Good morning, ladies and gentlemen. Welcome to the HealthCare Global Enterprises Q2 FY 2022 earnings conference call. As a reminder, all participant lines will be in the listen-only mode, and there will be an opportunity for you to ask questions after the presentation concludes. Should you need assistance during the conference call, please signal an operator by pressing star then zero on your touchtone phone. I now hand the conference over to Mr. Diwakar Pingle from Christensen Advisory. Thank you, and over to you, sir.
Thank you so much, Lisa. Good morning and a warm welcome to all the participants to the HealthCare Global Enterprises Limited Q2 FY 2022 earnings conference call. Today we have with us, Dr. B.S. Ajaik umar, Executive Chairman, Mr. Raj Gore, Chief Executive Officer, and Mr. Srinivasa Raghavan, Chief Financial Officer of HealthCare Global Enterprises, along with the top management members to share the highlights of our business and financials. Please note that we have uploaded the earnings update presentation to the stock exchanges and also shared the same through our mailers. In case anyone has not received it, please reach out to us, and we'll be happy to send the presentation over to you. Without further ado, I'll now hand over the call to Dr. B.S. Ajaik umar. Doctor.
Thank you, Diwakar, and good morning to everyone and a warm welcome to all the participants. I'm glad to note that the specter of COVID is behind us as of now, and we can now move ahead with a greater sense of optimism. At HCG, we believe in patient-centric care and focus on accessible oncological services, advanced treatments, and high-quality care and outcomes. Over the years, we have emerged as a responsible brand, earning the trust of thousands of patients and admiration of the community. Our focus on advanced technology, our ability to deliver exceptional clinical outcomes, and team of dedicated specialists equipped with our capabilities of further oncology care continuum while emerging as the pioneer and leader in oncology.
The company has turned in industry-leading revenue growth this quarter, which is also backed by improving profitability, especially among the new centers that have not yet reached the mature stage of operations. The growth opportunities ahead of us in the domestic business is quite strong, and we are also seeing turnaround in number of international patients visiting our center with easing of the travel restrictions. As mentioned about Milann, our fertility center, which has performed very well with a growth of 57% on the YoY basis on the back of new leadership team under Shailesh Guntu, aided by our focus on digital outreach, which is delivering us the desired results. Overall, HCG, under the dynamic leadership of Raj Gore, our CEO, is positioned very uniquely with strong pipeline as well as delivered balance sheet to deliver superior growth and profitability.
With a clear focus on tangible outcome for all our stakeholders, most important of which are our patients, for whom positive outcomes from the disease is the best result. I would now like to hand over the call to Mr. Raj Gore for his prepared remarks. Raj?
Yeah, thank you, Dr. Ajai, for being the inspiration and guide to all of us at HCG. A very warm welcome to all the participants and good to be speaking to you again. We continued with the momentum that we had built up in the first quarter of this fiscal with a strong performance across all operating metrics in the current quarter. We delivered our highest revenue and EBITDA for any quarter ever in our history. I would like to highlight that over the last three quarters we have consistently reported our highest ever revenue. What is heartening is that the Q2 core revenue, excluding COVID and vaccination business, is also the highest ever recorded in our history. The growth in revenue has also been matched by corresponding growth in profitability margins.
We closed the second quarter with our highest ever EBITDA at INR 65 crore with 1.6% margin expansion over the previous quarter. This is also the first quarter after 13 quarters where our PAT is back in positive territory. A direct impact of the improving financials has been the generation of free cash flow over the last two quarters. The results showcase our entire team's focus on driving growth and operational efficiencies, which we are confident of continuing in the quarters to come. I would now like Srini, our CFO, to go over the key financial highlights.
Thank you very much, Raj, and very good morning, everyone. The highlights for quarter ended September 30, 2021. Consolidated revenue was INR 3,520 million as compared to INR 2,479 million in the corresponding quarter of the previous year, reflecting a 42% YoY growth. Consolidated EBITDA was INR 650 million as compared to INR 340 million in the corresponding quarter of the previous year, a growth of 91% year-on-year and 19% quarter-on-quarter.
Consolidated operating EBITDA was INR 670 million as compared to INR 300 million in the corresponding quarter of the previous year, a growth of 106% year-over-year and 20% quarter-over-quarter. Operating EBITDA for existing centers was INR 598 million, a growth of 109% year-over-year and 13% quarter-over-quarter, reflecting an operating EBITDA margin of 21.9%. Operating EBITDA profit for new centers was INR 19 million, as compared to a loss of INR 29 million in the corresponding quarter of the previous year and a loss of INR 19 million in the previous quarter. Consolidated PAT was a gain of INR 1,018 million. A gain of INR 1,018 million as compared to loss of INR 223 million in the corresponding quarter of the previous year. I now request your attention to slide number 33.
