Max Healthcare Institute Ltd · NSE:MAXHEALTH
Max Healthcare Institute — Investor Presentation (July 2020)
48 slides from Max Healthcare Institute's investor presentation, Aug 21, 2020
Slide 1: Cover letter to stock exchanges
August 21, 2020 The Secretary, The Secretary, National Stock Exchange of India Limited BSE Limited Exchange Plaza, Plot C-1, Block G, 25th Floor, Bandra Kurla Complex, Phiroze Jeejeebhoy Towers, Bandra (E), Dalal Street, MUMBAI - 400 051 MUMBAI - 400 001 Scrip Code: MAXHEALTH Scrip Code: 543220 Sub:
Slide 2: Investor Presentation: July 27, 2020
INVESTOR PRESENTATION : JULY 27, 2020
Slide 3: Disclaimer
Disclaimer This presentation contains certain “forward looking statements” including, but without limitation, statements relating to the implementation of strategic initiatives, and other statements relating to Max Healthcare Institute Limited’s (“MHIL” / “MHC”) future business developments and econ
Slide 4: Content
Content Company Overview 04 Key Strengths 12 Strategy Going Forward 29 Covid-19 Response 31 Appendix 35 3
Slide 5: Company Overview
0 MAX wa ep HEALTHCARE Company Overview
Slide 6: Max Healthcare: India's second largest hospital chain
Max Healthcare: India’s second largest hospital chain • Max Healthcare and Radiant merged their healthcare businesses to create the second largest healthcare chain in India by revenue • Combined entity to be led by first generation entrepreneur Abhay Soi and backed by KKR NCR 280 Pitampura(1,2) Shal
Slide 7: Vision: To be the most well regarded healthcare provider in India
Vision: To be the most well regarded healthcare provider in India To be the most well regarded healthcare provider in India committed to the highest standards of clinical excellence and patient care supported by latest technology and cutting edge research • Quaternary care facilities • World class i
Slide 8: Journey so far
Journey so far Dr. B L Kapur Memorial Dr. Balabhai Nanavati Radiant-Max Healthcare Hospital, Rajendra Place(2) Hospital, Mumbai(2) merger 2000 2009 2014 2020 2016 2018 Discontinuation of Max Multi specialty 2012 Hospital, Max Hospital, 2014 Max Institute of Greater Noida Gurugram Cancer Care, Lajpat
Slide 9: Strong operational and financial KPIs
Strong operational and financial KPIs MAX HEALTHCARE RADIANT LIFE PROFORMA CARE CONSOLIDATED FY19 FY20 FY19 FY20 FY19 FY20 # of Total beds 2,488 2,505 886 886 3,374 3,391 OPERATING METRICS # of Operational beds 2,376 2,367 867 867 3,243 3,234 Occupancy 73.8% 73.4% 67.6% 70.0% 72.1% 72.5% ARPOB ('in
Slide 10: First generation entrepreneur backed by marquee sponsor (1/2)
First generation entrepreneur with strong track record, backed by marquee sponsor (1/2) Current shareholding Post listing shareholding(1) 17.7% 17.7% 7.0% 12.0% 47.0% 52.0% 23.3% 23.3% KKR Abhay Soi Max Promoters Public & Others • Going forward, Abhay Soi and KKR to be the promoters of MHIL, while c
Slide 11: First generation entrepreneur backed by marquee sponsor (2/2)
First generation entrepreneur with strong track record, backed by marquee sponsor (2/2) Abhay Soi - Experienced private equity and turnaround specialist • Led financial restructuring at Arthur Andersen, E&Y and KPMG • Co-founded a $350 million Special Situations Private Equity Fund for American bill
Slide 12: Strong governance led by a distinguished Board of Directors
