Bumrungrad Hospital Public Company Limited (BH) Earnings Call Transcript & Summary

Good morning, everybody. [Foreign Language] Welcome to the Third Quarter 2020 BHPC Analyst presentation. The format of this presentation is a prerecording, which will be posted online on the 10th of November. Subsequent to that, on the 11th of November at 10:00 in the morning, we will have our live Q&A session, whereby management will be available to ask -- answer any questions you may have via live chat. With that in mind, we jump straight into the presentation. As we're all pretty familiar right now, COVID has impacted the business around the globe since the first quarter of 2020. We remain affected by the International business segment, in particular, as a result of medical and tourism travel restrictions to the country. You are probably quite familiar by now, and hopefully, you've had time to review our MD&A and our financial results. In it, I'd like to identify and point out certain key elements, which I believe could be useful. First off, you could see that on a Q-on-Q -- in Q-on-Q terms, performance across the board from our Thai, expat and international business has improved significantly. Notably, however, on year-on-year terms, our Thai and expat business has also grown despite the challenges of COVID, despite economic impact that we currently face and despite the uncertainty as a result of political unrest in Thailand. Thai and expat revenue segment grew 3.4% and 13.4% year-on-year, respectively. And while we mentioned that in mid-August the third quarter would be an improvement to the second quarter, we know now that our realignment towards Thai and expat business has gained traction. Over the coming quarter, we're monitoring the effect that these programs that we have been offering, particularly in screening, in checkups, which has been very positively taken by the Thai and expat community, is going to generate additional downstream revenue. Over the coming quarter, we're monitoring the effect that these programs will have, especially in terms of downstream revenue, and it will take a little bit of time, 3 to 6 months, to see the effects of these programs take root. Our strategy of focusing on enticing spending with attractive limited term campaigns, improving the convenience of patients by digitally purchasing vouchers, packages, et cetera, on our online store and our targeted marketing campaigns has contributed to not only a recovery but growth in our Thai and expat segment. We've also had notable success in our alternative hospital quarantine and alternative state quarantine services. Dr. Thassanawut, who presented in the previous quarter, will once again elaborate on what the developments are in these areas in addition to relief flights, medical evacuation and transportation as we try to bring in some international business in a particularly challenging time. A major part of the achievement in the third quarter can be attributed to MarTech or marketing technology. Our investment and commitment in MarTech since November of last year has paid dividends to us. Starting from humble beginnings, MarTech has rapidly evolved into a platform that allows patients to more conveniently access our services and to be communicated in a much more cost-efficient and wide-ranging way. Run by a highly talented team, it is creating value not only for our patients but for shareholders as well. Another factor that has contributed significantly to growth in the Thai and expat business but is often overlooked is the sizable business we receive from referrals not only from our health network hospitals but from local hospitals around the country. It is a testament to our position as a leading health care destination that hospitals refer patients from their own areas to the medical center here in Bangkok. In this segment, in the third quarter, we saw growth of 12% year-on-year and over the 9 months, 27% year-on-year growth as well. These are quite strong results, especially when you consider that every hospital around the country is seeking to protect market share and market penetration in a time of very challenging circumstances. On our international business, despite the impact of the travel and medical tourism restrictions, our Indo-China and China revenue grew 50% and 121%, respectively, on Q-on-Q terms. It is our strong network of referral offices as well as our particular focus on medical transportation and evacuation that has created this result. On telemedicine, on mobile care and home services, we saw a 78% growth year-on-year in Q3 to a revenue of approximately THB 89 million in absolute terms, and this revenue is being driven by not only Thai and expat patients but also international patients. It is worthwhile to note that these international patients, although physically unable to come to the hospital, are expecting health care at the level that we offer here. And it is through our digital platform that allows us to serve these patients in their time of need. It might be interesting to note that teleconsultations do not generate the vast majority of revenue in telemedicine and home care. It is this ancillary income that is generated as a result, in particular, medication refills. Many people in many countries in underdeveloped regions are unable to find advanced medications, and we are assisting them in providing this. Telemedicine, we believe, has room to grow as we continue to develop the platform in a more sophisticated way in approaching the ancillary part of the business and in generating a strong ecosystem, which includes logistics and includes staffing, organization and also the technology platform to cater to it. On the cost -- on cost and cash preservation, it is imperative for any company in Thailand right now to look stringently at their costs and to take a cash preservative approach when managing their businesses. Ours is no different. Our cost management and cash management program remains on track and, in fact, has exceeded our expectations. In part, this performance has been reflected in our performance in the third quarter, where good cost management has impacted positively to the bottom line. As the year draws to a close, focus now shifts towards 2021, and cost management and cash preservation remains a priority for our strategy going forward. Khun Artirat, our CEO, will elaborate further on the themes of what we are focusing on in 2021. We have THB 8.4 billion in cash and cash equivalents at the end of September. And it is increasingly evident that the cash prudent 0 net leverage approach that we have taken for several years now has in hindsight been prescient. As the latest TRIS Rating confirms, and as Khun Oraphan will present to you later on, we remain among the most stable and having -- and possess the strongest balance sheet in the SET index. It is this balance sheet, this cash balance that allows us to buttress the challenges that COVID has presented to us and the challenges in the global economy currently. Now it is without further ado that I hand over the rest of the presentation to Mr. Neil Sorrentino, our Chief Global Strategist.

