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Fortis corp ppt

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  • 1. June 2011
  • 2. DisclaimerThis presentation may not be copied, published, distributed or transmitted. The presentation has been prepared solely by the company.Any reference in this presentation to “Fortis Healthcare (India) Limited” shall mean, collectively, the Company and its subsidiaries. Thispresentation has been prepared for informational purposes only. This presentation does not constitute a prospectus, offering circular oroffering memorandum and is not an offer or invitation to buy or sell any securities, nor shall part, or all, of this presentation form the basis of,or be relied on in connection with, any contract or investment decision in relation to any securities. Furthermore, this presentation is not andshould not be construed as an offer or a solicitation of an offer to buy securities of the company for sale in the United States, India or anyother jurisdiction.Securities may not be offered or sold in the United States absent registration or an exemption from registration. Any public offering in theUnited States may be made only by means of an offering document that may be obtained from the Company and that will contain detailedinformation about the Company and its management, as well as financial statements. Any offer or sale of securities in a given jurisdiction issubject to the applicable laws of that jurisdiction.This presentation contains forward-looking statements based on the currently held beliefs and assumptions of the management of theCompany, which are expressed in good faith and, in their opinion, reasonable. Forward-looking statements involve known and unknown risks,uncertainties and other factors, which may cause the actual results, financial condition, performance, or achievements of the Company orindustry results, to differ materially from the results, financial condition, performance or achievements expressed or implied by such forward-looking statements. Given these risks, uncertainties and other factors, recipients of this presentation are cautioned not to place unduereliance on these forward-looking statements.The Company assumes no responsibility to publicly amend, modify or revise any forward-looking statements, on the basis of any subsequentdevelopment, information or events, or otherwise. Unless otherwise stated in this presentation, the information contained herein is based onmanagement information and estimates. The information contained herein is subject to change without notice and past performance is notindicative of future results. The Company may alter, modify or otherwise change in any manner the content of this presentation, withoutobligation to notify any person of such revision or changes.By attending this presentation you acknowledge that you will be solely responsible for your own assessment of the market and the marketposition of the Company and that you will conduct your own analysis and be solely responsible for forming your own view of the potentialfuture performance of the business of the Company.Neither the delivery of this presentation nor any further discussions of the Company with any of the recipients shall, under any circumstances,create any implication that there has been no change in the affairs of the Company since that date. 2
  • 3. Agenda A. Healthcare Industry in India B. Company Overview C. Recent Developments D. Financials
  • 4. Healthcare Sector: Favorable industry dynamicsHealthcare Services remains attractive to both public and private market investors Strong Cash Generation Characteristics Increasing Public Scalable Business Outsourcing Models Favorable Increasing Private Underlying Payers Demographics Healthcare Sector Healthcare without Scarcity of Quality Binary Risk Assets Defensive Growth Characteristics Rise of Independent Providers Considerable Consolidation Opportunities 4
