GPT Healthcare Limited (GPTHEALTH) Earnings Call Transcript & Summary

Ladies and gentlemen, good day, and welcome to the GPT Healthcare Limited Q4 and FY '25 Earnings Conference Call. [Operator Instructions] Please note that this conference is being recorded. I now hand the conference over to Mr. Anurag Tantia, Executive Director of the company. Thank you, and over to you, sir.

Thank you. Good morning, everyone, and welcome to GPT Healthcare Limited's Earnings Conference Call for the Fourth Quarter and Full Year ended March 31, 2025. GPT Healthcare Limited is the health care arm of GPT Group. Guided by a strong sense of purpose, we are committed to delivering quality health care, particularly in the underserved regions of the country. Through our tertiary care hospitals, we bring -- we aim to bring advanced medical services closer to where people live, especially in Eastern India. Before we begin, I'm pleased to share a significant milestone in our journey. We've moved one step closer to our goal of becoming a 1,000-bed hospital chain. On the May 2, 2025, we commissioned a 158-bed facility at Pachpedi Naka in Raipur. This facility has been established under an asset-light rental-based model. This new hospital will not only serve Raipur, but also the surrounding districts of Bilaspur, Durg, Bhilai and also Odisha. It offers advanced care across a wide range of specialties, including cardiac sciences, oncology, neurology, orthopedic, pediatrics and more. The hospital is equipped with the state-of-the-art medical technology such as a 3 Tesla MRI, 128-slice dual-source CT scan, cardiac cath lab and 5 module operation theaters. Designed for quaternary care and complex treatments, this facility is supported by a skilled team of health care professionals. This marks a proud step forward in our mission to bringing world-class health care closer to the people who need it most. With this, we now operate 719 beds across 5 full-service multi-specialty hospitals. Additionally, we have signed an MoU for a hospital in Jamshedpur, which will have a planned capacity of 150 beds with an estimated investment amount of approximately INR 65 crores. The hospital is expected to be commissioned by the end of Q3 FY '27 and will further strengthen our presence in the underserved regions with quality tertiary care services. These developments are key milestones in our mission to expand access to world-class health care and move closer to our 1,000-bed target. Let me now walk you through some of the financial highlights for Q4 and the full year ending FY '25. Revenue from operations for Q4 FY '25 stood at INR 101 crores, registering a 2% Y-o-Y growth. EBITDA for the quarter was INR 22 crores with an EBITDA margin of 21.6%. PAT came in at INR 13 crores with a margin of 12%. For the full year of FY '25, revenue from operations grew slightly on a Y-o-Y basis to INR 407 crores. EBITDA dipped slightly by 1%, reaching INR 92 crores on account of certain expenditures related to the new hospital in Raipur and also on account of higher impairment provisioning while maintaining a stable EBITDA margin of 22%. PAT grew by 5% Y-o-Y, totaling to INR 50 crores and delivering a PAT margin of 12% A key positive this year has been our finance cost, which saw a sharp decline of 55% Y-o-Y, driven by a strategic reduction in debt. With that, I'm pleased to share that we are now a net debt-free company, a milestone that not only strengthens our balance sheet, but also enhances our ability to invest in future growth opportunities with greater flexibility and confidence. We were also able to achieve an ROE of 23.5% and a return on capital employed of 20% for the year March 31, 2025. On the operational front, the average length of stay improved to 3.54 days from 3.95 days in the same period last year, a result of our ongoing efforts to optimize case mix and enhance throughput. Our ARPOB stood at INR 37,200, aligned with our focus on the middle to high-income segment. Approximately 94% of our business continues to come from cash and insurance patients, reflecting the strength of our neighborhood tertiary care model. Bed occupancy currently stands at 53%, which is mainly due to the reduced length of stay, which allows us to serve more patients efficiently while focusing on complex procedures. Coming to the hospital-wise performance for the full year FY '25. Let me begin with ILS Hospital Salt Lake, our 85-bed center of surgical excellence. The hospital has delivered a strong performance with an ARPOB increasing by 15% Y-o-Y from INR 34,000 to INR 39,200 and the ALOS further came down with a focus on short-stay specialties, allowing us to serve more patients without compromising quality. The Agartala Hospital, which is the next hospital we are talking about, is the only corporate tertiary care hospital in the entire state of Tripura with 205 beds. It has 66 critical care beds and has commenced its journey towards providing comprehensive oncology services as well. The Cancer Care Department of Medical Oncology commenced in FY '25 and the radiation oncology equipment has also been commissioned in May FY '26, making it the only unit of its kind in Tripura. The ARPOB has increased by 16% on a Y-o-Y basis, INR 33,700 for FY '25. The next hospital is the Dum Dum Hospital, which is 155 beds and is located in the densely populated part of North Calcutta. The occupancy rate stands at a long-term sustainable rate of 70%. It recorded an ARPOB of almost INR 41,000 for FY '25, which is an increase of 8% and the revenue stood at INR 162 crores. In line with our continuous effort to increase throughput in this hospital, Dum Dum's average length of stay has reduced from 5.17 to 4.59 for the FY ending 2025. This reduction in length of stay has correspondingly led to a slight dip in occupancy as well despite overall inpatient volumes increasing. The company intends to commence a full-fledged cardiothoracic setup and revamp its other clinical offerings in this hospital to further strengthen its scope of services. The Howrah Hospital continues to grow from a revenue and patient volume basis. We have also commenced robotic knee surgeries in this hospital. In Q4 FY '25, the hospital performed 12 surgeries using the robot. Our 4 existing hospitals, Salt Lake, Agartala, Dum Dum and Howrah continue to show steady progress in both financial and operational performance. As shared earlier, we remain firmly committed to our goal of becoming a 1,000-bed hospital chain over the next 2 to 3 years. This target reflects our broader vision of scaling up operations and bringing quality health care to more communities. By expanding our reach and strengthening our capabilities, we aim to enhance health care access and improve patient outcomes across Eastern India. This vision continues to guide our strategy and reinforces our commitment to delivering excellence in health care. Thank you for your attention. With this, I conclude my opening remarks, and I would request the moderator to open the floor for questions. I look forward to addressing your queries regarding our performance and future outlook.

