Ambulatory Surgery Centers, India Nova Business Model & Value Proposition

©2011. Nova Medical Centers. Strictly private and confidential

2nd September 2011

Mr. Suresh Soni, Chairman & CEO, Nova Medical Centers

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Indian Healthcare growing exponentially … to $280Bn by 2020

20

100

20

180

2010 2020

PRIVATE PUBLIC

$280Bn

$ 40Bn

Indian Healthcare

25%

17%

CAGR

Growth of

22%

India's healthcare

spend ($40Bn) is

growing at 16%, well

ahead of 8% GDP

growth

However, the spend

represents a meager

4.1% of GDP as

compared to global

average of 9.7%

By 2020, Private

healthcare spend in

India is estimated to

be ~$180Bn

Significant investment opportunity

In $Bn

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Family / Private Funds

Group / Single Specialty Practice /

1st Corporate Hospital Established

(Apollo)

Very Active Investment Interest in Healthcare … from PE / VC’s

Private Healthcare Delivery Source of Funds

Self Funded Single Practice / Nursing Home 1980’s

Private Funds / Debt Standalone Multi Specialty Hospitals 1990’s

Private Funds /

Foreign Direct Investment (FDI)

Corporate Chain

Multi Specialty Hospitals 2000

Stand Alone Surgery Centers / Tertiary

Hospitals / Medicities / Other

Innovative Models

FDI / Venture Capital / Private

Equity / Private Funds

2011 &

beyond

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The Last Decade has seen large number of

Investments in the Healthcare Segment

382 M&A deals worth $19.4Bn Including Increasing buyouts by

large corporate hospitals for

immediate scale

Example: Fortis’ acquisitions of

Wockhardt, Malar, Hiranandani

Hospitals

1

275 deals in Venture Capital &

Private Equity worth $2.9Bn

• AIG & JP Morgan invested ~$100Mn

in Narayana Hrudayalaya

• Warburg Pincus’ investments in Max

of $33Mn

• Recently, Sequoia invested $20Mn in

Vasan Eye Care

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Foreign Direct Investments

• Singapore-based Parkway Group

Healthcare JV with Apollo Group

• Columbia Asia Group, US started

operations in India

• Max collaboration with Singapore

General Hospital

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Healthcare Providers command significant valuation premiums

But Wealth Creation is solely benefitting Promoters and Investors

RECENT DEALS

Enterprise Value

(EV) Revenue EBITDA

Multiple

EV / EBITDA

PUBLIC COMPANIES

3,000 350 ~110 27x

560 200 20 28x

475 ~330 ~32 15x

6,142 2,027 324 18x

7,330 1,467 498 14x

27x

28x

15x

18x

14x

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Nova’s Ambulatory Surgery Centers seek to provide

better economics to all stakeholders

VALUE created by

FINANCIAL BENEFITS to…

MANAGEMENT TEAMS

ADMINISTRATIVE STAFF

DOCTORS

Patients

Insurance Companies

Doctors

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Investors

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Nova has introduced a unique Ambulatory Surgery model in

India

Compact 10,000 – 12,000 sq ft

leased center

Clinically Proven Procedures

undertaken by experienced

surgeons

Use of Advanced Equipment,

technology and surgical techniques

reduce recovery time

Each center has − 5 Operating Theatres

− 15-20 Pre and Post Op Rooms

− 8–10 OPD Consultation Suites

− Pathology Lab, Radiology & Pharmacy

− Preventive Health check

Patients are pre screened

to avoid complications

Recovery & discharge occurs

from 2 – 72 hours after surgery

is performed. 90% of patients are

discharged the same day.

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Nova Patients Save 15-20% as compared to corporate Hospitals

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Each Nova Center Offers a Comprehensive Range of Services

8

Operating Theaters Five state of the art operating theaters

Pre and Post Operating

Recovery Typical Nova center has 16-20 beds with

ICU facilities and 2-3 rooms for short stay

Doctor’s Outpatient

Clinics

Fully Equipped

Lab, Ovum pick up

and Embryo

transfer.

Pathological Labs Biochemistry, Hematology,

Micro-Biology, Cytology &

Histopathology, Serology

including tumor markers

Radiology Services X-ray, Ultrasound, Echo, ECG,

and TMT, C-Arm (Routine,

Special, DSA).

Pharmacy

IVF

Health Checkups

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Major Specialties covered at Nova Ambulatory Centers

Paediatric surgery

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ASC's are Eco Friendy & provides better value … to all stakeholders

100 Bedded Hospital Conventional ASC’s

Eg: Nova

Space required 60 – 70,000 sq ft 10 – 12,000 sq ft

# of OT’s 5 5

Staff At least 300 staff 35 & Support Staff

Insurance Mandatory 24 hour Stay Stay not Mandatory

Initial Set up costs ` 120 – 130 crores ` 10 - 12 crores

Monthly Optg Costs ` 2 - 3 crores ` 35 – 40 lakhs

Break Even Time 5-7 years 8 – 10 months

Land Acquired Leased

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Nova has introduced a Unique Ambulatory Surgical care

model in India

Owner doctors receive: • Higher professional fees

• Profit Sharing

• Very Significant equity appreciation

Each center is a 70:30 partnership between Nova Holding Company & 40

experienced surgeons

Each Surgeons can invest up to Rs ` 10 lakhs

Each center costs `10 – `12 crores to build

Nova Medical centres have low Operating Costs of

Rs 30 lacs per month

40 Surgeons performing 2.5 surgeries a month

will achieve break even

Typically Cash flow positive in One year from

inception

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Only Nova's Unique Business Model allows Equity

Ownership and Wealth Creation for Professional Doctors

Significant Equity

Appreciation

(8 – 10x

of initial investment)

Performance

Linked Incentive

(PLI)

Nova Ambulatory

care Model

30 – 34%

Professional Fees

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Marginal to Nil

Terminal Value for

Practice

Profit Share from

large Investment by

Nursing Home

Owner

Nursing Homes

Professional Fees

• Non-owner doctors receive

30-40 % professional fees in

less than stellar facilities, no

national branding, no profit

sharing or equity

consideration

Corporate

Hospitals

10 – 20% of surgical

Package paid as

Professional fees

(less affiliate

charges)

No Equity or Profit

sharing for Doctors

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Nova Business Model has achieved been

accepted by all stakeholders

Clinical Proven Undertaken over 6,000+ Surgeries with Superior

Outcomes .

Doctor Acceptance Over 300 doctors under Nova fold across 5 cities

Insurance Empanelment All major insurance companies/ TPA’s have

empanelled Nova to undertake ~ 800 surgical

procedures without 24 hour mandatory

hospitalization

Patient Acceptance Over 97% patient satisfaction

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Nova business model creates value for all

stakeholders in the Healthcare Industry

Patients

• 15-20% cheaper package rates compared to Corporate Hospitals

• Better Outcomes

• Faster Discharge & Recovery at home reduces chances of HAIS

MULTI-FOLD ADVANTAGES

FOR PATIENTS, SURGEONS, HEALTHCARE PROVIDERS

AND INSURERS & TPAS

Surgeons

• Higher Professional Fees, Profit Sharing and Ownership interest leads to

significantly improved economics for Surgeons

• Pride of Ownership without large Investment

• Flexible work schedule and improved lifestyle

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Insurance & Corporate Employers • Significant cost Savings

• Increased Productivity for work force as operated employees return faster to work

• Pan India footprint and strong brand offers consistent expectations and easy to

manage relationships