Global Health Ltd:Annual Report 2023-24 Analysis

Global Health Ltd. Overview #

About the Company #

• Year of Establishment and Founding History: Established in 2009 by Dr. Pankaj Sahni
• Headquarters Location and Global Presence: Headquarters are located in Gurugram, Haryana, India. They primarily operate within India.
• Company Vision and Mission: Vision is to deliver quality healthcare services at affordable prices to all. Their mission is to build an integrated healthcare delivery system with a focus on operational excellence.
• Key Milestones in Their Growth Journey:
  • 2009: Started with the first hospital in Gurugram.
  • Expansion across Delhi NCR and other cities in North and East India.
  • Focus on clinical excellence and patient-centric care.
  • Successful IPO in November 2022.
• Stock Exchange Listing Details and Market Capitalization: Listed on the National Stock Exchange (NSE) and the Bombay Stock Exchange (BSE) under the ticker “MEDANTA.” Market capitalization fluctuates based on market conditions; refer to current stock market data for up-to-date information.
• Recent Financial Performance Highlights: For the financial year 2023-24, Global Health Ltd. has showcased robust operational performance. They reported revenue from operations at ₹2,755 crore, marking a 17% year-on-year increase.
• Management Team and Leadership Structure:
  • Chairman and Managing Director: Dr. Pankaj Sahni
  • Executive Director: Dr. Narendra Kumar Pandey

Their Products #

• Complete Product Portfolio with Categories: Global Health operates a network of hospitals under the “Medanta” brand, offering a wide range of medical services across various specialties. This includes:
  • Cardiac Sciences
  • Neurosciences
  • Oncology
  • Orthopedics & Joint Replacement
  • Kidney & Urology
  • Liver Diseases & Transplantation
  • Gastroenterology
  • Critical Care
  • Internal Medicine
  • Pulmonology
• Flagship or Signature Product Lines: Medanta is known for its expertise in complex procedures such as liver transplants, cardiac surgeries, and advanced cancer treatments.
• Quality Certifications and Standards: The hospitals likely adhere to national and international quality standards and accreditations, such as NABH (National Accreditation Board for Hospitals & Healthcare Providers) and potentially JCI (Joint Commission International). (Verification is recommended.)

Primary Customers #

• Target Industries and Sectors: Healthcare.
• Geographic Markets (domestic vs. international): Primarily focused on the Indian market, with a growing presence in North and East India. They also cater to medical tourism from neighboring countries.
• Major Client Segments:
  • Individual patients
  • Corporate clients (employee healthcare)
  • International patients (medical tourism)

Major Competitors #

• Direct Competitors in India and Globally: Major competitors in the Indian healthcare sector include:
  • Apollo Hospitals
  • Fortis Healthcare
  • Max Healthcare
  • Narayana Health
• Competitive Advantages and Disadvantages:
  • Advantages: Medanta’s focus on clinical excellence, brand reputation, and expertise in complex procedures are key strengths.
  • Disadvantages: They are geographically concentrated compared to national players like Apollo and Fortis.

Future Outlook #

• Expansion Plans or Growth Strategy: Global Health aims to expand its footprint across India by adding new hospitals and facilities. They may also explore strategic partnerships and acquisitions.
• Sustainability Initiatives or ESG Commitments: The company may be involved in sustainability and social responsibility initiatives. Details will need to be found in their Annual report.
• Industry Trends Affecting Their Business:
  • Increasing healthcare awareness and demand in India
  • Growing medical tourism sector
  • Technological advancements in healthcare
  • Government regulations and healthcare policies
  • Rising healthcare costs
• Long-term Vision and Strategic Goals: Global Health’s long-term vision is likely to strengthen its position as a leading healthcare provider in India, known for its quality, affordability, and patient-centric approach.

Comprehensive Performance Overview #

3-Year Trend Analysis of Key Financial Metrics (Consolidated, FY 2021-24) #

• Total Income: Grew at a CAGR of 22%, from ₹22,058 million (FY22) to ₹33,498 million (FY24).
• EBITDA: Increased at a CAGR of 40%, from ₹3,333 million (FY22) to ₹8,737 million (FY24). EBITDA margin expanded significantly, from 15.1% (FY22) to 26.1% (FY24).
• PAT: Increased by 46.6% Y-o-Y, reaching ₹4,781 million in FY24, with PAT margins expanding by 245 basis points to 14.3%.
• Capacity Beds: Increased from 2,467(FY23) to 2,823 (FY24).
• Occupied Bed Days: Increased by 14.5%, with Occupancy rate around 62% in FY24.
• ARPOB: Increased by 5% to ₹61,890 in FY24.
• Net Cash Flow from Operations: Decreased from ₹4,305.30 million (FY23) to ₹3,406.40 (FY24).
• Net Cash / (Net Debt): A net cash position of ₹7,720 million was reported as of March 31, 2024.
• EPS (Basic): Increased from ₹10.16(FY23) to ₹13.44 (FY24).
• Debt to Equity Ratio: Decreased significantly from 0.35x (FY23) to 0.14x (FY24).
• Return on Equity: Increased from 16.13% to 17.93%.

