Insurance Penetration Government recognizes the need to partner with Private Sector Healthcare expenditure estimated to be 6% of GDP by 2012 & employ around 9 million people
One of the largest private healthcare delivery player in India Aggressively grown from 1 hospital in 2001 to a network of 56* hospitals in 2011 with ~ 8,000* beds Fortis Healthcare Leadership in Cardiac Sciences, Neuro Sciences and Orthopedics Evolved the Business Model and high level of Brand Equity Proven ability to acquire, integrate and turn around Providing attractive value propositions to various segments of market
* Estimated number of hospitals and beds is including hospitals under projects stage
41
Analyst CoverageBroker* B&K Analyst name Vikash Singh Comments B&K maintains its positive outlook on Fortis due to its focus on profitable growth, improvement in realization and operational efficiency across its facilities Expects strong growth in earnings as majority beds will turn profitable going ahead Positive on the companys growth prospects Over the longer term, CITI forecasts sustained growth & improvement in profitability as the new hospitals scale up Fortis constant growth focus and strong management team supports our positive outlook on the company FHL continues to pursue its strategy to grow aggressively with sustained focus on operational parameters Asset light strategy to help Fortis scale up at a faster pace and improve its capital return profile. Bullish on Fortis ability to execute aggressive expansion plans Optimistic about Fortis opportunities ahead, its ability to improve the operating performance of its acquired hospitals
Bank of America Centrum CITI Goldman Sachs ICICI Direct
Prasad Deshmukh Rahul Gaggar Prashant Nair / Anshuman Gupta Balaji V Prasad / Rishi Jhunjhunwala Rashesh Shah
IDFC
Nitin Agarwal / Ritesh Shah
JP Morgan
Princy Singh / Dinesh S. Harchandani, CFA
Morgan Stanley
Saniel Chandrawat / Sameer Baisiwala, CFA
UBS
Ajay Nandanwar
* In Alphabetical order
THANK YOU
Fortis Healthcare (India) Limited