Release Date: August 12, 2024
For the complete transcript of the earnings call, please refer to the full earnings call transcript.
Positive Points
- Revenue growth of 13.1% year-over-year, within the guided range of 13% to 15%.
- EBITDA and PAT grew by 21.2% and 31.3%, respectively, indicating strong financial performance.
- Successful expansion into 650 towns, with plans to reach 1,000 towns, showing robust geographical growth.
- Increased focus on specialized tests and bundled wellness and illness packaging, driving higher revenue per patient.
- Strong B2C revenue growth of 18.4%, contributing to 54% of total revenue, up from 51% in the previous year.
Negative Points
- Patient volume growth was partially impacted by a price increase in the B2C segment, causing a temporary dip in volumes.
- Gross margins have only marginally improved despite the increase in B2C mix and focus on Tier 1 cities.
- New lab additions initially result in higher material costs, impacting gross margins.
- Continued provisions for receivables from government contracts, particularly in Delhi, affecting financial stability.
- Competitive intensity remains high, especially in Western India, impacting pricing and market dynamics.
Q & A Highlights
Q: The question I have is on the other expenses, which have gone down sequentially. Should we assume the other expenses as a structural change, or is it led by some seasonality or something else?
A: This is a combination of both. Seasonality will help us ramp up revenue and improve margins. Additionally, structural changes like automation, process improvement, and productivity increases are also contributing.
Q: Considering we are expanding, how should we look at the margin front for the full year?
A: We have guided that margins will be between 25% to 26%. We closed Q1 at 25% and expect to reach up to 26% as the year progresses.
Q: On the top line guidance of 13% to 15% for the full year, can you guide us on the price hike point for next year?
A: Currently, there are no discussions on a price hike for next year. Our focus is on increasing volumes, improving productivity, and expanding into new markets. Any price increase will be considered based on market conditions.
Q: If the price hike is not taken next year, are we confident of achieving the ARPP (Average Revenue Per Patient) targets?
A: ARPP is influenced by educating doctors about advanced diagnostics and driving more TruHealth packages. Both areas are growing faster than overall revenue, so we are confident in achieving ARPP targets regardless of price hikes.
Q: What is stopping us from growing 25% year-on-year? Why are we guiding for mid-teen growth?
A: Growing faster would require playing in all parts of the industry, including less profitable segments. Our focus is on sustainable and profitable growth, targeting high-quality segments and maintaining strong margins.
Q: Where would we like to expand inorganically? Which states and regions in India?
A: We have three strategies for acquisitions: geographical expansion, acquiring technical or medical skills, and turning around subscale players. We are open to all markets but prefer North and East India.
Q: We've seen a slowdown in growth in our focus cities. Is this due to competition, saturation, or a high base?
A: Focus cities have shown 8% to 11% growth over the last few quarters. We aim to improve this through same-store growth, franchisee additions, and focusing on TruHealth and Specialty segments.
Q: Can you provide a split between North, South, East, and West for the quarter?
A: We will look into providing this information. The current presentation may already include some of these details.
Q: How is the pricing scenario in Western India, particularly Mumbai?
A: Competition intensity remains similar to the past. Growth in Mumbai, Pune, and Surat has been strong. We continue to focus on productivity, efficiency, and product mix to drive growth.
Q: What gives us confidence to grow in UP and other non-core markets?
A: We use a scientific approach to identify new markets based on population, medical facilities, competition, and other factors. Our success rates in new markets have been good, and we see significant opportunities in UP and MP.
For the complete transcript of the earnings call, please refer to the full earnings call transcript.