Business Segment Performance #

• Mature Hospitals (Gurugram, Indore, Ranchi): Contributed ~70% to consolidated revenue in FY24. Revenue increased by 18% to ₹23,829 million, driven by an 8% increase in occupied bed days and a 7% improvement in ARPOB. EBITDA increased by 29%.
• Developing Hospitals (Lucknow, Patna): Demonstrated strong performance with increased traction and higher patient footfalls. Revenue increased by 34% to ₹9,948 million, accounting for ~30% of consolidated revenue. EBITDA grew by 49%.
• By Speciality: Heart, Cancer, and Digestive were the top three specialities, contributing 23.1%, 12.3%, and 11.4% of healthcare service revenue, respectively.
• By Payor Category (IPD): The revenue is devided by: “Others” (52%), PSU and Corporate (30%), and TPA/Insurance(18%).
• By Region: NCR contributes 59%, East India contributes 26%, and UP contributes 15%.
• By patient category: IPD revenue contributes 83%, and OPD contributes 17%.

Major Strategic Initiatives and Their Progress #

• Capacity Expansion: Added 126 beds in FY24 (98 in Lucknow, 28 in Patna), reaching a total of 2,823 beds.
• Noida Hospital: Construction is in progress, with Phase I (300 beds) expected to be operational by Q4 FY25/Q1 FY26.
• New Greenfield Hospitals: Announced plans for three new greenfield hospitals in South Delhi (400 beds, in partnership with DLF), Indore (300 beds), and Mumbai (500 beds).
• Continuity of Care Expansion: Expanded Medanta Labs to ~120 collection centers and 8 labs. Launched the first retail pharmacy. Expanded Home Care services to Lucknow, Patna, and Indore.
• Digital Transformation: Implemented Doctors EMR app, Smart Nursing Application, and tele-ICU program in Lucknow. Partnered with DocBox and Qure.ai for AI-driven solutions.

Risk Landscape Changes #

• Operational Risk: Remains a key concern, with a focus on managing costs and maintaining occupancy rates, especially in new facilities. Mitigated by diversification and the strong “Medanta Model of Care.”
• People Risk: Addressed through a distinguished doctor engagement model and by fostering collaboration.
• Competitive Intensity: Increasing competition in the hospital sector is acknowledged. Mitigation strategies include brand strengthening and focusing on high-quality care.

ESG Initiatives and Metrics #

• Environmental:

  • Focus on natural light optimization in building design to reduce energy consumption.
  • Adoption of solar power.
  • Zero Liquid Discharge (ZLD) policy in Greenfield hospitals.
  • Upcoming Noida hospital pre-certified as a Green Building.
  • 13% reduction in energy consumed per rupee of turnover.

• Social:

  • 50% female workforce, including over 633 female doctors.
  • Community outreach programs like “TB Free Uttar Pradesh” and “SAVERA” for breast cancer screening.
  • 97,663 training manhours delivered to staff.

• Governance:

  • Adherence to a “Code of Conduct” for the Board, KMPs, and Senior Management.
  • Implementation of policies like POSH, Whistle Blower, Risk Management, and Data Privacy.

Management Outlook #

• Continued focus on expanding healthcare accessibility, particularly in underserved regions.
• Planned bed additions of approximately 250 beds in existing facilities in FY25.
• Continued focus on executing strategic priorities and exploring new opportunities, supported by a strong net cash position of ₹7,720 million.
• The Company has entered into a partnership with DLF Limited to build a 400 bed super speciality hospital in South Delhi.
• The Company acquired 2.2 acres of land in Mumbai to build a 500 bed super speciality hospital.

Detailed Analysis #

Financial Position Analysis #

3-Year Comparative Analysis of Assets, Liabilities, and Equity (Consolidated, in ₹ millions) #

Significant Changes in Major Line Items (>10% YoY) #

• Property, plant and equipment: Increased by 6.15% due to ongoing expansions and upgrades of facilities.
• Right of Use assets: Increased by 24.22%.
• Capital work-in-progress: Increased by 17.82% due to ongoing construction of the Noida hospital, addition of beds in existing hospitals.
• Other non-current financial assets: Decreased by 36.70%, primarily due to decreases in bank deposits with maturity of more than 12 months.
• Non-current Borrowings: Decreased by 61.54%, due to repayments.
• Current Borrowings: Increased by 29.27%,.
• Deferred tax assets (net): Increased by 138.55% due to unabsorbed business losses.
• Cash and cash equivalents: Decreased by 44.68%, indicates utilization for operational/ expansion activities.
• Loans (Non-Current and Current). There is an increase as the loans were provided to the subsidiaries.
• Other Equity: Increased by 20.1%, primarily due to an increase in retained earnings.
• Lease Liabilities (Non-Current): Increased by 41.18%

Working Capital Trends #

• Current Ratio (Current Assets / Current Liabilities):

  • FY 2023-24: 2.44
  • FY 2022-23: 2.76
  • FY 2021-22: 1.80

  The current ratio has decreased during FY2024, but it is still above the general benchmark of good working capital conditions.