  • 5. Hospitals: Proxy for India’s Healthcare Boom • The Healthcare delivery market in India pegged at around US$ 45 billion in 2010 • While globally healthcare is typically provided through a largely government-funded public system, the Indian healthcare industry is dominated by the private sector • India has ~17% of the worlds population, but one of the poorest healthcare infrastructures among growing economies and the lowest spend on healthcare (~4.5% of GDP) • Demographic changes, improving income levels, changing lifestyles, and rising insurance penetration etc will result in a rise in discretionary spending on healthcare Indian Healthcare Market (US$bn) • Accessible, reliable and affordable healthcare continues to be a challenge CAGR: 12% • Opportunity in healthcare being significantly leveraged by private healthcare providers • Expected to generate employment opportunities for 9 million people by 2012Source: Analyst Research 5
  • 6. Indian Healthcare Delivery 20% 80% Others 7% Population Insurance Pvt. Govt. 1% Sector 22% 30% Govt. Sector 70% Out of Pocket 70% Hospitals in the Country Healthcare Expenditure6
  • 7. Evolution of Healthcare in India Very Low Healthcare Spend as % of GDP High Disease Burden & Insufficient Facilities 20% 9% 8% 8% 6% 1% Disease Beds Doctors Nurses Community & Lab burden health workers technicians Significantly Low Hospital Beds Per 10,000 Population Changing Age Profile of Indian Population 139 72 39 34 32 31 30 24 22 9 Japan France UK CanadaSingapore US China Brazil Thailand IndiaSource: WHO, FICCI, Ernst & Young, Analyst Research 7
  • 8. Current Status Of Global Healthcare There is a wide discrepancy in the world with regards to the amount of health expenditures both relative to GDP and in absolute terms Health Expenditure (% of GDP) Developed Countries Developing Countries Health Expenditure Per Capita (US$) Developed Countries Developing CountriesSource: The World Pharmaceutical Markets Fact Book 2009 from Espicom Business Intelligence; CIA World Factbook
  • 9. Lifestyle Changes Driving Diseases Which RequireHospitalisation Changing Disease Profile Expected No. of Cardiac Patients in India 72.1 Number of people (in million) Lifestyle Diseases 45.0 Acute 2008 2018E Diseases Estimated No. of Diabetes Patients Cancer and Cardiac – Grows widely in the Number of people (in million) lifestyle segment 49.4 39.0• Lifestyle diseases are set to assume a greater share of the healthcare market• Lifestyle diseases such as cardiac diseases require hospitalization and are more expensive to treat hence increasing the in-patient revenues 2008 2018ESource: CII-McKinsey, CRISIL Research 9
  • 10. India: Potential to Become the Global HealthcareDestination Overview Cost of Important Procedures (US $)• Medical value travel is one of the most lucrative segments of US UK Thailand Singapore India the healthcare sector and is expected to grow into a US$ 1.5 billion industry by 2012 Heart Surgery 100,000 41,726 14,250 15,312 6,000• Potential to contribute US$ 1.2 – 2.4 billion additional Heart Valve Replacement 1,60,000 30,000 10,500 13,000 6,000 revenue for up-market tertiary care hospitals by 2012, and Bone Marrow Transplant 250,000 292,470 62,500 150,000 30,000 will account for 3 – 5% of total healthcare market Liver Transplant 300,000 200,000 75,000 140,000 45,000 Knee Replacement 48,000 50,109 8,000 25,000 6,000 Hip Replacement 38,000 18,000 10,000 12,000 6,000 Key Drivers For The Growth Issues• Quality healthcare at fraction of the cost • Inadequate healthcare infrastructure• Availability of skilled doctors & hospitals • Unstructured medico legal jurisdiction• Good reputation of Indian doctors • Indians hospitals’ standards below par against the global• Upsurge of lifestyle diseases benchmarks of care • Lack of accredited hospitals and follow up care 10
