Good morning, everyone. I welcome you to Aster DM Healthcare's earnings conference call for the third quarter of financial year 2023. The company declared Q3 FY 2023 results last evening. I hope you got a chance to review them along with other materials which were posted on the stock exchanges and the company website. Today to discuss the quarterly business performance and the future business outlook, we have the senior management team at Aster DM Healthcare available with us. It includes Dr. Azad Moopen, Chairman and Managing Director, Ms. Alisha Moopen, Deputy Managing Director, Mr. T.J. Wilson, Non-Executive Director, Mr. Amitabh Johri, CFO for GCC Operations, Mr. Sunil Kumar, CFO for India Operations. I would like to inform everyone about how we conduct this call. All external attendees will be in the listen-only mode for the duration of the entire call.
We'll start the call with the opening remarks by management, followed by an interactive Q&A session. During the Q&A session, you will get a chance to ask a question by raising your hand by clicking on the Raise Hand icon in the Zoom application at the bottom of the window. We'll call out your name, after which your line will be unmuted, and you will be able to ask your question. We request you to please limit your questions to 2, but not more than 3 per participant at the most at a time. Post the completion of your query being answered, you will lower your hand. Certain statements that may be discussed in the meeting that are not historical facts and might be forward-looking statements.
Such forward-looking statements are subject to certain risks and uncertainties like government actions, local political or economic developments, technological risks, and many other factors that could cause the actual results to differ materially from those contemplated by the relevant forward-looking statements. Aster DM Healthcare will not be in any way responsible for any action taken based on the statements and undertakes no obligation to publicly update these forward-looking statements to reflect subsequent events or circumstances. With this, I will ask Dr. Moopen to start with the opening remarks. Over to you, sir.
Thank you, Bala. Thank you very much. Good morning, everyone. Thank you all for joining us for the earnings call for the third quarter of financial year 2023. The COVID-19 pandemic fortunately is very well under control with improving herd immunity of the population worldwide. We hope and pray that we won't have the challenge of a potent variant in future. It's very important that we remain vigilant about COVID as well as other infectious diseases which are capable of playing havoc with health of world population, as we have seen. The International Monetary Fund recently published its forecast painting a slightly less gloomy picture as inflation appears to have peaked in 2022, consumer spending remains so robust, and energy crisis following the Russian invasion of Ukraine has been less severe than initially feared.
That's not to say that outlook is rosy, as the global economy still faces major headwinds and a fall in growth from 3.4% in 2022 to 2009% this year before rebounding to 3.1% in 2024. However, it is relieving that IMF predicts the slowdown to be less pronounced than previously anticipated. As per IMF, growth in India is set to decline from 6.8% in 2022 to 6.1% in 2023, before picking up to 6.8% in 2024. With resilient domestic demand despite external headwinds, meaning India will remain the world's fastest growing major economy both in 2023 as well as in 2024.
With the thriving economy and our strategic initiatives, we are able to produce excellent revenues and profitability growth in India already. We hope that we'll be able to continue that. The oil and non-oil sector in UAE continues to do well, with good growth being predicted in 2023, showing resilience in the face of global economic headwinds. UAE continues to be a preferred destination for business and people. The saturation in the healthcare sector is producing demand-supply issues in the sector, and that's reducing the growth. The introduction of corporate tax, as well as the insurance-related issues shall have an impact on the profitability of business. One of the major opportunities in the GCC is the opening up of Saudi Arabia with large population and a thriving oil economy.
Alisha will speak more on this, and you will hear more about this from her. Let me now discuss the financial performance of Aster for quarter three, financially at 2023. At a consolidated level, we posted a revenue of INR 3,192 crore, which is an increase of 20% when compared with the same period last financial year. EBITDA was INR 449 crore when compared to INR 397 crore in financial year 2022, an increase of 13%. EBITDA growth has impacted due to the loss from new hospitals in GCC. Adjusted for this loss, EBITDA was INR 468 crore, an increase of 15% over the last quarter, over the last year, quarter three.
Profit after tax post NCI stands at INR 139 crore when compared to INR 148 crore in Q3 of FY 2022. Profit after tax, excluding losses for new hospitals, is INR 180 crore, a growth of 12%. The Aster India business continues to grow very well, with revenues growing at 25% to INR 771 crore and EBITDA increasing by 13% to INR 115 crore. A profit after tax stood at INR 30 crore as compared to INR 27 crore in FY 2022, with a growth of 11%.
With respect to the GCC business, revenue grew 19% year-on-year to INR 2,421 crore, and the EBITDA grew 13% year-on-year to INR 334 crore as compared to INR 296 crore in the same period last financial year. Moving to the operational updates in the quarter, Aster India continues to have excellent growth as seen from the above numbers, and is slated to grow further in the coming years. Some of our hospitals have reached almost full capacity, and we are adding new beds in such areas. We are also setting up new hospitals in the geographies where Aster is the leading brand. The work on the new 200-bed Aster Hospital Kasaragod has begun.
We are also in the process of adding 100 beds in Aster Hospital Kannur and 100 beds in Aster Medcity Kochi, because it's already working on almost full capacity. The work on the Phase II of 275-bed Aster Whitefield Hospital in Bangalore is nearing completion, and we shall soon be starting the construction of a Phase I through 350 Aster Capital Hospital in Trivandrum. One of the strategies we adopted is to add more beds by the O&M model, O&M asset light model to take healthcare to the suburban areas without incurring lot of cost. In the last quarter, we added 150 beds at Tirupati, Andhra Pradesh, and we are adding another 100 beds this quarter in Mandya in Karnataka.