• Inventory Turnover Ratio: 12.67 (FY 2023-24), 11.32 (FY 2022-23). An increasing ratio indicates slightly improved inventory management.

• Trade Receivables Turnover Ratio: 12.49(FY2024), 11.40 (FY2023). An increasing ratio indicates improved efficiency in collecting receivables.

• Trade payables turnover ratio: 8.32(FY2024), 8.30(FY2023). A consistent ratio suggests the company is managing payments to suppliers.

Asset Quality Metrics #

• Impairment Losses on Financial Assets: Increased to ₹293.13 million in FY 2023-24 from ₹76.19 million in FY 2022-23, indicating a growing credit risk, particularly in trade receivables.

Debt Structure and Maturity Profile #

• Non-Current Borrowings: Decreased significantly (61.54%) due to repayments and restructuring of loans.
• Current Borrowings: Increased, primarily due to current maturities of long-term debt.
• Debt-to-Equity Ratio: Decreased from 0.35 to 0.14, indicating a strengthened financial position with reduced reliance on debt.
• Lease Liabilities: The presence of lease liabilities indicates a significant portion of the Group’s assets are financed through leases, both current and non-current.

Off-Balance Sheet Items #

• Contingent Liabilities: Claims against the Group not acknowledged as debts amount to ₹256.89 millions, primarily related to income tax and other legal cases.
• Commitments: Capital commitments remain substantial, indicating continued investment in property, plant, equipment, and intangible assets.
• Corporate Guarantee: The Company has provided a corporate guarantee for one of its subsidiary, implying potential financial obligation if the subsidiary defaults.
• Support Letter: The Company has given support letter to one of its subsidiary, for providing operational and financial support.

Operating Performance: Global Health Limited (FY 2023-24) #

Revenue Breakdown #

By Speciality (FY 2023-24) #

• Heart: 23.1%
• Cancer: 12.3%
• Digestive & Hepatobiliary Sciences: 11.4%
• Neurosciences, Musculoskeletal, Kidney & Urology, and Others constitute the remaining revenue.

By Payor Category (FY2024) #

• TPA (cashless and reimbursement for various insurance providers): 47.9%
• PSU & Corporate: 16.4%
• Self-Pay (cash collected directly from the patient): 30.7%
• Others: 5.0%

By Region (FY 2023-24) #

• Gurugram: 57%
• Lucknow: 21%
• Patna: 8%
• Others (includes Indore and Ranchi): 14%.

By Patient Category (FY 2023-24) #

• Out-Patient Department (OPD): 17.7%
• In-Patient Department (IPD): 78.4%

Matured vs. Developing Hospitals (FY 2023-24) #

• Matured Hospitals (Over 6 Years - Gurugram, Indore, Ranchi): Contributed ~70% of consolidated revenue, with revenue increasing by 18% YoY to ₹ 23,829 million.
• Developing Hospitals (Less than 6 Years - Lucknow, Patna): Contributed ~30% of consolidated revenue, with revenue increasing by 34% YoY to ₹ 9,948 million.

Overall Revenue Growth #

• Total income grew by 21.4% YoY, reaching ₹ 33,497.75 million in FY 2023-24.

Cost Structure Analysis #

• Cost of Materials Consumed: Increased by 17.68% to ₹ 6,876.86 million, primarily driven by pharmacy, medical, and laboratory consumables.
• Employee Benefits Expense: Grew by 15.7% to ₹ 7,348.58 million.
• Finance Costs: Decreased by 5.15%, due to a reduction in overall borrowings and repayment of debt.
• Other Expenses: Increased by 9.36% to ₹ 5,254.76 millions, this includes, power and fuel, lease rent, repair and maintenance, rates and taxes, and other administrative costs.

Margin Analysis #

• EBITDA Margin: Improved to 26.1% in FY 2023-24 from 24.5% in FY 2022-23 (a 154 basis points increase).
• Profit After Tax (PAT) Margin: Increased to 14.3% in FY 2023-24 from 11.8% in FY 2022-23 (a 250 basis points increase).

EPS Analysis #

• Basic EPS: Increased to ₹ 17.80 in FY 2023-24 from ₹ 12.58 in FY 2022-23.
• Diluted EPS: Increased to ₹ 17.80 in FY 2023-24 from ₹ 12.57 in FY 2022-23.

Financial Ratio Analysis: Key Performance Indicators #

Profitability Ratios (3-Year Trends) #

• From FY2021-22, there is missing data for calculating Consolidated ROE, as the company was not listed, therefore, a three-year trend can’t be established accurately. #ROA= Net Profit/ Average Total Assets. ^ EBITDA Margin for FY2021-22 is calculated on consolidated basis.