Good morning, and welcome to quarter 3 2020 analyst presentation for Bumrungrad Hospital Public Company Limited. In the quarter, we showed some significant improvement in the form of really a V-shaped recovery from Q2, and this goes back to the commitment we made in early February about remaining agile as an organization and as a management group and try to focus on what business we could acquire, what business we could serve and what business was not going to be available to us, and it became very apparent very quickly that international business was not going to be something that any health care provider was going to be able to serve because of borders being closed, lockdowns, et cetera. So at that point, we took on a very focused digital marketing strategy, affecting positively -- and Q3 shows that in a very, very big way, as I mentioned, in this V-shape recovery, affecting very positively our success in going after Thai business, expat business, and frankly, we were able to bring in additional international business. While it wasn't very, very much, we did conduct our own private jet relief flights, 2 of which came from Myanmar, which added to our patient volume, added to our revenue intensity. And Dr. Thassanawut will talk a little bit more about that later. But in the face of some very, very difficult economic times in Thailand, where the economy is still very, very negative at the moment. The borders are still closed. Although the government officials continue to talk about relaxing the quarantine from 14 days to 10 days, we management do not expect this to really materially change for the remainder of 2020. So we are, as a management group, looking at 2021 to really begin more of an open flow of international business, although we have, through our aggressiveness, have, as I said, brought in some international business in the quarter, and I'll talk a little bit about that. So what I'm going to provide for you now is a deep look into each one of our market segments and what happened in the quarter and why did it happen. So if we look at net patient revenues overall, if you look here on this chart, you will see that Q2 versus Q3. And I've chosen to do a quarter-by-quarter analysis because the value in doing a year-over-year analysis is not equivalent anymore because one was before COVID. The other is during COVID, and the relationships are really not comparable. So it's better for us to show you what we've done in Q-over-Q. And many international companies are doing the very, very same thing as they conduct their analyst presentation, so I chose to do that as well. So if you look at the Q-over-Q for net patient revenues overall, we had almost a 20% increase from Q2 to Q3. Year-over-year, I'm showing this because people like to see the year-over-year as well, although you have that information already published of 38.9%, and that's being driven principally by the lack of international business. On net patient revenue, Thais. And for Thais and expats, we're really very proud of this performance in Q3. If you look here on Thai, we're up 29.1% for Q2 against Q2. And against Q1, which was only half of the COVID impact period, we were up 14.2%; and year-over-year for Thais, this is '19 versus '20 Q3, we were up 3.4%, which shows we've been very, very aggressive in how it is that we've been able to move market share. Now in Thailand, none of the health care providers are required by government regulation to report market data that it's publishable around the country, but this tells us as management that we have substantially moved market share from other parties. Now some of this is actual market share movement into the institution, and some of it is remote movement of market share, whether it's through telehealth, whether it's through vaccines at home, whether it's higher outpatient utilization, which we did experience in Q3. It's really all of those things combined. And if you look at the bottom of that chart there, you will see the month-by-month progression from Q2 to Q3, fairly dramatic increases. That's Thai business. For expat business, it's kind of the same story. If you look again against Q2, 28%, against Q1, which again was only half of the COVID impact, we were up against Q1, 2.3%. And year-over-year, Q3 '19 versus Q3 '20, we were up 13.4% and that is probably the highest expat quarter-over-quarter or period-over-period growth we've had in a very, very long time at Bumrungrad. On net patient revenues for all international, you'll see, in Q3, it was down 3.5%. The story there is that it's a story of 2 issues. On the one side, we had obviously no international business and some discharges against the long-stay international patients, principally in Middle Eastern patients. But on the other side, we had fairly good growth from Indochina, and our Indochina sleeve, you'll see on the next slide, which countries that involve. But principally, we've got good support from Cambodia, and we brought these patients in through normal regulatory channels of the Ministry of Public Health and Ministry of Foreign Affairs. And then, of course, year-over-year, this tells the story of with international business and without international business, down 73.5%. Middle East, quarter-over-quarter, down 30.5%. These are long-stay patients who started going home in Q3, and there was no backfill for them to really speak of. And of course, against Q3 '19, the net revenue for Middle East was down 74.5%. Indochina was a positive story for us for Q3. And while many institutions have not really brought in a whole lot of international business, we, through our assertiveness through our referral offices, through our medical coordination offices, Dr. Thassanawut is going to talk to you about how we prosecuted successfully bringing these patients into Bumrungrad grad, but you can see in the quarter was up 49.9% from Q2. That's a 50% increase, yes, from a lower quarter but nonetheless, a 50% increase. And from the prior year, it was down 78%. The big driver there was no business from Myanmar because that's a country with a high infection rate. And apart from our 2 relief flights, which we did bring in, the difference was pretty dramatic against the total. Moving now to EBITDA and NOPAT. And before I go into this detail, it's important to note that, for the quarter, we quadrupled our NOPAT from Q2 to Q3. And how did we do that? Some of which I've described in terms of net revenue, but the other part of how we did that is good cost control. We had -- for the quarter and by quarter, we management look at what the target is for cost savings. And in Q3, we had a targeted cost savings of THB 88 million, and that's a variety of different things that we really call sort of go after cost reductions probably 40%, 45% of which is overtime, which we froze to 0. We had a freeze on all hiring and a number of other flexible things that we did in the quarter. So instead of THB 88 million, which was