The total number of beds added this financial year through this model in 3 asset light hospitals is 390 beds. We also acquired 100% share in Aadrian IB Healthcare Private Limited through a subsidiary, Dr. Ramesh Hospitals, at a cost of just INR 1.6 crore. With this acquisition of 50-bed hospital, we now have a total capacity of 263 beds in Vijayawada and 913 beds in 6 hospitals in AP, become the largest healthcare provider in the state, with presence in Vijayawada, Guntur, Ongole and Tirupati. We are adopting strategies to improve the revenue and margins in the state, including the acceptance of Aarogyasri cases.
Last year we announced our intent to increase the stake in the profitable Malabar Institute of Medical Sciences, MIMS, subsidiary, a subsidiary which operates four hospitals in North Kerala with 1,464 beds. We have started the process and are hopeful to increase our stake from 74.14% to over 76% in coming months. Coming to other asset light businesses. As on December 31st, 2022, we have a total of 239 Aster Pharmacy branded retail stores. 105 in Karnataka, 72 in Kerala, 60 in Telangana and 2 in Andhra Pradesh, which are operated by Alfaone Retail Pharmacies Private Limited. The Aster Labs has established its presence in Karnataka, Kerala, Maharashtra and Tamil Nadu, Andhra Pradesh and Telangana.
As of 31st December 2022, there are 2 reference lab, 18 satellite labs, and 157 patient experience centers. The restructuring of the lab management with expansion of retail pharmacy outlets will enable us to establish Aster Omnichannel ecosystem more effectively. I'm happy to let you know that Aster Health Academy, which was launched recently with the headquarters at Bengaluru, shall be leveraging our internal capabilities and external resources to develop the next generation of healthcare leaders. Apart from managerial courses, the academy is also developing repository of clinical courses in collaboration with world-class healthcare providers. In GCC, there were some challenges last quarter due to the losses from the new Aster Hospital Sharjah and Aster Royal Hospital, Muscat. These are temporary in nature, and utilization of these hospitals is expected to increase in the coming quarters.
The future opportunity in GCC is Saudi Arabia with a population of 30 million, which is equal to the combined population of all other GCC countries. We were struggling earlier with the Aster Sanad Hospital in Riyadh, which has now turned profitable with 10%+ EBITDA margin this financial year. We are looking at other opportunities, including the rolling out of a network of pharmacies. Alisha will talk to you more on the GCC related matters. I wanted to inform you certain management changes which has happened during the quarter. Mr. Sreenath Reddy has stepped down from the post of Group CFO on 5th January 2023, which was a planned activity on the basis of restructuring of the company, which is in progress. That's a restructuring where we think that the GCC and India demerge or I mean, the structure will change.
Going forward, the GCC finance matters shall be looked after by Mr. Amitabh Johri, who is presently the CFO for GCC as well as the India part shall be looked after by Mr. Sunil Kumar, who is presently CFO of India. Accordingly, both of them shall be addressing you on both geographies today, and they will be available for any queries now as well as in future regarding the investment-related matters. The investor relations position, which was vacant has been filled up by a highly experienced senior IR professionals who will be joining us in April. He will also be responsible for our M&A activities in India. We have begun the process of selecting the CEO for India and expect to have the position filled within the next few, next 2 months. Status of the restructuring.
We have been updating you about the progress of the restructuring process. While we have shared in the past that Board formed a subcommittee on March 22nd and appointed investment bankers in June 22nd, who had reached out to the potential investors. The company's investment bankers have received interest and indicative terms for potential buyers of Gulf Cooperation Council region business. The investment bankers are working actively with the potential buyers on terms, and their advisors are conducting due diligence on the GCC business. The investment bankers have communicated that binding bids are likely to be received in the quarter one of financial year 2023-2024. Upon submission of the final evaluation by the investment bankers, the Board shall review the proposal of sale of the company's business in GCC.
Appropriate intimations and impact disclosures will be made as and when any conclusions are arrived at and approved by the board. I now request Deputy Managing Director, Alisha Moopen, to elaborate more on GCC business, the digital transformation and other strategic initiatives undertaken by Aster. Thank you very much.
Thank you, Chairman. Good morning, everyone. As Chairman mentioned, we are seeing the COVID receding and UAE is seeing an increased traffic of visitors and return of expats who had moved out during the COVID period. The overall numbers of GCC, it has seen a revenue increase of 19% on the revenue and 13% of the EBITDA over the last year. The GCC business, EBITDA, excluding the operational losses from the new hospitals commissioned during this period, is INR 468 crore, which is a growth of 15%. If you look at it at a segmental level, the hospital revenues during the Q3, it increased by 22% year-on-year. We expected the hospital business to grow larger, especially with the installation of the new beds of Sharjah and Oman.
The empowerment of the new facilities has been a little bit more extended and delayed than we had anticipated. This is the intense negotiation that is a reality of a fully insured market that we are facing. We want to make sure that we get the right contracts and the right rates in place for large facilities and big infrastructure that we're building up. While we were hoping that most of this will be done by the end of Q3, this has gotten a little bit more delayed than we had anticipated. We know that we will be seeing much larger growth as these empowerments are complete. The retail business, on the other hand, actually saw an increase in revenue of 36%, and that kind of lends itself to the focus we've had on increasing non-insurance business in the clinics.
Also in the clinics, we are seeing the core revenue, which is excluding the PCR, showing an increase of more than 35%. On the business updates, as Chairman mentioned, we are kind of laying the foundation for Saudi in a big way. We are working on all the regulatory approval to set up the joint venture with our partners, Care Group. We are expecting to set up our first facilities in Q1 2023/2024. Our plan for the first year is to have 50 pharmacies being rolled out, things are working according to the plan so far. We also launched Wellth, which is a hub of integrative medicine in UAE, which was in November last year.