[Operator Instructions] We have our first question from the line of Naman Bansal (sic) [ Naman Bhansali ] from Nine Rivers Capital.

First question is on the volume growth this year, which has been flattish for our overall consolidated level. So what are certain reasons which has led to this flattish growth in terms of volumes this year?

Thank you, Naman, for this question. So if you see, yes, the volume growth in our Agartala Hospital has been slightly flattish, while we've grown in Howrah, Dum Dum and in Salt Lake. The reasons for this slightly flattish trend in, say, Dum Dum or Howrah and Agartala has been on account of external factors. The R. G. Kar in Calcutta, which is very, very close to our Dum Dum Hospital really affected the numbers to a large extent in that hospital and Agartala has been greatly affected by the Bangladesh issue plus a large-scale floods, which happened in Tripura. So these were some incidents which muted the numbers slightly. However, our numbers are looking up after that and we are hopeful of gaining momentum this year.

Got it, sir. And how is the situation now in terms of Bangladesh patients may be coming in as well as in the Agartala? Is the patient inflow yet still subnormal versus the last year, last full financial year?

So the Bangladesh situation is improving very, very slightly, but we still don't see the patient volumes back in the same numbers, which we were experiencing earlier. However, the good part is that patients from the rest of Tripura have started supporting the hospital and with our setup of comprehensive oncology, we expect the volumes to increase significantly in that hospital.

Got it, sir. Second question is on the Raipur facility. So congratulations on commercializing it this quarter. Firstly, what is the expense that has been already built up for the Raipur facility in the FY '25 financials or maybe Q4?

