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

Welcome to the analyst presentation for the first quarter 2025 Bumrungrad Hospital Public Company Limited. My name is Achariya Sanrattana, Investor Relations and Sustainability. For this time around, we are holding the analyst meeting in an online format. As usual, we will post our prerecording webcast of the analyst presentations on our website, and then will be followed by the analyst meeting online Q&A session with management later on. So for this kind of online format, we will hold this analyst meeting in an online format for every first quarter and every third quarter of the year. Then we will hold an in-person analyst meeting at the hospital for every half year and for the full year results. For the presentation today, we have Khun Neil Sorrentino, Corporate Chief Strategy Officer, to talk about the key takes away in the first quarter of 2025. Then we have Khun Artirat Charukitpipat, Chief Executive Officer, to talk about the business update. Then we have Khun Oraphan Buamuang, Chief Financial Officer, to talk about the financial highlights and the financial performance in the first quarter of 2025. Then lastly, we have Khun Rajeev Rajan, Chief Business Development Officer, to give us an update on the business development performance. Before we start with the presentation, in terms of the guidance, usually, the management will provide the guidance to the -- for the top line revenue growth year-over-year in a quarter-by-quarter basis. But please note that this time in this quarter, the management will provide the guidance for the second quarter of 2025 during the analyst meeting Q&A session. So now let me hand over the presentation to Khun Neil Sorrentino.

Good morning, and welcome to Q1 2025 Bumrungrad Hospital Public Company Limited. Looking at the takeaways for the quarter, the most significant thing about Q1 was the fact that we experienced over 90% of the Ramadan days in Q1, given the fact that the Islamic calendar has advanced year after year. And this year, we have almost -- had almost the full impact of the Ramadan length of stay declines and revenue intensity declines. While we showed significant improvement in Qatar and UAE admissions, and I'll go over that in detail. At the same time, we showed a greater length of stay decline of those Middle Eastern patients that were in our hospital for a long period of time, but went back to their home country. These were long-stay patients that generated a lot of resource consumption and drove a lot of revenue intensity. Let me go through some statistics for you, so you'll have a better understanding of the depth of the quarter. Insofar as Middle East was concerned, we saw approximately 30% decline in revenue, again, as a result of lower length of stay and lower revenue intensity. For Qatar and UAE, we saw positive improvements. Even though it was Ramadan, we saw positive improvements. For Qatar, admissions increased by 8.4% and our visits or outpatient visits increased by 13.4%. This is -- this though, is in correlation with the lower revenue intensity and lower length of stay, which drove down additional revenue changes. Insofar as the UAE was concerned, we showed inpatient admissions of 12% growth for the quarter, although on an outpatient basis, it was less because we had far few travelers coming back into the country during the Ramadan period. So it was a contradiction in terms in a way because on the one hand, we had greater outpatient utilization and inpatient utilization for Qatar, greater inpatient utilization for UAE, but the revenue intensity and the length of stay was declined relative to other quarters. We will talk in detail next week at our live stream Q&A about Kuwait, we don't really have much to say because the Kingdom has been rather quiet and silent about their future plans as to where they're going to be sending patients if they're going to be sending patients. Currently, as we understand it, almost all -- with a few exceptions, almost all of their patients are now being cared for in country, not totally, but almost all. Insofar as Indochina was concerned, Bangladesh, because it is an Islamic country, also was impacted -- we were also impacted by Ramadan, we saw significant declines in that utilization, but this was predicted in my guidance on revenue declines. Myanmar was a strong comeback country for us in Q1, not affected obviously by Ramadan. We showed almost a 20% of growth from Myanmar on revenue. In addition, other winners, as I refer to them as the United States of America was driven almost down the middle between growth in revenue from expats, U.S. expats working in Thailand as well as those coming from abroad. The China growth was mixed. We saw strong 7%, 8% China growth on revenue from Chinese expats in country and around the Thailand area. We saw a decline in international China visits, mainly because the country of Thailand is experiencing a significant decline in Chinese tourists from Mainland China as a result of safety concerns. There was a question, as you may or may not know, about a Chinese national that was kidnapped out of China -- out of Thailand into Myanmar, and that created a chilling effect on Chinese nationals coming into