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    Health.Global

    HCG
    Healthcare·26 May 2025
    Management Summary

    Health.Global reported a strong Q4 and FY25, driven by robust growth in core and emerging centers, and strategic expansions. While PAT was impacted by increased depreciation and interest from recent investments, the company is optimistic about future growth and margin improvement, especially with new investors (KKR) and planned divestment of the Milann business.

    Highlights

    5
    • Revenue (ex-Milann) grew 20% in Q4 FY25 to INR571.1 crores and 17% for FY25 to INR2,165.1 crores.

    • Adjusted EBITDA for Q4 FY25 was INR106.9 crores, up 14% YoY, with a margin of 18.3%.

    • Emerging centers demonstrated strong performance with 32% revenue growth and 44% EBITDA growth in Q4 FY25.

    • Digital revenue doubled over the past year, with continued growth expected.

    • New flagship HCG Cancer Center in Ahmedabad (189-bedded) inaugurated, and 2 new Bangalore hospitals planned for H2 FY26.

    Concerns

    4
    • Q4 FY25 PAT was INR7 crores, and FY25 PAT was INR44 crores, impacted by increased depreciation and interest from recent expansion.

    • Q4 FY25 effective tax rate was high at 50.3%, though FY25 was 14.3%.

    • Receivables were temporarily higher YoY in Q4 FY25 due to state elections, though corrected in April.

    • Milann business continued to struggle, with a proposal for divestment in FY26.

    Key financials

    Single quarter

    15 metrics
    1. 01Revenue (ex-Milann) Q4₹571.1 Cr+20%YoY
    2. 02Revenue (ex-Milann) FY25₹2,165.1 Cr+17%YoY
    3. 03Adjusted EBITDA Q4₹106.9 Cr+14.0%YoY
    4. 04Adjusted EBITDA Margin Q418.3%
    5. 05Adjusted EBITDA FY25₹396.3 Cr+17%YoY

    Segment breakdown

    Core HCG Centers (ex-Milann)
    17% Revenue Growth17% EBITDA Growth17.8% EBITDA Margin
    Established Centers
    22% Revenue Increase Q415% EBITDA Growth Q442,591 Rs ARPOB Q42.5% ARPOB Growth Q420% EBITDA Margin
    Emerging Centers
    32% Revenue Growth Q444% EBITDA Increase Q466,755 Rs ARPOB Q412.4% ARPOB Growth Q410% EBITDA Margin
    Vizag (MGM Hospital)
    ₹50 Cr Revenue H2₹10.5 Cr Adjusted EBITDA H2
    CCK Cancer Center (Kenya)
    24% Margin
    List

    Capital allocation

    5
    CategoryHeadline
    Capex

    ₹286 crores

    Debt

    Debt disclosed

    M&A

    KKR

    acquisition · pending regulatory

    M&A

    MG Hospital (Vizag)

    acquisition · integrated

    M&A

    Milann

    divestment · announced

    Guidance & targets

    7
    CategoryTargetPriority
    Profitability
    Overall EBITDA Margin
    low 20s
    Medium
    Profitability
    Vizag Normalized EBITDA Margin
    25% to 30%
    Medium
    Capex
    Capex
    INR286 crores
    High
    Tax
    Effective Tax Rate
    about 30-odd percent
    Medium
    ARPOB
    ARPOB Growth
    7-8% increase
    Medium
    Capacity
    Operational Beds
    over 900 beds
    High
    M&A
    Milann Divestment
    Divestment
    High

    Milann Divestment Progress

    This fiscal year (FY26)
    CurrentProposal to divest
    TargetDivestment completed or significant progress announced

    Why it matters

    Resolution of a struggling asset, improving overall profitability and focus.

    We are definitely putting a proposal to divest. And hopefully, this will happen definitely this fiscal year, and we'll keep you updated.