Thank you. So the Raipur facility [Technical Difficulty] project cost was approximately INR 55 crores as this was an asset-light hospital on a rental basis.

Sir, I'm asking on the OpEx side. In case you have already started marketing activities or doctor costs have sided to build up already?

So that was an impact, which had to be factored in into our EBITDA this year on account of Ind AS. The quantification of that, we'll be able to share with you down the line.

Okay. Sure. And how do we see the scale up or -- in the Raipur Hospital maybe in terms of occupancies in the initial year, initial first 2 years? And what is the breakeven level time period that we are internally targeting here?

So we expect the hospital to break even on a month-on-month basis in 24 months, which will be transitional to around 35% occupancy. We expect that in the first year of operations, we would be stabilizing at around the 20% mark for that hospital.

Got it, sir. That's it from my side, I will join back the queue.

Thank you.

We have our next question from the line of Parth Kotak from Plus91 Asset.

Sir, a couple of questions from my end. One, our model relies heavily on cash and insurance patients. Are there any plans to increase government scheme patient mix, especially for the new hospital?

Yes, our model is heavily reliant on cash and insurance patients that allows us our freedom of getting cash flow to operations of almost 80% compared to EBITDA. That being said, for the newer hospital of Raipur, initially, we would be relying to an extent on the corporates and government schemes. But as the hospital matures, we would be, again, transitioning to our strategy of cash and insurance patients. But that strategy does not change in our existing hospitals.

Got it, sir. Sir, also on the Raipur Hospital, would it be fair to understand that expected ARPOBs would be slightly lower compared to existing hospitals?

So compared to the existing Calcutta hospitals, we would be slightly muted by around 10%, which should be made up as the hospital matures. Compared to other hospitals of the region, we are at par in terms of our pricing strategy.

Got it, sir. Just a slightly deeper understanding, meaning Raipur has a propensity to give us a INR 30,000-plus ARPOB kind of a number, right?

Yes, we are very confident and our model builds into the fact that we are estimating ARPOBs of greater than INR 30,000.

That's very helpful, sir. I'll join back in the queue.

Thank you.

[Operator Instructions] We have our next question from the line of [ Agastya Dave from CAO Capital ].

Hello? Am I clearly audible?

Yes, [ Mr. Dave ].

Yes, sir.

Sir, actually, most of my questions were asked by the previous 2 participants. Just one question on ARPOB growth in general overall for the company. If you can go asset by asset and give some commentary on how do you see this -- the trend of ARPOB growth over the next, let's say, 2 to 3 years? I'm saying 2 to 3 years because there are some mature assets and some which will be ramping up. So if you can go into slightly more detail, sir, that would be it from my side.

Sure. So the ARPOB has gone up by an average of around 10% to 12% across the different units, going unit-wise as requested by you. At the Salt Lake Hospital, we have gone to an ARPOB of INR 39,200 compared to INR 34,000. This is primarily on account of an increase in the number of robotic surgeries and on account of the shortening of length of stay, which we've been focusing on in this hospital to deliver more comprehensive care for short-stay surgeries. We expect the ARPOB at this hospital to continue increasing at around the 8% to 10% mark. For the Agartala Hospital, the ARPOB has moved from INR 29,000 last year to INR 33,600 this year. This is primarily on account of the oncology services, which -- medical oncology services, which have been started, combined with our deeper focus on super specialty segments like nephrology and cardiology. We are expecting this ARPOB to increase by almost 15% on an annual basis on account of the larger specialized treatments which we are starting. Here also, our focus has been on reducing the government scheme cases, which is impacting -- which is increasing our ARPOB. At Dum Dum, the ARPOB has grown slightly by around 10% from INR 38,000 to INR 41,000. Here, again, it is a function of our focus on reducing the length of stay of this hospital. The average revenue per patient has gone down slightly, but the ARPOB has gone up because of our focus on reduction on length of stay and increasing the throughput in the hospital. We expect the ARPOB to maintain similar momentum and increase by around 7% to 8% every year. Howrah has gone up from INR 27,000 to INR 32,000 -- almost INR 33,000 this year on account of larger focus on super specialties like cardiology and neurology. We expect this ARPOB to grow at almost 10% -- a healthy 10% to 12% every year. With regards to Raipur, as I already highlighted, we are -- we've just started off that hospital, and we expect the ARPOBs to match up with our existing ARPOBs over the course of the next 2 years.