China -- coming into Thailand as tourists. And that continues to stay. Just recently, I was reading where for the entire period of 2025, the Chinese Mainland visitor -- tourist visitors into Thailand is down by almost 2/3. So those were the beneficial improvements, changes, increases, decreases with respect to revenue, outpatient admissions and OPD. As we look at the rest of the quarter, we were proud to report, and Khun Artirat will mention this in her comments later, we're proud to report that for the fifth consecutive year, we have been awarded the best hospital in Thailand, and we improved from 130 ranking in the world up to 100 to the 100 best hospital in the world, and we're extremely proud of that. This helps us in many, many ways, especially with international tourists coming into Thailand, looking to just go to the best hospital and not knowing what that best hospital is. We promote this achievement because it's well earned by our doctors and our staff. In addition, in the first quarter, we were the first hospital in all of Thailand to install and have operational a Siemens Photon Counting CT, now what that means is higher resolution, faster throughput, being able to detect lung cancer through CT diagnosis, being able to, most importantly, avoid potentially angiograms being done on patients as opposed to just having them go through this machine. It was a very, very significant expenditure, well over THB 100 million plus-plus, but it was worth it because our patients are benefiting from it. Finally, in the quarter, I have commented in the past about our relationship with Massachusetts General Brigham Hospital. We have developed a formal partnership agreement with them on a Cancer Institute collaboration. That has passed Phase I. It's now into Phase II, and we're looking to finally and finalize, develop what our cancer institute will look like using and getting the benefit of expert advice from Mass General Brigham. As you may know, we are building our Bumrungrad Cancer Institute. It's underway now. It's coming out of the ground. It should be finished somewhere between 18 months, 15 to 18 months from now, and that cancer institute will very much have a number of recommendations by Mass General Brigham as part of that clinical services design. Moving on now to the consolidated revenue by vertical. In general, this is very indicative of what you see here of the revenue proportionality by market segment. In Q1 2024, the International/Middle Eastern revenue was 54% of the total revenue for the company, dropping down to 51%. I commented earlier about 30% of that revenue decline overall came out of the Middle Eastern Q1 2025 revenue change. The rest of it is pretty pro forma, 13%, 13%, 33%, 36%, picking up 36% versus 33% in Q1 2025 as a difference between that 51% and 54% of the prior year quarter. Next slide. Looking at the overall revenue decline for the quarter within our guideline that we gave the last time we met, down 6.1%. As a subpiece of that, the International was down to 11.6%. I've commented by country what that amounted to. Thai was up, expat was down mostly by revenue intensity. Volume was up, but revenue intensity was down for expat. Next slide. Middle East, as I said earlier, was down 30% on revenue. Indochina, up 2.4%. That's the negative of Bangladesh, the positive, the high positive of Myanmar and others were 6.3%. Next slide. These were the ups and the downs for the quarter. If you look at Myanmar and you look at the United States, you look at Cambodia, slightly down. United States was up significantly. Inside the numbers of Qatar and UAE, as we've spoken about, while average length of stay and revenue intensity was down, admissions and outpatient visits were up. Next slide. These are the consolidated numbers on EBITDA and NOPAT, Khun Oraphan will talk about this in detail. slightly down on revenue from 40.7% million to 37.7% on margin. The difference on EBITDA as a result of Ramadan 12.6% decline on EBITDA and on net profit, just about the same percentage decline. Very, very slight decline, though, on net profit for our margin. We did a very good job of containing costs and controlling costs, especially when you consider that our Middle Eastern revenue was down 30% for the quarter, did a really good job on cost control. Next slide. Moving now to our other -- one of several other business lines of principal importance was VitalLife. VitalLife had a very good quarter when you look at it quarter-to-quarter, this is a business that continues to grow, continues to improve and continues to diversify in the longevity and longevity leisure market space. EBITDA was close to the prior year, THB 114 million versus THB 117 million. Net profit very close, THB 89 million versus THB 91 million in Q1 2024. The EBITDA margin was slightly off because the revenue was slightly off as a result of Middle Eastern patients not being on our campus and not using this service. Net profit was 30.6% versus prior year, which was 34.1%. That is the highlight of the quarter. Insofar as guidance for Q2 is concerned, we'll be addressing that at our live stream Q&A. Please join us. That's -- it's at 10:00 on Wednesday, April 30. And we're happy to answer all questions at that time. Thank you.