    How to verify

    capital_allocation.m_and_a[target='Milann'].status

    Risks & concerns

    2
    RiskSeverity

    Geopolitical issues impacting international patient flow

    Reduced medical visas for Bangladeshi patients impacted international business, but HCG compensated with domestic growth.Analyst acknowledged

    medium

    Milann business underperformance

    Milann has struggled, and a proposal for divestment is being pursued in FY26.Analyst acknowledged

    medium

    Q&A highlights

    8

    “But is it good to say as the emerging centers also rack up, our margin, as we always indicated, will be in the low 20s. That is our initial goal.”

    Clarifies the company's long-term margin target and the strategy to achieve it through emerging centers' scaling.

    asked by Gautam Rajesh

    3 min read6 chapters

    Detailed Narrative

    01

    Strong Q4 and FY25 Performance Driven by Core and Emerging Centers

    Health.Global reported a robust Q4 FY25, with revenue (excluding Milann) growing 20% YoY to INR571.1 crores, and full-year revenue reaching INR2,165.1 crores, up 17%. Adjusted EBITDA for Q4 stood at INR106.9 crores, a 14% YoY increase, with a margin of 18.3%. For the full year, adjusted EBITDA was INR396.3 crores, up 17%, with a margin of 17.8%. Emerging centers demonstrated exceptional performance in Q4 FY25, with revenue growing 32% and EBITDA increasing 44%, while established centers also showed strong growth with a 22% revenue increase and 15% EBITDA growth.

    02

    Strategic Expansion and Infrastructure Upgrades Underway

    HCG continued its strategic expansion and infrastructure upgrades, including the acquisition of MG Hospital in Vizag and the addition of 5 state-of-the-art linear accelerator machines. The company inaugurated its flagship 189-bedded HCG Cancer Center in Ahmedabad, projected to increase patient footfall by 30-40%. Additionally, two new hospitals are planned for Bangalore in H2 FY26, contributing to the target of operationalizing over 900 beds within the next three years. The company plans a capex of INR286 crores for FY26 for network expansion and technology upgrades.

    03

    Profitability Impacted by Investments, Future Outlook Positive

    The company's significant investments in expansion and acquisitions led to ROU creation of INR275 crores and fixed assets addition of INR400 crores, resulting in a net debt increase of INR250 crores. This, along with increased depreciation and interest costs (totaling INR25 crores), impacted PAT, which stood at INR7 crores for Q4 and INR44 crores for FY25. However, management anticipates PAT normalization as EBITDA scales from these new investments, with an overall EBITDA margin target in the 'low 20s' as emerging centers mature.

    04

    Digital Transformation and Enhanced Patient Engagement

    HCG's digital revenue doubled over the past year, driven by initiatives like the launch of its official mobile app for appointments, virtual consultations, and report access. The company is committed to further scaling its digital presence, expecting it to become a significant contributor to top-line growth by enhancing patient experience and reach. This digital focus complements the company's integrated approach to cancer care, aiming to make services more accessible and data-driven.

    05

    Milann Divestment and Capital Structure Optimization

    The Milann business continued to struggle, and management confirmed its intention to divest it, with a proposal expected to be finalized within the current fiscal year (FY26). Furthermore, with new investors (KKR) coming in as CVC dilutes its stake, the company is exploring the possibility of a primary equity infusion to reduce debt. This move is expected to improve interest costs and PAT, aligning with the company's long-term vision for growth and a stronger capital structure.

    06

    ARPOB Trends and Competitive Positioning

    The network-wide ARPOB increased by 4% to INR44,236, with emerging centers showing a 12.4% growth to INR66,755. ARPOB in metro cities like Bangalore and Ahmedabad is significantly higher, reaching up to INR1 lakh, while Tier 2 cities are around INR30,000-35,000. For FY26, the company expects ARPOB to increase by 7-8% due to decreasing length of stay and high-end treatment modalities. Management emphasized HCG's single-specialty focus, quality outcomes, and advanced technology as key differentiators against multi-specialty competitors, leading to market share gains in key regions.

    This is an AI-generated summary of a publicly available earnings call transcript. It is for informational purposes only and does not constitute investment advice, a recommendation, or an endorsement. inve.money is not a SEBI-registered investment advisor. Please consult a qualified financial advisor before making any investment decisions.