AHEL Investor Presentation Dec 14

7/26/2019 AHEL Investor Presentation Dec 14

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June 25, 2015


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64%

34%

2%

7,207 2,008 9,215 44 11 55

6,200+ 10,000+ 3,400+

1,822

Shareholding(1): Promoters (34.4%), FIIs & FCBs (55.6%), MF/FI/IC (2.0%),Others (8.0%)

Market capitalization of` 190,490 mn(4) and Debt to Equity ratio of 0.52x(1)

Health Insurance (AHEL stake 10.2%)

Primary Clinics

Sugar Clinics

Birthing centres CRADLE

Day Care Centres

across 21 states

(1) As on 31st Mar 2015.(4) NSE Closing price on 31st Mar 2015Source: Company audited financials and Q4FY15 Earnings Update. # Source: Frost & Sullivan

146

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(2)All financial are for fiscal year (FY) ended March 31. (3) Fx used: US$1= ` 63.

* FY15 info for owned hospitals only. Does not include managed hospitals

350,000+

Admissions

3,200,000+

Out-Patients

250,000

Preventive HealthChecks

11,000+

HeartSurgeries

5,000+

JointReplacements

14,000+

Neuro SurgicalOperations

500

RoboticSurgeries

1,100+

KidneyTransplants

400+

LiverTransplants

120

CountriesMedical Value

Travel

170

Bone MarrowTransplants

155,000+Radiotherapy

Sessions

47,000+Chemotherapy

Sittings

FY15 at Apollo Hospitals*

FY10 FY11 FY12 FY13 FY14 FY15

Gross Revenue(`mn) 20, 265 26, 054 31, 475 37,687 43, 842 51, 785

Gross Revenue($ mn)(3)

322 414 500 598 696 822

YoY Growth 25.50% 28.60% 20.80% 19.70% 16.30% 18.12%

EBITDA 3,013 4,190 5,131 6,082 6,724 7,347

EBITDA Margin 14.90% 16.10% 16.30% 16.10% 15.30% 14.19%

Profit A ft er Tax (P AT) 1, 376 1,839 2,194 3, 044 3, 168 3,399

PAT Margin 6.80% 7.10% 7.00% 8.10% 7.20% 6.56%

Net Worth 16,776 19,238 25,194 27,641 29,955 32,443

Total Loans 9,132 9,585 8,183 12,179 13,601 20,142Cash and Cash

Equivalents 3,117 2,664 3,588 6,842 4,151 4,833


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# of Beds: 9,215# of Hospitals: 55




# of Beds: 5,118

# of Hospitals: 15




Source: Company Reports, CRISIL Research # Beds as on 31st March 2015.* Fortis corporate presentation as of April 2015, publicly available on Fortis Healthcare Ltd.s website.

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Owned BedsCAGR (FY05-15)

9.2%

Capacity Beds Operational No. of Hospitals

Category Wise

Owned 7,207 6,321 44

Managed 2,008 2,008 11

Grand Total 9,215 8,329 55

Cluster Wise (Owned)

Chennai 1,718 1,495 13

Hyderabad 959 930 7

Kolkata 540 540 2

Delhi 875 713 2

Bangalore 499 378 2Ahmedabad 320 274 2

Tamilnadu

(outside Chennai) 808 589 4

Bhubaneswar 290 264 1

Other India 1,198 1,138 11

Grand Total 7,207 6,321 44

Maturity Wise (Owned)

> 5 years 4,406 4,334 24

3 - 5 years 957 773 7

1 - 3 years 1,136 740 6

< 1 year 708 474 7

Grand Total 7,207 6,321 44

*

Source: Company MIS Reports,


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2011 Apollo Day Care Surgery facility for minor surgeries

requiring short stay. Hospital atKaraikudi, Tamil Nadu

2013 Hospitals in Vanagaram(Chennai), Jayanagar(Bengaluru) & Trichy

2015 Hospitals in Nashik, Nellore,Women & child centers atKarapakkam & SMR, OMRPerungudi

2011 Apollo Institute of RoboticSurgery launched - the firstrobotic centre in Tamil Nadu

2012 Placed order for Proton therapyequipment for Cancer treatment

2013 Apollo Health City, Hyderabadperforms Minimally InvasiveKnee Replacement (Resurface)Surgery using OrthoGlideMedial Knee system

2011-2015

FY2015

9,215 beds

1,822 stores

Revenues 51,785 mn.