Q2 revenue grew by 42% year-on-year. HCG centers grew by 41% and Milann centers by 57%. Q2 operating EBITDA existing centers INR 598 million, 21.9% margin versus 16.7% margin in Q2 FY 2021. New centers witnessed a profit of INR 19 million versus loss of INR 29 million in Q2 FY 2021. I would like to draw your attention to slide 33 of the presentation. The revenue split for our business is 95% contribution by HCG centers and 5% by Milann Fertility centers. Within HCG centers, Karnataka contribution to the revenue is 34%, followed by Western India comprising of Gujarat at 26% and Maharashtra 19%, followed by East India 9%, Andhra Pradesh 8% and Tamil Nadu 8% and North India contributing to 2%.
I would now like to draw your attention to slide number 34 of the presentation. Strong growth in revenue continues across centers in second quarter of FY 2022. South Mumbai delivered 286% year-on-year growth. Nagpur delivered 118% year-on-year growth. Borivali delivered 105% year-on-year growth, and Jaipur delivered 77% year-on-year growth. Revenue from new centers of INR 750 million in Quarter 2 FY 2022 versus INR 478 million in Quarter 1 in FY 2021, which is a growth of 56.7% year-on-year basis. Existing centers revenue growth of 37.3% in quarter 2 of FY 2022 on a YoY basis. I would now like to draw your attention to slide number 35 of the presentation.
Increase in average occupancy rate in Q2 FY 2022 YoY basis of 53.3% versus 49.8% at a consolidated level. For existing centers, occupancy rate was 50.3% versus 46.9% corresponding quarter of last year. Increase in existing center ARPOB in Q2 FY 2022 was INR 38,345 versus INR 30,904, which is a 23.8% growth. Existing centers operating EBITDA margin increased by 370 basis points to 20.3% in Q2 FY 2022 from 16.5% EBITDA margin in Q2 FY 2021. Looking at key geographies in slide number 36 in Karnataka region.
Our centers of excellence performance in Q2 with revenue growth of 51.9% year-over-year, ARPOB of 58,000 versus 45,000 in the corresponding quarter last year, and 26.3% operating EBITDA margin. With respect to Gujarat region, we had a strong revenue growth in Q2 FY 2022 on a YoY basis, with oncology revenue growing by 38.2% and the multi-specialty revenue was almost flat. With respect to Maharashtra region, new centers grew by 128.6% YoY and 56.8% QoQ. South Mumbai revenue continues to grow primarily driven by CK revenue. Borivali radiation and surgical revenue grew by 30% and 39% respectively year-over-year. For East India, existing center revenue grew by 53.6% year-over-year, and expansion of revenue at new centers by 25.4% year-over-year.
Kolkata is leading the regional revenue growth driven by radiation and PET cases. In Andhra Pradesh, we witnessed strong revenue growth across the region. Vizag delivered revenue growth of 47.5% year-over-year. Coming to slide number 37, covering key highlights of Milann Fertility business. Milann demonstrated good recovery in Q2 FY 2022 across all metrics. New centers revenue grew by 77.8% YoY. There was a big improvement in digital traction as a result of continued efforts on our digital campaigns and with continued focus on strengthening clinical talent across Milann. Looking to consolidate and focus on market leadership in Bangalore and scaling up North India centers in near term for Milann going forward. I would now like to draw your attention to slide number 38.
With respect to the CapEx table, we have implemented judicious control measures with respect to both routine and growth CapEx, with most of our expansion completed. Total CapEx for H1 FY 2022 was INR 183 million, which was largely with respect to the HCG center. With regard to net debt as on September 13, net debt was INR 2,268 million, which is a huge reduction compared to the previous quarter. I would now like to hand over the call back to Diwakar, please.
Thank you, Srini. Lisa, now you can open up the question for Q&A, please.
Thank you. Ladies and gentlemen, we will now begin with the question and answer session. Anyone wishing to ask a question may please press star and one on your touchtone telephone. If you wish to remove yourself from the question queue, you may press star and two. Participants are requested to use handsets while asking a question. Ladies and gentlemen, we will wait for a moment while the question queue assembles.
Yeah.
The first question is on the line of Aditya Khemka from InCred AMC. Please go ahead.
Hi. Good morning, everyone, and thanks for the opportunity. A question on the net debt. As per slide 38, our net debt has come down from June 2021 to September 2021, from INR 63 crores to INR 37 crores. I just wanted to check with you, does this imply that our free cash flow for the quarter was around INR 26 crores? Is that the right way of looking at it?
