Healthcare Global Enterprises Limited (HCG) Q1 2027 Earnings Call Transcript

Ladies and gentlemen, good day and welcome to the Healthcare Global Enterprises Limited Q1-FI27 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 and then zero on your touch-tone phone. Please note that this conference is being supported. I now hand the conference over to Mr. Suraj from CDR India. Thank you, and over to you, sir.

Thank you, Sagar. Good afternoon, everyone, and thank you for joining us on Healthcare Global Enterprises Q1 FY27 Earnings Conference Call. We have with us Dr. Manish Mattu, Executive Director and CEO, Mr. Sanjeev Kumar, Chief Financial Officer, and Mr. Ravi Gotwal, Head Investor Relations. We would like to begin the call with opening remarks from the management, following which we will have the forum open for an interactive Q&A session. Before we start, I would like to point out that some statement made in today's discussion may be forward-looking in nature, and a disclaimer to this effect has been included in the earnings presentation shared with you earlier. I would now like to invite Dr. Manish to make his opening remarks.

Good afternoon, everyone. Thank you for joining us for HCG's Q1 FY27 earnings call. Before I begin, I would like to warmly welcome our new Chief Financial Officer, Mr. Sanjeev Kumar, who has recently joined HCG. Sanjeev brings more than three sets of experience across finance, strategy, and business transformation, and I am delighted to have him as part of our leadership team. His experience will further strengthen our execution capabilities as we continue to build India's leading oncology platform. As we enter FI27, our focus has progressed from laying the foundation to executing our strategy and delivering consistent operational and financial performance. Over the past year, we have achieved several important strategic milestones that strengthen our position as India's leading oncology platform. We sharpened our strategic focus through the successful divestment of our fertility business, which was completed at the end of June 26. We also strengthened our balance sheet to a successful rights issue, expanded our leadership team, successfully commissioned our North Angle Hospital, and continued to advance our brownfield expansion pipeline and other growth initiatives. With these foundational initiatives in place, our priorities are cleared, delivering sustainable, profitable growth, driving operational excellence, improving asset utilization, enhancing racial experience. Building our clinical differentiation, optimizing our revenue mix while reinforcing our leadership in cancer care. I am pleased to share that we have started FY27 on a strong note. During the quarter, SCG delivered revenue of 6,951 million rupees, representing approximately 13% year-on-year growth. Our newly operational North Bangor Hospital, which commenced operations in May 26, contributed... 67 million rupees during this very first quarter. More importantly, growth was broad-based, with 16 out of our 25 centers, including Oxfam, delivering their highest-ever quarterly revenues, reflecting sustained patient demand and improving institution across the hospitals. Revenue growth during this quarter was primarily driven by an 11% increase in patient volumes. ARPP grew by 2%. ARPP improvement driven by annual price height and favorable bear mix partly offset by changes in case mix, including a lower contribution from high-value, low-margin therapies. Our objective is not to merely grow faster, but to grow with a better quality of earnings by treating more complex oncology cases, improving our patient mix, enhancing productivity, and generating stronger returns on the capital we deploy. We believe this disciplined approach will create sustainable value for both our patients and our shareholders over the long term. I am encouraged to see this strategy translating into visible outcomes. During the quarter, non-institutional business revenue grew by 17% year-on-year. As a result, our pair mix improved with non-institutional contributions, increasing from 67% in QY26 to 69% in QY21FI27. This gradual improvement in revenue weeks is an important driver of sustainable profitability and strengthens the long-term quality of our earnings. On the profitability front, the reported EBITDA for the quarter stood at $1,223 INR million, excluding losses from North Van Lort and Bun-Off costs, adjusted EBITDA increased by 20% year-on-year to INR $1,339 million, with EBITDA margins improving to 19.4% from 18.2% in Q1 F526. This demonstrates that the underlying operational performance of the business continues to strengthen. Overall, our QA performance reflects healthy operating momentum across the network, supported by robust patient demand, improving operational execution, and continued progress in enhancing our R&U mix. Let me now briefly touch upon the performance across our operating clusters. The South Cluster delivered another strong water, with a revenue growing approximately 16% year-on-year, supported by healthy growth in both patient volumes and realizations. We also witnessed continued improvement in the cash and DPM mix across the Bangalore Center of Excellence and the Wysiak Cluster. As a reminder, the South Cluster numbers include the newly commissioned North Dandlo Hospital, which contributed INR $67 million of revenue. The West Cluster reported a growth of 9%, led by the Maharashtra region, which grew by over 14%, while growth in the Gujarat remained relatively moderate during the quarter.