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In order to meet the global median of 30 beds per 10,000 population, India will need to invest over 14 trillion ($230 bn)

Source: CRISIL Research


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Service

Excellence

Guest Relation Apollo has adopted the engagement

Pathway for Voice of Customer (VOC) Partnered with Gallup to benchmark

e-customer feedback with best in classhospitals globally

In-house framework captures VOCfrom Interactions and converts theminto Qualitative and quantitativefeedback for quick follow-up action

Awarded Best Innovation in servicedelivery In 2013 by AIMA & HospitalsManagement Awards

Tender Loving Care Core training module for all

nurses

Inspires the conversion of dailyinteractions into memorableexperiences, resulting inenhanced courtesy index fornursing

Tender Loving Care (TLC) -Training for frontline staff

TLC acknowledge as BestTraining Initiative in Healthcareat Asian Learning &Development Leadership

Awards In Dubai in 2013

Human Sigma 1st in India to adopt Human Sigma by

mapping customer and employeeengagement to the Gallup SMethodology

Ranked this year among top 37companies that partner with Gallup

This recognises exceptional leadershipthat understands that engagingemployees drives real businessoutcomes

Apollo now among globally recognisedorganisation for mastering how to engageworkforce to deliver sustainable growth

Admissions Minimises waiting

time for plannedadmissions

Dedicated roomingexperience thatorients patients andattendees tovarious hospitalsservices

Discharge Post-discharge calls to patients for

suggestions and feedback 72hours after discharge

Speedy discharge summary forplanned discharges


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Healthcare services: Improvement in operating metrics Strong continued revenue growth in mature clusters

New Hospitals driving substantial revenue growth through quickramp up

Standalone Pharmacies: Revenue growth andmargin improvement Standalone pharmacies reported a positive EBITDA for each of the

last five years FY11, FY12, FY13, FY14 & FY15

All stores are in the growth phase with relatively mature stores growing

at a consistent rate with increasing EBITDA margins improvement in first year store performance due to better ramp-up

and lower losses


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Indias largest organized pharmacy retail chain with a network of 1,822 stores.

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Asset light business model with an established track record

Presence in metro centers such as Hyderabad, Chennai,Bengaluru, Pune, Ahmedabad and NCR regions

Offers a wide range of medicines and surgical products, hospitalconsumables and over-the-counter products

Own brand private labels (FMCG & OTC drugs) constitutes over6% of FY14 turnover. Target to increase to 20% in next 5 years

Introduced generic and in-house brands (Private Labels)

Consistent growth in standalone pharmacy revenue

Calibrated rollout: 190 stores opened in FY15, 129 stores opened inFY14, 139 stores opened in FY13, 165 stores opened in FY12, 150 inFY11 and 166 in FY10

Increased penetration of private label sales

Integrate supply chain network and optimize inventory levels

Emphasis on margin improvement

Mature cohort of pre-2008 stores have achieved 5.9% EBITDAmargins in FY15

Positive overall EBITDA margin FY 11 , FY 12, FY13, FY14 & FY15

Regulatory Update: In September 2012, the Central Governmentapproved the DIPP proposal to permit 51% FDI in multi-brandretail, subject to certain conditions


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Revenue growth of18.1% from ` 43,842 mn in FY 14 to` 51,785 mn in FY 15

Consolidated EBITDA grew by 9.3% % from` 6,724 mn in FY 14 to` 7,347 mn in FY 15

Consolidated PAT grew 7.3% from ` 3,168 mn in FY14 to ` 3,399 mn in FY15

(1) Capital employed for the calculation of ROCE does not include Capital Work in progress on newhospital expansion projects of` 5,122 mn for FY15 and ` 4,810 mn for FY14 & investments inmutual funds and associates