  • 11. Health Insurance Growing Share Of Urban Middle Class Households Health Insurance Market Size (US$ mn)100% 3.3% 5.2% 7.0% 7,000 6,20780% 6,000 44.2% CAGR: 32% 52.5% 5,000 58.6%60% 4,00040% 3,000 52.5% 2,000 1,47220% 42.3% 1,127 34.5% 713 1,000 494 0% 0 2001-02 2006-07E 2010-11E 2006 2007 2008 2009 2015E <US$ 2,100 US$ 2,100 - 12,800 >US$ 12,800 Health insurance market in India is expected to grow at a CAGR of 32% to reach a market size of US$ 6.21bn by FY15 • One of the fastest growing free economy • Overall penetration at 2%. • Ranked 4th largest economy in the world in terms of • Growth driven by: purchasing power parity a) increasing awareness, • Higher service mix, increasing urbanization b) soaring healthcare costs and c) demographic profile of the peopleSource: CRISIL Research 11
  • 12. Agenda A. Healthcare Industry in India B. Company Overview C. Recent Developments D. Financials
  • 13. The Fortis Edifice…..“Vision” “To create a world-class integrated healthcare delivery system in India, entailing the finest medical skills combined with compassionate patient care” Globally respected healthcare organization known for Clinical excellence and Distinctive Patient care Talented Strong value Efficient Responsibility“Achieved by” towards people system systems stakeholders“Foundation” of Trust 13
  • 14. Fortis Healthcare: The first decade of growth• Incorporated in 1996, Fortis is second largest healthcare chain in India built on a focused organic and inorganic strategy• 56* healthcare delivery facilities • 31 operating hospitals, • 17 satellite and heart command centers and • 8 hospitals under development• Listed on Indian stock exchanges with a market capitalization of c.USD1.5bn (May 2011)• International and Nationally accredited facilities by JCI, NABH, NABL along with quality certifications by ISO Standards 9001 / 14001• Acquired 10 hospitals from Wockhardt Hospitals in 2009 and gained pan India presence and had recently acquired a ~25.3% stake in Parkway Holdings (Southeast Asia’s leading healthcare service provider with a network of 20** hospitals with more than 3,400 beds throughout Asia) and has chosen to exit considering higher valuations Took a significant step in establishing Fortis as a Global Healthcare Brand by its attempt Acquired Strategic stake inStarted first hospital at Acquired Escorts chain of hospitals Acquired Malar Hospitals, to acquire Parkway Holdings Ltd – Asia’s Super ReligareMohali Chennai finest healthcare provider, but exited Laboratories (SRL) considering high valuations of the asset Have signed 5 O&M contracts till Enters Delhi Listed on BSE and NSE Rights Issue date and progressing towards Commences operations at with a market cap of Acquired 10 hospitals from Wockhardt ongoing projects in tier II cities Noida USD543mn Starts hospital at Jaipur Commenced two Greenfield facilities at Revenues grow Company achieves Shalimar Bagh, Delhi and Anandpur, 4x with strong profitability on Kolkata; Launched an Oncology block at presence in NCR consolidated basis Mulund, Mumbai * Includes projects under development 14
  • 15. Key Differentiators – Success Drivers Strong IT system Differentiated Model – Doctor engagement, Deep Brand penetration Strategy, Pan India presence Key Execution capabilities – Differentiators People focus M&A deals, Integration and turnaround Stress on Quality, Patient Operational Synergies – Centricity FOS, TRM, PSM 15
  • 16. Organisational Chart Managing Director President – Strategy, Chief Financial Organisational Vice President – Corporate Chief Executive Officer Affairs Officer Development & Projects Head – Growth & Business Planning Director- Head- Director-Medical Chief People Chief Financial Marketing & Regional / Zonal Head – Internal Information Chief Sales Operations Officer Controller Corporate Directors* Audit Technology Group Communications* The business is bifurcated into three regions headed by Regional Directors (RDs) for respective regions. 16