our target, we bettered that and the total cost savings for the quarter was THB 110 million. That contributed to that quadrupling of NOPAT from Q2 to Q3. So the quarter-over-quarter change for EBITDA was almost 69% from 2 to 3 and of course, year-over-year change, down 66% because of the absence of international business. On the margins for EBITDA, it increased from 12.9% to 18.3%, more volume, slightly better marginal contribution of revenue per patient -- per adjusted patient and of course, the fact that we had good cost control in the quarter. For Q3 net profit, I just referred to it earlier twice. So this is an important number for us because it's not only a quadrupling of net profit for the quarter, but this sets the stage and sets the platform for us going forward in continuing quarters. We have learned how to do business differently in fiscal year '20 because of COVID. We've had to be more agile. We've had to be more aggressive. We've had to be more successful in servicing our expat and Thai business. And the numbers for Q3 show that. And I would guide that for Q4, without giving any top line revenue growth guidance, we expect Q4 to be better than Q3. As I told you last time when we met that Q3 would be better than Q2, and clearly, it was dramatically better. We expect Q4 to be better as well. Of course, the year-over-year net profit number is down 79%, impossible to replace, replace 66% of historical international revenue, which is what we're known for in terms of concentration. But we expect in 2021 -- because we just completed our budgeting process for 2021, we expect to see growing international business return gradually in the first half of 2021. This is truly dependent upon what the government does in terms of allowing open borders. Mind you, the COVID surge in infections is growing in Europe; the Middle East, not so much. We see a relaxation of Middle Eastern countries, allowing their citizenry to travel to Thailand. We expect that to grow in the first half of the year. In the second half of the year, we expect it to get even better. And this is how we have developed our budgeting guidance for our management, our day-to-day management operations in the medical center and our other subsidiaries. Net profit, you can see the trend for the quarter in Q1. It was 18.3%. That's only half of the COVID impact. It began in mid-February. You see it went down to 1.8%, and for the quarter 3, it was up 7.5%. And again, it was those same indicators that I mentioned earlier that drove EBITDA. The profitability, which I wanted to provide for you by market, this is not something I have done in the past, but I thought you'd find this interesting to see where we're driving the profit from by market type or by market share type. If you look at the overall market segment on EBITDA, it was up 68%. On Thai, it was up 110%; on expat, 71 -- 70-plus percent; and on international, 24%. International, if we were under normal operating conditions, that number would be around 40% if you look at our history. But because we don't have very much Middle Eastern patient flow and most of this was Indochina business, although good business, didn't have the same kind of revenue intensity as our Middle Eastern business did. But nonetheless, when you look at this as a portfolio, it was very good performance overall on EBITDA. And by market type, we were especially proud of the Thai business, both in the amount of market share we moved and in the performance to the bottom line that the Thai business produced for us. On EBITDA by margin by market segment, you can see what that shows. The overall market was up from 12% to 18%, the Thai from 9% to 15%, the expat from 18% to 23%, and international slightly smaller in its incremental growth of about 5% differential between 16% and 21%. So the largest variance here, again, is Thai and expat, expat being a little bit shorter than Thai, but the 2 combined was what was able to allow us to quadruple our NOPAT for the quarter 3 versus quarter 2. The net profit by market segment as opposed to EBITDA, you can see what the numbers show. Overall, there is the quadrupling of our NOPAT for the quarter, 398%. For Thai, it was 312% Q2 over Q3 -- Q3 rather over Q2. Expat, up 142% for the quarter; and international, up 82.4%. This for us is very, very important data, again, that shows both that the net revenue line, vis-à-vis the cost control, vis-à-vis the EBITDA line, vis-à-vis the NOPAT line that we're really setting ourselves forward for 2021 on a very, very positive way. We expect this to be -- this kind of performance to be additive in 2021 because we're going to maintain this as well as bring back our international business when borders open. So we see a very, very bright future. No -- net profit margin by market segment, you can see what the numbers are here. Again, for the overall in the 1s versus 7.5% for all; for Thai, minus 2.4% in the quarter 2 up to 4% in quarter 3; for expat, 7% versus 13%; and international 6% to 11%, a delta of 5% change from quarter-to-quarter, all very, very positive indicators that will represent future quarters positive performance. For Vitallife, I don't normally show this level of detail, but it fits in line with what I've just shown you for our Thai and expat and international business, I thought I would show you this, on a quarter-to-quarter analysis, for our scientific wellness center, in Q2 versus Q3, were up 13.2% on net revenue at Vitallife; and on EBITDA, up almost 60% change between the 2 quarters, 2 versus 3, very positive performance for Vitallife. On the topic of guidance expectations for quarter 4, insofar as the business positioning of Bumrungrad is concerned, we fully intend on continuing to push our digital marketing strategy. Our online store program has produced over 4,000 orders over the last 2 quarters and continues to grow. This is principally being driven through expat and Thai choices online, and we continue to expect to grow that business. But insofar as guidance is concerned, we will maintain our position that we took out of Q1 into Q2 and into Q3. It's quite impossible to offer top line revenue guidance when our concentration of revenue historically has been international business and has been well documented. Our borders in Thailand are closed. You also know, of course, that there's been some short-term political instability. The economy is not in good shape in Thailand. It will take some time for it to return. And in Europe, COVID infections are surging. So it's very difficult to predict what the pandemic will look like here in Thailand for Q4 and beyond and what that impact will be from other parts of the world, so we will withhold top line revenue guidance. But I will say this to you. We do expect Q4 to be better than Q3 because the fundamentals are in place that I've covered with you here that continue to show on an unofficial basis as we've just recently entered into Q4. Thank you.