This was again to move towards a more wellness initiative within the UAE, to help people lead more healthier lives, alleviate chronic lifestyle diseases, and also help them prevent hereditary afflictions. Wellth is managed by MedCare and has a whole wide range of services, which includes anti-aging, regenerative medicine consultation, addiction management prevention, osteopathic, chiropractor, and a fully integrated wellness hub. It also includes DNA testing, chronic disease management, and actually is a completely new venture within the MedCare vertical. On the Aster Pharmacy front, which is the retail arm, we have entered into a strategic partnership with UAE's largest online food delivery and Q-commerce platform, Talabat, to bring prescription medicines directly to the front door of patients in Dubai.
Post-COVID, what we are seeing is an increased activity of delivery of medicines. We wanted to extend it one step further to enable prescription delivery with this aggregator partnership. Under the strategic pact, Talabat customers can upload their medical prescription securely and easily through the Talabat app to make the prescription medicine purchases beginning first February 2023. This partnership is designed to save consumers time and money in line with Dubai's vision to provide the highest quality of specialized and accessible healthcare to its community members by pursuing efficiency, appropriate allocation, and utilization of resources.
It aims to create a complete ecosystem of care that fully utilizes the latest technologies to enhance patient-centered care and ensure medication adherence compliance in line with Aster DM's mission to improve accessibility to healthcare. As chairman mentioned, we have made good strides as far as our digital health ambition is concerned. Our app, myAster, has seen significant traction in the third quarter. We are currently ranked number 1 free medical app in the UAE, both in the App Store, as well as the Google Play Store. We're currently at around 220,000 downloads, which is up from 86,000 in the last quarter. Both the consultation and the e-pharmacy services that are live on the platform has seen significant growth during this time.
The major improvements that were made was smoother appointment bookings, quicker search, conversion-focused product listing, and product detail pages, all was which was done on the basis of consumer research and feedback which we obtained in our pilot days. In the third quarter, we had more than 38,000 appointments booked through myAster. We had nearly 1 million transactions on the app, a combination of appointment booking as well as e-pharmacy orders. This number has continued to scale since. The e-pharmacy orders has increased 150% month-on-month. Our non-prescription orders on our digital channels have also grown by 2x in comparison to the prior quarters, and this is continuing to scale as well. The home delivery business continues to trend more than AED 10 million on an average per month.
We are working on improving our efficiency of our rider base using state-of-the-art technology, which will help us to scale the digital orders without a major increase to our cost base. I will now request our GCC CFO, Amitabh Johri, and India CFO, Sunil Kumar, to take you through the details of the financial and segmental performance of the quarter. Thank you.
Thank you, Alisha. Good morning, everyone. On a consolidated basis, our revenue from operations for the quarter is INR 3,192 crores. It's an increase of 20% on year-on-year basis. Consolidated EBITDA for the quarter was at INR 449 crores as against INR 397 crores, which is again a growth of 13%. This quarter also saw operational losses from three new businesses in GCC, namely Aster Hospital, Sharjah, Aster Sonapur, Aster Ruwi, Muscat, and one India hospital, that is the Mother Hospital Areekode. This impacted the quarter's EBITDA. Excluding the losses from these new losses, the EBITDA stands at INR 468 crores as against INR 406 crores during the same period of the last financial year, which is a growth of 15%.
Consolidated PAT post NCI is at INR 139 crores as compared to INR 148 crores in Q3 of FY 2022. Excluding losses from new hospitals, as I called out earlier, the PAT post NCI stands at INR 180 crores. Coming to the nine months performance, the revenue from operations stood at INR 8,671 crores. It's a growth of 15% compared to the same period last financial year. EBITDA for this period was at INR 1,060 crores compared to INR 1,021 crores in FY 2022 nine months. Excluding the losses from the new hospitals, GCC and India, the EBITDA was at INR 1,123 crores, which is a growth of 9%.
PAT post NCI was at INR 254 crores compared to INR 300 crores in the FY, the 2022 nine-month period. Excluding the losses from new hospitals and one-time other income, the PAT stood at INR 346 crores, which is 11% growth over the same period last year. Specific on the revenue from GCC operations was at INR 2,421 crores. It's an increase of 19% on year-on-year basis. Our previous year had significant COVID revenue, which makes some of the revenue and EBITDA numbers as not comparable. Q3 for the last year had almost INR 207 crores of COVID revenue. The core business revenue growth, excluding this COVID testing, was 32% on year-on-year basis.
EBITDA from GCC operations stand at INR 334 crores as against INR 296 crores in Q3 of FY 2022. Excluding losses of new hospitals in GCC, the EBITDA stands at INR 350 crores in Q3 FY 2023, which is a growth of 15%. Coming to the segmental reporting, as Alisha had called out, the performance for the quarter has been good. The GCC hospital revenue was at INR 1,059 crores, an increase of 22% on year-on-year basis, the EBITDA stands at INR 171 crores compared to INR 141 crores in FY 2022 Q3. It's a growth of 21% year-on-year basis. Excluding the losses from new hospitals, the hospital segment had an EBIT of INR 188 crores. The adjusted EBITDA margin for losses from new hospital was 18.1%.