Analysis: ROE, ROCE and Net Profit margin, all showcase a continuously improving trend, demonstrating enhanced profitability and efficiency in utilizing shareholder’s equity and overall capital and resources.

Liquidity Metrics #

Analysis: The Current Ratio, although slightly decreased from the previous year, is still robust. This indicates a strong ability to cover short-term liabilities with short-term assets. Quick ratio and cash ratio are omitted as the relevant metrics are not present in the document.

Efficiency Ratios #

Analysis: Both Inventory Turnover and Trade Receivables Turnover show improvement, demonstrating a better efficiency in inventory management and collecting receivables.

Leverage Metrics #

Analysis: The Debt/Equity ratio has significantly decreased, demonstrating reduced financial leverage and lower reliance on debt financing. The Debt service coverage ratio improvement indicates strengthened ability to meet debt obligations.

Working Capital Ratios #

Analysis: Improvement in Net Capital Turnover Ratio signifies efficient use of working capital in generating sales.

Business Segments: Global Health Limited (Medanta) Analysis #

Financial Performance #

• Consolidated Total Income: FY2023-24: ₹33,498 million, Growth: 21.4% YoY.
• Consolidated EBITDA: FY2023-24: ₹8,737 million, Growth: 29.0% YoY, Margin: 26.1% (up 154 basis points YoY).
• Consolidated PAT: FY2023-24: ₹4,781 million, Growth: 46.6% YoY, Margin: 14.3% (up 245 basis points YoY).
• Matured Hospitals (Gurugram, Indore, Ranchi): Revenue: ₹23,829 million, Growth: 18% YoY. EBITDA: ₹6,002 million, Growth: 29%
• Developing Hospitals (Lucknow, Patna): Revenue: ₹9,948 million, Growth: 34% YoY. EBITDA: ₹3,208 million, Growth: 49% YoY.
• Pharmacy Revenue (In-House): ₹1,120 million, Growth:32%

Market Position #

• Medanta is a leading private multi-specialty healthcare provider, with a strong presence in North and East India.
• Medanta - The Medicity, Gurugram is the largest single-location private hospital in NCR (Delhi).
• Medanta Lucknow is the largest private hospital in Uttar Pradesh.
• Medanta Patna is the largest private hospital in Patna.
• Medanta Ranchi is the second largest hospital in Ranchi.

Key Services Performance #

• Healthcare service revenue by Speciality:
  • Heart: 23.1%
  • Cancer: 12.3%
  • Digestive & Hepatobiliary Sciences: 11.4%
  • Other Specialties: 53.2%
• Revenue by Payor Category:
  • Insurance TPA: 33%
  • Self-Pay: 42%
  • PSU & Corporate: 25%
• Revenue by Patient Category:
  • IPD: 80%
  • OPD: 20%
• Key Procedures: High volumes of cardiac surgeries (8,165), neurosurgeries (5,324), and transplants (718) were performed.
• International Patient Revenue: ₹1,935 million, Growth: 24% YoY, ~6% of overall revenue.

Geographic Distribution #

• Five operational hospitals in Gurugram, Lucknow, Patna, Indore, and Ranchi, serving approximately 400 million residents.
• Regional Revenue Breakdown:
  • Gurugram: 61.1%
  • Lucknow: 21.4%
  • Patna: 8.8%
  • Indore/Ranchi: 8.7%
• Focus on underserved healthcare regions, particularly Uttar Pradesh and Bihar.

Expansion Plans #

• Planned Bed Additions (FY 2024-25):
  • Patna: 150 beds
  • Lucknow: 50 beds
• Upcoming Noida Hospital: 550 beds (300 beds operational by Q1 FY 2025-26).
• Announced Projects: South Delhi (400 beds), Indore (300 beds), Mumbai (500 beds).

Operational Metrics #

• Occupancy Rate: 62% (on increased bed capacity) with 14.5% growth.
• Average Revenue Per Occupied Bed (ARPOB): ₹61,890, Growth: 5% YoY.
• Average Length of Stay (ALOS): 3.23 days (reduced from previous year).
• Outpatient Volume: 2,683,293, Growth: 18% YoY.
• Inpatient Volume: 155,915, Growth: 15% YoY.
• Census Beds: 2,231, Growth, 14%
• Operating Bed Capacity: 2,823, increased by 126 beds in FY24.
• Matured Hospitals - Occupied Bed Days 489,370
• Developing Hospitals- Occupied Bed Days:325,339

Growth Initiatives and Challenges #

• Growth Initiatives:
  • Capacity expansion in existing hospitals (Lucknow and Patna).
  • New hospital projects (Noida, South Delhi, Indore, Mumbai).
  • Expansion of clinical capabilities (oncology, new specialties).
  • Continuity of care initiatives (Medanta Labs, Clinics, Pharmacy, Homecare).
  • Digital technology adoption (Doctors EMR app, e-Clinic app, Smart Nursing Application, tele-ICU).
  • Focus on medical research and academic excellence.
• Challenges:
  • Shortage of skilled medical professionals.
  • Rising competitive intensity.
  • Capital and operational expenditure intensiveness.
  • Evolving healthcare regulations.