Good morning, everyone, [Foreign Language]. I would like to report you all the financial performance in third quarter and 9 months 2020 recap. For the financial highlight, despite growth in Thai and expat business, the continued restriction on travel and medical tourism continue to impact the company international business. In third quarter 2020 revenue declined by 38.6%, mostly due to a decrease in revenue from non-Thai by 60% offset with the increase in revenue from Thai patient by 3.4%. EBITDA declined by 66.1% with EBITDA margin 18.3%, down from 33.1% in the same period last year. Net profit and diluted EPS down by 79%, with net profit margin, 7.5%, down from 22% in third quarter last year. However, in third quarter, this year, performance improved significantly from the previous quarter due to the lifting of the national lockdown within Thailand and from target market. Resulting in recovery in growth in Thai and expat business in this quarter. Total revenue increased by 18.5% from previous quarter. This was mostly due to -- and an increase in revenue from Thai and non-Thai patient by 29.1% and 8.6%, respectively, as a result of Q-o-Q revenue improvement, together with the variance cost containment program implement in COVID-19 outbreak. Third quarter 2020 EBITDA grew by 68.3% from second quarter 2020, with an EBITDA margin of 18.3% compared to 12.9% in second quarter 2020, while net profit grew almost 400% from previous quarter. For the performance 9 months of 2020, revenue declined by 30.8%, mostly due to a decrease in revenue from non-Thai patient by 44.4% and from Thai patient, 3.9%. EBITDA declined by 52.1% with EBITDA margin 22%, down from 31.7% in the same period last year. Net profit and diluted EPS down 64% with net profit margin 10.7%, down from 20.6% in 9 months of last year. For the financial performance, total revenue in third quarter 2020, the company reported total revenue, THB 2.948 billion. This amount represents 38.6% decrease from third quarter 2019. For 9-month 2020 company report total revenue, THB 9.611 billion, 30.8% decline year-over-year from 9 months last year. This mostly due to a decrease in revenue from non-Thai patient and Thai patient by 44.4% and 3.9% respectively. Move on to see the revenue contribution by nationality. Due to the lifting of the national lockdown within Thailand and from targeted market, resulting in recovery in growth in Thai and expat business in this quarter, including we have launched promotion to stimulate local market and create many new activities and channel for patient access. We got a good feedback from Thai and expat patient with good [ increase in revenue ] contribution of Thai from 30% to 56% in third quarter 2020 and 9 months this year, up to 46% from 33% in the same period last year. For revenue contribution by service, in third quarter and 9 months 2020, revenue in [ the stay ] of inpatient service increased from longer length of stay in both of Thai and non-Thai patient. Revenue contribution from inpatient service increased to 49% and 52% in third quarter and 9 months of this year, respectively. In terms of revenue contribution by payer type, there were a change in payer mix due to the COVID impact. Self-pay declined from 70% to 60% in 9 months 2020 mostly due to decrease in revenue from international self-pay as a result of travel ban in our international country during first half this year and selected opening on a few countries in third quarter 2020. Insurance contribution increased from 16% to 20% in 9-month 2020 due to increase in Thai and expat insurance patient. For government third party, contribution also increased from 13% to 17% in 9-month 2020 mostly due to increase in revenue from a few Middle East payer. For EBITDA, we have implemented many cost management programs in this year, including workforce management, contract management, inventory management. As the result, we could achieve cost savings THB 230 million for 9 months and plan to continue for fourth quarter this year and next year. However, there are a few fixed costs that could not be reduced such as depreciation, software support maintenance and license. As the result, EBITDA in third quarter 2020 was THB 533 million, declined by 66.1%. 9-month 2020 EBITDA was THB 2.089 billion, declined by 52.1% from the same period last year. For the EBITDA margin, in third quarter 2020 was 18.3% decline from 33.1% and 9-month 2020 EBITDA margin was 22%, declined from 31.7% in 9 months last year. For the net profit, decline with the same reason of EBITDA decline, except for the company reported a corporate income tax credit of THB 1 million in third quarter 2020 as a result of tax benefit related to training expense and capital spending that exceeds profit before tax expense. For the net profit of third quarter 2020 was THB 222 million, declined by 79%, and 9 months for 2020 net profit was THB 1,081 million (sic) [ THB 1.031 billion ], declined by 64% from the same period last year. For the net profit margin in third quarter 2020 was 7.5%, decline from 22%, and 9 months for 2020 net profit margin was 10.7%, decline from 20.6% in the same period last year. For the net debt to EBITDA for 9 months 2020 was 0.2x, slightly higher than last year due to less cash on hand and net debt. For net debt to equity, in 9 months 2020 was flat at 0. Interest coverage ratio in 9 months 2020 dropped to 21.2x due to less EBITDA in 9 months 2020. When considered, bond covenant requirement for net debt to EBITDA should [ less than ] 3.25x, and net debt to equity less than 1.75x. The current net debt to EBITDA and net debt to equity in 9 months 2020 are still a lot lower than bond covenant requirement. Based on the bond covenant requirement, BH still has borrowing capacity THB 8.3 billion. In terms of the cash and cash equivalent plus short-term investment and long-term investment as at end of this quarter, the company have total about THB 8.3 billion. And for the TRIS Rating, on September 30, 2020, TRIS Rating affirmed the company rating at the rating on BH's senior unsecured debenture at A+ with a stable outlook. The rating also take into consider its strong balance sheet with minimal financial leverage and ample liquidity position. These are our financial performance in third quarter and 9 months 2020.