GCC clinic revenue stands at INR 662 crores, an increase of 4% year-on-year. Normalized for COVID testing, the core business of the clinic segments saw a healthy growth rate of 35% in this quarter. It's also resumption of normal business from a GCC perspective. EBITDA for GCC clinic segment stands at INR 142 crores, which is at a 21.5% margin. GCC pharmacy revenue increased 36% year-on-year basis on the back of our new initiatives like e-pharmacy, home delivery and new stores being opened. From a revenue of INR 608 crores to INR 829 crores on account of additional sales having generated in this quarter. It would increase from INR 72 crores to INR 98 crores, an increase of 29%. EBITDA margin for this segment is at 11.9%.
Sorry, I stand corrected. GCC net debt stands at $203 million as of 31st December 2022 compared to $197 million as of 31st March 2022. I request the CFO of India Operations, Mr. Sunil Kumar, to take you through the India performance during the period.
Thank you, Amitabh. Good morning, everyone. For the quarter ended 31st December 2022, India revenues have increased to INR 771 crores, up by 25% from INR 618 crores in Q3 FY 2022. EBITDA from India operations have increased to INR 115 crores with EBITDA margin of 15% compared to INR 102 crores in Q3 FY 2022 with a growth of 13%. Excluding the losses from the new hospital, Aster Mother Hospital Areekode, EBITDA is at INR 118 crores in Q3 FY 2023 with a year-on-year growth of 16%. For the nine months performance, the revenue from operations stands at INR 2,179 crores with the growth of 23% compared to INR 1,776 crores for nine months FY 2022.
EBITDA from India operations stands at INR 326 crores with a margin of 15% in 9-month FY 2023 compared to INR 275 crores in 9-month FY 2022 with a growth of 19%. Excluding the losses from the new hospital, EBITDA is at INR 336 crores in 9-month FY 2023 with a growth of 22% compared to 9-month FY 2022. PAT post NCI is at INR 99 crores compared to INR 49 crores in 9-month FY 2022 with a growth of 104% year on year. With respect to segmental performance, revenue from India hospitals and clinics stands at INR 735 crores in Q3 FY 2023 with a growth of 20% year on year.
EBITDA stands at INR 132 crores with a margin of 18% in Q3 FY 2023 as compared to INR 110 crores in Q3 FY 2022 with a 20% growth in year-on-year. Excluding the new hospital, the EBITDA stands at INR 135 crores in Q3 FY 2023 with a year-on-year growth of 23%. Aster India net debt stands at INR 455 crores as on 31st December 2022 compared to INR 319 crores as of 31st March 2022. The CapEx for the 9-month period is at INR 190 crores. On that note, I conclude my remarks. We would be very happy to answer any questions that you may have. I now request Balachander to open the question and answer session. Thank you.
Thank you, Sunil. I would request the attendees to click on the raise hand button, okay, to get in the queue for the questions. Meanwhile, I think I already see a couple of attendees having their hands up. I would request Nikhil Chandak to raise the first question. Nikhil, you can unmute your mic and you can ask your question. Mr. Nikhil Chandak. Mr. Nikhil Chandak, are you able to unmute and speak? Can you please go ahead and speak? There may be some technical difficulties. I would request the second question list, Nikhil Mathur, to ask this question, please.
Hi. Hello? Yeah, hi.
Yes, Nikhil.
I'm audible, right?
Yes, you're audible.
Yeah. Hi, good morning, everyone. 2, 3 questions I had. The first question is on the losses currently sitting in the 0-3-year maturity profile hospitals. If I look at GCC and India combined, this loss in 9 months at EBITDA level is around INR 66 crores. Given the planned bed additions in FY 2024, do you expect these losses to further go up or you are now reaching a stage where some of the losses are still start getting absorbed with incremental revenue, so we might be entering a phase of flattish losses from these maturity profile hospitals?
Yeah. Amitabh, you would like to take it up for GCC and
Sunil for India.
Sure. Sure, Mr. Chairman. Hi, Nikhil. Thank you for the question. If you look at from a GCC perspective, as we had called out, there are 3 hospitals that have been opened recently, behind operating losses at least for quarter three. Anish had alluded to some of the empowerments that are open, which we expect to come sometime between quarter four of this financial year and quarter one of next financial year into FY 2024. Assuming that happens, it will allow us to start reducing the losses and we expect that by at least quarter three or quarter four of next financial year, we should start seeing neutrality coming in in terms of initial losses reducing significantly. That is on the profile of these 3 hospitals that are at quarter.
Sunil, can I request you to pick up the India-?
Yeah. Just as one follow-up here, what is the planned bed addition in GCC in FY 2024?
We are looking at incremental beds of almost 150, close to 210, 220 beds right now. When I say that 220 beds, this is between an annex building that is coming up in Saudi. That's around 56-59 beds that are there. Incrementally, we are looking at another facility coming up in Dubai, where we have taken a fully fitted out facility for creating a multi-specialty hospital.
Nikhil, just to add to what Amitabh said. The two new hospitals which would be coming up in FY 2024, one of them will not have these insurance issues because it's already an extension of the existing facility, so there's no empowerment that is required for that. The other hospital will only be commissioned by Q4 of 2024. I mean Q1 of '24, basically January, around January time next year. We again will not see losses of that unit for this coming year. As Amitabh mentioned, we expect the losses of these three hospitals to flatten out with the increasing revenue and increasing occupancy by Q3 this year.
Sure.
Yes, sir. Thank you, Nikhil. India bit of it, say 0 to 3 years, we have about only 2 hospitals. Specifically Aster Mother Hospital Areekode and Whitefield Hospital. In the Whitefield Hospital we've got 3 blocks, you know, A, B and C. Only the current operational is the women and children block, where our losses are hardly anything there. Whatever the losses which you're seeing is majority contributed by Mother Hospital Areekode. This is being a O&M model, we don't expect that loss to continue the next year, you know. That is 1 bit of it. From the next year point of view, the major hospital which is going to get operational is only Aster Whitefield ENB block with 275 beds.