Strong governance led by a distinguished Board of Directors CHAIRMAN MR. ABHAY SOI Chairman and MD, MHIL NON-EXECUTIVE DIRECTORS MR. SANJAY NAYAR MS. ANANYA TRIPATHI CEO, KKR India Director, KKR Capstone INDEPENDENT DIRECTORS MR. MAHENDRA GUMANMALJI LODHA MR. U. K. SINHA MR. MICHAEL NEEB MR. KUMMAMU
Slide 13: Key Strengths
0 MAX wa ep HEALTHCARE Key Strengths
Slide 14: Key strengths
Key strengths Quaternary care facilities with best in class clinical programs; opportunity to partner on 1 Leading hospital brand asset light models to expand domestic and international reach ~85% beds in metros – the most attractive hospital markets in India; well positioned to 2 Presence in the mo
Slide 15: Leading hospital brand (1/4)
1 Leading hospital brand (1/4) High end quaternary care facilities, including 2 JCI accredited, with best in class clinical outcomes Max Healthcare Radiant Life Care Proforma Consol (“MHIL”) (“Radiant”) Transplant(1) 617 261 878 • Largest BMT Robotics 289 377 666 program in Asia Complex Surgeries Ca
Slide 16: Leading hospital brand (2/4)
1 Leading hospital brand (2/4) State-of-the-art infrastructure Robotics TrueBeam Stx LINAC System Cath Lab – Artis Zee Pure Advanced robotics provides high precision Provides a variety of treatment techniques Artis zee floor-mounted system with and enables minimal invasive surgery across such as Hyp
Slide 17: Leading hospital brand (3/4)
1 Leading hospital brand (3/4) Strong focus on research and academics Research: Academics: Significant strategic partnerships including: Max Institute of Medical Excellence (MIME) is the education division of • Imperial College London and NIHR, UK – 15,000+ research MHC for medical education & train
Slide 18: Leading hospital brand (4/4)
1 Leading hospital brand (4/4) Operational Clinical Safety Service Quality Others Excellence • CNBC TV-18 Award • Best use of six sigma • Best customer service • ET Best Healthcare for best multi-specialty in Healthcare in Healthcare brand hospital in metro • HIMSS-Elsevier Digital • Patient Safety
Slide 19: Presence in the most attractive markets (1/2)
2 Presence in the most attractive markets (1/2) Highest demand supply mismatch, per capita income and insurance penetration leading to Delhi and Mumbai having the highest ARPOB and most profitable hospital market in India High demand-supply gap in Delhi NCR & Mumbai… …leading to higher ARPOB 3.6 3.1
Slide 20: Presence in the most attractive markets (2/2)
2 Presence in the most attractive markets (2/2) Being metro-centric also positions MHC well to capitalize on medical tourism Delhi NCR captures highest proportion of Key hubs from domestic hinterland in North and East India India’s foreign medical tourists feed into Delhi NCR 100% Srinagar Others Ot
Slide 21: Growth opportunity in existing facilities
3 Growth opportunity in existing facilities Opportunity to ramp up occupancy and further optimize payor mix FY20 Occupancy(1) Total bed 538 521 402 378 348 280 250 220 182 200 72 3,391 capacity 82% 76% Headroom to grow 73% 75% 74% 72% 73% 71% occupancy 70% 69% 66% by another ~500 beds, without any i
Slide 22: Extremely valuable land bank
4 Extremely valuable land bank Availability of brownfield capacity plus land banks leading to high return on incremental capital employed Bed build-out potential 5,676 200 85 100 200 600 1,100 3,391 Bed Saket Nanavati BLK Patparganj Shalimar Mohali Potential capacity Complex Bagh bed (FY20) capacity
Slide 23: Ability to build on capex light adjacencies