Previous year figures have been reworked/regrouped/rearranged and reclassified wherevernecessary to conform to the requirement of revised Schedule VI format

JVs include Ahmedabad50%, Kolkata50% ,PET CT50%, Apollo Munich10.23%,Quintiles40%, Apollo Lavasa37.50% , Future Parking Pvt Ltd49% and Apokos Rehab Pvt Ltd -50%

FY 15: financial performance

Revenues of` 45,928 mn, 18.9% yoy growth

EBITDA at ` 6,781 mn, 10.5% yoy growth

EBIT at ` 5,200 mn, 7.3% yoy growth

Higher Depreciation due to application of higher depreciation rates as per theNew Companies Act & New Units Nashik and Women & Child, OMR

PAT at ` 3,466 mn, 4.8% yoy growth

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``

FY 14 FY 15 yoy (%)

Revenue 38,616 45,928 18.9%

Operative Expenses 20,019 24,240 21.1%

Employee Expenses 6,102 7,210 18.1%

Administrative & Other Expenses 6,357 7,698 21.1%

Total Expenses 32,478 39,147 20.5%

EBITDA 6,139 6,781 10.5%

margin (%) 15.9% 14.8% -113 bps

Depreciation 1,291 1,580 22.4%

EBIT 4,848 5,200 7.3%margin (%) 12.6% 11.3% -123 bps

Financial Expenses 871 833 -4.3%

Other Income/ Except ional item * 225 306 36.2%

Profit Before Tax 4,202 4,673 11.2%

Profit After Tax 3,307 3,466 4.8%

margin (%) 8.6% 7.5% -102 bps

ROCE (Annualized) 14.6% 12.8%

Capital Employed(1) 33,205 40,703

FY 14 FY 15 yoy (%)

Income from Operations 41,113 48,705 18.5%

Add: Share of JVs 2,730 3,079 12.8%

Total Revenues 43,842 51,785 18.1%

EBITDA 6,724 7,347 9.3%

margin(%) 15.3% 14.2% -115 bps

EBIT 5,046 5,230 3.6%

margin (%) 11.5% 10.1% -141 bps

Profit After Tax 3,168 3,399 7.3%

margin (%) 7.2% 6.6% -66 bps

Total Debt 20,142

Cash & Cash equivalents

(includes investment in liquid funds)

4,833


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Healthcare

services

(Existing)

New

Hospitals

Healthcare

services

(Total) SAP Standalone

Total

Healthcare

Services

(Existing)

New

Hos pitals SAP

Munich

(AHEL

stake 10%)

AHLL

(incl.

Cradle) Consol idated

FY 15

Revenue 26,435 1,767 28,202 17,726 45,928 30,483 1,767 17,726 735 1,074 51,785

EBITDA 6,276 (75) 6,200 580 6,781 7,124 (75) 580 10 (292) 7,347

margin (%) 23.7% 22.0% 3.3% 14.8% 23.4% 3.3% 1.3% 14.2%

EBIT 5,111 (300) 4,811 390 5,200 5,574 (300) 390 2 (435) 5,230

margin (%) 19.3% 17.1% 2.2% 11.3% 18.3% 2.2% 0.3% 10.1%

FY 14

Revenue 24,437 531 24,968 13,648 38,616 28,312 531 13,648 607 743 43,842

EBITDA 5,900 (210) 5,690 449 6,139 6,688 (210) 449 (30) (172) 6,724

margin (%) 24.1% 22.8% 3.3% 15.9% 23.6% 3.3% 15.3%

EBIT 4,838 (333) 4,505 343 4,848 5,330 (333) 343 (37) (257) 5,046

margin (%) 19.8% 18.0% 2.5% 12.6% 18.8% 2.5% 11.5%

YoY Growth

Revenue 8.2% 232.7% 13.0% 29.9% 18.9% 7.7% 232.7% 29.9% 21.0% 44.4% 18.1%

EBITDA 6.4% NA 9.0% 29.4% 10.5% 6.5% NA 29.4% NA NA 9.3%

EBIT 5.6% NA 6.8% 13.7% 7.3% 4.6% NA 13.7% NA NA 3.6%

FY 15: financial performance

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Chennai & Hyderabad clusters