Understood, sir. And sir, are there any other levers in terms of super specialty treatments across all your assets which you can pull over the next 2 years to give you that further bump up?

Definitely, there are multiple levers which we are already working on across all our units. Every unit has a different strategy in terms of what levers are to be utilized. For example, in Dum Dum, as I said earlier, we are focusing a lot on cardiology. We are also utilizing the lever of interventional neurology and cardiac surgeries in that hospital. In Raipur, we are focusing on electrophysiology and cardiology that is going to be a big lever in super specialty which we will be starting afresh. At Agartala, we are starting oncology, and we are also going to end up -- we'll be starting kidney transplant also soon there. So every hospital has a different lever which is in play, which should materialize over the course of the next year.

One final question, sir. So we have discussed the realizations to you, but how about cost inflation to you? What kind of inflation are you expecting over the next 2, 3 years in general across all your assets? Here, I don't want, sir, asset by asset but in general, for the company, what are you seeing, sir?

See, in general, the cost inflation is expected to be in line with the industry standards of around 7% to 8%. This ranges from across manpower to consumables, everything should be around an average of around 7% to 8%. That being said, we are focusing strongly on getting our cost of medications and consumables down, and we've been able to reduce it by almost 2% on a Y-o-Y basis because of the stronger focus which we have there.

Excellent, sir. Sir, thank you very much for answering all the questions in such detail and with such patience. Sir, all the best, sir, this was very, very useful.

Thank you.

[Operator Instructions] We have our next question from the line of Naysar from Credent Asset Management.

So just want to understand at an aggregate level, what will be the contribution of patients coming from Bangladesh to our total revenues?

Thank you for the question. So at an aggregated level across we don't have a very large focus on Bangladesh. The Bangladesh as a whole would contribute around 10% of our unit volume to our Agartala Hospital. So I would say that it forms a minuscule 2% or 3% of the overall volume of our consolidated revenues.

Okay. And you mentioned reasons earlier as to why occupancies were low. But some of the reasons that you mentioned maybe were probably therefore a very weak pillar. So that would have still so much impacted our occupancies for the year as a whole? Or maybe -- maybe there are some more reasons because of higher competition or whatever. Maybe can you some well deeper into because our occupancy have been running very low for the last few years and we'll not be able to increase. I understand ALOS is 1 of the reasons. And again, on that as well, see, because our occupancy are low, so I can understand you're reducing ALOS when you are running at 70% plus. But when you're already at low occupancies, why would you want to say, maybe reduce maybe just creating capacities ahead of probably demand. So maybe can just a little deeper on that.

Thank you for the question. So at an aggregated level across Calcutta, we don't have a very large focus on Bangladesh. The Bangladesh -- Bangladesh as a whole would contribute around 10% of our unit volume to our Agartala hospital. So I would say that it forms a miniscule 2% or 3% of the overall volume of our consolidated revenues.

Okay. And you mentioned reasons earlier as to why occupancies were low. But some of the reasons that you mentioned maybe were probably there for a very weak period. So that would have still so much impacted our occupancies for the year as a whole? Or maybe there are some more reasons because of higher competition or whatever. Maybe can you some -- dwell deeper into because our occupancies have been running very low for the last few years, and we've not been able to increase. I understand ALOS is one of the reasons. And again, on that as well, see, because our occupancies are low, so I can understand you're reducing ALOS when you are running at 70% plus. But when you're already at low occupancies, why would you want to, say, maybe reduce ALOS, maybe just creating capacities ahead of probably demand? So maybe just can you just dwell deeper on that?