5 Ability to build on capex light adjacencies Non-captive Pathology SBU 3rd largest player in NCR Over 8X revenue growth in 3 years Gross revenue 100+ Partner-run collection centres (INR Lacs) 5,833 +105% 3,792 5 Company owned collection centres 2,163 681 FY17 FY18 FY19 FY20 120+ Phlebotomist At Sit
Slide 24: Proven track record for M&A and turnarounds (1/2)
6 Proven track record for M&A and turnarounds (1/2) MHC turnaround: Remarkable improvement in margins post transaction in June 2019 EBITDA expansion driven by: 19.2% • Robust performance improvement program ‒ ~INR 220 Cr worth of initiatives implemented with ~INR 140 Cr flowing in 11.9% 11.6% 15.4%
Slide 25: Proven track record for M&A and turnarounds (2/2)
6 Proven track record for M&A and turnarounds (2/2) BLK & Nanavati turnarounds: Significant profitable growth since signing of respective O&M agreements BLK Restructuring 150 30% 21% 709 17% 19% 18% 599 13% 20% +29% 100 10% 502 521 8% 448 10% 378 1% 107 114 129 50 89 283 58 0% 213 24 37 125 0 2 -10%
Slide 26: Robust financial performance in FY20 (1/2)
7 Robust financial performance in FY20 (1/2) Consol Gross Revenue (INR Cr) Consol EBITDA(2) (INR Cr) 4,443 625 71 38 +12% +13% +8% +76% 3,920 +65% +14% 356 3,639 4,371 312 587 FY18 FY19 FY20 FY18 FY19 FY20(3) Revenue Normalization impact(1) EBITDA Normalization impact (1) Margin(4) (%) FY18: 9.2% |
Slide 27: Robust financial performance in FY20 (2/2)
7 Robust financial performance in FY20 (2/2) Emerged as industry outperformers EBITDA margin(1) (%) EBITDA per bed, annualized(1) (INR Lacs) 25 30 27.1 28.1 25.3 15.2% 15.7% 25 22.3 24.3 20 15.1% 15.7% 23.8 20.1 14.8% 15.5% 20 17.5 15 12.5% 19.8 21.5 13.5% 14.1 20.4 10.8% 11.8% 18.1 15 13.3% 13.3% 1
Slide 28: Experienced and dynamic management team
8 Experienced and dynamic management team Mr. Abhay Soi Dr. Sandeep Buddhiraja Mr. Atulya Sharma Chairman and Managing Director Group Medical Director Director – Legal, Comp. & Regulatory Affairs Extensive experience in financial Senior Director – Institute of Internal Over 26 years of diverse exper
Slide 29: Conclusion - a sustainable growth story
Conclusion - a sustainable growth story New management Best in class Long term Massively with proven Highest level of asset in the underpenetrated most attractive track record corporate sustainable Hospital market focused on governance growth story markets in India growth and expansion 28
Slide 30: Strategy Going Forward
0 MAX wa ep HEALTHCARE Strategy Going Forward
Slide 31: Key pillars to focus on over the next 2-3 years
Key pillars to focus on over the next 2-3 years 1. 2. 3. Optimize Existing Network Invest in Growth Develop Asset Light Adjacencies • Continue developing high-end tertiary • Brownfield Expansion across key • Scale up and unlock value of and quaternary programs hospitals in metros MaxLab- non-captive
Slide 32: Covid-19 Response
0 MAX wa ep HEALTHCARE Covid-19 Response
Slide 33: Covid-19: Significant initial impact followed by sharp recovery
Covid-19: Significant initial impact from Covid-19 followed by sharp recovery Occupancy (%) Occupancy rate dropped sharply towards 72 73 72 73 76 76 71 76 70 72 76 61 59 62 the end of March to 30-35%. While, it 33 43 continued to remain subdued during April-May, gradual recovery is now being Oct-19
Slide 34: Covid-19: Response & Contributions
Covid-19: Response & Contributions Key contributions : Our response : • First private hospital to offer a complete facility in Delhi for Covid-19 care • One of the first private sector lab to start COVID-19 testing Infrastructure • First of its kind convalescent plasma therapy trial for critically i
