Performance review

A close look at the Q3 FY23 results announced by listed Indian hospitals and diagnostic centers

The medical facilities are eager to return to normalcy, now that the pandemic seems to have receded.

Hospitals
Revenue of private hospitals is poised to grow 10 percent over the next two fiscal years. Increase in domestic demand and a gradual return of medical tourism is pushing up occupancy levels. The listed hospitals have largely seen a quarter-on-quarter improvement in gross margins. And it is expected that this trend will be sustainable.

In the Covid years, the consumable cost was high. Now that Covid has receded, the hospitals have been able to work savings relating to that part of consumption. Also, there is a distinct improvement in supply chain. Serious attempts are on to improve throughput so that existing capacity utilisation is optimal. Hospitals are focusing on day-care cardiac procedures and robotic procedures which have better throughput, with a morning admission, evening discharge. They are also working on adding operation theatres, ICUs, diagnostic and lab setups.

Hospitals are also investing significantly in technologies to improve throughput, faster discharges, faster lab results and so on. Throughput is being increased through process transformations, improvement in discharge efficiencies, and reduction in ALOS. This has helped increase the revenues in the same capacity with the same cost in terms of overheads and manpower, and that’s where it is becoming possible to squeeze higher margins quarter on quarter. Unless there is any unforeseen headwind, this is reasonably sustainable.

Nevertheless, headwinds in the form of consumables coming under price control, including the high-end implants; and reduction in price of stents and addition of more items are anticipated. Being in an extremely competitive industry, doctors and nurses always have good job opportunities in other centres and in other countries.

Performance of leading hospitals
Narayana Hrudayalaya Ltd.
Q3 FY23 vs Q2 FY23. The company has reported total income of ₹1139.718 crore in the quarter ended December 2022 as compared to ₹1172.797 crore during the quarter ended September 2022. Net profit of ₹153.773 crore was posted in Q3 FY23 as against net profit of ₹168.779 crore for Q2 FY23. Reported EPS was ₹7.57 for Q3 FY23 as compared to ₹8.31 for Q2 FY23.

Q3 FY23 vs Q3 FY22. The company has reported total income of ₹1139.7218 crore during the period ended December 2022 as compared to ₹966.496 crore during the period ended December 2021. Net profit was ₹153.773 crore for Q3 FY23 as against net profit of ₹97.492 crore for Q3 FY22. Reported EPS for Q3 FY23 was ₹7.57 as compared to ₹4.80 for Q3 FY22.

Nine-months comparison (YoY). The company has reported total income of ₹3353.943 crore during the nine-months period ended December 2022 as compared to ₹2785.388 crore during the nine-months period ended December 2021. Net profit was ₹433.104 crore for the nine-months ended December 2022 as against ₹273.009 crore for the nine-months period ended December 2021. Reported EPS was ₹21.32 for the nine-months period ended December 2022 as compared to ₹13.44 for the nine-months period ended December 2021.

Apollo Hospitals Enterprise
Q3 FY23 vs Q2 FY23. The company has reported income of ₹4263.6 crore in the quarter ended December 2022 as compared to ₹4251.1 crore during the quarter ended September 2022. Net profit of ₹153.5 crore was posted in Q3 FY23 as against net profit of ₹204 crore for Q2 FY23.

Q3 FY23 vs Q3 FY22. The company has reported income of ₹4263.6 crore during the period ended December 2022 as compared to ₹3638.9 crore during the period ended December 2021. Net profit was ₹153.5 crore for Q3 FY23 as against net profit of ₹228.4 crore for Q3 FY22.

Hospital business grew 8.4 percent YoY, but declined 3.1 percent QoQ . Occupancies stood at ~65 percent in Q3FY23. Management expects occupancy to improve further to ~70 percent in Q4FY23. ARPOB grew 12 percent YoY to ₹51,482. Pharmacy business revenue reported a strong growth of 34.5 percent YoY (+5.4% QoQ). Apollo 24×7 recorded GMV of ₹543 crore in Q3 (+85% QoQ). Hospital business margin expanded 20bps YoY to 24.7 percent. AHLL margins dipped 370bps QoQ to ~8.2 percent. EBITDA margin contracted 140bps QoQ at 11.9 percent.