As you know, that's a bigger capacity with a full-fledged multi-specialty, including oncology, which we are commencing. Losses is going to be, you know, in a good number. The same time, that is the only hospital which is coming up immediately. What we see is other addition of beds is going to come up only in the O&M projects, where we don't expect any major losses. With that being keeping in the picture, we don't expect any huge losses in the coming years. That going to be very minimal, whatever you're seeing there, in and around that number should be there.
Sure. The second question I had was on your initiatives on the pharmacy side in India. How many stores are you planning in India next 12 months, 24 months? A question tied to that is that we have seen couple of companies now listed, MedPlus and Apollo, having a very sizable presence in the southern market of India and also expanding into West. Being the third big entrant on the organized side, isn't it a bit late in the game because you already have a fairly established market on the pharmacy side and you have two incumbents. How easy or difficult would it be to kind of make a presence in India as a third player in this market?
Nikhil, I'll answer the first part of that and second part of that and Sunil will answer about the numbers, the number of units and all. Strategically what we thought is that unlike other players who are much larger and much bigger, we are not looking at catching up on these numbers. What we are looking at are 2 things. One, an ecosystem to be created between our hospitals, pharmacies, labs, and home care, which will, with the myAster app, which is now launched in GCC, coming into India in the next 6 to 8 months. This will tie up the patient and all the requirements of the patient. We have been talking about the omni-channel, which we hope that is the difference that we can provide.
Unlike other providers, of course, for some of our I mean, competitors or peer group have got that, but not to this level that we are looking at where we are tying this up. For that, it is important that we have the pharmacies also. If you look at the geographies where we are rolling out, this is not pan-India. We are looking at geographies where we already have hospitals, and we can extend that whereby, for example, the patient who is discharged, giving the medicines from the pharmacies around or doing the lab tests once the labs are there, and even the home care post-discharge. We want to create, one, the brand to have a wider presence, and second, to provide the patients that care. Number-wise, we are not going to be anywhere near that, and that is the most important thing.
The second part which we are trying, we are again not looking at the profits which are coming up from the actual medicine supply and all. We are looking at our own white labeled products. We have this advantage of having the GCC business where we have large number of white labeled products. We are also trying to get this benefit in India where we'll be now looking at having white labeled products which are much more profitable when compared to the normal medicines. We know that's a cutthroat competition with huge discount and all. We don't want to go into that online or offline players, we'll be looking at having a better margin through the white labeled products. Sunil will tell about the numbers. Sunil.
Thank you, Chairman. Adding on to that, Nikhil, number-wise, we already are 239 pharmacies, and we are expecting to close the year with around 260-270 pharmacies. Next one year, we are looking in the, you know, range of 125-150 pharmacies is what we look at. At least in every year we want to add up. You know, that's a number bit of it.
Sure. One more question, if I may just squeeze in. The O&M model, I understand it is more for India that we're talking about 303 bed additions. Can you give some sense on what's the EBITDA per bed that you are targeting from this O&M model? In India you are at INR 24-25 lakhs EBITDA per bed, basis last quarter number. Any sense on how the EBITDA per bed can look like in this O&M model?
Sunil, you want to answer that?
Yeah. Thank you, Nikhil. More than EBITDA per bed, I would like to give on the margin bit of it. In this O&M model, right, we are, you know that we are putting in tier two, tier three cities. That means OPEX are going to be lower. Second is that we are not, we're going to treat these scheme patients also, you know, because volume is the key there. Considering all those things, and also the CapEx investment is very low. That means to say we're getting the existing hospital with the most of the equipment being there and our investment on the, what do you call, you know, equipment will be less. I'm talking about INR 5 lakh-INR 10 lakh per bed. Keeping that in mind, my revenue share will be on the higher end.
Here we look at a margin somewhere between around 15%, you know. That's the number we're looking at. We're not looking at what we are in other hospitals wherein we are 20% above, 25% above. That margins we're not looking at. It'll be lower margin but a higher ROC. That's what we expect here.
In terms of accounting, you will book proportionate revenues and, or it would be a management fee? What would you be looking at?
No. It's not a management fee. Just like the other O&M models, we book the complete revenue and complete profitability. The whole accounts will be running by us. We instead of we charging a management fee, we give a revenue share to the landlord.
Okay. Where is that expensed out, the revenue share to the landlord?
That will come as your, normal, you know, rent, basically on the EBITDA and EBITDA, right?
Below. Okay. It will be treated as a lease, right?
Right. Exactly. Exactly.
Okay. Okay. Understood. Thank you so much.
Thank you.
Thank you, Nikhil. The next question is from Amrish Kacker. Amrish, can you please unmute and go ahead and ask your question.
Thank you for the opportunity. My first question is just a follow-up on the O&M question. I think the strategic rationale has been explained, quite clearly. We also understand, for our own brownfield and greenfield, what the future expansion looks like. Could you help me to understand how should I think about what the additions on beds could be looking out 2, 3, 4 years into the O&M model?
No. What was that question, last part of it that I didn't-
How do I think about what is the capacity, incremental capacity for O&M hospitals?
Yeah.
going forward?