  • 17. Driving Efficiencies Branding & Marketing • Conveying Value Proposition Operating Efficiency• ARPOB, ALOS, Occupancy Capital Efficiency• Gross Margins, EBIDTA • Optimize Capex• Bed to Nurse ratio • Cheap Finance• Supply Chain Management • Model of Growth• Best practice benchmarking • Outsourcing• DSO/ Inventory Days Maximizing Return • Off Balance Sheet• Surgical : Non Surgical on Invested • Turn key/ PPP/ Leased Premises• Shared Service Centres Capital • Technology Management : COE• FOS, MOS, Patient Satisfaction Index Processes People • IT system, Protocols, SOP’s, Governance, • Motivated, Trained and Engaged Staff: • Trust and Transparency , Integration Service Excellence, Academics & Capability, Project Execution Research, HR Processes 17
  • 18. Deep Pan India Presence Total Capacity Operational Beds No. of Hospitals Category wise Owned 4,716 2,941 22 Presence across - 15 States Managed 1,576 800 26 - 30 Cities Projects 1,945 - 8 Grand Total 8,237 3,741 56 Region wise North 4,538 1,977 29 South 1,469 663 10 West 1,270 685 6 East 840 306 8 International 120 110 3 Grand Total 8,237 3,741 56 Focus Areas Maturity wise More than 5 years 766 542 45 Owned Facility 3 to 5 years 2,806 1,908 27 Managed Facility 1 to 3 years 851 616 8 Heart Command Centers (HCCs) Less than 1 year 1,919 675 9 Projects Projects 1,945 - 8 Grand Total 8,237 3,741 56Not included in above map are international hospitals, and projects* Expansion of beds at Mulund hospital is a project, but does not add a new hospital to the total number of hospitals. Although, the beds considered as part of capacity in Project stage 18
  • 19. Growth strategy Focused and Improving Leveraging Aggressive Operational People and Growth Strategy Performance Technology Reinforce presence in already present Maximize efficiency through strategies Attract and retain clinical staff with regions such as common procurement unit for reputations for clinical excellence in their medical equipments and supplies communities Flexible approach to expansion through Green Field, Brown Field, O&M Improve occupancy rates by Training and skill enhancement agreements, Asset Light model and Public expanding its reach and increasing programs Private Partnerships (PPP) community outreach programs to gain Adopting latest medical equipment and market share Replicate its North India model to technology establish a network of super-specialty Increase its average income per bed Focusing on evolving a robust IT “Centers of Excellence” and multi- in use by focusing on high-end platform for seamless integration of specialty hospitals delivering quality healthcare services, reducing the information healthcare, to all regions average length of stay of in-patients Motivated, Trained and Engaged Execution capabilities – Supply Chain Management, Staff: Service Excellence, Greenfield projects, M&A deals, Shared Service Centers Academics & Research, HR Integration and turnaround FOS, MOS, Processes 19
  • 20. Typical Tertiary Care Model (200 Beds - Owned facility) Indicative Hospital Operating Model 500 [1.3x – 1.5x of CAPEX] Book Breakeven 4x 400 Cash Breakeven 28% 300 Revenues Land 13% EBITDA 23%Other Equip 12% Breakeven 17% Medical 200 16% 25% 20% Equip 23% 28% x 31% 28% 100 38% 30% Building & 33% 50% Utilities 38% 27% 31% 29% 40% 36% 0 CAPEX (16%) Cost of set up is 30% Occupancy 85% ` 60 – 90 lacs/ bed (100) Debt: Equity – 1:1 Year 1 Year 2 Year 3 Year 4 Year 5 ROCE = 26% ROE = 20% Variable Personnel SG&A Cost EBIDTA 20
  • 21. Asset Light Model (200 Beds) Indicative Hospital Operating Model 500 [1.3x – 1.5x of CAPEX] 4x Book Breakeven 400 5% Besides elongated book Cash Breakeven 28% breakeven 300 period, Fortis’ to Revenues 6% 13% witness higher Land 17% Other EBITDAR 23% returns on its 12% Breakeven Equip 8% investment Medical 200 16% 20% ROCE = 51% 25% 28% Equip 11% 23% ROE = 39% x 18% 31% 28% 100 38% 30%Building & 33% 50% 38% 27% Fortis to invest Utilities 36% 29% only on Medical 40% 31% and Other 0 (16%) equipment (~37% CAPEX Cost of set up is of project cost). ` 60-90 lacs/ bed 30% Occupancy 85% (100) Debt: Equity – 1:1 Year 1 Year 2 Year 3 Year 4 Year 5 Variable Personnel SG&A Cost EBIDTAR* Rent *EBITDAR is Earnings before Interest, Tax, Depreciation, Amortisation and Rent/lease 21