Risk Assessment Framework #

Strategic Risks #

• Severity: High. The healthcare sector’s growth is rapid, driven by rising demand, digital advancements, and affordability, yet faces significant gaps in tertiary care infrastructure.
• Likelihood: High, Given India’s low bed density, especially outside major metropolitan areas (16 beds per 10,000 population vs. a recommended 30).
• Trend: Increasing demand in underserved areas (Uttar Pradesh and Bihar). Medanta added 126 new beds during the year, the Company’s network of hospitals has expanded.
• Mitigation Strategies: Capacity expansion in underserved markets (Lucknow and Patna). Planned addition of beds in existing facilities and development of new hospitals (Noida, South Delhi, Indore, Mumbai). Expansion of “Continuity of Care” services.
• Control Effectiveness: Partially Effective. Existing hospitals demonstrate operational success. New projects face execution risks.
• Potential Financial Impact: Positive, long-term, if expansion is successful. Negative, if delays or operational inefficiencies occur, leading to increased capital expenditure without proportionate revenue increase.

Operational Risks #

• Severity: Medium to High. Operational inefficiencies and high fixed costs can impact margins.
• Likelihood: Medium. Risks include rising non-variable operating costs and occupancy rate fluctuations, potentially impacting margins and business growth.
• Trend: Stable, with efforts to improve. Occupancy rate for FY 2023-24 was 62%. ALOS reduced to 3.23 days.
• Mitigation Strategies: *Diversification of the business by establishing operations in multiple underserved healthcare regions. *Focus on implementing the ‘Medanta model of care’ across all locations.
• Control Effectiveness: Moderate. Positive trends in operational efficiency are evident, but ongoing monitoring and improvement are necessary.
• Potential Financial Impact: Operational inefficiencies could lead to increased costs and reduced profitability.

Financial Risks #

• Severity: Medium.
• Likelihood: Low to Medium. Primarily related to capital expenditure and managing cash flows.
• Trend: Improving. Debt-to-equity ratio improved from 0.35 to 0.14 in FY 2023-24, indicating lower financial leverage.
• Mitigation Strategies: Maintaining a robust cash position. Net cash balance of ₹7,720 million as of March 31, 2024. Strategic expansion plans funded through a mix of internal accruals and borrowings.
• Control Effectiveness: High.
• Potential Financial Impact: Increased interest expenses and potential strain on cash flow if new projects face delays or cost overruns. Positive return on equity (17.93%) shows strong profitability relative to shareholder investment.

Compliance/Regulatory Risks #

• Severity: High. The healthcare industry is highly regulated. Adverse government policies on pricing or operational restrictions could impact business.
• Likelihood: Medium. Changes in regulations are constant.
• Trend: Stable, with ongoing compliance efforts.
• Mitigation Strategies: *Adhering to all regulatory requirements and guidelines. *Implementation of robust internal control systems. *Having comprehensive policies such as Whistle Blower Policy and POSH Policy.
• Control Effectiveness: High. No significant penalties or instances of non-compliance were reported.
• Potential Financial Impact: Material impact, including penalties, restrictions on operations, and reputational damage, if non-compliance occurs.

Emerging Risks #

Cybersecurity and Data Breaches #

• Severity: High
• Likelihood: Medium
• Trend: Increasing, as the healthcare industry faces global digitalization, making it more vulnerable.
• Mitigation strategies: The company has a multi-layered cybersecurity strategy in place, including firewalls, intrusion prevention systems, and regular cybersecurity assessments.
• Control effectiveness: High
• Potential Financial Impact: Significant financial losses, reputational damage, and regulatory fines in the event of a data breach.

Climate Change #

• Severity: Medium
• Likelihood: Medium
• Trend: Increasing.
• Mitigation Strategies: Commitment to reducing carbon footprint, adopting energy-efficient technologies, and utilizing renewable energy sources.
• Control Effectiveness: Partially Effective. The Company implements natural light optimization and solar power adoption. Upcoming hospital in Noida pre-certified as a Green Building.
• Potential Financial Impact: Energy inefficiencies and non-compliance with water regulations, resulting in operational disruptions and increased costs.

Talent Shortage #

• Severity: High.
• Likelihood: High
• Trend: Stable.
• Mitigation Strategies: A comprehensive HR strategy with investment in learning and development. Conducted 442 training programs covering 15,395 staff.
• Control Effectiveness: Moderate.
• Potential Financial Impact: Could limit the scale of business operations, impacting the Company’s reputation, service delivery and the ability to expand.