No. If you see the net debt, you know, if I go back to the net debt slide, our net debt has come down. If it has come down from INR 294 crores to INR 226 crores, which is, you are looking at the net debt from a new center perspective, which is 374 to 632. To answer your question, the net debt has come down by close to about INR 70 crores, contributed by two things. One is, yes, we have generated free cash flow in the quarter. Two, because of the Strand transaction that had happened, we have got some cash inflow which has contributed to the net debt reduction.
Yeah, exactly. Out of the INR 70 crores of total free cash flow, how much came from Strand and how much came from operations?
Yeah. To give a broad perspective, you know, free cash flow will be to the tune of about INR 8-10 crores, and the balance would be from the Strand transaction.
From the Strand transaction. Understood. Makes sense. Secondly, on the Milann, now that the procedures are back and, you know, discretionary operations are happening, where are we on the utilization of our Milann facilities?
The Milann utilization has significantly improved, as you know. Shailesh, you want to add that? Please. Now I'll ask Shailesh to talk.
Yeah. Currently, we are at a utilization of close to 55%-60%, and I think there is a potential upside by Q3 and Q4.
Understood. In terms of the new centers overall for HCG, you know, all your regional new centers combined, what is our EBITDA on the new centers in terms of margins?
If you go back to the slide, you know, I'll draw reference to the slide so that,
Sure.
As far as if you refer to slide number 32, where there we have very clearly called out new centers, you know.
It's breakeven. New center, INR 0 million.
I'll tell you. New centers have delivered INR 1.9 crores of profitability for a Q2, on a Q2 basis, compared to a loss in the previous quarter. That trajectory will continue in the future as well. That is the answer to your question.
Understood. A question for Dr. Ajai. Dr. Ajai , our understanding with the Strand Life Sciences, you know, divestment, that we retain some of the capabilities. Are those agreements now in place with Strand Life Sciences as to how, you know, we operate without them in our labs? You know, how do we operate our labs? Yes.
Aditya, what has happened is, as I said before, during the Triesta transaction, we had given our labs and our clinical trial to the Strand 4 years ago, 3.5 years ago. All of it has come back to us. Now one of the good things is our wet lab capability is also quite enhanced. Our biorepository has also come back to us. The only thing is we collaborate with them in the biorepository. The wet lab part, we collaborate with them in the bioinformatics. Okay? For which they are known, Strand. It is a collaborative effect, but essentially all our labs, all our capability in an enhanced way have come back to us. We believe genomics, as we know, is the driver, is the future.
We are driving that very significantly, and we see significant growth opportunity in our lab itself as we move forward.
Got it. One last question, gentlemen. On the current quarter's revenue of INR 335 crores at a confirmed level, how much was driven by vaccination? What is the vaccination revenue this quarter, and what is the outlook on that? I know vaccinations are going down as you know, most of the population gets vaccinated. Just wanted your perspective on that.
Hi, Aditya, it's Raj here. The vaccination revenue was about 7% of our top line in Q2, which is about INR 25 CR.
Going forward, we don't see much revenue from the vaccination. It will dwindle significantly. Am I right, Raj?
Yeah.
Yeah.
Thanks a lot, and all the best, guys.
Thank you.
Thank you.
Thank you. The next question is on the line of Shyam Srinivasan from Goldman Sachs. Please go ahead.
Yeah, good morning, and thank you for taking my question. Just the first one is on center of excellence and the Karnataka geography. We have seen ARPOB, at least in the COE, has reached 58,000, right? This was 51,000, I remember last quarter. Just want to understand some of the drivers of this. Is international patients back in that facility? I remember historically it used to be 20% contribution, but if you can help us understand what are the drivers of this ARPOB increase.
Yeah, the main driver has been. I know as we have made a statement, in spite of international not being there, we have grown. Particularly our domestic market has grown significantly in the last quarter. One of the most important things for the ARPOB to grow has been the fact that our high-end work has increased. Like, you know, robotic surgery hit all-time high for us, as well as our CyberKnife. These are the co-contributors for our ARPOB. As our international picks up going forward, this can even increase. One of the things, Sham, we have known for is we take care of very advanced and recurrent tumors. Because of that, we see lot of complicated cases which require complicated procedures, and that is the reason we are seeing, you know, enhanced CyberKnife and robotic surgeries.
This is likely to continue as we move forward.
Dr. Ajai, just following up here. Is there an element of pent-up demand, or you think. You just made a statement that it could sustain. I'm just trying to disaggregate what could be, you know.
Yeah.
Multiple procedures coming together this quarter but may not recur, right? The volume of some of these complicated procedures.
See, this is a question we have internally discussed also. What we have found is the internal work we have done shows this is probably a sustainable model. In the first few months, we thought it could be pent-up post-COVID, but we don't think so now because it has sustained month-on-month, it has grown. One of the things is we have now very you know high-end work, high-end caliber of doctors. For example, you take head and neck, we have a large team, and we draw head and neck patients now across India because of the large team, and we are now doing like robotic surgery in head and neck, which is sustainable. Similarly, you know, for certain GI-liver cancer, we are now doing significant robotic work and high-end work.