  • 22. Focus on ARPOB Surgical vs. Non Surgical Critical Care Beds vs. Medical Program General Care Beds Total Revenue Pricing Specialties Chosen AverageRevenue Per Average Length ofOccupied Bed = ÷ Stay (ALOS) Patient Turnover (ARPOB) Occupied Beds Volumes Bed Utilization No. of ProceduresA Hospital must grow its ARPOB, as when the occupancies go up it ensures that incremental beds are filled with high value added business 22
  • 23. Fortis has Achieved Growth Both through SuccessfulAcquisitions and Value Added Services Ramp up at an acquired facility – Fortis Malar, Chennai Extracting value from M&A: Escorts Delhi 90.0 83.3 ` Cr. Grown twice on quarterly basis since 2008 Acquired 80.0 67% CAGR Fortis Malar in 90.0 78.0 70.0 64.1 80.0 February 2008 69.9 60.0 70.0 60.0 54.5 50.0 ` Cr. 50.0 41.4 40.0 33.2 40.0 30.0 30.0 17.9 20.0 14.0 14.2 20.0 10.9 13.6 13.4 9.4 10.0 4.1 4.2 10.0 4.3 1.1 0.0 - Q3FY08 Q3FY09 Q3FY10 Q3FY11 FY07 FY08 FY09 FY10 FY11 Operating Revenue EBITDA Operating Revenue EBITDA Extracting value from M&A: Escorts Amritsar Performance of a Greenfield facility: Jaipur 70.0 ` Cr. 61.6 6x growth on quarterly numbers 60.0 33% CAGR 25.0 50.1 4x on annual basis since inception 20.7 50.0 20.0 41.2 16.7 40.0 15.0` Cr. 30.0 25.9 9.0 10.0 5.9 20.0 14.6 15.4 3.6 4.5 5.0 3.4 9.7 10.0 2.9 (1.7) (2.2) (0.5) - 0.0 Q2FY08 Q3FY08 Q3FY09 Q3FY10 Q3FY11 (5.0) FY08 FY09 FY10 FY11 Operating Revenue EBITDA Operating Revenue EBITDA 23
  • 24. Fortis Approach to Industry ChallengesKey Challenges Fortis Approach • Focus on CME, research and accolades Shortage of • Aligned compensation structure, ESOPs skilled medical • Foothold in more than one hospital professionals • Nursing school and DNB programs • Competence to strike deals, invest in green field hospitals, acquire hospitals, and O&Ms High start up • Partnership with government for PPP projectscosts and capex • Centralising of common services to achieve economies of scale requirements • Concept and designed to reduce capex per bed • Innovative models to finance medical equipments Lack of • Accreditation of hospitals, laboratories, and blood banks by national and international authoritiesstandardization / quality • Focus on best practices and continuous review by a strong team • Innovative tie ups Technological • “Center of Excellence” Approach helps recycle technology around the network obsolescence • Centralized Specialist group owning technologies across network • Medical Advisory Board; Accreditation committee at each hospital Maintaining • Executive counsel taking call on key hospital discussions medical ethics • Code of Ethics; Whistle blower policy 24
  • 25. Agenda A. Healthcare Industry in India B. Company Overview C. Recent Developments D. Financials
  • 26. SRL Acquisition & Rationale Acquisition of strategic stake in SRL – India’s leading diagnostic company Acquired 42.7 million equity shares representing 82.2% of the paid up capital as on April 14, 2011 Post PE investment (AVIGO and Sabre), it would represent 71.5% of expanded capital Total purchase price of ~Rs 803.7 Crore on cash basis; valuation based on arm length price paid by AVIGO for minority stake of 8.9% and lower than 4.2% by Sabre capital Fortis-SRL deal valued at 2.2x Sales and 12x EBITDA (FY12E); compares favourably to SRL - PDSPL deal and Dr Lal Pathlab – TA Associate deal To become an integrated healthcare player with presence in all major verticals To participate in high growth segment of healthcare industry with huge potential SRL offers a strong fit due to: Geographical Complementarities Pan India presence Strong talent pool Well established brand and strong logistics network Synergistic with the hospital business 26