Chennai cluster revenue growth of 12.1% Revenue growth of 8.5% in Hyderabad

Others driving substantial growth (17.2%) focus on Inpatient revenue growth (17.3%). 16.6% growth in OP Revenues. Significant Subsidiary / JV & Associate Hospitals Revenue growth of 10.3%. 8% yoy growth in Bangalore & 6% yoy growth in Ahmedabad and 13% yoy growth

in Kolkata.

Notes:(1) Others include Madurai, Karur, Karaikudi, Trichy, Mysore, Vizag, Pune, Karimnagar, Bilaspur, Bhubaneswar, Jayanagar,Nashik & Nellore.(2) Significant Hospital JVs/Subs/Associates are Ahmedabad, Bangalore, Kolkata, Kakinada, Delhi & Indore(full revenues shown in table above).(3) Outpatient volume represents New Registrations only.(4) ARPOB and Net Revenue is net of doctor fees.(5) Revenues under the head Total have not been provided as Consolidated actual results will differ from Total due to proportionate consolidation.* Inpatient volumes are based on discharges.** Previous year financial and operational numbers have been regrouped and reclassified wherever necessary to conform with current year classification and full year audited numbers.

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Total(5) Chennai cluster Hyderabad cluster Others(1) Significant subs/JVs/

associates(2)

Particulars FY 14 FY 15 yoy ( %) FY 14 FY 15 yoy ( %) FY 14 FY 15 yoy (%) FY 14 FY 15 yoy (%) FY 14 FY 15 yoy (%)

No. of Operating beds 5,811 6,321 1,264 1,491 930 930 1,585 1,821 2,032 2,079

Inpatient v olume 331,678 353,547 6.6% 75,931 81,920 7.9% 51,048 51,877 1.6% 78,757 87,834 11.5% 125,942 131,916 4.7%

Outpatient volume(3) 1,132,618 1,244,192 9.9% 351,195 381,931 8.8% 152,495 161,717 6.0% 231,102 257,174 11.3% 397,826 443,370 11.4%

Inpatient ALOS (days) 4.54 4.43 4.35 4.43 4.49 4.15 5.00 4.80 4.39 4.30

Bed Occupancy Rate (%) 71% 68% 72% 67% 67% 63% 68% 63% 74% 75%

Inpatient revenue (`mn) NA NA 8,372 9,273 10.8% 3,763 4,066 8.1% 4,573 5,364 17.3% 11,901 13,063 9.8%

Outpatient revenue (`mn) NA NA 2,717 3,161 16.3% 820 905 10.4% 810 944 16.6% 2,237 2,537 13.4%

ARPOB (`/ day)(4) 23,684 25,381 7.2% 33,561 34,266 2.1% 20,002 23,081 15.4% 13,662 14,953 9.5% 25,590 27,506 7.5%

Total Net Revenue (`mn)(4) NA NA 11,089 12,433 12.1% 4,582 4,971 8.5% 5,383 6,308 17.2% 14,137 15,600 10.3%


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FY 15 Revenues EBITDA

EBITDA Margins # of Stores 31 Mar15

`17,726 mn

30% yoy growth

`580 mn

FY15

`449 mn

FY14

3.3%

FY14

3.3%

FY15

Added 242

Closed 52

Total 1,822FY

15

Like-for-like Revenue per store growth

14.3% (yoy)

pre FY08batch of stores

20.0% (yoy)

FY09batch

ROCE

~ 18%

mature stores

pre FY08 batch

Gross addition of

53 stores

and closed

15 in Q4FY15

EBITDA margins

5.9%

mature storespre FY08 batch

SAP revenue

grew by 29.9%

EBITDA margins

3.3%

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`

Batch Particulars FY 14 FY 15 yoy (%)