Good morning. [Foreign Language] I'm Oraphan Buamuang, Chief Financial Officer. I would like to report you all the financial highlights and financial performance of first quarter 2025. In first quarter 2025, total revenue declined by 5.6%. EBITDA and net profit declined by 12.6%. The decline in revenue mainly came from non-Thai patient, revenue down by 9.7%, offset with Thai patient revenue increase by 1.2%. The EBITDA margin and net profit margin in this quarter was 37.7% and 27.9%, respectively. I will walk you through more detail in financial performance section. The total revenue in first quarter 2025 was THB 6,208 million, decline from first quarter last year by 5.6%. The total revenue decline mainly came from the decrease in revenue from hospital operation, which declined by 6.1% when compared to first quarter last year. This was primarily due to 9.7% decrease in revenue from non-Thai patient, highly correlated to the greater impact of Ramadan days experienced in first quarter 2025 compared to first quarter 2024. This decline was partially offset by 1.2% increase in revenue from Thai patient. In terms of revenue contribution by nationality, in first quarter this year, the contribution of Thai was 36% increase from 33% in first quarter last year, while the contribution of International was 64% in first quarter 2025, declined from 67% in first quarter 2024. This was mostly due to an increase in Thai patient revenue at 1.2%, while revenue from non-Thai patient declined by 9.7%. In terms of revenue contribution by service. In first quarter this year, the revenue contribution of outpatient service increased to 52% from 49% in first quarter 2024 due to OPD revenue decreased by 4.8%, while IPD revenue decreased by 7.3%, mainly due to lower length of stay. In terms of revenue contribution by payor type, insurance contribution in first quarter 2025 increased to 22% from 18% in the same period last year due to insurance revenue for first quarter 2025 grew by 12%. The government third-party contribution in first quarter this year was 13%, dropped from 20% in first quarter 2024 due to lower Middle East revenue. Self-pay contribution increased to 64% in first quarter 2025 from 61% in first quarter 2024. In terms of EBITDA and EBITDA margin, in first quarter this year, EBITDA was THB 2,338 million, decrease from same period last year by 12.6%. The decrease mainly due to total revenue decreased by 5.6% and offset with total expense slightly declined by 0.8%. EBITDA margin in this quarter was 37.7%. In terms of net profit and net profit margin, in first quarter this year, net profit was THB 1,734 million, decreased from same period last year by 12.6%. The net profit decrease is in line with EBITDA decline. Net profit margin was 27.9%. In terms of leverage ratio, net debt to EBITDA of first quarter this year was negative 0.3x due to less net debt and net debt to equity was also negative at 0.1x due to less net debt as well. In terms of liability to asset, at the end of first quarter 2025, the percent of liability to asset was dropped to 14%. This is due to the higher net asset continuously. In terms of cash flow statement, at the end of first quarter 2025, total cash and investment increased to THB 16 billion from THB 12.9 billion in first quarter 2024. This came from the accumulated operating cash flow and cash collection from account receivable, especially Middle East account, offset with the dividend payment to the shareholder. In terms of increase in short-term and long-term investment, we have invested in multiple financial assets to capture the higher interest income yield in this year. These are our financial highlights and financial performance of first quarter 2025. Thank you for your attention.

[Foreign Language] So today, I would like to update about the hospital operation part. This is the fifth consecutive year receiving world's best hospitals by Newsweek and Statista. And we rank at 100, which is the best ranking in the past 5 years, coming up a bit from 130 last year. This is why we still remain the #1 best hospital in Thailand. Bumrungrad held a press conference titled Where Life Gets a Second Chance. We reaffirm our leadership in heart, kidney transplant and liver transplant and corneal transplant services with strong outcomes and high expertise, Bumrungrad continues to be recognized by the Thai Red Cross Organ Donation Center as a trusted transplant center. We co-host the 57th International Endoscopic Spine Surgery training with St. Anna Hospital, Germany. We welcome over 120 surgeons from 10 countries. This event reinforced our global reputation in minimally invasive spine surgery and strengthens our position as a regional training hub. Bumrungrad became the first hospital in Thailand to implement Photon Counting CT technology we introduced at the press conference on March 13 this year. This cutting-edge diagnostic innovation with AI technology improve early detection, precision and safety while significantly reducing radiation exposure. For our Center of Excellence performance in the first quarter 2025, due to Ramadan falling in March this year, while it span in March and April last year, this impact revenue in some Center of Excellence. However, we still continue focusing on strengthening differentiation and driving long-term value through medical innovation and clinical outcomes. Bumrungrad Hospital Foundation and Bumrungrad International Hospital are committed to promote public health and well-being. To support this initiative, we organized the Bumrungrad Race to Heal 2025. This is a charity fund run held on February 16 at Chatuchak Park. The event welcome over 1,000 participants supported by 37 sponsors and very successful raised a total donation around THB 2 million, a testament to the strong engagement from our staff and partners. Thank you.