Overall load was led by volume.

which grew 11% year-on-year, and ARBP remained broadly stable during the quarter. The benefits of an improving pair mix were largely offset by changes in case and service mix, including a higher share of medical oncology patients would pause, which typically carry a lower average revenue population. Furthermore, institutional business in best cluster declined by more than 16% year-on-year, which moderated overall revenue growth of the cluster. However, this is consistent with our strategic focus on improving the quality of revenues, and we expect this business to be progressively replaced by high-value cash and non-institutional patients over time. Each cluster delivered strong 22% revenue growth during this quarter, driven by robust volume growth across the region. Despite temporary moderation in ARPP, healthy patient volumes continue to support strong top-line momentum. We remain confident that a significant increase in patient throughput provides a strong foundation for future growth. This provides us with adequate financial flexibility to fund our expansion pipeline while maintaining a disciplined approach to capital allocation. Looking ahead. I'm particularly encouraged by the initial performance of our North Bangalore Hospital, one of our most important strategic investments. In the very first quarter, the hospital recorded over 550 new patient registrations, more than 300 admissions. While the hospital is still in the early stages of its ramp-up, these early operating metrics reinforce the confidence in the long-term potential of this asset. We expect utilization to improve steadily over the coming quarter as insurance and panelments are completed, onboard utilization ramp up their practices, and awareness and brand record in the surrounding catchment continues to increase. Our capacity expansion continues to progress well and remains an important growth driver over the coming years. During the quarter, we added 121 operational beds across the network, including 61 beds in the south cluster. 27 bests in West, and 26 bests in East Cluster, and 7 bests in Arkelia unit. Looking ahead, we have plans to add additional 65 bests in FY27, 520 bests in FY28 and FY29, and 230 bests in FY30. Nearly 60% of our planned capacity expansion continues to come through brownfield projects, enabling faster execution and low capex. Whereas three greenfield projects are in the pipeline, and we will share more details once finalized, and please refer to slide 12 of the presentation for more details. Alongside bed expansion, we continue to strengthen our clinical capabilities by investing in advanced technologies. During the quarter, we commissioned a new LEN Act in Rajkot, completing its transition into a comprehensive cancer center. We also enhanced the robotic surgery capabilities with the addition of two surgical robotic systems, a new installation at NASHIC, and a replacement at our Bangalore COE. Clinical excellence remains at the heart of STG's clinical demonstration. During the quarter, our team successfully managed several highly complex oncology cases across surgical, medical, and radiation oncology. These included advanced CAR T therapies for relapsed hematological cancers, rare anatomical cancer surgeries, first-of-its-kind minimally invasive thoracic procedure, and complex organ-preserving oncological surgeries. Such cases reflect the depth of our multidisciplinary expertise and reinforce HCG's position as a reference destination for complex cancer care across India. Overall, we are encouraged by the momentum we are seeing across the business. The strategic actions undertaken over the past year have significantly strengthened SCG's platform, and we believe the company is well-positioned to deliver consistent, sustainable, and a profitable growth while further consolidating its leadership position in oncology care. With that, I would like to hand the call back to the operator. I will be happy to take your questions.

Thank you very much. We will now begin with the question and answer session. Anyone who wishes to ask a question may press star and then 1 on their touchtone phone. If you wish to remove yourself from the question queue, you may press star and then 2. Participants are requested to use handsets while asking a question. Ladies and gentlemen, we will wait for a moment while the question queue assembles. Again, to register for a question, please press star and then 1 now.