So if you notice that our hospital of Dum Dum and Salt Lake had been functioning at over 70%, 75% occupancy. And there, there has been a conscious shift to reducing the ALOS so that beds can be freed up. We've always had that struggle to make beds available for patients in those 2 hospitals. So there, it has been a very, very conscious focus to reducing length of stay. At -- and R. G. Kar incident, which affected Dum Dum volumes to an extent, was extending for almost 3 to 4 months, which is a significant amount of time in the overall financial year. When we come to Agartala, there were 2 impacts. As I said, 10% of the volume of Agartala, which is a significant amount, comes from Bangladesh, which has been impacted for a long time now. And apart from that, there were floods, massive floods in the entire state, which extended for almost 2 to 3 months. The entire connectivity of the region was hampered during that period, which impacted the Agartala volumes as well.

Sir, only Dum Dum is 69%, right? Because Salt Lake is less than 60%, Agartala is 46% and Howrah is 41%. So it's only Dum Dum, which is close to 70%, right?

Dum Dum was almost 75%, which has come down on account of the reduction of length of stay despite higher volumes. While Salt Lake, if you see historically, has been maintaining the 70%, again, on account of reduction in length of stay while increasing volumes, it has come down. If you see the volume growth of Salt Lake, it has been consistent. But because of the reduction in length of stay, it has come down.

Maybe any outlook that you can share on occupancies for FY '26?

So in FY '26, we expect Dum Dum to be stable at around the 72%, 73% mark. Salt Lake will be at around the 70% mark. Agartala should be at 55% and Howrah should also be at 55% -- 50%.

So you're saying Salt Lake will increase from 58% to 70%. So significant increase there you are expecting is it?

Yes.

And Agartala, you said from 46% to 55% and Howrah from 41% to 55%.

Yes.

Okay.

Howrah, 41% to 50%.

41% to 50%. Salt Lake from 58% to 70% and Agartala from 46% to 55%, right?

Correct.

Okay. Okay. All the best to you.

Thank you.

[Operator Instructions] We have our next question from the line of Naman Bhansali from Nine River Capitals (sic) [ Nine Rivers Capital ].

My question is on the EBITDA margin side. So what sort of compression can we expect in the coming financial year? And on the EBITDA margin, can you please specify on the ex other income EBITDA margin, the operating profit?

Sure. So in this coming year, we expect a business loss on account of the new hospital to the extent of around INR 7 crores to INR 8 crores, which will overall have an impact of around 5% to 6% on the overall EBITDA, but the other hospitals would be kicking in, in terms of that growth. We expect the EBITDA margin to be [Technical Difficulty] [ 2.5% to 23% ] overall.

Got it, sir. And in terms of growth guidance, what can we expect going from here, considering in the past over the -- and which is the longer-term financials, you have grown more than 15% CAGR consistently, but this financial year has been largely flat. So going forward, what is the expectation here?

We expect the company to grow at a 15% Y-o-Y growth on account of the new hospitals as well as the newer specialties being introduced in the existing hospitals.

Got it. And lastly, we have already signed Jamshedpur, and could you please share the status on the Ranchi project as well?

So the Ranchi project, we are still -- there has been a delay on account of the developers in getting clearances. We are still awaiting the clearances from their end. But as I highlighted earlier, we have signed Jamshedpur, and we are going full ahead with that. At this stage, the building is already G+4 constructed, and now it is being modified and increased to meet our requirements.

[Operator Instructions] As there are no further questions, I would now like to hand the conference over to the management for closing comments.

Thank you, everyone, for your questions, which I hope we have suitably addressed. In case you have any further queries, please get in touch with us. Thank you for your continued support and trust in our company's vision and capabilities. Together, we look forward to achieving new milestones and creating lasting value. Thank you, and have a good day ahead.

Thank you. On behalf of GPT Healthcare Limited, that concludes this conference. Thank you for joining us, and you may now disconnect your lines.