Competition #

• Severity: High
• Likelihood: High
• Trend: Increasing, private healthcare providers are actively expanding. Mitigation Strategies: Continuous focus on clinical excellence, investment in advanced medical technology, expansion of clinical capabilities, and digital transformation initiatives. Control Effectiveness: Moderate, as shown by bed additions, new oncology services, and clinical talent onboarding.
• Potential Financial Impact: Increased competition may exert pressure on costs, particularly in attracting and retaining skilled talent, which could negatively impact financial margins and market share.

Telemedicine #

• Severity: Medium
• Likelihood: High.
• Trend: Increasing.
• Mitigation Strategies: Tele-ICU program in Lucknow and partnerships for advanced cardiac critical care monitoring.
• Control Effectiveness: Good, with demonstrated success in remote patient monitoring and critical care delivery.
• Potential Financial Impact: Enhances efficiency, improves patient care, and reduces costs, leading to a better overall experience for both patients and clinical teams.

Strategic and Management Analysis of Global Health Limited (Medanta) #

Long-Term Strategic Goals and Progress #

• Medanta is strategically expanding in underserved regions with high population densities (e.g., Uttar Pradesh, Bihar).
• Bed capacity has been consistently increasing, with 126 beds added in FY2023-24, reaching a total of 2,823 beds.
• Expansion plans include adding approximately 250 beds in existing facilities (Lucknow, Patna) and a new 550-bed facility in Noida.
• Investing in new technologies and services, such as the Varian Edge Linac radiation machines in both Lucknow and Patna.
• The addition of GHL Hospital Limited and new services indicates efforts towards vertical integration.

Competitive Advantages and Market Positioning #

• Operates under the established “Medanta” brand.
• Has a “doctor-led model” with a high degree of clinical autonomy.
• Possesses state-of-the-art infrastructure and advanced medical technology.
• One of the largest private multi-specialty tertiary and quaternary care providers, especially in North and East India.
• Strong positioning is demonstrated through awards and recognition, including being named “India’s Best Private Hospital” by Newsweek for five consecutive years.

Innovation Initiatives and R&D Effectiveness #

• Investing in digital technologies such as the Doctors EMR app, mOrder, e-Clinic app, and Smart Nursing Application.
• Collaboration with US-based DocBox and Qure.ai.
• Implementation of a tele-ICU program in Lucknow.

M&A Strategy and Execution #

• Partnership with DLF Limited to build and operate a 400-bed hospital in South Delhi.
• Acquired 2.2 acres of land in Mumbai to develop 500 bed hospital.
• Acquired a 26% equity stake in Qure.ai Technologies Private Limited.
• The Board approved a scheme of amalgamation of its wholly-owned subsidiary (Medanta Holdings Private Limited).

Management’s Track Record in Execution #

• The Management successfully scaled operations, including the establishment of large-format hospitals in Lucknow and Patna.
• Consistent growth in revenue, EBITDA, and PAT (FY2023-24).
• Successful launch and rapid growth of Medanta Labs.

Capital Allocation Strategy #

• Significant capital expenditure is planned, including capacity expansion in existing hospitals and the construction of new hospitals (Noida, South Delhi, Indore, Mumbai).
• Investments are also being made in technology, new super-specialties, and out-of-hospital services (Medanta Labs, Pharmacies, Clinics, Homecare).
• The company is funded by a mix of equity and debt.
• The Company is in net cash position, which is used to grow organic and inorganic growth.

ESG Framework #

Environmental Metrics and Targets #

• Medanta’s building design optimizes natural light to reduce electricity consumption and carbon emissions.
• Energy consumption per rupee of turnover decreased by 13%.
• The upcoming Noida facility is pre-certified as a Green Building under the IGBC Green Healthcare Facilities Rating System.
• Medanta facilities in Gurugram, Lucknow, and Patna follow a Zero Liquid Discharge (ZLD) policy, treating wastewater onsite for reuse in gardening and flushing.
• The Company installed 500 kWh solar energy equipment at Medanta, Gurugram.
• All greenfield hospitals have exemplary zero liquid discharge, minimizing water waste.

Social Responsibility Programs #

• Medanta introduced the ‘SAVERA’ initiative in Gurugram for early breast cancer detection, benefiting 215 individuals.
• Medanta is involved in community welfare through the “TB Free Uttar Pradesh” initiative in collaboration with the state government and the ongoing “TB-Free Haryana” program.
• Medanta’s Rural Health Reach Program included health camps that benefitted 7142, and OPD centers 867
• Medanta spent ₹38.98 million on CSR, with ₹35.87 millions on the ‘Mission TB-Free’ programs and the ‘Rural Health Reach Programs’.

Governance Structure and Effectiveness #

• The Board of Directors comprises 10 members, with a mix of executive (2), and non-executive directors (8), including 5 independent directors.
• Five Board Committees exist: Audit, Nomination & Remuneration, Corporate Social Responsibility, Risk Management, and Stakeholders Relationship.
• The Board carried out annual performance evaluations of itself, individual Directors, the Chairman, and all Board Committees.
• The Company has adopted a Code of Conduct, Whistle Blower Policy, Risk Management Policy, POSH Policy and Data Privacy Policy.
• A separate meeting of Independent Directors was held, evaluating the performance of Non-Independent Directors and the Board.
• Employee Grievance Committee serves as a focal point to resolve workforce grievances.

