Yatharth Hospital & Trauma Care Services Limited — Q3 FY25 earnings call

Call held 28 Jan 2025

Management summary

Yatharth Hospitals delivered robust financial performance in Q3 FY25, driven by strong revenue and volume growth, particularly from its Noida Extension Hospital. The company is actively expanding its super specialty services and integrating new acquisitions, with a focus on operationalizing the recently acquired Delhi and Faridabad hospitals by Q1 FY26. While EBITDA margins saw a slight dip due to initial losses from the Greater Faridabad unit, management expects sustainability going forward. The ongoing income tax matter, with ₹60 crores provisionally blocked, is being actively addressed with authorities.

Highlights

  • Q3 FY25 Revenue reached ₹219.2 crores, marking a substantial 31% YoY growth and 1% QoQ growth.

  • EBITDA for Q3 FY25 stood at ₹54.9 crores, an 18% YoY increase, with an EBITDA margin of 25.1%.

  • Profit (PAT) for Q3 FY25 was ₹30.5 crores, growing 3% YoY.

  • Average Revenue Per Occupied Bed (ARPOB) for Q3 FY25 increased 4% YoY to ₹30,652.

  • In-patient volumes surged by 36% YoY, while out-patient volumes grew 12% YoY in Q3 FY25.

  • For 9M FY25, revenue grew 32% YoY to ₹648.7 crores, and EBITDA increased 22% YoY to ₹163.2 crores.

  • Overall group occupancy for 9M FY25 rose to 61% from 53% in the prior year period.

  • Two newly acquired hospitals in New Delhi and Faridabad (adding 300 and 400 beds respectively) are expected to be operational by Q1 FY26.

Key financials

3 periods

Headline

  • Revenue
    ₹219.2 Cr
    YoY +31% QoQ +1%
  • EBITDA
    ₹54.9 Cr
    YoY +18%
  • EBITDA Margin
    25.1%
  • PAT
    ₹30.5 Cr
    YoY +3%
  • In-patient Volume Growth
    36%
  • Out-patient Volume Growth
    12%

Q3 FY25

  • ARPOB
    ₹30,652
    YoY +4%

9M FY25

  • Revenue
    ₹648.7 Cr
    YoY +32%
  • EBITDA
    ₹163.2 Cr
    YoY +22%
  • EBITDA Margin
    25.2%
  • PAT
    ₹91.1 Cr
    YoY +21%
  • Overall Occupancy
    61%

What they filed

Q1 FY27: revenue up 35.4%, net profit up 3.7% against the same quarter last year.

₹ Cr · quarterly
Line itemQ2 FY25Q3 FY25Q4 FY25Q1 FY26Q2 FY26Q3 FY26Q4 FY26Q1 FY27
Revenue113 110 112 130 137 +21%158 +44%164 +46%176 +35%
EBITDA31 32 32 35 27 −13%37 +16%39 +22%40 +14%
Net profit20 22 22 27 21 +5%24 +9%24 +9%28 +4%
How to read this

₹ crore, as filed. The percentage beside a figure is the change against the same quarter a year earlier — never the quarter before, which would make every seasonal business look like it collapses and booms each year.

Segment breakdown

  • Noida Extension Hospital
    36% Revenue Contribution43% Revenue Growth₹37,886 ARPOB (Q3 FY25)60% Occupancy (9M FY25)
  • Greater Noida Hospital
    ₹34,584 ARPOB (9M FY25)21% ARPOB Growth
  • Greater Faridabad Hospital
    5% Revenue Contribution₹34,365 ARPOB (Q3 FY25)
  • Jhansi-Orchha Hospital
    50% Occupancy (9M FY25)

Guidance & targets

Profitability

  • EBITDA Margins Profitability · next financial year · High confidence sustainable
    So, the drag will not be lower and the EBITDA margins will be sustainable next year from where we end this financial year.

    — Yatharth Tyagi

ARPOB

  • ARPOB Growth ARPOB · years to come · High confidence 10%
    and we feel the 10% ARPOB growth that the company has seen YoY for last year should be sustainable for the years to come ahead.