In urological cancers, we have hit large numbers in the last few. You know, this model, based on our internal assessment, it looks like it is a sustainable model. Particularly in the international patients coming in in the next quarter or two, it can only increase.
Dr. B.S. Ajaikumar, fair to assume, like-
The other thing I forgot to add, sorry, is our bone marrow transplant is increasing significantly month-on-month. That is also going to add to the ARPOB.
Dr. Ajai, the data point on international contribution in Karnataka or COE, whichever you disclose it this quarter, is it like less than 5%?
Yeah. Right now it is about less than five-
Less than five, yeah.
Less than that. Much less than 5%, maybe even 2%.
Yeah. We're still below 50% of pre-COVID level in terms of international business. We see, you know, as things get normalized going forward, that's the additional upside we are expecting.
Got it. Thank you. The second question is on the margins then. 26% in COE, we have seen your existing centers reach 22%. If Dr. Ajai, Srini, Raj, anybody, if you can give us some outlook on how should we look at the margin trajectory going forward.
Yeah. Look, I mean, the spread that you see is about, you know, 12-12.5% to 23%. Our existing center, you know, new centers have just broken even. As new centers ramp up, you know, we feel that our aggregate, you know, margins will continue to grow. In addition, I think international business, as I just mentioned, is just too, you know, less than 50% of our, you know, pre-pandemic level. I think, as we strengthen our go-to-market efforts in new centers as well as existing centers, we feel that we will continue to maintain and increase our margins.
If you see the last two, three quarters, you know, on all accounts, we've expanded our margin at aggregate level, at existing center level, at new center level, and we just feel that, you know, we'll continue that momentum going forward.
Last follow-up from me, I'll stop there after that. Raj, just to understand, when we have these new centers, maybe we may not reach the same margin profile like existing centers. Or you think, you know, is there some outlook on new centers? What is the target margin profile that these could reach?
I mean, we just reported that new center as a bucket, we've just broken even, you know, and just got into positive territory for the first time. You can see the upside, you know, when existing centers that are about 22-odd%, you know, and a COE is at a 26+%, you know. You know, I think the model is same, the potential is same, you know. We feel that, you know, with the strong fundamentals, there's no reason why we shouldn't be able to drive the margin expansion in new centers to the similar level.
Yep.
Okay. Thank you and all the best. Thank you.
Thank you.
Thank you. A reminder to the participants, anyone wishing to ask a question, may please press star and one. The next question is from the line of Kaustubh Pawaskar from Sharekhan by BNP Paribas. Please go ahead.
Yeah. Good morning, sir. Congrats for a good set of numbers. I have a couple of questions. First, on your Andhra Pradesh region, the occupancy are down on year-on-year basis. Is it because of the new centers coming up? Any understanding on that, sir?
Sorry, can you repeat your question?
I have a question on the Andhra Pradesh region. The occupancies are down on a year-on-year basis. Any particular reason for it?
No, sir. If you look at the footnote number six, we are excluding occupancy of government-sponsored radiation patients. You know, radiation patients usually are daycare patients. With our scheme agreement, we're supposed to provide them dormitory facilities, which is not really a usual patient of bed occupancy. We've excluded that, and that's the drop in Andhra Pradesh.
Oh, okay.
Yeah. I think previously last year we were reporting including those dormitory patients. I think from next year onwards it will get normalized on a year-over-year comparison.
Sure, sir. On your core revenues, as you said that this quarter the revenue contributions of vaccination was 7%. Excluding that, on like to like basis, what would be your revenue growth?
I think without the business as usual, you know, I don't have
15, 20.
One minute.
15%.
I think without this INR 25 crores of vaccination, also this is our highest ever business as usual revenue.
It should be in the range of 15% growth compared to last time, same time.
Okay. Got your point, sir. As you said that the international business would recover in the coming quarters. Vaccination obviously it will reduce over the period of time, the revenue contribution. Since international business is coming, so will that significantly impact or the revenue trajectory would be better than what it was in quarter two, considering the fact that international revenues would be coming back?
It is. Once the international business comes back, our revenue should only improve. There are two ways of looking at it. One, it should more than compensate the vaccination revenue. Not only that, it should also help us in terms of, you know, improving our margins also.
Right, sir. Right. Thank you. Thanks for the understanding and all the best for your future.
Thank you. Thank you.
Thank you.
I just would like to, you know, give, share the data point. Your previous question about business as usual, year-on-year growth in Q2, that's about 31%.
Not 15.
Yeah.
31%.