Max Healthcare Institute Limited.
Q3 FY23 vs Q2 FY23. The company has reported total income of ₹1186.39 crore in Q3 FY23 as compared to ₹1162.94 crore during Q2 FY23. Net profit of ₹222.41 crore was posted in Q3 FY23 as against net profit of ₹457.35 crore for Q2 FY23. Reported EPS was ₹2.29 for Q3 FY23 as compared to ₹4.71 for Q2 FY23.

Q3 FY23 vs Q3 FY22. The company has reported total income of ₹1186.39 crore during the period ended December 2022 as compared to ₹1022.77 crore during the period ended December 2021 (YoY). Net profit of ₹222.41 crore was posted for Q3 FY23 as against net profit of ₹189.75 crore for Q3 FY22. Reported EPS of ₹2.29 for Q3 FY23 as compared to ₹1.96 for Q3 FY22.

Nine-months comparison. The company has reported total income of ₹3447.11 crore during the nine-months period ended December 2022 as compared to ₹3095.31 crore during the nine-months period ended December 2021. Net profit of ₹.852.59 crore for the nine-months ended December 2022 as against ₹481.32 crore for the nine-months period ended December 2021. Reported EPS was ₹8.78 for the nine-months period ended December 2022 as compared to ₹4.97 for the nine-months period ended December 2021.

Hospitals

Healthcare Global Enterprises Limited.
Q3 FY23 vs Q2 FY23. The company has reported total income of ₹428.33 crore in the quarter ended December 2022 as compared to ₹421.97 crore during the quarter ended September 2022. Net profit was ₹7.54 crore in Q3 FY23 as against net profit of ₹7.38 crore for Q2 FY23. Reported EPS was ₹0.54 for Q3 FY23 as compared to ₹0.53 for Q2 FY23.

Q3 FY23 vs Q3 FY22. The company has reported total income of ₹428.33 crore during Q3 FY23 as compared to ₹360.98 crore during Q3 FY22. Net profit of ₹7.54 crore has posted for Q3 FY23 as against net loss of ₹45.78 crore for Q3 FY22. Reported EPS of ₹0.54 for Q3 FY23 as compared to ₹(3.55) for Q3 FY22.

Nine-months comparison. The company has reported total income of ₹1261.26 crore during the nine-months period ended December 2022 as compared to ₹1042.82 crore during the nine-months period ended December 2021. Net profit was ₹20.97 crore for the nine-months ended December 2022 as against net profit of ₹47.74 crore for the nine-months ended December 2021. Reported EPS was ₹1.50 for the nine-months period ended December 2022 as compared to ₹3.57 for the nine-months period ended December 2021.

Shalby Limited.
Q3 FY23 vs Q3 FY22. The company has reported total income of ₹206.501 crore during the period ended December 2022 as compared to ₹165.189 crore during the period ended December 2021. Net profit of ₹15.286 crore was posted for Q3 FY23 as against net profit of ₹12.943 crore for Q3 FY22. Reported EPS of ₹1.41 for Q3 FY23 as compared to ₹1.20 for Q3 FY22.

Nine-months comparison (YoY). The company has reported total income of ₹619.278 crore during the nine-months period ended December 2022 as compared to ₹544.525 crore during the nine-months period ended December 2021. Net profit of ₹53.802 crore for the nine-months ended December 2022 as against net profit of ₹43.921 crore for the nine-months ended December 2021. Reported EPS of ₹4.98 for the nine-months period ended December 2022 as compared to ₹4.06 for the nine-months period ended December 2021.