Thank you, Khun Oraphan. Now our CEO, Khun Artirat, will present to you about operational updates in the third quarter of 2020, followed by 2021 strategies. In addition to this, we will elaborate to you further on cost management, and Khun Oraphan will provide further details on how we are managing our cost chassis in 2021.

Thank you, Daniel. [Foreign Language] Good morning, everyone. I'm very pleased to meet all of you again. So today, I would like to update about the business and operationals followed by Dr. Thassanawut. He will talk about ASQ, AHQ and the status of our international patients and the very interesting project, RAKXa at Bangkrachao, will be presented by Dr. Narinthorn. Please allow me to start with the first slide. This is the PR of Bumrungrad 40 anniversary occasion. We arranged in the press conference of medical and wellness tourism the main objective because we would like to support the government and would like to be a part of the economic crisis recovery in Thailand. In this press conference, we also have Dr. Taveesin, our Chief Medical Officer. He presents the 40 years of delivering successful medical care at Bumrungrad. We also have panel discussion between our hospital, our Chief Marketing Officer, Khun Napas, together with the executive from SCB, TAT and [ Centron ]. The main objective, everyone would like to see the highlights of the post COVID, what's going to happen after the COVID passed. So we realize and we found out that every business needs to think about new business model. The next slide is the Local HERO. We have launched the short movie of the Local HERO. This movie will emphasize Bumrungrad's core competency because this one can show that we can take care of the critical patients' complicated disease with cutting-edge technology, is also show the teamwork of the multidisciplinary team. Without working together to help our patients, we cannot have the safety and quality system. The story is very touching and reflects the very good image of Bumrungrad Hospital in the international way. And you can see the comments in the PowerPoint or the comments are very good feedbacks and very positive and very international effective. The next one, I would like to mention a little bit about the digital marketing part. Since June this year, we have launched online store in our website until -- around 25th of October, 5 months already, be so around more than 4,000 packages and I think as of now, we achieved over THB 50 million from this online store package. Another one is I think everyone waiting for our Bumrungrad applications. Now we are ready, and we launched Phase I. So this is the QR code. So everyone can download QR code, and you can get for both Android and Apple Store. You have Bumrungrad application. So what can you use the service of Bumrungrad via this application? Firstly, of course, you don't need to take any hospital ID card with you because in this application, you have the digital membership card. And also, you can make appointment with our doctors, where you have notifications to remind your appointment and any key message that we would like to communicate with you and your parents or your patients. You can find the doctors from Bumrungrad applications, and MyCare is the function that we can review our historical visit in -- from Bumrungrad Hospital. And we also have online packages. You can view the online store. And if you would like to buy in this phase, it will link you to our website and you can have online payment via our website. And of course, the next phase, we will have e-payment in our applications. And last but not least is ask a question, so you can contact with our contact center. You can ask any general inquiry or contact with any medical inquiry. So the next phase, coming soon by the end of November, we will have the, my allergy function. That means any patients that have allergy to the medications or food, we have the record, and it will show in your applications. We will have live chat, and you can also review your medications. And telemedicine right now, we use [ line ], use Zoom or WhatsApp via the social media. But coming soon, I think around end of this year, you will have telemedicine in the application as well. So it will come more and more in the Bumrungrad applications, including the IoT. The next slide is the progression of Bumrungrad Health Network. The -- so this year, in 2020, we can open 5 clinics. Everyone knows that since Q1, we opened the Joint and Spine Excellence Center in Princ Suvarnabhumi Hospital. And in Q4, I can say early of October, we already launched the Spine Center at Nakornthon Hospital. And on the 19th of November, we will have the press conference, and this will be the grand opening of the Absolute Spine Center of Bumrungrad Health Network joining with the Nakornthon Hospital. And around end of this year, we're going to open another 2 centers with Aikchol Hospital in Chon Buri province. The next one, I will present the key strategies of 2021. Key strategy from the business operations for next year, the first one is the -- we will continue to develop, differentiate and advance center of excellence to serve our quaternary care. The key products in the center of excellence, of course, we will concentrate on the high-intensity service and products, and we will focus more and more on the critical, complicated, and we will use cutting-edge technology and premium care to treat our patients. The second strategy, we will attract the patients with the great deal in common procedures, as everyone knows that during COVID, we launched many package and campaign for the fixed-price campaign. We will continue to do this strategy with the common procedures. Anyway, even with the common procedures, we will use the advanced medical technology but under the attainable price strategy. Number three is to acquire new patients and retain the existing with new clinical programs and programs enhancement. The example of the new clinical programs will be related to the vascular and endovascular disease. For the common disease like diabetes, we will have the new concept we call integrated practice unit. That means, we will add more predictive, preventive concept to prevent the patients before they have a diabetes problem. Even they have -- already have diabetes problem, we will have like the service care at home to provide to our patients. This is just one of the example products. And the advanced technology for the surgery center, we will continue to look at the robotic surgery and minimal invasive surgery. And the programs to retain our existing patients, of course, we will use the digital tools, and we can explore the digital channel to acquire more new patients from both domestic and overseas countries. So with the digital strategy, we believe that in terms of the new patients or the volume increment we will achieve