Yeah.
Okay. Thank you.
15% is on a sequential quarter.
Yes.
Thank you. The next question is on the line of Shantanu Basu from SMIFS Limited. Please go ahead.
Hi. Thanks for giving me the opportunity. I have few questions. Firstly, I would like to understand with respect to your Gujarat and Maharashtra clusters, the occupancies have dropped from 61% to 51%, and the ARPOBs have increased significantly. Is the increase in ARPOB due to the decreased occupancy? Is that the case? And the second question relating to this is with respect to Andhra Pradesh. I don't see a much drop in your occupancy rates, but the ARPOB has improved significantly. What has been the driver for Andhra Pradesh? That's my first question. My second question would be on your plans on Africa post your buyout, post your CVC buyouts. And my last question will be on the lab business. I missed on the collaboration part which doctor talked about.
I want to know your plans on the lab business. How do you strategize to take it forward, and what would be those collaborative arrangements? Thank you.
Yeah. Let me take the Gujarat question first. As you know-
Right.
Most of our multi-specialty presence is in Gujarat. Second quarter last year was a COVID quarter. As you know, COVID patients, the length of stay is, you know, more than a week, up to two weeks.
That's the difference this year that we've not had a similar number of COVID patients, and therefore the drop in occupancy and increase in ARPOB.
No, I'm talking sequentially. If I see your Gujarat occupancy now is 50.8%, whereas last quarter it was 60.6%.
It's the same issue. Q1 this year was also COVID wave 2, and therefore we had more COVID patients admitted in our multi-specialty hospital in Gujarat.
In Gujarat, we have three nearly multi-specialty hospitals. Two of them were full with COVID cases. Now we are not seeing that. That is why it has come back. It has got kind of normalized. Our normal occupancy is in the fifties. Okay?
Now coming to your next question of Africa.
Can I go to the next one?
About Maharashtra.
Yeah, I asked about Maharashtra as well, and also, so the new ARPOB level and the new occupancy level for Gujarat, shall I take this as a sustainable thing going forward?
Yeah, yeah.
Okay. What about Maharashtra?
Maharashtra ARPOB increase is led by Nagpur, where we've had higher realization on subspecialties in oncology. Therefore, you know, the Maharashtra ARPOB has gone up this quarter.
Okay. Andhra Pradesh. You had a question on Andhra?
Yeah.
Andhra is just as I explained, you know, we have reclassified our occupancy, excluding government scheme patients who, as per the agreement, are supposed to stay where they don't need it. They're not really, you know. Otherwise we wouldn't admit radiation patients overnight. This year we're just normalizing that, reclassifying that, and therefore year-on-year it looks like a drop, but it's not really a drop. And therefore, you know, the ARPOB is also going up. It's also baseline correction. Last year was a COVID year and, you know, some of the numbers like radiation and all, which are high realization, lower length of stay, were lesser. Now that business is coming back and therefore that's a baseline correction of just getting the mix to pre-pandemic level.
Okay. Now with regard to the Africa question, please.
Regarding Africa, as you know that we had a partnership with CDC, now we are complete owners of Africa. We have now in Nairobi we have expanded our department with new installation of linear accelerator. We have also got preliminary agreement was done in the past for a PET scan, which we may install. Certain funding has already been done in the past for that. With this, we are looking at our Nairobi Cancer Center to become a state-of-the-art center. Along with that, we have peripheral clinics in several East African countries like Dar es Salaam. These things will only be there, and we will enhance our presence in Africa once the COVID situation improves. Long-term plan, we are strategizing now, how are we going to look at East Africa as the primary area as well as Nigeria.
With the CDC now no longer being partner, we will re-strategize on our own to see where we should move forward. Once this plan becomes fortified, of course, we will share with the investor community. Okay? Any questions on Africa?
Lastly on the lab business, I mean.
Yeah.
Now, I mean, what's your plan going forward and what about the collaboration with Strand at this time?
Yeah. Lab business, as we know, that we got back our entire CRO with all the very well-trained human resources as well as our lab, basic lab and the wet lab. This was a great three-year experience, and we not only got some money, which is about INR 83 crores, but we also got all the human resources who are well-trained and also kept the equipment back. With this, you know, being now we will be oncology-focused only. Our future growth in oncology will be very good, and particularly since the future of oncology is in molecular diagnostics and in genomics. We are very well-positioned. For example, we are the only ones in India with Illumina. We have partnered to do TruSight Oncology 500, which is even better than the Foundation Medicine.