Yeah. We think that we'll be able to add around 500 beds in a year through this model. This year we already have reached 390 beds or so, and we have 1 hospital which is in a closure state. What we do is that we do a thorough DD, and we want to have all the requirements like the legal as well as other statutory requirements being met. Only we enter into that. We have at least 15, 20 in consideration, but we make it very, very clear that we will enter only if all the requirements are being met. At least 1 more hospital, we hope that we'll be able to do it this year or early next year, first quarter of next financial year.
Answering your question, we are talking about adding about 500 beds in a year. The best part of that is that, like what Sunil was mentioning, our total cost for this is so low and that is going to have a high impact on our ROC.
Right. This is a medium term. I mean, we can think about this 500 beds a year for medium term.
Yeah.
next year. The second question is just trying to understand a little bit more on the pharmacy and labs, profitability. We do now show the numbers, EBITDA and revenue numbers split out. If my understanding is correct, the pharmacy business should, because it's run by a third party, we should not be having a lot of losses in that. Is it mainly the labs that has a negative EBITDA? Could you help to explain that a little bit?
Sunil.
Yeah. Thank you, Amrish. What you said is exactly right. Whatever we're giving the segmental portion that covers only the labs and wholesale pharmacy. As you know, retail pharmacies are managed by another company called EF PPL. We don't consolidate their numbers but capture the wholesale revenue out of it. As rightly said, 80%-90% of the losses which are sitting there, that is contributed by Aster Labs. You're right.
Thank you very much for that.
Just to extend that, I also wanted to just, Amrish, I wanted to add that the labs we have done a restructuring. Earlier this was being run as a vertical across all the geographies. We have aligned it with our individual hospital clusters. This has produced significant impact because now that ecosystem has started working and that is producing, one, increased awareness as well as sale. Second, the cost also has come down. We hope that by maybe in 6 months-9 months, we'll be able to go into a breakeven on the lab side. That is our hope, that at least by next year we'll be able to, towards the third quarter, we'll be able to go into a, I mean, breakeven state in the lab.
Thank you. If I may just slip a quick question in on the debt. How should we think about the debt evolution in India? It's net debt.
Yeah. Sunil?
Amrish, on net debt, excluding the lease liabilities.
Yeah.
we should be in the range of around 2:1 ratio, our own net debt to EBITDA ratio would be around 2. That's what we are looking at. Even now also we are at just I think, 1.6 or 1.7. Considering that, you know, the CapEx what we already communicated, around INR 190 crores was spent. Under the current financial year because Whitefield is going to get operational, and majority of medical equipments are going to be purchased in the last quarter. We see that, you know, CapEx growing to more than INR 250-300 crores. As per the previous guidance we've given, we expect to incur around INR 250-300 crores going forward also, considering we have got almost 1,800 beds in pipeline.
Keeping all this in mind, we will be able to keep that ratio net debt to EBITDA excluding lease liabilities below around 2, is what we are, what I see.
Okay. Thank you very much, and all the best.
Thank you.
Thank you, Amrish. The next question is from Shyam. Shyam, if you can, go ahead and ask your question, please.
Yeah. Good morning. Thank you for taking my question. Just a question, just like from last quarter, I think the Andhra Telangana region, if there is an update, because that seems to be the one underperforming cluster in the India business. You know, do you think that fiscal 2023 it's gonna be difficult and maybe we rebase and look at 2024 as the earliest when this business can grow?
Exactly. That's what we are also trying. While this quarter may see some improvement in the margins as well as overall profitability, but we hope that with the changes that we have brought in, including the bringing some of the aggregation related hospitals which we were losing out, that was a strategic failure which happened 2-3 years back. The COVID revenues filled it up. Now we are thinking that with that also coming into the picture, we'll be able to go to that pre-COVID levels of profitability. You are absolutely right with this, I mean, changes. We hope that it will go into a, I mean, the earlier levels as well as to the EBITDA as well as revenues going up.
Dr. Moopen, just probing here. You know, when you look at the historical, let's assume fiscal 2022 or 2021 margins, maybe COVID. I'm looking only Andhra Telangana cluster.
Mm-hmm.
Margin 16 or 19%, right? Do you think that can't be achieved, right? Should we look at a fiscal 2020 where 15% is the right number to go by?
Yeah. I will rather go for that 15% in the near future, next financial year. We hope that we'll be able to go beyond that in the, as we go forward. Yes. What you said is right.
Got it, sir. Helpful. The second question is on the GCC pharmacy. I think pretty solid numbers. You know, for this quarter, I think there is an acceleration, even when I look at YOY growth, Q2 versus Q3 also. What's driving that acceleration? Is it additions of a new pharmacy and rollout, or is it just the same store also growth seeing pretty strong?
Alisha, you would like to answer that.
Yeah. Thank you. Thank you, Shyam. It's, it's a combination. We haven't added too many new stores, so there is a lot of focus on same store growth itself. I think we have been changing the assortments. We've been increasing sort of like what Chairman was saying, our own products, sale of our own products. We've been working on our wholesale and distribution business where our products are now in the supermarket, in the duty free. There's been a whole range of effort to sort of make sure there's a more balance between prescription and non-prescription, dispensation. It's not really just new store, additional growth. We have, I think we added around 30 pharmacies last year. Amitabh, you wanna just
Sorry, the last quarter we have added only 12 pharmacies.
No, the whole nine months for this year.
Nine months we have 30 odd pharmacies. It's not that much. In fact, just to add on to what Shyam, Alisha said. In the initial months, we don't see too much of a sales boost coming from the new pharmacies. It's more around the operational efficiencies and the whole dispensation and the cataloging that we have done that has allowed us to gather more sales volumes.
Shyam, I just wanted to chip in here. One of the things which Alisha mentioned in her speech was the myAster app and the home delivery.