Q3 FY23 vs Q2 FY23. The company has reported total income of ₹206.501 crore in Q3 FY23 as compared to ₹207.103 crore during Q2 FY23. Net profit of ₹15.286 crore was posted in Q3 FY23 as against net profit of ₹18.411 crore for Q2 FY23. Reported EPS was ₹1.41 for Q3 FY23 as compared to ₹1.20 for Q2 FY23.

Aster DM Healthcare.
Q3 FY23 vs Q3 FY22. The company has reported income of ₹3,192 crore during the period ended December 2022 as compared to ₹2,649.6 crore during the period ended December 2021. Net profit of ₹139.4 crore was posted for Q3 FY23 as against net profit of ₹148.3 crore for Q3 FY22.

Q3 FY23 vs Q2 FY23. The company has reported income of ₹3,192 crore during the period ended December 2022 as compared to ₹2816.3 crore during the quarter ended September 2022. Net profit of ₹139.4 crore was posted for Q3 FY23 as against net profit of ₹46.2 crore for Q2 FY23.

Laboratories
The industry at large is experiencing operating deleverage in this financial year due to sharp decline in Covid and Covid-related revenue. The decline in Covid business has been to the extent of 80 percent compared to last year in general. Deeper analysis also suggests that even non-Covid revenues were favorably as well as unfavorably impacted in some quarters due to Covid, thereby resulting in extremely uneven quarter numbers in FY22.

The industry also experienced entry of many players from pharma, hospitals and even e-commerce in the last couple of years. Most large players in the industry also have not taken meaningful price increase in the last five to six years. On the contrary, the bundling of tests may have led to higher realization per patient but has resulted into effective decline in realization per test. So, far, this has been possible due to operating leverage, mainly driven by higher number of tests per patient. Though it would be very interesting to see how this pattern takes shape, given very high inflation scenarios in times to come.

Competition in the metros and tier-1 cities has heated up and the partners have been growing very, very fast in that space. Apart from that, the tier-2 and beyond of India also continues to enjoy a decent amount of growth.

There is now a need to take a re-look at the business model. Patients are looking for a higher level of convenience, and are no longer prepared to come to a lab and stand in the queue and wait for 30-35 minutes for their turn to come and give blood sample. They expect collection to be done near them, which could be in the format of a collection center or a home collection. That also adds to the overhead structure. The traditional model will have to undergo a change.

This is a very asset-light business, supply side is abundant, and new entrants abound, whether its a hospital, or pharma or even smaller players. So that a very high market share in one market is difficult. The only option is to widen the footprint, both organically and inorganically.

The real differentiator remains trust. Aggressive promotion in this business does not go down too well. A person who commands trust of medical fraternity will eventually last.

Performance of leading diagnostic centres
Thyrocare Technologies Limited.
Q3 FY23 vs Q3 FY22. The company has reported total income of ₹130.13 crore during the period ended December 2022 as compared to ₹118.80 crore during the period ended December 2021. Net profit of ₹14.72 crore was posted for Q3 FY23 as against net profit of ₹21.50 crore for Q3 FY22. Reported EPS of ₹1.88 was Q3 FY23 as compared to ₹4.05 for Q3 FY22.

Nine-months comparison. The company has reported total income of ₹395.51 crore during the nine-months ended December 2022 as compared to ₹485.40 crore during the nine-months ended December 2021. Net profit of ₹51.89 crore for the nine-months ended December 2022 as against net profit of ₹154.90 crore for the nine-months ended December 2021. Reported EPS of ₹9.78 for the nine-months ended December 2022 as compared to ₹29.21 for the nine-months ended December 2021.

Q3 FY23 vs Q2 FY23. The company has reported total income of rs. 130.13 crore in the quarter ended December 2022 as compared to ₹136.59 crore during the quarter ended September 2022. Net profit of ₹14.72 crore was posted in Q3 FY23 as against net profit of ₹15.43 crore for Q2 FY23. Reported EPS was ₹1.88 for Q3 FY23 as compared to ₹3.80 for Q2 FY23.