We are expanding this in going forward, just to talk on the medical side. In the future, we won't be talking about breast cancer or lung cancer. We'll be talking about genomic specific cancer. It is not organ specific, genomic specific. If you fast-forward next five to eight years. HCG is very well positioned for the future. If somebody says the future, we say future is here now in HCG. That is how we are very well positioned. In fact, our clinics are now more and more genomic-driven clinic, and that is why, you know, we get good outcomes, very personalized medicine. This is a great opportunity, the lab coming back to us in a way for us to drive this and the biorepository we have will only enhance. We'll still collaborate with Strand in the bioinformatics division.
There are various developments, you know, of obviously, artificial intelligence is playing a major role. We are looking at that so that we may be able to use artificial intelligence for bioinformatics. This is how, you know, where technology is merging with us to enhance how we can deliver better care to the patient.
Okay. Thank you, Dr. Thank you very much.
Thank you. A reminder to the participants, anyone wishing to ask a question may please press star and one. Participants, if you wish to ask a question, you may please press star and one. The next question is on the line of Aditya Khemka from InCred AMC. Please go ahead.
Yeah, hi. Thanks for the follow-up. Dr. B.S. Ajaik umar, Mr. Raj Gore, can you guys talk a bit about, you know, the new innovations happening in cancer care? I know Dr. B.S. Ajaya Kumar speaks of genomics frequently, and that is the new age, you know, diagnostic coming in. Also, you know, personalized medicine in cancer seems to be picking up very, very fast in the Western world, so how are you positioned on that side? Lastly, in terms of the technology you use, which is CyberKnife, you know, how does that compare to, let's say, a proton therapy and other new kinds of, you know, innovations happening in, the medical sector on the oncology care side?
Yeah, it's a good question, Aditya. Thanks. Yeah, correct. Definitely, you know, the technology is moving fast in oncology. There are several ways. One is, you know, what we call as the metaverse, the new terminology.
Mm.
which is virtual. All our tumor boards now, even pre-COVID and particularly post-COVID, have become virtual, where we are able to conduct a patient-per-patient virtual tumor boards with specialists in radiology, pathology, and we have mastered the technique of teleradiology, digital pathology, and molecular diagnostics, as I said. With all this, you know, what is going to happen and which is already happening, in a matter of an hour, I will be able to deliver the advice to the patient, which used to take weeks, if not months in the past. This is one of the major development which has happened in technology. Going forward, the world has become smaller. The patient could be in Nairobi or in Mumbai or Bangalore, so we can, we'll get them the advice very quickly, and this is going to enhance the presence of HCG globally.
Mm.
This is one and which is already in the works. All this digital pathology, very specific, advice by two pathologists signing off will become a norm. The second thing is in terms of delivery. You asked about CyberKnife. CyberKnife has been around, it has, you know, it has been around for a while. When you compare it to proton, why did we. You know, this is my pet project, so I'll explain to you. Proton therapy has been around since 1975. Because it is like a huge football team where proton is delivered, very expensive. Over the period of time, the proton has come down, the size of the proton, so it became appealing, but still costing, you know, like $30-$40 million. When technology like CyberKnife came and we started accepting, it does intrafractional correction. Because of that, it is equally precise.
What is good about proton, it doesn't treat normal tissue. CyberKnife is also delivering that, but in a shorter period of time, what we call as radiosurgery, which is more effective.
Mm.
Because of this, in a way, CyberKnife has become more usage is better, indications are better. Whereas proton indications in the past has been only for mainly children-
Mm.
To prevent second malignancies because we want to avoid exposure to normal tissue.
Mm.
CyberKnife, in a way, is achieving the same. Now there is a MRIdian Linac, which is coming into the field. We are also looking at that. In future, what proton therapy may be looking at is a flash therapy, which we feel could be the future. It may take another five to eight years, where a patient is in treatment only for seconds, and the treatment is given. You know, you want to give a mega dose in seconds without patient moving. That could be the future also. That is what everybody is working on, even linear accelerators or proton are working on flash therapy. That is where the technology headed. Of course, the robotic surgery has become more precise. That is another area of technology.
Medical oncology, you know, the technology is where we have moved in the research, where from chemotherapy, you know, no longer chemotherapy is being discovered, invented because in the past five years, because we are into targeted therapy. We use targeted therapy for blood cancer if you take. People used to live nine months, one year. Today, they are living six to eight years with advanced disease because of targeted therapy. So this is where all things are moving. Augmented reality, where, you know, we have difficulty in tier two cities, we can't perform surgery. The patient has to come, or our expert has to go there. Recently, we had a case where a patient had a big tumor in the neck, Tier 2 city , attached to the blood vessels. It only required expertise.
Our doctor from Bangalore, head and neck surgeon, his avatar was there helping the doctor in tier two city to perform the surgery successfully. That is going to be the future where patients don't have to come. This will make it accessible and bring the cost down also for the patient and the family. We can perform in all kinds of surgery, even in tier two cities, and help the surgeons even in deciding what should be the course of action, either for surgery or radiation. The future is more and more becoming what we call as metaverse. That is where we are headed.