Yeah.
This has a definite impact on that, and we hope that this will be the driver as we go forward, and that is going to be one of the major areas of focus for the company to go into that area for digitalization as well as, you know, the e-commerce space.
Got it. Just last follow-up. Is just the dilution in the margins when I look at nine-month or even quarter three over last year, is it the investments that is leading to dilution in margins and we should look towards, say, at some point of time margins to be at least stable in this segment?
You're talking about the pharmacy, Shyam?
Yes. Yes, yes, Alisha.
Some of it is the new investments, and like Chairman said, as we are building up the myAster platform, we obviously have had, you know, we are, we're doing some free deliveries. All of that to kind of increase the scale-up and adoption of the platform itself. We expect it to sort of stabilize to what it was at the 9, 10%. We really wanted to ensure that we are able to kind of push on the adoption, but we also wanted to do it without losing any money. We will not just go with making it negative. There's a slight dilution in margin you're seeing because of that increase.
The last data point, what's the private label sales now? How has that been trending?
It's roughly around 15%, so we're seeing a good improvement on that, which used to be around 11%.
Got it. Yeah. Thank you and all the best. Thank you.
Thank you, Shyam. The next question is from Nikhil Chandra. Nikhil, if you can try and unmute yourself and ask your question.
Yeah, I think finally I can mute. Thanks. You know, I had just one question, and this was on the GCC restructuring. You know, I did see the comment in the notes to the account that you were expecting certain bids, et cetera, in the first quarter of next financial year. You know, what I wanted to check is at least if you can share what is the broad thought process. Now, you know, this initiative has been on for more than a year, if I recollect. I'm sure you broadly have a structure in mind. What I wanted to check is, are you looking at a complete exit of the GCC business and de-linking the Indian listed entity from the GCC business?
Do you envisage a structure where the Indian entity continues to hold a part shareholding in the GCC business? The third leg is, if you are exiting the GCC business completely, I'm sure you would have some thought process on what do you do with the cash. Do you put it into CapEx? Do you
Yeah, you are breaking up, Nikhil.
distribute it as dividends even
Nikhil, it's breaking up.
I think some more concrete information on this will help because, you know, depressing the valuations of the listed stock.
Yeah. No, so
Can you. Yeah.
I can.
Nikhil, maybe you may have to just mute a bit. There is some line disconnect, I think.
Some echo coming, Nikhil. I will give you some insights into that. One part I can tell you that if this is going ahead, as the board is decided that or going ahead, it will be a complete segregation between the GCC and India. It will be a sale of the GCC business by India listed company. That is what I can give a clarity on. That is what we have asked for this, or the company has appointed the investment bankers who have got bids for buying the GCC business from the listed company. That part I just wanted to clarify. The other parts, how this money is going to be used when it comes to India, how is it going to be dividended out or used for expansion?
I don't want to go into that because the board has not decided how to do that. It will be, as you know, a significant amount, which will be appropriately used as per the board's direction as we go forward.
Perfect. At least. Yeah, no, at least that is clear that there is no cross-holding because that's, you know, that will not be great for a shareholder. At least there's no cross-holding between Indian listed entity and whatever, you know, GCC or that's the eventual plan.
Yeah. Nikhil, you're absolutely right. That is very clear.
Perfect.
to the board, as well as whatever is happening now is for a complete clear cutoff between the two.
Two. Perfect. My, my second question... No, that's very reassuring. Thank you. My second question was, you know, how do we take the, take the India business, you know, in the other parts of the country? Is there a plan or do you still plan to be primarily a south-focused, you know, business? Or is there a plan to kind of, you know, go towards, say, west or north, central? The south has the most number of organized hospital chains at this point of time. Are you seeing competitive intensity increasing in the south region or is it still a market where growth can come through for, say, the next three to five years? Resultantly, do you see the need to go to other regions more aggressively than what you've done so far?
Yeah. We have now been in the south, like what you know. There are areas in South India where we have not gone into it. For example, in Tamil Nadu, where we are now trying to start off with something in Chennai, where we are looking for a hospital to be established, we have not identified the right land. I'm telling you that Tamil Nadu is a large opportunity. Beyond that, as we feel that there is more of saturation, we always have the desire to go into other parts of India, whether it is northeast, whether it is north, whether it is other parts of India. We definitely will be looking at this.
India is a huge opportunity, and as we have the bandwidth, develop the bandwidth and we have the confidence that we'll be able to put it all together, we definitely will look at that. This can happen in many ways. It can be organic, inorganic, like what you were talking about, no? The money coming into India, maybe or maybe it's M&A. We'll have to look at that, but we have significant plans for India as we go forward.
Perfect. Great. Thank you so much. Thank you.
Thank you, Nikhil. If there are any other questions, if the attendees can raise your hand, that will be helpful. Yes, Rahul, please go ahead and ask your question.
Hello. Can you hear me?
Yes.
Yes. Yes.
Yeah. Hi. Just my question was just in regards to any outlook or guidance for the next financial year for the business as a whole in terms of revenue or EBITDA margins. What are you expecting? What are your targets?
Nikhil, we don't give any guidance regarding the revenue and profits. That's, as you know, we can't do that. While we have some internal projections and all, we can't tell the market what it is. We see significant opportunities in India as well as in GCC. Like what has been mentioned in the initial part of this, we are seeing the growth is very good in India. We hope that this will continue on the same pace. Even in GCC, there has been good growth. There have been some, not headwinds, actually, some losses which were incurred by our hospitals. Two hospitals coming on stream all of a sudden, which has have some impact, but we hope that this financial year we'll be having. Beyond that also Saudi we mentioned.