Sustainability Investments and ROI #

• Capital expenditure included investments in energy-efficient technologies, such as LED lights and modular UPS systems, and solar energy equipment.

Regulatory Compliance and Future Preparations #

• The Company is compliant with the Bio-Medical Waste Management Rules, 2016, and State Pollution Control Board guidelines.
• All Medanta hospitals are NABH accredited, reflecting adherence to biomedical waste management standards.
• Compliance status with requirements of regulation 17 of listing regulation with Section 149 of the Act.
• The Company is developing a comprehensive policy to ensure that their sourcing practices align with their sustainability goals.
• Compliance with the provision of regulation 16(C) of listing regulation.
• Declaration of independence from Independent directors as per requirement.
• Details on the policy on Directors’s Appointment and Remuneration.
• The Company is in the process of developing a policy to ensure that their practices are in full alignment with the legislative requirements of the Rights of Persons with Disabilities Act, 2016.
• The Company maintains a robust Occupational Health and Safety Management System (OHSMS) across all hospitals.

Future Healthcare Projections #

Management Guidance and Assumptions #

• The “Medanta Model of Care” integrates clinical expertise, infrastructure, technology, and compassionate care.
• Quality of care is uniform across locations, reflecting the “Har Ek Jaan Anmol” philosophy.
• Full-time doctor engagement with clinical autonomy drives clinical excellence.
• Continued growth driven by increased patient volumes and improved case mix.
• Focus on expanding the tel-ICU program.
• Construction of Noida, South Delhi, and Mumbai hospitals is expected to be on track.
• Management guidance focuses on underserved areas in India.

Market Growth Forecasts #

• The Indian healthcare delivery market is projected to grow at a 9.0-11.0% CAGR, reaching ₹ 9.2-9.3 trillion by FY 2027-28, driven by lifestyle-related illnesses, health insurance, and rising income.
• The telemedicine market is predicted to increase at a 31% CAGR and be worth USD 5.4 billion by 2025.
• India’s elderly population is expected to reach 200 million by 2030, driving demand.
• Medical tourism to India is projected to grow, reaching USD 13.4 billion by 2026.
• The private healthcare sector’s share is expected to increase to 73.0% by 2027.

Planned Strategic Initiatives #

• Bed capacity expansion of approximately 250 beds in existing facilities (Patna and Lucknow) during FY 2024-25.
• Launch of the first phase of Noida hospital with 300 beds by the end of Q4 FY 2025 or the beginning of FY 2025-26.
• Development of a 400-bed facility in South Delhi, a 300-bed facility in Indore, and a 500-bed facility in Mumbai.
• Expansion of clinical teams and enhancement of clinical capabilities, including robotic and minimally invasive surgery.
• Expansion of Medanta Labs, Medanta Clinics, Medanta Pharmacy, and Home Care services, with a focus on integration and patient engagement.
• Continued investment in digital technology and innovation.
• Ongoing collaboration for advanced cardiac critical care monitoring and clinical decision support using AI.

Capital Expenditure Plans #

• Significant capital expenditure is planned for enhancing the capacity of existing hospitals and adding new hospitals.
• Investment in new super-specialties and the latest medical equipment and technologies.
• FY 2023-24 saw the addition of 126 beds (98 in Lucknow, 28 in Patna).
• Planned addition of ~50 beds in Lucknow and ~100-150 beds in Patna in FY 2024-25.
• Ongoing construction of a 550-bed hospital in Noida.
• Acquisition of 2.2 acres of land in Mumbai for establishing a 500-bed hospital.
• Capital expenditure is geared at facility expansion and adding new technology and treatment.

Efficiency Improvement Targets #

• Leveraging algorithm-driven porter tracking systems to improve porter management and utilization.
• Implementation of the Doctors EMR application for real-time access to patient records, enhancing clinical decision-making and efficiency.
• Use of the Smart Nursing Application for algorithm-based nurse allocation, optimizing workload visibility and care quality.
• Integration of AI and predictive analytics to enhance productivity, efficiency, and accuracy of medical diagnoses, particularly in radiology.

Potential Challenges and Opportunities #

• Challenges:
  • Shortage of skilled medical professionals.
  • Rising competitive intensity.
  • Capital and opex intensive industry.
  • Evolving regulations and potential adverse government policies.
• Opportunities:
  • Low bed density and inadequate quality health infrastructure in India.
  • Capacity expansion in underserved markets.
  • New hospital projects in high-growth potential markets.
  • Strengthening the ‘Continuity of Care’ model with expansion of labs, clinics, pharmacy, and homecare services.
  • Improvement in case mix, with a focus on high-end procedures.
  • Growing medical tourism.
  • Increasing healthcare accessibility and affordability driven by technology and digitalization.
  • Increased budgetary allocation by the government to the health sector.
  • Rising elderly population.