Right. Secondly, you know, talent has become a big issue in our industry, medical industry. You know, post-COVID, I understand retaining talent has been a challenge and, you know, compensation has been a challenge for many, many employees. Can you talk about how that is playing out for your industry and your company? How are you ensuring retaining talent and hiring fresh, better talent? You know, how is it playing out for you?
We have a model for a while which has really matured. Our doctor attrition is one of the lowest in the industry, particularly the expert oncologists. Also we train. See, I took the model from MD Anderson where I trained long time ago. MD Anderson never worried which doctors leave because we were a training school, and that is what HCG is becoming. In fact, recently for something close to 20 fellowship programs, we had 400 applicants, not only in general oncology, but in very highly specialized fields like radiology, interventional radiology. For two posts we had 40 applicants. We are becoming known not only as a care provider, as a training research academic, so attracting a lot of talent.
That is why, you know, even in physics, for example, we have a training program, so we don't have dearth of physicists going into Tier-2 cities. One of the ways we have overcome in doctor population is through these training programs, where our own trainees will come highly trained and we retain them. If we want to or go elsewhere, they become our ambassadors. Similarly, we are doing a nurse training program, nurse leadership program, oncology certification program. The two pillars, apart from the administration and all in any institute, particularly oncology, are really the medical doctors and the paramedical, including nurses. We are well-positioned for the next, you know, decade or so with this kind of ongoing training program and certificate program. We are also starting in hospital administration very specific to oncology.
Going forward, we will be doing more and more oncology-specific training, so they become well trained and hopefully a lot of them will stay with us as the need requires. Even in Tier 2, Tier 3 cities, they can go.
Fantastic. Can you talk a little bit more about the, you know, outsourcing of healthcare services to other geographies? You spoke about this briefly about the virtual reality, augmented reality, using those technologies for your doctor to be present everywhere at the same point in time. India is the low-cost destination for healthcare, and we see medical tourism today, you know, as a, as evidence of that. Now, with augmented reality, virtual reality becoming more of an executable tool and, you know, robotics, remote robotics becoming more and more relevant, how is it? Is it a platform that the company is developing inside? Are you in licensing technology software that you can leverage, to use augmented reality, virtual reality robotics to your advantage and to outsource healthcare services to other countries where, you know, similar procedures are much more expensive?
Certainly, you know, right now it is in the very early stage. Once we perfect this, augmented reality, we are actually working very closely with Microsoft on this. If we do that, and that is an interest of Microsoft also, suppose we partner with them and do that, I think this will be a big blockbuster to say even go to the other emerging markets, what you suggested, Aditya, to see, hey, if you don't have trained people, our people can actually be avatar can be there. Now, the avatar was in the past a cartoon form. Now it is changing to the real human form of the people in the next few months. That will be a big addition. If you say Dr. Vishal Rao has to go, actually Dr. Vishal Rao avatar will be there in Nairobi.
This will help us a lot in not only, you know, saying how HCG is a leader. You know, because of this, we already have a big leadership position, and it will only enhance that. Certainly, we can help these, you know, most of these countries to develop this in a short period of time. As you know, the leapfrogging happens very fast in technology. Once we start doing it'll leapfrog very fast. This will happen. Another area, Aditya, where we have great interest in technology is data collection. We are working with another group where we are collecting a humongous amount of data in oncology for our patients, whether it is head and neck or breast cancer.
With this, I think we will be able to offer a platform for pharma companies and others to participate with us in future. In the past, as you know, India has been a laggard in data because we didn't have proper follow-up technology to do the follow-up. Today, we have. This will only help us. You know, we are in the beginning of this big revolution, I can say, in oncology, where things will change rapidly in the next five to ten years. Raj, you want to add something?
No, no. I think you covered everything.
Yeah.
You know, partnership with Mi-
Yeah.
You did, but I just needed a couple more details on the partnership with Microsoft. You know, while we are partnering with Microsoft, are we in licensing sort of a software with them? Is it like a joint venture partnership where, you know, eventually you will share profits with them, or is it that you pay a fee for their software? Is there like a term sheet signed between you two as to how long that partnership will last and what are the terms? I mean, I'm just trying to understand the contours of the partnership and how interested is Microsoft in helping you with this project.
As far as we know, this was like a pilot project for them also. When they did the study, it was first time they said, really and globally they have done. We have an agreement where we'll work with them in oncology. You know, we are going to obviously, you know, iterate it more and make sure we work with them in a collaborative way as we move forward, and they have expressed interest. So far, you know, in writing, we have not done anything. We will certainly work with them. They see interest in us, and we see because Microsoft, from what I know, is spending significant amount of funds for healthcare in this kind of vertical.