Slide 35: End
End 0, MAX of Ne HEALTHCARE 34
Slide 36: Appendix
Appendix 1. Detailed financial and operational metrics 2. Network structure 3. Transaction structure 4. Industry overview 35
Slide 37: Appendix 1: Detailed financial and operational metrics
Appendix 1: Detailed financial and operational metrics 36
Slide 38: Abridged P&L statement
Abridged P&L statement MHC Radiant Proforma consol Particulars (INR Cr) FY19(1) FY20 FY19 FY20 FY19 FY20 Revenue (gross) 2,921 3,212 999 1,159 3.920 4,371 Revenue (net) 2,671 2,959 928 1,067 3,599 4,026 Direct Costs 1,122 1,223 444 492 1,565 1,715 Contribution 1,549 1,736 484 575 2,033 2,311 Contrib
Slide 39: Improving Operational metrics (1/2)
Improving Operational metrics (1/2) ARPOB(1) (INR/OBD) (‘000) Avg. Inpatient Occupancy (%) +250 bps +7.7% 51 72.1 72.5 70.0 46 44 FY18 FY19 FY20 FY18 FY19 FY20 ALOS(2) (in days) +1.2% • ARPOB grew by 7.7% CAGR during FY18-FY20 while also 4.4 4.3 increasing occupancy, primarily driven by specialty mi
Slide 40: Improving Operational metrics (2/2)
Improving Operational metrics (2/2) Inpatient procedures ('000) Day care procedures ('000) +7.7% +4.2% 241 109 232 94 93 222 FY18 FY19 FY20 FY18 FY19 FY20 Outpatient consults (‘000) +9.7% 2,424 • IP procedures grew by 4.2% CAGR and daycare 2,270 procedures grew by 7.7% 2,015 • IP procedures and OP c
Slide 41: Appendix 2: Network structure
Appendix 2: Network structure 40
Slide 42: Network structure – Post merger
Network structure – Post merger Max Pitampura Max Shalimar Bagh Balaji Trust Max Dehradun (Max Patparganj) Medical Service Agreement with Trust MHIL Max Panchsheel Immigration centre Max Saket (West) Devki Devi Trust SBUs (MaxLab, (Max Saket East, Max@Home) Onco day care center) 100.0% 100.0% 77.95%
Slide 43: Appendix 3: Transaction structure
Appendix 3: Transaction structure 42
Slide 44: Transaction structure overview
Transaction structure overview Step 1: Acquisition of Life’s 49.7% Stake in MHIL Step 2: Composite Scheme of Amalgamation Max Promoter Public Max Promoter Public 41.0% 59.0% 41.0% 59.0% Element 3: Merger of residual MIL with MHIL Max India Max India (MIL) (MIL) Element 2: Demerger of healthcare busi
Slide 45: Appendix 4: Industry Overview
Appendix 4: Industry Overview 44
Slide 46: Indian healthcare industry expected to reach ~$372 billion by 2022
Indian healthcare industry is expected to reach ~$372 billion by 2022 fueled by multiple demand drivers Indian healthcare sector * Estimated size, Bn USD 372 +18% 280 160 140 2016 2017 2020 2022F Demand drivers for growth ~142 mn ~175 mn ~55 mn additional middle class population > 60 years at risk o
Slide 47: Hospitals constitute ~70% of Indian healthcare market
Hospitals constitute ~70% of Indian healthcare market with increasingly dominant role of private sector Indian healthcare sector (1) Market share % Private players have established a dominant presence in tertiary / quaternary care 30% 22% 20% 37% 40% 70% 78% 80% 63% 60% 10% Market Share Beds Inpatie
Slide 48: Public sector spending on healthcare not likely to change
At current level of public sector spending the scenario is not likely to change India- public spend on Healthcare % of GDP Developed countries 8-10% USA ~8% WHO guidelines 5%+ BRICS - excluding India 3.5-4% 2.50% 1.38% 1.40% 1.50% 1.50% 2014 2016 2018 2019 2025 Source: World Bank database, FICCI Rep
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