  • 27. Two-way Synergy – Many New Upsides • Increased opportunity from repeat customers of Fortis and SRL Patient footfalls in Unified Fortis Network • 25 % of the Path and Radiology testing is followed by hospital accessions – OPD/IPD conversions • Favorable demographic and macroeconomic trend Geographical Complementarities • Fortis to leverage on SRL’s presence and leadership in 400 cities for its tier II and tier III expansion plan • Highly skilled talent pool to help take the hospital diagnostic Quality Improvement excellence to the next level • To result in enhanced Patient safety and better Clinical outcome • Fortis and SRL to cross leverage on SRL’s comprehensive offering of ~3,300 tests and its strong all-modaility experience In-house Radiology & Pathology and expertise in radiology for better managing in-hospital diagnostics. • Combined entities will access the large unifiedLarge Database for CRM, Research customer/patient/doctor database and significantly increase their and Reach ability serve the nationwide patient population. 27
  • 28. Established and Wide Geographical Presence Geographical Presence North India East India Present in ~400 cities in India Reference Labs 1 Reference Labs 1 Pathology Labs 27 Pathology Labs 18 Has won FICCI’s award for Operational Radiology Labs 1 Radiology Labs -Excellence (2010), Frost & Sullivan Award for Wellness Centers 4 Wellness Centers 1Excellence in Diagnostics (2008 , 2009) and Collection Centers 339 Collection Centers 218rated the most innovative diagnostic companyby Business Today Internation India Total alReference Labs 6 2 (1) 8Pathology Labs 164 - 164 (2) West India South India Reference Labs 3Radiology Labs 17 - 17 Reference Labs 1 Pathology Labs 50 Pathology Labs 69Wellness Centers 15 (3) - 15 Radiology Labs 13 Radiology Labs 3 Wellness Centers 5 Wellness Centers 5Collection Centers 865 23 888 (2) Collection Centers 194 Collection Centers 114Source: Company1 – Includes 1 reference lab in Nepal and a service agreement for a reference lab in Dubai Healthcare City.2 – Includes 25 pathology labs run through franchisees and 875 collection centers run through franchisee.3 – 12 Wellness Centers are in existing labs. 28
  • 29. Financials: 2010-11 (Scenario)* Fortis +SRL Revenue Revenue*** Rs 1483 Cr Rs 507 Cr Rs 1960 Cr Increases revenue by EBITDA 32% while impacting EBITDA profitability marginally Rs 209 Cr Rs 88 Cr Rs 297 Cr PAT PAT Rs 124 Cr Rs 4 Cr** Rs 128 Cr*Financials have been annualized based on Q4FY11 for SRL and include FY11 for Fortis **PAT for SRL is after Interest costs of ~ Rs 45 Cr , which will substantially go down post IPO 29***Net of inter-company revenue 29
  • 30. Recent Deals1. O&M agreement with O.P. Jindal Hospital, Raigarh, Chhattisgarh 100 bed multi-speciality secondary care hospital Located within the campus of Jindal Steel & Power Limited2. Reverse O&M agreement with Vivekanand Hospital Moradabad, Uttar Pradesh 150 bed multi-speciality secondary care hospital ; Premises also house a Nursing College and a Nursing School Located in Moradabad, North Eastern UP, the hospital was set up under a Trust in 1985. Constructed over a 6.3 acre land with a built up area of 198,000 sq ft3. O&M agreement with East Coast Hospital in Pondicherry 100 bedded facility with a plan to expand it to a 250 bed facility To be operational by Q1FY124. Reverse O&M agreement with Lifeline Hospital, Alwar, Rajasthan 100 bedded facility with a plan to expand it to a 150 bed facility Constructed over a 3 acre plot with a built up area of 100,000 sq ft5. Public Private Partnership with State of Uttarakhand To set up a 50 bed Cardiac Centre at Deen Dayal Upadhyaya (Coronation) Hospital at Dehradun To be operational by Q2FY12 30