If that is the case, then definitely their interest is there because of for volume of oncology we have, and they can showcase. This is where we are headed. Once we do something, definitely we'll of course inform the investor community on that. Okay? We do see a bright future. Anything else?
Yeah. Aditya, see, we have existing partnerships, whether it's Cloud, whether it's application, you know, and we are evaluating, you know, on certain more areas, whether it's CRM, et cetera. We have an existing relationship.
I think what technology firms look forward to is how do they take these technologies and do a proof of concept with, you know, healthcare players. In oncology space, that's where our strength comes in. A lot of it is taking a concept, taking a technology and find real world applications to it. That's where I think this partnership potential is. We'll see how it goes. We feel there is a big potential, and we would love to partners with technology firms, you know, to lead, you know, on the innovation front.
There is no exclusivity here, right, Raj? For as in Microsoft's software is not going to be exclusive for you as oncology player, they're free to go to other oncology players, and you are free to go to other software providers other than Microsoft.
Yes. Yes. I think that comes when you really have something that can be commercialized, right? That will come into place. Right now, we are open to partnering with anyone and everyone to push the boundaries.
How far are we from a potential commercialization of such a platform in terms of timeline? That'll be months, weeks or years?
I think in one year, commercialization means we have to define commercialization correctly.
Yeah.
For us to use it.
Earning the first penny out of such a venture. How are we?
When we go and do a procedure, we are more looking at a healthcare patient-centric approach. When we go and do a surgery, let us say in Cuttack with our experts in Bangalore avatar being there, that is our C. We have to measure the success rate, how it is playing out. It will take us a year to know how it is playing out. Only after that we can say how are we going to commercialize it. Okay? Because it's like a pilot project. We have to do a pilot project first.
I understand. I appreciate that. In terms of the big data that you spoke to, you know, obviously pharma companies will be very, very interested in oncology data, targeting specific genes and creating personalized medicine, as I said, you know. We... I recall you guys had some sort of a clinical research going inside when COVID was at its peak, right? You had a clinical research program at your hospital. How is that vertical worked out for you? Any plans you have on that vertical in terms of helping with clinical research? Can you talk a bit more about that?
Yeah. There are two types of clinical research. One is investigator, one is pharma company sponsored CRO. We are now centralizing the CRO working with some pharma companies, which obviously in due time we will give out the names, is to see how we can expand clinical trial program in a joint way. That is, I think going to go very well in future because of the centralization using our EMR and other things. Second is in terms of investigator-initiated trials. You know, there is lot of openness among the various companies, sponsors to do that and our own doctors' capabilities. There also we are going forward. Investigator-initiated trials, lot of interest has been taken by our doctors and the publications themselves indicate that. We are one of the largest oncology publishers in India today. The third area is collecting the data.
We are working with a group exclusively oncology with them. Like you asked about exclusivity, this is exclusive, where the data is oncology with us only they work. Sharing that data and working on that, we'll look at how we can expand research on very patient-centric based on this data to create new molecules or understand the disease, and based on that, new trials, new treatment trials could happen. All of this, Aditya, is exciting, but it is going to take a next four to five years before we kind of really exactly get an upper hand on this and able to produce some significant revenue from this. Some revenue is coming in terms of grants, working with companies like, you know, big manufacturer companies, we are getting, but it's very small amount. In the future, I think this will expand significantly.
No, no. I appreciate that. Thanks a lot for your answers and your patience with my questions. All the best.
Thank you. The next question is from the line of Kaustubh Pawaskar from Sharekhan by BNP Paribas. Please go ahead.
Thanks for the follow-up. My question is on the CapEx front. The first half you did a CapEx of around INR 18 crores. If I can go through your presentation, FY 2021, the CapEx was around INR 35 crores. Should we expect a similar kind of CapEx for FY 2022, around INR 35 crores-INR 40 crores? Or is there anything add on to it?
See, we normally do not guide as far as these numbers are concerned. We will do what is right from a business serviceability point of view and a patient care point of view. We will invest on the right CapEx.
Okay. Got your point, sir. Thank you.
Thank you. Ladies and gentlemen, that was the last question. I now hand the conference over to the management for their closing comments.
Yeah. Thank you very much, very much and thanks for all the investors for being here. We look forward to interacting with you in the near future as and when we have information as well as next quarter earnings report. Thanks again and for the nice questions and I hope we move forward. HCG is very well positioned to move forward. I'm sure you'll be hearing a lot about HCG in the future. Thank you very much. Raj, you want to end?
Thank you.
Thank you. Ladies and gentlemen, on behalf of HealthCare Global Enterprises, that concludes this conference call. We thank you for joining us and you may now disconnect your lines. Thank you.