Dr. Agarwal's Health Care Q1 FY27 earnings call

Dr. Agarwal's Health Care Limited reported a strong start to FY27, with revenue from operations reaching INR614 crores, reflecting a 26% year-on-year growth and an 8.8% sequential increase. Total income for the quarter stood at INR620 crores, up 24% YoY. The company's Ind AS EBITDA grew 25.2% YoY to INR177 crores, with margins improving by 30 basis points to 28.5%. PAT margin expanded significantly by 127 basis points to 8.9%, demonstrating improved profitability despite initial losses from new greenfield facilities.

The company continued its rapid expansion, commissioning a record 18 new greenfield facilities in Q1 FY27, including 16 surgical centers. This brings the total new greenfield additions since FY23 to 166 facilities. Management reiterated its plan to add 60 new facilities in FY27, with 12 slated for Q2 and 30 for H2, supported by a strong pipeline of over 30 signed Letters of Intent. This aggressive expansion reflects a robust operational foundation and ability to generate patient footfalls from early stages.

Dr. Agarwal's highlighted its commitment to clinical excellence and complex surgeries. High-end cataract surgeries constituted 29.3% of the 67,000 total cataract procedures performed. Robotic (Femto) cataract surgeries grew 33.4% YoY to 1,548 procedures, while Lenticular (SMILE) surgeries increased 36.2% YoY. Retinal surgeries also saw a 30% YoY growth, reaching 3,861 procedures, and the company performed a record 285 corneal transplants.

A key innovation highlighted was the Pinhole Pupilloplasty (PPP) technique, developed by the Chairman, Dr. Amar Agarwal. This procedure offers a sight-saving alternative to traditional corneal transplants, addressing donor cornea shortages and providing predictable visual outcomes. Over 500 PPP procedures were performed last financial year, with approximately 94% of patients experiencing significant visual acuity improvements, gaining global academic and clinical recognition.

Surgical services remained the largest revenue contributor at 66%, with total surgeries growing 15.5% YoY to nearly 91,000. The Southern region, contributing 63% of group revenues, grew 22.8% YoY, driven by expansion into retina and cornea specialties. The West region grew 24% YoY, contributing 15% of revenues, while the North region showed the fastest growth at 50.5% YoY, contributing 9% of revenues, benefiting from new Delhi-NCR entries and recovery in Punjab.

Mature facilities (operational prior to FY23) delivered a strong SSSG of 16.3% YoY, accounting for 75.9% of group revenues. This growth was equally driven by volume and value, with both growing 8%. Average realization per cataract has increased from INR28,000-30,000 to INR42,000, attributed to higher insurance penetration, demand for better lenses, and the adoption of Femto cataracts. Management expects Femto cataracts to further boost gross margins.

The company demonstrated improved financial efficiency with gross margins expanding year-on-year. Finance costs decreased to INR23.5 crores in Q1 FY27 from INR24.7 crores in Q1 FY26, primarily due to a reduction in interest on deferred acquisition payable. The share of profit after tax attributable to owners expanded to 82.2% in Q1 FY27 from 79% in Q1 FY26. Regarding the ongoing merger, management expects to finalize and close the transaction around mid-November.