  • 31. Upcoming Greenfield Hospitals No. Location Beds Area & Land Date of Commencement Estimated Status Ownership Capex (INR Cr) • Civil and interior work completed 1. Kangra 100 37,000 sq. ft., B. Lease Q2 FY12 24 • Medical equipment have been ordered • Facility being handed over to operations • Civil construction work of the hospital 27,000 sq.ft, Public Private building is complete 2. Dehradun 50 Q3FY12 15 Partnership • Some delays in handing over premises • Equipment ordered • Work on interiors is on 3. Gurgaon 450** 11 Acres, Owned Q4 FY12 325 • Medical equipment ordered • Rs 235 Cr has been spent till March’11. • Construction in full swing. Casting of 4. Ludhiana – 1 200 1,55,000 sq. ft., B. Lease Q2 FY13 50 columns in progress • Project on schedule • Building construction work is delayed by 5. Peenya, Bangalore 120 ~70,000 Sq ft; B. Lease FY13 18 landlord • Approval from govt. authorities received; 6. Ludhiana – 2 75 60,000 sq ft. B. Lease FY 13 20 design work underway 7. Gwalior 200 2.5 Acres, L. Lease FY14 72 • CLU permission awaited from authorities 8. Ahmedabad 200 1,55,000 sq. ft., B. Lease FY14 50 • Approval from govt. authorities awaited Total 1,395 574** Only for Phase – 1, total size of the project is 1000 beds 31
  • 32. Agenda A. Healthcare Industry in India B. Company Overview C. Recent Developments D. Financials
  • 33. Operating Revenue and PAT INR Cr.450.0 39.0 415.6400.0 34.0 Revenues 371.4 124% 357.8350.0 337.9 34.5 29.0 329.5 29.4 27.2300.0 24.0 21.7 232.5 PAT250.0 21.6 20.8 19.0 3.9x200.0 185.4 190.5 14.0 13.0150.0 9.0 7.6100.0 4.0 Q1FY10 Q2FY10 Q3FY10 Q4FY10 Q1FY11 Q2FY11 Q3FY11 Q4FY11 Operating Revenues PAT 33 3
  • 34. Revenue breakup Speciality wise Category wise Gastro, 2% PSUs, 10% Corprates MSH,Onco, 5% 8% OPD, 19% and Others, Renal, 4% TPA, 14% 4% Neuro, 6% Pulmo, 2% Gynae, 2% Ortho, 8% Other, 16% CGHS, 3% Others, 10% ECHS, 7% Cash, 58% Cardiac, 35% International , 5% International revenue Others, Cash business is ~63% of Focus on key specialties 11% SAARC, overall business Cardiac, Neuro, Ortho, USA, 7% 15% Renal & Onco to continue… Africa, 40% Middle International patients East, 27% contributes 5% to Fortis’ network revenue3434
  • 35. Growth Driven by Steadily Increasing Occupancy RatesLeading to Improving Operating Parameters… Occupancy 80% 74% 72% 70% 68% 63% 60% 50% 40% FY08 FY09 FY10 FY11 Average Revenue Per Operating Bed (Rs. Million) Average Length of Stay (days) 8.30 8.10 8.10 7.65 4.30 4.20 4.10 3.70 FY08 FY09 FY10 FY11 FY08 FY09 FY10 FY11 35
  • 36. Significant Increase in No. of Procedures with a Focus onKey Specialty Areas (Cardiac, Neuro, etc.) Cardiac Ortho55,000 51,866 10.767 8,000 4,482 +31% 7,083 7,013 +52%45,000 39,651 6,000 3,66235,000 26,830 4,553 4,00025,000 20,85115,000 10,777 2,000 3,754 8,214 2,530 5,000 6,924 9,777 0 FY10 FY11-5,000 FY10 FY11 Knee Replacements THR & Others CTVS & Pediatrics PTCA CAG Others Neuro Dialysis 62,315 +41% 4,928 +62% 5,000 60,000 4,000 50,000 44,096 2,709 40,000 3,000 30,000 2,000 20,000 1,000 10,000 0 0 FY10 FY11 FY10 FY11 36
  • 37. Summary : Consolidated Profit and Loss – FY 2010-11 FY11 Base operations Parkway TotalParticulars % (Rs Cr.) (Rs Cr.) (Rs Cr.)Operating Revenue 1,482.8 94.1% - 1,482.8Other Income * 92.3 5.9% 366.6 458.9Total Income 1,575.1 100.0% 366.6 1,941.7Direct Costs 393.0 24.9% - 393.0Employee Costs 273.1 17.3% - 273.1Other Costs 607.6 38.5% 161.0 768.6EBITDA 301.4 19.1% 205.6 507.0Finance Costs 69.6 4.4% 180.4 250.0Depreciation & Amortization 104.5 6.6% - 104.5PAT after minority interest and share in 106.4 6.8% 18.0 124.4associatesOperating EBITDA 209.1 14.1%• Rs 85 Cr of the Other Income constitutes interest & such income from deployment of surplus fundsNote : The nos. have been restated and realigned to reflect profit from base operations separately 37 3
  • 38. FY11 Comparative Financials – Base Operations FY11 FY10Particulars % % Growth (%) (Rs Cr.) (Rs Cr.)Operating Revenue 1,482.8 100.0% 937.9 100.0% 58.1%Direct Costs 393.0 26.5% 262.7 28.0% 49.6%Employee Costs 273.1 18.4% 195.0 20.8% 40.1%Other Costs * 607.6 41.0% 339.8 36.2% 78.8%Operating EBITDA 209.1 14.1% 140.4 15.0% 48.9%Other Income 92.3 6.2% 50.1 5.3% 84.2%Finance Costs 69.6 4.7% 57.3 6.1% 21.4%Depreciation & Amortization 104.5 7.0% 59.9 6.4% 74.4%PAT after minority interest and share 106.4 7.0% 69.5 7.4% 53.1%in associatesEPS for the period** (Rs) 3.23 2.61*Increase in other costs is primarily due to doctor engagement model at newly acquired hospitals.**EPS calculated on reported consolidate net profits for the relevant year 38 3
