Krishna Institute of Medical Sciences, a healthcare service provider with presence in Andhra Pradesh and Telengana, reported its results for Q1FY22 with an operating revenue of Rs. 473 Cr, an increase by 135% Y-o-Y compared to Q1FY21 and an increase by 32% Q-o-Q compared to Q4FY21
The EBITDA of the company increased in the quarter to 30.36% from 28.14% in the previous quarter (Q4FY21). Comparison with the corresponding period of previous year (Q1FY21) is not possible because the stringent lockdowns in the country on account of the first wave of the pandemic
The PAT of the company in the quarter increased to Rs. 92.03 Cr compared to Rs. 58.62 Cr in the previous quarter – An increase by 57% Q-o-Q. The profit in the corresponding quarter of the previous year was Rs. 8.92 Cr
The growth during the quarter was driven mainly by ECMO and Heart & Lung Transplant program which has doubled compared to previous quarter, high occupancy of covid patients, vaccination revenue, RTPCR tests, Covid home care and Covid hotel packages
Business Highlights
The company performed 20 lung transplants related to Covid during the quarter
The company’s hospitals specialize in ECMO treatments. The company has a total of 18 ECMO machines as on date which is among the highest of all hospitals in India
Focus is on reduction of cost for the patient
Around 25% of the revenue of the company during the quarter was through covid related operations
At the peak of the second wave of Covid, 90-95% beds were allocated for covid
The ARPOB (Average revenue per operating bed per day) is expected to be back to Rs. 20000 levels in the future
The overall occupancy during the quarter was around 58-62%
Around 300 people were recruited by the company during peak Covid to adjust for the healthcare service demand which overwhelmed the hospitals
Revenue from ECMO is around Rs. 6-7 Cr per month in a normal quarter. However, it doubled in Q1. ECMO and Heart & Lung transplant business is a high APROB business and contributes significantly to the top-line and bottom-line
The company has a competitive advantage in ECMO and Heart & Lung transplant since this is a complex process in which coordination of the entire team of 35-40 people is important and needs to have very specialized doctors
Doctor’s cost has a fixed component to it which is around 50% of the remuneration in Tier 1 cities and around 90% in Tier 2 and 3 cities
Around 15% of the EBITDA constitute contribution of hospital units which are not fully owned by the company
Future Outlook
KIMS Kondapur has already entered into an agreement for expansion of facility which is very close to the existing location. There are plans to increase the number of beds to 700-800 over the next 3 years. This facility is currently facing shortage of beds
The company is looking at Central India and Maharashtra for further expansion and is in talks with a few players for partnerships and acquisitions
The company is also in the process of getting clearances to begin construction of unit at Chennai and Bengaluru
Approximately 1500 beds will be installed by the company over the next 12-36 months. The cost of setting up a bed is expected to be between Rs. 0.90 Cr to Rs. 1.10 Cr per bed
The management is confident of earning an EBITDA of around 28-29% in the future consistently
The management believes that with penetration of health insurance, the healthcare industry will grow at a fast pace
The company will have a preference of owning the facilities in further expansion rather than an asset light model since it believes that an asset light model is not beneficial in the long term
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