Headquartered in Bengaluru, Narayana Hrudayalaya (NH) is one of India’s largest hospital chains. The Narayana Health Group has chosen a more calibrated approach to deliver solid revenue growth in next three to four years.
Recently, the hospital has introduced diagnostics and other technology-led healthcare services such as cardiac, dialysis, oncology and neurosurgery.
Further, it commissioned a 230-bed multi-specialty hospital in Kakriyal, Jammu, in April 2016, revenue from which is expected to accrue by year end. In the recent years, the NH network has multiplied through construction of new hospitals and management indentures. Some of its hospital projects are likely to be completed within a short span of time.
The healthcare major earned a net profit of Rs 19.1 crore in 2015-16, in contrast to a loss of Rs 16.8 crore in the last fiscal. Partially repaying the debt helped the company lower its interest rate by 28% during 2015-16. Debt-to-equity fell to 0.25 times and is within controllable limits. However, the hospital managed to derive revenue by healthier operational performance, as margins enhanced.
As compared to the Apollo Hospitals, NH is at a 20% premium on EV/EBITDA of 33 times (earnings before interest, taxes and depreciation). However, as the hospital maturity profile and occupancy levels improve, the margins can significantly boost, since revenue is growing at a healthy pace. The management looks forward to deliver double-digit revenue growth in Q1FY17.
- Established in 2000, NH treats over 20 lakh patients annually and performs nearly 400 surgeries and procedures each day. As of May 2016, it operates 23 hospitals and clinics pan India.
- Better bed management is a new mantra of Narayana Hrudayalaya for improved patient satisfaction. The hospital increased the count of beds to 5,498 in 2015-16 from 3,815 in 2012-13.
- This has doubled the inpatient revenue to Rs 1,254 crore from Rs 670 crore during the same period. As inpatient collections account for nearly three-fourths of the total revenue, this trend has boded quite well for the NH Group.
- Furthermore, the earnings and margins of NH have improved due to its maturity profile advancements.
- Narayana Hrudayalaya has diversified its portfolio of healthcare services. Shares of therapies such as neurology, oncology, and gastroenterology have surged up to 42% from 32% in 2012-13.
A 31% rise in total surgeries, 10% increase in average revenue per operating bed, and 3% increase in inpatient volumes were the major drivers of increased consolidated revenue. NH recorded an increase of 18% Y-o-Y to Rs 1,607.5 crore from operations.
EBITDA margin enhanced to 11.6 from 9.5% during this period. Performance for the quarter ending June 2016 has been promising. Operating revenue surged 19% Y-o-Y and margins enhanced to 12.2 from 9.7%.