Nephrocare Health Services Q4 FY26 earnings call

Nephroplus reported robust financial results for FY26, with revenue growing 32.2% YoY to INR 998.8 crores. Adjusted EBITDA increased by 37.6% to INR 238.1 crores, leading to a 100 bps margin expansion to 23.8%. Adjusted PAT saw a significant 74.6% YoY growth, reaching INR 128.3 crores, with PAT margin improving by 310 bps to 12.8%. Operationally, active guest counts grew 11.8% to 36,981, and total treatment volumes increased 16.6% to 38.4 lakhs, demonstrating strong underlying business momentum.

Revenue Per Treatment (RPT) for FY26 stood at INR 2,598, a 13.3% increase from INR 2,292 in FY25. This improvement was primarily driven by three factors: a favorable shift in international mix (from 32% to 42% of revenue), beneficial exchange rate movements (Philippines peso +5%, Uzbek currency +7%), and a significant 58% price increase in the Philippines in October 2024, which had a full-year impact in FY26. These factors collectively contributed to higher realizations and improved profitability.

The company demonstrated strong capital efficiency, with capital allocation (capex) increasing by approximately 50% to INR 165 crores in FY26 from INR 113 crores in FY25. Despite this higher investment, the annual pre-tax ROCE improved from 19.9% to 22.8%. Furthermore, working capital days improved from 92 to 83 days, and accounts receivable (AR) days reduced by 14 days from 130 to 116 days, particularly in the Philippines, leading to a free cash flow of INR 68 crores in FY26. The company currently holds INR 500 crores in cash, indicating a strong liquidity position for future growth.

Nephroplus continues its international expansion, now operating 524 clinics across 5 countries, making it India's and Asia's largest, and the world's fifth largest dialysis network by volume. The Philippines market, where the company is the second-largest provider with 44 clinics, is a key growth area, with plans to add 12-15 new clinics annually. The Saudi Arabia joint venture is in an investment phase, with the first clinic at Riyadh Hospital expected to launch within two months, and the company is actively participating in new government tenders. The company emphasizes leveraging its India platform's cost efficiency and operational expertise to achieve higher margins and ROCEs in international markets.

Management addressed concerns regarding the impact of GLP-1 drugs on the dialysis market, stating that while they may cause a minor 0.25% drop in new patient additions in developed markets by delaying the onset of dialysis, they are not relevant for emerging markets for the next 10-15 years. In emerging markets, a significant portion of patients still lack access to dialysis. Therefore, GLP-1 drugs are not expected to materially impact Nephroplus's total addressable market (TAM) opportunity, which is projected to grow from 3 lakh to 5.2 lakh patients by 2029 in India alone.

Nephroplus is committed to investing in advanced technologies, including AI, to differentiate itself and enhance core operations. The company has successfully implemented its 'Reformmed.AI' application in 50 clinics to monitor operational elements and plans to expand it across its entire network. This technological focus, combined with standardized clinical protocols, guest experience, and operating processes (codified in the 'Blue Book'), underpins the company's ability to scale efficiently and maintain high clinical quality across its diverse operating models (captive, standalone, and PPP).