    — Yatharth Tyagi

  • ARPOB Growth ARPOB · at least three to four years · High confidence 10%
    and even ARPOB growth as Mr. Amit mentioned should continue to be 10% yearly of at least three to four years and bridge the gap between some of our peers.

    — Yatharth Tyagi

  • ARPOB (Delhi & Faridabad New Hospitals) ARPOB · High confidence upwards of 35,000
    No, for both these hospitals, it could be even upwards of 35,000.

    — Yatharth Tyagi

Payor Mix

  • Government Payor Mix Payor Mix · 2.5 years' time · High confidence 25%
    so we feel that in 2.5-years' time our government payer mix should be close to not more than 25%.

    — Yatharth Tyagi

Acquisitions

  • New Hospitals (Delhi & Faridabad) Breakeven Acquisitions · post operationalization · Medium confidence 18 months to 2 years
    our hospitals have been able to break even somewhere around 18 months to two years' time and I think these two hospitals will also be in a similar timeline as far as that is concerned.

    — Yatharth Tyagi

  • New Hospitals (Delhi & Faridabad) Payback Acquisitions · post operationalization · Medium confidence 4 to 5 years
    usually takes four to five years for our hospitals in the past to have that payback. So, we would assume that both these two hospitals will be similarly on those lines.

    — Yatharth Tyagi

  • Greater Faridabad Hospital Profitability Acquisitions · within 9 months of next financial year · High confidence profitable
    So, I think Greater Faridabad Hospital should be able to turn profitable in the next financial year, somewhere between nine months ending of next financial year.

    — Yatharth Tyagi

Capacity

  • New Hospitals Operationalization Capacity · Q1 FY26 · High confidence operational
    And now coming to the acquisitions that you made in Delhi and Faridabad, you mentioned that 300 and 400 beds in Delhi and Faridabad will become operational from Q1 FY'26.

    — Prolin

Receivables

  • Receivable Days Receivables · end of this financial year · High confidence 110 days
    So, I think somewhere at the end of this financial year, if we close it, close to 110 days, that's what I think would be a good reduction from the start of the year

    — Yatharth Tyagi

  • Receivable Days (Steady State) Receivables · 2.5 years' time · High confidence 75 to 80 days
    as far as the steady state, I think see, in 2.5 years' time, we expect our receivable days to be somewhere close to 75 to 80 days.

    — Yatharth Tyagi

Revenue

  • Revenue Growth Revenue · FY26 · High confidence upwards of 30%
    I mean as we said that we have delivered in the past few quarters industry-leading growth as far as YoY is concerned, I think I think it should be on track for that and the company is on track, has always delivered upwards of 30% YoY growth for the last few quarters and we are quite hopeful for sustaining it and increasing it also in the future.

    — Yatharth Tyagi

Risks & concerns

  • Income Tax Provisional Attachment

    medium

    ₹60 crores of assets are provisionally blocked by the IT department, though management expects early release and minimal financial liability.

    Both downplayed

  • Operational Losses from New Units

    low

    Operational losses at the Greater Faridabad unit contributed to a reduction in Q3 FY25 EBITDA margin, but profitability is expected within 9 months of next FY.

    Management acknowledged

  • Increased Depreciation Expense

    low

    Increased depreciation due to bed capacity expansion and new medical equipment led to slower PAT growth in Q3 FY25.

    Management acknowledged

Areas of evasion (1)

  • Initial details of the income tax blocked amount were somewhat unclear, with different figures mentioned across quarters, though the current amount was clarified.

Q&A highlights

2 direct
Income Tax Provisional Attachment Partial
Just like our provisioning block of the amount a year ago had been released, we have been assured by the department that this provisional blocking of assets will also be released and we do expect a very positive outcome very soon from the department and there are no plans to give any FDs in exchange of this. It is close to 60 crores.

Analysts sought clarity on the exact amount currently blocked by the IT department and the process for its release, which is a significant financial and reputational concern.

Asked by Ritika from Perpetuity Ventures

Acquisition Strategy and Profitability Timelines Direct
our hospitals have been able to break even somewhere around 18 months to two years' time and I think these two hospitals will also be in a similar timeline as far as that is concerned. And as far as the payback is concerned, usually takes four to five years for our hospitals in the past to have that payback.