from this strategy. Number Four is we will improve the patient experience and look at the revenue cycle management because we found that we have many third-party payers and will increase -- the portion of third-party payers will increase more and more. So we would like to implement seamless strategy by having the revenue cycle management, so we can fix the gap of the insurance or overseas insurance with the other functions in the patient journey. And the last one is the cost management. We need to continue the cost containment and Khun Oraphan, our CFO, will present to you later. This is the second strategy that I already mentioned, how to fully engage the existing and how to acquire the new patients. This is just the example of key market strategies that we're going to implement in the next year. We will focus on the 5 revenue driving formula by using digital strategy: First is how to increase volume; the second, how to increase the lead target customer; the third one, how to convert the patients to be the Bumrungrad patients; the fourth, how to increase intensity of our service; number five, of course, when we use the digital, we expect to have increased margin because we can save cost in many perspective. The example of the key market strategy, we revised and rearranged our website, and we have online store that I just mentioned to you. And right now, we have Bumrungrad applications. And we will use the technical from digital market strategy to direct approach, the third-party payers and also the -- acquire the new target market and see whether there are prospect target in anywhere in the world, so we can attract more patients from this channel. From my slide, that's all for me. So next one is Khun Oraphan. Thank you [Foreign Language]

In 2020, we did make many activities to do the cost management plan, and we plan to continue for next year as well. In terms of the workforce management, we will continue to see low over time, reduce part-time staff, hiring and replacement freeze, and we will implement a work-from-home project, outsource workforce optimization. For contact management, we plan to review and negotiate with the existing source or vendor and [ that term ] to optimize purchasing costs, finding new qualified vendor to do bidding with the existing vendor, combine and reduce variety of branding [ used ] in order to gain more volume for negotiation and grouping service contact to optimize the service and cost. In terms of the inventory and supply management, we will continue to review and adjust inventory and supply to match with the demand and patient volume. So next year, in the overall, we plan to have cost saving about THB 230 million. Thank you for your attention.

Thank you, Khun Oraphan. Now Dr. Thassanawut will present to you an update on our -- on the measures that we've been taking to bring patients internationally into Bumrungrad. Dr. Thassanawut, please?

Good morning, everyone. My name is Dr. Thassanawut Dhearapanya. I'm the Division Director of Medical Transport Bumrungrad International Hospital, and I'm also the Division Director of Business Development International. Today, I'd like to give you an update on our health care and quarantine. As you may be well aware that Thailand is still under locked down. Fortunately, the Thai authorities have opened up a little bit, a small slit through the Ministry of Public Health for us to bring in international patients in the so-called Alternative Hospital Quarantine program, which is led by the Ministry of Public Health. The Deputy Minister of Public Health, Dr. Satit Pitu-techa, along with Dr. Tares Krassanairawiwong, the Director General of the Department of Health Service Support, who is the main responsible for the AHQ program, had paid us a visit at Bumrungrad International. You guess why. Because Bumrungrad International had accumulated the number of patients and ranked in #1 in the proportion of the patients brought in from international. We summed up 40% of the total number of the patients that came in to the AHQ opened by the MOPH. We also had a chance to show them our services and our high standard of care in terms of infection control, how we manage the patient's path and also how we keep our patients and our staff safe in the hospital. In the AHQ program, as you can see up here, as of 25th of October 2020, we had successfully brought in almost 300 patients, along with 313 companions. And that summed up to THB 358.8 million, which is not possible to happen with the lockdown. Thankfully to the Ministry of Public Health, Ministry of Foreign Affairs, these international patients who are seeking for medical care, who are seeking help could get one. Not only the Alternative Hospital Quarantine that we are doing at the hospital facility, we also have affiliation with the hotels, which are designated as Alternative State Quarantine. As of 27th of October this year, we have been affiliated with 6 hotels and accepted more than 2,200 guests, and that also summed up to THB 51.7 million in revenue to the hospital. The top 5 nationalities coming to our ASQ hotels were from U.S.A., Japan, China, Thai people and from the U.K., while the top 5 nationalities coming to our AHQ were from Cambodia, Myanmar, China, Ethiopia and from the United Arab Emirates. We were successfully bringing the patients from Yangon to Bangkok with what we call a Bumrungrad relief flight. We not only served our patients and their companions but also served the ones in need of traveling back and forth between Yangon and Bangkok. Many of the tickets sold were directed from the embassy in Yangon and also the Myanmar Embassy in Thailand. As you can see up here, the first flight happened on the 27th of August 2020. We had successfully brought in 11 patients and 12 companions, and that added up to THB 13.9 million in revenue. On the second flight that we summed up from the successfulness of the first flight, the second flight happened on the 24th of September this year. Unfortunately, we could bring only 4 patients and 4 companions, mainly because the number of COVID-positive cases in Myanmar were climbing. Imagine the patients in our pipeline, which is 404 as of today, how much the revenue these patients would bring. As you could imagine and see from the previous slide, 300 patients brought in THB 350 million. On average, it's THB 1 million-plus per patient. So more than THB 400 million is waiting out there. We can see the patients from China, Cambodia, Qatar, Oman, Kuwait, U.S.A. and other Gulf countries. Number of Cambodian patients here might be a little bit deceiving because most of them had arrived in our hospital. Hope you can see from today's presentation we are not only managing what we have, but we are determining and focusing on how to bring more international business back into Thailand, especially to Bumrungrad International Hospital. Thank you.