  • 39. Maturity-wise Performance – FY 11: Main Hospitals Average Average Revenue EBITDA Average Maturity EBITDA ARPOB (Rs Contribution Contribution Occupancy margin * Cr) 14% of operating beds aged 5 years 5 Years and and above contributes 24% toAbove 24% 34% 26.0% 80% 1.00 revenue(Four hospitals)3 years to 5 51% of operating beds are 3 to 5Years (Nine 58% 62% 20.0% 78% 0.83 years of age and contributes 58% toHospitals) revenueOne to threeYears (Eight 13% 9% 13.9% 57% 0.63Hospitals) 16% of operating beds are 1 to 3 years of age and contributes 13% to revenueUpto one year(Three Hospitals) 5% (5)% (18.4)% 37% 0.34 18% of operating beds are up to 1 year of age and contributes just 5% toAverage - - 18.8% 72% 0.81 revenue * Average EBITDA margin has been calculated on Unit basis 39
  • 40. Balance Sheet as at March 31, 2011 Balance Sheet Rs Crore Shareholder’s Equity* 3,313 Foreign Currency Convertible Bonds (FCCB’s)# 446 Debt 642 Total Capital Employed 4,401 Goodwill 885 Net Fixed Assets (including CWIP of Rs 270 Crore) 1,910 Investments - in Associates 28 - Deposits (including Inter-Corporate Deposits) 1,348 - Liquid and Mutual Funds 62 Cash and Bank Balances 86 Net Current Assets** 82 Total Fixed Assets 4,401 Net Cash Surplus*** 854* Shareholder’s Equity is inclusive of Revaluation Reserve and Minority Interest** Net Current Assets includes Deferred Tax Assets*** Net Cash Surplus excludes FCCB’s #Fortis issued US$ 100 million,5% convertible bonds due in May 2015 convertible at Rs 167 per equity share; redeemable on or after May 2013 40
  • 41. Summing Up • Healthcare Sector poised to grow Healthcare • Growth led by Lifestyle Diseases and Insurance Penetration Sector • Government recognizes the need to partner with Private Sector • Healthcare expenditure estimated to be 6% of GDP by 2012 & employ around 9 million people • One of the largest private healthcare delivery player in India • Aggressively grown from 1 hospital in 2001 to a network of 56* hospitals in 2011 with ~ 8,000* beds Fortis • Leadership in Cardiac Sciences, Neuro Sciences and Orthopedics Healthcare • Evolved the Business Model and high level of Brand Equity • Proven ability to acquire, integrate and turn around • Providing attractive value propositions to various segments of market* Estimated number of hospitals and beds is including hospitals under projects stage 41
  • 42. Analyst CoverageBroker* Analyst name Comments B&K maintains its positive outlook on Fortis due to its focus on profitable growth, improvement inB&K Vikash Singh realization and operational efficiency across its facilities Expects strong growth in earnings as majority bedsBank of America Prasad Deshmukh will turn profitable going aheadCentrum Rahul Gaggar Positive on the company’s growth prospects Over the longer term, CITI forecasts sustainedCITI Prashant Nair / Anshuman Gupta growth & improvement in profitability as the new hospitals scale upGoldman Sachs Balaji V Prasad / Rishi Jhunjhunwala - Fortis’ constant growth focus andICICI Direct Rashesh Shah strong management team supports our positive outlook on the company FHL continues to pursue its strategy to growIDFC Nitin Agarwal / Ritesh Shah aggressively with sustained focus on operational parameters Asset light strategy to help Fortis scale up at aJP Morgan Princy Singh / Dinesh S. Harchandani, CFA faster pace and improve its capital return profile. Bullish on Fortis’ ability to execute aggressiveMorgan Stanley Saniel Chandrawat / Sameer Baisiwala, CFA expansion plans Optimistic about Fortis’ opportunities ahead, itsUBS Ajay Nandanwar ability to improve the operating performance of its acquired hospitals * In Alphabetical order
  • 43. THANK YOU… Fortis Healthcare (India) Limited

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