Scenario Analysis and Sensitivity #

• Positive Scenario: Successful and timely completion of Noida, South Delhi, Indore, and Mumbai projects, leading to significant revenue growth and market share expansion. Increased technology adoption could lead to improved patient outcomes.
• Negative Scenario: Delays in project completion and operationalization, impacting expansion plans and profitability. Higher-than-expected competition or regulatory changes could also pressure margins.
• Key Sensitivities:
  • Occupancy Rates: Fluctuations in occupancy rates directly affect revenue.
  • ARPOB: Changes in case mix and tariff adjustments will impact ARPOB and profitability.
  • Capital Expenditure Timing: Delays in capex projects can defer revenue generation.
  • Regulatory changes could put a burden on margins and limit operations.

Audit and Regulatory Analysis of Global Health Limited #

Auditor’s Opinion and Qualifications #

• The Statutory Auditors, M/s Walker Chandiok & Co. LLP, issued an unmodified (clean) opinion on the standalone and consolidated financial statements.
• There were no qualifications, reservations, or adverse remarks in the audit reports for FY 2023-24.
• Secretarial Audit reports do not provide any qualifications.
• The only modification is related to internal controls over financial reporting which is included under section 17(h)(vi) and 17(b) of the auditor’s report.

Key Accounting Policies and Changes #

• The financial statements comply with Indian Accounting Standards (Ind AS).
• The Company uses the historical cost basis, except for certain financial assets and liabilities, and share-based payments, which are measured at fair value.
• The Company has applied consistent accounting policy.
• During the year, changes were made in key accounting policies.
• There were no new standards or amendments to existing standards notified by the Ministry of Corporate Affairs that materially impacted the Company in FY 2023-24.

Internal Control Effectiveness #

• The Company maintains internal financial controls over financial reporting.
• The auditor’s report on internal financial controls with reference to financial statements expressed an unmodified opinion, indicating adequate controls and operating effectiveness, except for the lack of database-level audit trail logging in the accounting software, where application level controls have been tested.
• The audit trail feature was not enabled at the database level for any direct data changes.
• Management asserted the existence of risk assessment and mitigation processes.

Regulatory Compliance Status #

• The Company has generally complied with statutory provisions and regulations.
• No penalties were imposed by stock exchanges or SEBI for non-compliance on capital market-related matters during the last three years.
• The Company has complied with the provisions of Sections 177, 186, and 188 of the Companies Act, where applicable.
• The Company’s internal audit system is appropriate and effective, and the internal auditor reports to the audit committee.
• Secretarial Standards issued by the Institute of Company Secretaries of India have been duly complied with.
• The Company is fully complaint with all environmental laws.

Legal Proceedings and Their Potential Impact #

• There are pending litigations against the Company, disclosed in Note 41 of the standalone financial statements. The primary matter pertains to income-tax disallowances.
• Other legal cases involve medical/employee-related issues.
• Contingent liabilities have been created for these cases based on legal advice and internal analysis, where the likelihood of outflow of resources is not remote.

Related Party Transactions #

• All related party transactions during FY 2023-24 were in the ordinary course of business and on an arm’s length basis.
• There were no materially significant related party transactions that presented a potential conflict with the interests of the Company.
• Disclosure as per Ind AS-24 is provided in Note 39 of the standalone financial statements.

Subsequent Events #

• The Board of Directors approved a Scheme of Amalgamation between Medanta Holdings Private Limited (wholly-owned subsidiary) and Global Health Limited, subject to statutory approvals on March 21, 2024.
• The Board of Directors approved the appointment of M/s. Ramanath Iyer & Co. as the Cost Auditors for FY 2024-25.
• Global Health Limited along with DLF Limited has incorporated a Joint Venture Company namely ‘GHL Hospital Limited’, to construct appox 400 bed super specialty hospital in South Delhi.
• Global Health Institute of Medical Sciences Foundation was incorporated on March 30, 2024.
• No dividends has been declared for the year.

Accounting Quality Analysis #

• The unmodified audit opinion suggests high accounting quality.
• Consistent application of Ind AS and accounting policies suggests reliability.
• The use of estimates and judgments (as disclosed) is inherent in financial reporting, but their reasonableness is confirmed by the auditors.
• There is no indication of aggressive accounting.

Regulatory Risk Assessment #

• The primary regulatory risk arises from pending litigations, specifically income tax matters. While provisions have been made, the outcome of these disputes could affect future financial results.
• The Company’s compliance with relevant laws (Companies Act, SEBI regulations, etc.) indicates a low-to-moderate regulatory risk profile.
• The absence of material non compliances reduces regulatory risk exposure.
• Environmental laws have been strictly followed, indicating low environment risk.