Dr Agarwal's Hea

Dr. Agarwal's Health Care Limited delivered robust financial results for Q3 FY25, with revenue growing 28.6% year-on-year to ₹443 crores and EBITDA increasing 26.3% to ₹128 crores, achieving an EBITDA margin of 28.8%. For the nine months ending December 2024, revenue reached ₹1,281 crores, up 27.2% YoY, and EBITDA grew 27.5% to ₹356 crores, with a margin of 27.8%. PAT for Q3 and 9M FY25 stood at ₹28 crores (25% YoY growth) and ₹68 crores (26.2% YoY growth) respectively, reflecting strong operational execution.

The strong revenue growth was primarily driven by a significant increase in surgical volumes, with 72,815 surgeries performed in Q3 FY25, representing a 35.7% year-on-year growth. Over the nine-month period, the company performed approximately 2.1 lakh surgeries, a 31.8% YoY increase. Cataract surgeries remained the largest contributor at about 75% of volumes, while refractive surgeries accounted for approximately 5%. Notably, higher-end procedures now constitute about 21% of overall cataract surgeries, up from 19.2% in FY24, indicating a positive shift towards more advanced treatments.

The company expanded its network by adding 42 new facilities year-to-date in FY25, bringing the total to 221 hospitals across India and Africa. The strategic hub-and-spoke model includes 28 tertiary facilities, 132 secondary centers, and 61 primary centers. Management plans to add another 8-10 surgical facilities and 7 primary facilities in Q4 FY25, aiming for a total of 45-50 new facilities this fiscal year. This expansion strategy focuses on strengthening presence in core markets like Tamil Nadu, Maharashtra, Karnataka, Andhra Pradesh, and Telangana, while also expanding into north core states such as Gujarat, Jammu, and Odisha.

Despite aggressive expansion, management expects EBITDA margins to sustain at current levels, around the 27.8% reported for 9M FY25, even with the planned opening of 45-50 facilities this year. The payer mix remained relatively consistent, with 62% of payments from cash/self-paying patients, 27% from insurance/TPA, and approximately 12% from government schemes. The company noted an average price increase of 2-3% per year over the last three years and clarified that there are no discounts for insurance patients, with net realization for same procedures comparable to cash.

Acquisitions are primarily used for entering new markets (e.g., Varanasi early this year, Delhi, NCR, UP), with organic expansion being the focus in established core markets. Acquisitions are structured as 100% business transfers, with 70% of the payout upfront and 30% linked to revenue milestones over four years, predominantly through cash, with no equity dilution so far. Africa operations, while not a focus for significant expansion, are self-sustaining and have repatriated ₹9-12 crores over the last three years, with plans to open 2-3 facilities annually for moderate growth.

The listed entity, Dr. Agarwal's Eye Hospital, reported a 9M FY25 topline of ₹302 crores, a 25.4% growth year-on-year, with an EBITDA margin of 30.4% (₹91.9 crores) and PAT of ₹38.7 crores (15.2% growth). Management confirmed plans to merge the listed subsidiary with the holding company, aiming to complete the process within three years, ideally sooner, following a fair valuation and share swap to protect minority shareholder interests. The minority shareholding in the listed entity is expected to reduce to 16% by 2026 and 12-13% by 2027.