Upto FY08 Batch No. of Stores 434 425

Revenue/Store 11.63 13.30 14.3%

EBITDA/Store 0.66 0.78 19.2%

EBITDA Margin % 5.6% 5.9% 24 bps

FY09 Batch No. of Stores 193 189

Revenue/Store 10.23 12.27 20.0%

EBITDA/Store 0.30 0.46 52.0%


FY10 Batch No. of Stores 184 175

Revenue/Store 9.13 10.95 20.0%

EBITDA/Store 0.38 0.50 30.8%


Total No. of Stores 1,632 1,822

Revenue/Store 8.36 9.68 15.8%

EBITDA/Store 0.27 0.32 16.6%

EBITDA Margin % 3.3% 3.3%2 bps

Total Revenues 13,648 17,726 29.9%

EBITDA 449 580 29.4%

EBITDA Margin % 3.3% 3.3% -1 bps

Capex (`mn) 161 222

Capital Employed (`mn) 3,336 5,299

ROCE (Total) 9.8% 6.8%


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Cluster strategyfor expansion

with Greenfieldprojects inattractive newermarkets

We are focused on a Two pronged strategy on Healthcare services :

Ensure continued dominance by expanding into key existing clustersof Chennai, Bangalore,

Hyderabad, Kolkatta, Delhi and AhmedabadPlanned expansion in metros like Mumbai & large cities like Pune etcwith no existingpresence reaching to wider urban population

Grow laterally in high potential Tier II cities Expansion through REACH hospitals, first moveradvantage & leveraging the Apollo brand

Focus on Centersof Excellencewith one or two

anchorspecialties ineach market.

Oncology agrowing areaacross.

Each of our key clusters besides being built around a quaternary care hospital, focus on oneor two key specialties and build centers of excellence around that specialty

Aim to gain significant market share in each of the key specialties

Set benchmark standards in clinical outcomes, technology and practices in select acute and tertiarycare services Cardiology, Oncology, Neurosciences, Critical Care, Orthopedics andTransplants (CONECT)

Extend and expand our oncology presence both thru specialization and exclusive oncologyreferral hospitals in the clusters. 200 bedded Cancer referral center under construction inChennai with Proton Therapy

well planned strategy to deliver the next phase of growth

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Increase Presencein Indian Healthcare

Retail Space &calibrated expansionin StandalonePharmacies

Retail Healthcare : Increase our presence and reach across all markets through retail healthcare(Clinics, Sugar Clinics, Dental, Cradle & Dialysis) and Day Surgery centersthrough our Clinic

subsidiary - AHLL

Standalone pharmacy business - Calibrated expansion plans with focus on same store growth,increased private label sales and margin improvement


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Strong DoctorengagementModel and use oftechnology

guided by ourClinicalexcellence focus

Doctor engagement and Clinical focus probably is one of our core strengths.Doctor engagement model to be based on building group practice in key specialties withcombination of incentives based on revenue share/ profit share

Pioneers in use of technology to build robust health care systemscapable of addressing

diverse patient needs and changing disease profile Da Vinci Robotics in 4 locations, Truebeam ,NOVALIS, Cyber Knife, PET-CT, PET-MRI, ECMO, E-ICU etc.

Optimise AssetUtilisation inflagship facilities& locations

Enhance Out-Patients focus by creating value differentiators and leveraging on personalisedhealth checks advantage with the aim of increasing topline contribution from out-patients

Garner higher market share in select acute and tertiary care services

Specific plan to further penetrate deeper into Cardiology, Neurosciences & Oncology

Focus on time-to-serve and service standards

Stabilise newfacilities andcompress time-to-maturity ofplanned capacityexpansions

Bhubaneswar: Currently at 80%+ occupancy over 15% ROCE; Currently focused on: Enhancingspecialization mix and adding Oncology

Hyderabad and Bangalore: New capacity additions being utilised for high-end tertiary care;Recruitment of specialist consultants for COEs

Shorter time-to-maturity is being planned for new facilities like:Vanagaram (260 beds),Jayanagar (140 beds), Trichy (200 beds), Nashik (100 beds), Nellore (200 beds), OMR (170 beds)