Thank you, Dr. Thassanawut. Now Dr. Narinthorn will present to you an update on Bangkrachao Vitallife project as well as other things that we are focusing on here at Vitallife.

[Foreign Language]. I'm Dr. Narinthorn Surasinthon, Medical Director of Vitallife at Bangkrachao. Today, I would like to introduce our new project that we will have a grand opening in December. Vitallife have a partner, and we opened a new health retreat in the land of Bangkok in Bangkrachao. This is called RAKXa project. This is the Asia's first scientific medical wellness retreat, and we -- and that this is a new project that can diversify our portfolio to the hospitality. We just have a press conference last month with the partner is MK and Minor. We bring the concept of functional medicine and holistic medicine to integrate in this project. Our project, as you know, that Vitallife, our concept is the first scientific wellness. So every treatment, every test that we bring into RAKXa and Vitallife is -- have evidence based. And second, we do the personalized program in this project. So we start with the genetic test. So we can do the test to have a risk of disease in the future, like diabetes, hypertension, heart disease, obesity, even the detoxification process in the body. But not only the DNA that we check. If DNA is the seed to develop the disease or condition in the future is -- have to be -- have water and fertilizer to add into that seed. And for our life, that part is lifestyle and external factor, lifestyle such as exercise, sleep, stress, and diet and nutrition. And external factor is like environment pollutions, toxin. Even the COVID pandemic is also the external factor that may trigger our DNA to develop some disease. But before we move into the disease or symptom, we can detect some problem or some function in the body such as hormone functions, energy function in the body, gut health, brain health and detox process in the body. So the concept of wellness, we don't wait until you get disease or get sick, but we try to optimize your body functions. We try to educate you or coach you to have the healthy lifestyle. Then we create the package or program in RAKXa. We have health programs start from 3 nights until 14 nights, is have 3 nights such as Discovery RAKXa, the package that we can give the test of RAKXa to know the experience and treatment in RAKXa. Now we have the detox program for the one who exposed to too much toxin or pollution. When we check the -- my patients who come from China will have high heavy metal. My patients who come from Middle East also have high heavy metal, too. So if we can check and get rid of heavy metal out of the body, it can help to reduce inflammation in the body, and this is one of the secret to have a healthy aging. We also have the de-stress package. This package designed for the executive or the ones who have high stress to have more relaxations because we know that high stress lead to hormone imbalance. So we can also check the hormone level, and we have many kinds of treatment that can help to reduce stress from the body. Weight management -- this is one of the main concern for many people right now because the trend of the bad habits, eat fast food, no time to exercise, and many people have weight problem. Then we create the weight management program to help to boost the immunity and boost the metabolism to maintain and sustainable of the healthy weight loss. And we also have many more package, including the aesthetic package. We have facial solutions and body solution for the guests who like to take care of their beauty. For the aesthetic, we have a experienced doctor who have high expertise in facial designs. And we have all the advanced machines, Thermage, Ulthera, photon, even facial injection like BOTOX or filler. And we can also do the customized program for the group or the one who like to stay with us with the specific needs. And because of the COVID situation, now we try to design the more package, more variety especially for the local, for domestic customer. So we have the membership program, THB 500,000 and THB 1 million to have the whole year wellness plan to take care of their health regularly. At the end, we aim that this project, you can improve the level of health. Now if you think of level of health from 1 to 10 and the 1 who have the specific disease or specific condition may have level of health only 1, 2 or 3. And during COVID, we know that the one who have low level of health may have more risk to develop the lung problem and may have to go to ICU or have higher mortality rate. The one who have no symptom but never take care of themselves, no exercise, no good nutritions, their level of health only 4, 5, 6. But we aim to increase their level of health to 7, 8 or 9. And this is the aim of Vitallife and the aim of RAKXa project. So we hope that after we open in December, next year, we plan to get at least the 1,000 package in 2021, and we plan to have more than 100 membership next year. So we're sure that this is the new project that will add value and diversify portfolio of Bumrungrad and Vitallife into the hospitality industry. Thank you, [Foreign Language]

Thank you, Dr. Narinthorn. Now Dr. T, our Director of R&D, will talk about the concept of the Digital Twin. This is something that we have talked about in the previous quarter, but we'd like to expand on it and see how we, as a hospital, are moving and innovating in a way that moves away from commoditized services to something that is a lot more sophisticated and sustainable in the near term.