Dr. Lal PathLabs Ltd.
Q3 FY23 vs Q3 FY22. The company has reported total income of rs. 499.9 crore during the period ended December 2022 as compared to rs. 509 crore during the period ended December 2021. Net profit of ₹52.9 crore was posted for Q3 FY23 as against net profit of ₹57.3 crore for Q3 FY22. Reported EPS of ₹6.35 was Q3 FY23 as compared to ₹6.90 for Q3 FY22.

Nine-months comparison. The company has reported total income of ₹1553.4 crore during the nine-months ended December 2022 as compared to ₹1642.4 crore during the nine-months ended December 2021. Net profit of ₹182.2 crore for the nine-months ended December 2022 as against net profit of ₹283.5 crore for the nine-months ended December 2021. Reported EPS of ₹21.92 for the nine-months ended December 2022 as compared to ₹34.15 for the nine-months ended December 2021.

Q3 FY23 vs Q2 FY23. The company has reported total income of ₹499.9 crore in the quarter ended December 2022 as compared to ₹542.5 crore during the quarter ended September 2022. Net profit of ₹52.9 crore was posted in Q3 FY23 as against net profit of ₹71.7 crore for Q2 FY23. Reported EPS was ₹6.35 for Q3 FY23 as compared to ₹8.60 for Q2 FY23.

Metropolis Healthcare Limited.
Q3 FY23 vs Q3 FY22. The company has reported total income of ₹292.0807 crore during the period ended December 2022 as compared to ₹295.6628 crore during the period ended December 2021. Net profit of ₹35.7987 crore was posted for Q3 FY23 as against net profit of ₹41.0388 crore for Q3 FY22. Reported EPS of ₹6.97 for Q3 FY23 as compared to ₹7.98 for Q3 FY22.

Nine-months comparison (YoY). The company has reported total income of ₹879.6626 crore during the nine-months ended December 2022 as compared to ₹934.3828 crore during the nine-months ended December 2021. Net profit of ₹109.5273 crore for the nine-months ended December 2022 as against net profit of ₹174.1953 crore for the nine-months ended December 2021. Reported EPS of ₹21.31 for the nine-months ended December 2022 as compared to ₹33.88 for the nine-months ended December 2021.

Q3 FY23 vs Q2 FY23. The company has reported total income of ₹292.0807 crore in the quarter ended December 2022 as compared to ₹304.6844 crore during the quarter ended September 2022. Net profit of ₹35.7987 crore was posted in Q3 FY23 as against net profit of ₹40.3313 crore for Q2 FY23. Reported EPS was ₹6.97 for Q3 FY23 as compared to ₹7.85 for Q2 FY23.

Vimta Labs Limited.
Q3 FY23 vs Q3 FY22. The company has reported total income of rs. 78.508 crore during the period ended December 2022 as compared to ₹68.054 crore during the period ended December 2021 (YoY). Net profit of ₹10.241 crore was posted for Q3 FY23 as against net profit of ₹11.682 crore for Q3 FY22. Reported EPS of ₹4.51 for Q3 FY23 as compared to ₹5.17 for Q3 FY22.

Nine-months comparison (YoY). The company has reported total income of ₹239.147 crore during the nine-months ended December 2022 as compared to rs. 205.201 crore during the nine-months ended December 2021. Net profit of ₹35.489 crore for the nine-months ended December 2022 as against net profit of ₹29.496 crore for the nine-months ended December 2021. Reported EPS of ₹15.71 for the nine-months ended December 2022 as compared to ₹13.04 for the nine-months ended December 2021.

Q3 FY23 vs Q2 FY23. The company has reported total income of ₹78.508 crore in the quarter ended December 2022 as compared to ₹68.054 crore during the quarter ended September 2022. Net profit of ₹10.241 crore was posted in Q3 FY23 as against net profit of ₹11.682 crore for Q2 FY23. Reported EPS was ₹4.51 for Q3 FY23 as compared to ₹5.17 for Q2 FY23.

Laboratories