[Foreign Language] My name is Rajeev Rajan. I'm the Chief Business Development Officer. I would be presenting to you first quarter update of 2025. Net patient revenue by market segment overall, we had a negative 6.1% versus first quarter of last year. International, we had a deficit of 11.6%. For the Thai segment, we saw growth of approximately 1.1%. And for the expat segment, a negative growth of 1.9% further to elaborate on the International segment. Further to elaborate on the international revenue into 3 categories: Middle East, Indochina and Others. Middle East, we saw a significant 30.6% approximately. This was majorly because of the early onset of Ramadan, which affected the health care utilization patterns across this region. And also because of the early -- the Ramadan calendar moving every year, a few days early, this year, most of the key Ramadan period was in Q1 of this year, unlike last year, which was shared between Q1 and Q2. Further to have more details on the Middle East revenue by major markets. Qatar, we saw during the period of first quarter, our admissions increased 8.4% quarter-over-quarter. Our outpatient services visits rose by 13.4% approximately quarter-over-quarter. However, reductions in average length of stay and treatment intensity led to a close to around 24.4% quarter-over-quarter revenue decline. UAE, our inpatient admissions increased by approximately 12% same period versus last year, while OPD visits declined during this period, resulting in an overall quarter-to-quarter revenue decline of approximately 39.6%. Again, this is mostly also because of the early onset of Ramadan and mostly over 90% of the Ramadan holidays being in Q1 of this year. For Kuwait, we do not have any specific update or any other data as of now. We expect similar trends, which is anticipated because of the regional factors that was mentioned earlier as well. For Saudi Arabia, we have -- we will be participating in the Thai Festival, which is expected to be organized in the first week of May. It will be held in Riyadh, and we would be -- we will be joining this event and representing our organization there. It is expected to be held over 3 days, having over 20,000 visitors who would be visiting this booth, local residents, Saudi nationals. This is organized by the Thai Ministry of Tourism Health and External Affairs. We believe that this will influence future engagement and opportunities from this region. Moving to the Indochina segment, where we saw approximately 2.4% growth quarter-over-quarter, breaking it down into further in terms of countries. Bangladesh, we experienced 16.8% quarter-over-quarter decline, primarily due to Ramadan and also another factor, which is approximately a 20% decrease in incoming travelers during the month of February and March. This is likely -- it is linked with the visa challenges. Thailand had introduced the new e-payment e-Visa for Bangladeshis, which was brought into effect in January of 2025. But for the e-visas, the payments had to be done physically in banks, which was creating a lot of backlogs. But in March, they reintroduced the e-payment link, which -- where they can make the payments online. And because of this, we can see some of the backlogs getting cleared. But because of the visa challenges and the backlogs and accessibility issue in terms of making payments, we could see slowing in process of visas, which was also a reason for a drop in number of tourists coming into Thailand. So as per the numbers, 20% decrease in incoming travelers during February and March. However, the e-payment is now in place, and we expect these issues to improve moving forward. For Cambodia, OPD visits grew approximately 22% quarter-over-quarter. However, revenue dropped about 7.1% due to lower intensity services. Myanmar, we noted a significant growth of around 19.8%, indicating a robust recovery from this market this quarter. We are closely monitoring the post-earthquake situation. Our clinic in Yangon continues to operate normally today. For other markets, China international patient revenue declined by 11.6% approximately. This highly correlates with the 24% approximately decrease in Chinese tourist arrival into Thailand. This is as reported by the Ministry of Tourism and Sports. However, revenue from Chinese expats for us grew by 8.5% quarter-over-quarter. And for international Chinese revenue coming in from Mainland, the decrease we expect it because of -- this correlates with the tourism and the factors being the economic challenges and safety concerns that have contributed to the downturn in Chinese tourists into Thailand. For U.S., we overall -- we see an increase by approximately 17% quarter-over-quarter, reflecting a positive trend in the healthcare engagement from this market, which is a significant contributor to the 6.3% from the Others vertical. And in the next slide, I have the international revenue by top 10 nationalities. As mentioned before Qatar, we overall see a 24% drop in revenue, but we see a significant growth in terms of our admission numbers and also the OPD numbers. Myanmar, a strong growth by 19.8%. U.S., a strong growth quarter-over-quarter by 17% approx. Cambodia, close to 7% in terms of the value. But in terms of OPD numbers, we see a growth quarter-over-quarter versus last year. Bangladesh for Ramadan and also for the visa factor, but 16.8%. UAE, a strong growth in terms of numbers for IPD, where we see a significant growth quarter-over-quarter for inpatient admissions. 39.6%, mostly because of Ramadan and also from OPD footfalls coming down because of the Ramadan period. Then China, Ethiopia and Oman. So overall for international, 11.6% deficit versus quarter last year. That's the update from business development. Thank you, [Foreign Language].

Now we come to an end of the presentation. We will hold analyst meeting, Q&A session on Wednesday, 30 April at 10 a.m. to 12 p.m., where our management will be happy to answer to all of your questions that you may have. If you have any questions before the meeting, please feel free to send your questions through e-mail at [email protected], and then we will address those questions during the meeting. So for today, thank you very much and [Foreign Language].