We see the growth going forward to be at a, I mean, same or more better place as we go forward. Everything including the revenue, EBITDA, everything to be at a better place, Nikhil.
Oh, okay. Thank you, sir.
Thank you.
Thank you and all the best.
Thank you. Thank you.
Thank you, Nikhil. The next question is from Naman Bhansali. Naman, please go ahead.
Hi, sir. My first question relates to the India business. Currently we have some 4,000 capacity beds, and we are looking to add another 1,800 beds by FY 2025 or 2026 as per our latest presentation. I just wanted to know the strategy here that are we looking to pause at any some point of time and realize the full potential of our business in terms of margins and leverage on the India side? Second is on the GCC clinic side. The overall revenue has a 4% growth on a YOY basis. I see the revenue per outpatient, if I try to calculate, it has risen significantly versus the YOY number.
On a YOY basis, the revenue is largely flat. The outpatient seems largely at a decent growth at 7%-8%, but the revenue per outpatient seems a big inflated number. Can you just put some picture on that?
Yeah. The first part, I will answer, and the second part, Alisha or Amitabh will answer that. It's not that we are going to grow, I mean, just for adding beds. These are all strategic decisions which have been taken. Some of these are expansion of our hospitals, where we know that immediately that will get filled up, and we'll have significant benefit coming out of that. For example, what we are doing in our Kannur hospital or Aster Medcity. As well as what we have seen is that in our own geography and our main geography, Kerala, as soon as we start a hospital, it gets filled up because of the brand, the trust of people in the brand because of the large presence there.
What you will see is that the large part of these beds are going to be in a geography where we hope that this will get immediately going to a break-even. You may be aware that our Kannur hospital, when we started, four years back, went into a break-even, cash break-even within eight months or less than a year. Definitely we will be concerned to add more beds and just to put CapEx into that, but only if we are confident that this can give a decent return on investment. Without much of delay, we will do that. There are some strategic areas where we have to look at. Like for example, I mentioned about Tamil Nadu as we go forward.
These are all things which we will be taking a call depending on our EBITDAs and the debt to net EBITDA. We'll be looking at that and taking a call. Part of this growth also is coming from businesses which doesn't require too much of CapEx, like the CapEx light model, which is 500 beds is what that we hope that we'll be able to add every year. I know that the challenge is to have the growth at the same time. Not to spend too much on the CapEx so that there is the margins are kept and you have a better ROC. We are very aware about that, and we hope that...
See, some of our hospitals, when we look at it, has gone to that range of near 30% margin. That gives us lot of confidence. Some of the large hospitals we have, and many of these hospitals have gone to about 20% margin. Overall, we feel very confident about the India profitability, and we think that this is something which will help us to drive better profitability as we go forward. Alisha, you want to tell about the-
Yeah, sure, Chairman. Naman, when you look at the previous quarters, you have a high OP number also because of the PCR visits. Their per patient collection would be lower because it's PCR collection largely. What you're seeing now is our core business, the usual consultation, the procedure, which is the higher, which is the higher per patient collection, which is trickling in now. We just haven't been able to bring back the volumes as it was before, but we're seeing Q3 has been very strong and same with Q4. Slowly at least you're seeing the volume, but at least going back to the per patient collection that used to be part of the core business. It's a, it's a little bit different comparison.
Got it. Got it. That answers my question. Just one follow-up on the India hospitals. What are the optimal occupancy rates that we can assume for our business, which is increasing on quarter-on-quarter basis versus previous year that has reached around 70%. What are the peak occupancies that our hospitals can do if there are some ICU or PICU beds which are kept separate? I just wanted a picture on that.
Yeah. Sunil, you want to answer that?
Yeah. Naman, if you see currently, right, on the overall, as you said, we are at 68% occupancy at the India level. Kerala is around 80% currently, and Karnataka at 60% and Andhra clusters are at around 50%. When you look at the what are the peak occupancy, we can go up to 80-85 easily. There are certain hospitals wherein, for example, in Kerala, they reach even 90% because they create certain holding period by holding beds and then manage the occupancy. Comfortably, without any, you know, impact on the service excellence, easily we can look at 85% occupancy.
Okay. As you mentioned, Andhra and Telangana, which are some lower occupancy, region for us. What initiatives or what are the things which we are doing to reach, those segments at a higher occupancy rate?
Yeah. Naman, there, see currently one of the reasons, as Chairman, you know, told in the initial call, we have stopped the scheme patients, right? That is one of the reasons why we are at 50% occupancy. Now already we are restarting the schemes. Also there is a certain outreach clinics which we have started that is trying to be getting more referrals. We are also trying to create certain implant centers with respect to certain specialties. That will have, you know, it's a, you know, considering that will have impact to create a more occupancy there.
As I said, if you see, even from the margin point of view, see it is slowly grown. We expect it to turn around very quickly post-COVID. In the initial quarter, it started with EBITDA margin of 7%, then went to, eight something. Now we have reached around 10% in the Q3. Overall it's around 9%. As we said that it's going to grow little slowly. We can't expect a faster ramp-up, but we are seeing a, you know, good growth coming into the future quarters.
Got it. Thank you. Thanks for answering my question. That's it from my side.
Thank you, Naman. If there is anyone else who has any question, please go ahead and raise your hands. Okay. I see no more attendees, having their hands raised. I think, this concludes the earnings call for this quarter for Aster DM Healthcare. I thank you all and the management for joining us today. If you have any further questions or queries, please do get in touch with us. Thank you all.
Thank you. Thank you.