Cost Efficienciesand Focus onImproving KeyOperating Metrics

Optimised asset utilisationsand minimum waste of all resources thorough standardised SOPsand Lean Management

Higher patient turnover by reducing average length of stay and optimised ward processes forfaster turnaround time of all diagnostic process

Improving average revenue per bed day through richer case mix

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* Expected date of completion updated as of June 25, 2015# Standalone financials as on 31st Mar 2015

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Total funding requirement

16,626 mn(already invested

4,580 mn)

new projects investment & funding

Significant headroom

to raise capitaldebt equity ratio 0.52x #

debt EBITDA 2.48x #

Gross Debt

16,810 mn #

Cash & Cash equivalents

3,571 mn #

Net Debt

13,239 mn #

Location CoD* Type of Hospital No. of

Beds

Total Estimated

Project Cost

(`mio)

AHELs Share

of Cost

(`mio)

Additions in FY16

Navi Mumbai FY16 Super Specialty 350 4,374 4,374

North Bangalore FY16 Super Specialty 180 925 925

Vizag FY16 Super Specialty 250 1,494 1,494

MLCP FY16 400 83

Chennai-Main (Expansion) FY16 Super Specialty 30 100 100

Indore (expansion) FY16 Super Specialty 65 280 50Sub Total 875 7,573 7,026

Additions in FY19

South Chennai FY19 Super Specialty 175 2,000 2,000

Proton FY19 4,200 4,200

Byculla, Mumbai FY19 Super Specialty 300 1,400 1,400

Patna FY19 Super Specialty 240 2,000 2,000

Sub Total 715 9,600 9,600

Total 1,590 17,173 16,626


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Dr. Prathap C.Reddy

Executive Chairman, Founder(M.D, MBBS, FCCP, FICA and FRCS)

Conferred the Padma Vibhushan in 2010

Conferred the Padma Bhushan in 1991

Spent 28 years with Apollo Hospitals

Dr. Preetha Reddy Executive Vice Chairperson

On the Board since the year 1989

Suneeta Reddy Managing Director

On the Board since the year 2000

Shobana Kamineni Executive Vice Chairperson, on the Board since2010

Over 20 years of experience in the healthcareindustry

Sangita Reddy Joint Managing Director, on the Board since2000

Received Young Manager of the year 1998award from Hyderabad Management Association

Was a member of the Prime Ministers delegationto Malaysia organized by the CII

N. Vaghul Independent Director, on the Board since2000

Conferred the Padma Bhushan in 2009

Deepak Vaidya Independent Director, on the Board since2000

Chairman of the Audit committee

Sanjay Nayar Independent Director on the Board

Vinayak Chatterjee Independent Director on the Board,

Chairman of Feedback Infra Pvt Ltd

Other IndependentDirectors

G Venkatraman, Habibullah Badsha, RafeequeAhamed and Rajkumar Menon

K. Padmanabhan Group President and has been with the companysince 1996

Responsible for business and strategic initiativesacross the group

S. K. Venkataraman Chief Strategy Officer and has been with thecompany since 1991

Served as the Chief Financial Officer andCompany Secretary of the Company since2002

Responsible for strategic initiatives across thegroup

KrishnanAkhileswaran

Chief Financial Officer and has been with theCompany since 2010

Over 15 years of experience in the field ofFinance

Responsible for the finance function of theCompany and its subsidiaries

Anne MarieMoncure

Chief Executive Officer Southern RegionResponsible for hospital operations of theSouthern Region

Dr. K. Hariprasad Chief Executive Officer Central Division andhas been with the Company since 1999

Responsible for hospital operations for theCentral Region

Dr. Rupali Basu Chief Executive Officer Eastern Region and has

been with the Company since 2008 Responsible for hospital operations of the

Eastern Region

Jacob Jacob Chief People Officer of the Company

Responsible for people initiatives over 12 yearsof experience

ArvindSivaramakrishnan

Chief Information Officer of the Company

Responsible for driving IT initiatives andprojects

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Documents

AHEL Investor Presentation Dec 14