This question probed the financial viability and integration strategy for the newly acquired Delhi and Faridabad hospitals, crucial for future growth.

Asked by Parth Kotak from Plus91 Asset Management

ARPOB Growth and Payor Mix Strategy Direct
As far as your first question on the payor mix percentage, so we feel that in 2.5-years' time our government payer mix should be close to not more than 25%. That's what we are targeting and moving towards and even ARPOB growth as Mr. Amit mentioned should continue to be 10% yearly of at least three to four years and bridge the gap between some of our peers.

Understanding the strategy to improve ARPOB and reduce government payor mix is key to assessing the company's profitability and premiumization efforts.

Asked by Runit Kapoor from Elara Capital

3 min read 6 chapters

Detailed narrative

Q3 FY25 Financial Performance Overview

Yatharth Hospitals reported a robust Q3 FY25 with revenue reaching ₹219.2 crores, a significant 31% year-on-year increase. EBITDA grew 18% YoY to ₹54.9 crores, resulting in an EBITDA margin of 25.1%. Profit after tax (PAT) saw a 3% YoY growth, totaling ₹30.5 crores. The company's in-patient volumes increased by 36% YoY, and out-patient volumes by 12% YoY, indicating strong operational traction. For the nine months ended FY25, revenue was ₹648.7 crores (up 32% YoY) and EBITDA was ₹163.2 crores (up 22% YoY), with an overall group occupancy of 61%.

ARPOB and Super Specialty Focus

Average Revenue Per Occupied Bed (ARPOB) for Q3 FY25 increased 4% YoY to ₹30,652. This growth is primarily attributed to an increased focus on super specialty services, with oncology now contributing 21% to Noida Extension's revenue and 10% to the group's overall revenue, a 150% increase from last year. Noida Extension Hospital recorded the highest ARPOB at ₹37,886, driven by 70% contribution from super specialty services. Management expects ARPOB to continue growing at 10% yearly for the next three to four years, aiming to bridge the gap with peers.

Strategic Acquisitions and Expansion

The company has completed payments for two newly acquired hospitals in New Delhi and Faridabad, adding approximately 300 and 400 beds respectively. These hospitals are planned to be operational from Q1 FY26. Management anticipates these new facilities to achieve breakeven within 18 months to two years and a payback period of four to five years, similar to past acquisitions. The Greater Faridabad Hospital, operational since mid-May, contributed 5% to the group's revenue and achieved an ARPOB of ₹34,365 in Q3 FY25, with profitability expected within nine months of the next financial year.

Income Tax Matter Update

Management provided an update on the income tax matter, stating that while ₹60 crores of assets are currently provisionally blocked, a majority of the initially blocked funds (around ₹250 crores) have already been released. They are actively cooperating with the authorities and have been assured that the provisional blocking will be released very soon, with no plans to provide FDs in exchange. The company does not anticipate any significant material financial or operational liabilities from these proceedings and expects the matter to be closed before the end of the calendar year.

Payor Mix and Receivable Management

Yatharth Hospitals is strategically reducing its dependency on government business, targeting a government payor mix of not more than 25% within 2.5 years, down from approximately 35% in 9M FY25. This shift is expected to further boost ARPOB. The company is also focused on reducing receivable days, aiming to close FY25 at around 110 days and achieve a steady state of 75-80 days within 2.5 years. Dedicated recovery teams and outsourced channels are being utilized to manage receivables from both government and private insurances.

Operational Highlights and Technology Adoption

The company highlighted several clinical achievements, including the first Cochlear Implant Surgery, complex heart surgeries, and Coronary Artery Bypass Grafting procedures. In line with its vision for cutting-edge technology, Yatharth Hospitals added Interlaminar Spinal Endoscopy in Noida Extension and initiated Therapeutic Nuclear Medicine and Radiotheranostics (Lutetium Therapy). These advancements are aimed at elevating care quality and offering high-end oncology specialization services, contributing to higher ARPOB and attracting leading specialists.

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