[Foreign Language] My name is Teeradache Viangteeravat. I'm the Director of Research and Development here in Bumrungrad International Hospital. Pleasure to be here and to talk to everyone about the update journey of our Digital Twin version that Jeremy Ford has mentioned in the last quarter. So basically, Digital Twin in health care, what is it and why this matter? Why this matter to us? Digital Twin is a virtual model of the physical world or in other word, a virtual representation combining traditional knowledge and scientific-based approach with the data and artificial intelligence. The premise of the Digital Twin is very simple. So the more you understand about yourself, the more you and your doctor know about what influence your health, the better the care providers can help you stay healthy. So even when you get sick, your Digital Twin version can be also used for further diagnosis. And imagine that if we have multiple Digital Twin versions, they all can be used to analyze, to find a similar pattern and potentially supporting a precise diagnosis and a better treatment option. So basically, Digital Twin, how can we create one? It's all about the data. Every one of us here have our snapshot of the data. If we can put them all together, we believe they can all contribute to a holistic understanding of you as a Digital Twin version. In doing that, we are mainly focusing on 2 key components here. One is a platform, a big data platform. You might have heard about big data AI. And the second is the engine behind the platform, behind how we can use the data to make a meaningful use out of the Digital Twin version of you. For the platform, we had been working heavily with a lot of world-class provider or vendor. One of them is a bio computing platform or BC platform, is a spin-off from MIT. For imaging, we have Philips Carestream. And for hospital information system or electronic health medical record, we use TrakCare in the system. For Illumina and Thermo Fisher, they are specialized in genomics and next-generation sequencing. And also, we've been working with multiple world-class provider for Internet of Things platform. You can imagine, think about your biosensor data, wearable and something to keep you -- keep tracking as well as behavioral data. So for the engine, we work with one of the Microsoft partner, which is Lunit. So we're about to launch the mammogram breast cancer screening using Lunit AI capability as well as the CT scan and chest x-ray with Zebra. And one other, the in-house software that we are developing and is about to launch is called Keyoniq, which is the wellness expert adviser. Also the Microsoft cloud computing and Onegevity, which is take care of intelligent health platform. All of this is artificial intelligence engine that can help to put all your snapshot data and make meaningful out of your Digital Twin version. So the potential application is countless. So I'm listing here just a few applications that we have already been launched. For example, pharmacogenomic is having to do with gene and drug interaction. It's no surprise that FDA has reported that Alzheimer's patient, up to 70% of the patient has been taking ineffective medication, about 50% taking the ineffective medication for cardiac arrhythmia, and about 40% is about arthritis. So on average is 38% to 75% has been taking ineffective medication starting from depression to osteoporosis. We also have a program called prevention through your genetic rDNA wellness screening. This particular application has been launched for almost 2 years now. We are screening about 16 base organs. This can help you to be aware and make a proper prevention. Nutrigenomics is having to do with spot medicine based on your genetic data. And gut microbiome is nonhuman, a bacteria that work in your gut. As many, many study has been reported that your gut is very important as a secondary of your brain. So that another Digital Twin version based on your personal life data. We also have precision oncology in-house, both somatic and liquid biopsy for cancer prevention and treatment per our personalized based on your genetic profiles. And AI imaging, as I mentioned, we work with Lunit and Zebra for most pretty much all imaging modalities, CT scan, x-ray and mammogram. And as you can see, application is countless for Digital Twin version. So at the end of the day, it's all about our data. It's about your snapshot of data. And we try to put them all together to making sense of your personal life Digital Twin version of you, and the clinical value and application is spanned across your health continuum. Thank you.

And finally, an update on our campus master plan. In the next 5 years from 2021 to 2025, we are budgeting total CapEx of THB 13.1 billion. THB 9.3 billion of that is the Petchburi Hospital in 2025. You may have noticed that, that has shifted from 2021 in the original master plan to 2025. The reason for that simply is because of -- due to the COVID situation, we do not require the number of beds. Other key items that you may want to know about are as follows. The Soi 1 project, which began construction in February of 2020, remains and will continue to be a part of the campus master plan CapEx contribution for 2021 and 2022. We also are expanding a number of clinics within the BI Clinic building as well as, at the hospital, a major part of our CapEx is associated with replacing radiological diagnostic equipment, such as PET scan. And as you may have noticed, when you were at the hospital, the north lobby has completed its renovation, and the south lobby has now been closed off for renovation. And finally, we also are renovating and upgrading our fire and safety systems, as we take safety very seriously throughout the hospital. And that is something that will continue to play a role in the campus master plan going forward. On maintenance, we expect to see maintenance CapEx of approximately THB 750 million for the following year, which is roughly higher than the average that we've been quoting for the last several years of approximately THB 500 million to THB 700 million. Now with that, I'd like to conclude the third quarter analyst presentation. We will see you very soon in the live Q&A on the 11th of November. And for the fourth quarter and full year analyst results release, we're expecting to release news on that in the mid of February. Thank you very much. [Foreign Language]