Participants, you may press star and then one to ask a question.

Your first question comes from the line of Sumit Gupta from Antique. Please go ahead.

Hello, am I audible?

Yes, sir, you are audible?

Yes, sir. Yeah, hi, Rasko. That's on a good history of the PPT and two questions. So first is how is the performance in the various markets of like the last quarter PPT you related, scientists said more than 10 crores. So how is the performance in those markets this quarter? We are not really article.

Hello.

So basically, my question is on the performance of the various markets of the revenue. So basically, in the more than 10th rows of per month revenue, and then try to 10th rows.

How will the performance in those markets this quarter? Hello.

So, yeah, you mean you are referring to the bucket, you know, the revenue buckets that you've written in the presentation. So, this quarter you have not highlighted that.

Yeah, how was that performed?

Yes, that's right. I mean, we believe it will be an annual disclosure, but however, since you've asked that question, the bucket with more than 10 crore per month revenue, we've got from last year four hospitals, we moved to seven hospitals. So, we've added three new hospitals to that, and the bucket with 5 to 10 crores per month's revenue, that number has gone down from 14 to 11. So, we are seeing more and more hospitals moving off that ladder of, you know, higher revenue number per month. And the last category with revenues of less than 5 crores per month, that number has gone from 6 to 7 with the addition of North Bangalore. Thank you.

Okay.

So what will be the like-to-like growth in those markets?

Thank you.

Hello. So, I don't have that number.

Yeah, I don't have that number right now, but we can, I can often connect with you and give you that.

Understood, sir. Understood. And so, second question is, like in the presentation that you have highlighted, so in effort 28 and 29, there are 180 beds on the client field site.

So, like, which we expect these projects to be from?

So, these 180 beds will obviously come from two greenfield projects.

One of them is in our south cluster in Whitefield. The other one is in Maharashtra, in our west cluster. So, I think the likelihood of the first one to operationalize is somewhere at the end of F5-27-28, and the other one in the subsequent year.

Understood, sir. Thank you. All the best.

Thank you, Dean.

Thank you. We take our next question coming from the line of Chinmi, an individual investor. Please go ahead.

Yeah. Can I audible?

Yes, sir. You're audible.

Yeah. My question is, can you paint a picture on the plans in reducing the borrowing? What's the strategy of the company in reducing the financial price?

Sorry, could you come again, please?

Yeah.

What is the strategy of the company reducing the financial cost? So, if the company going forward would have a strategy to reduce the volume so that the profit would be evidently feasible in the financial shoes.

As you actually see that the interest cost has come down during this quarter because of the proceeds that we have raised from the right issue that has been used for the purpose of the payment of the case of the most amounted to 170 crores. We will actually continue to fund our growth through a mix of debt as well as internal records, and based on which the interest costs will actually fluctuate from year to year. But certainly at this point of time, in this year, we expect it to be moderated from the last year's perspective, as compared to last year.

Thank you. I'll wait in the queue.

Thank you. Before we take the next question, a reminder to all the participants, you may please press star and then want to ask a question. Your next question comes from the line of Aditya Chheda with Incurate Asset Management. Please go ahead.

Hi, good afternoon. So, as per the... Slide in investor presentation on bed expansion. The bed expansion compounds at an 8% dagger from 26 to 29 against our outlook of a mid-team revenue growth. So, I would like to know your outlook on, you know, the same center growth case mix. Higher occupancy, etc. You know how this mix will contribute towards the overall outlook that you have on revenue growth. So, how are you looking at this internally?

That's my presentation.

So, see, we are very confident of delivering a mid-team's work from the existing centers, and as... And including the new ones that we're building through the greenfield and brownfield expansion. So put together, as I said earlier also, we remain confident of the living maintained growth, and there is no change in that outlook. Our focus will remain on margin improvement, which will improve progressively on the back of improvement in fair mix. High complexity of clinical work, bearing down of the losses from the new hospital, and, you know, better operating leverage coming from existing centers. So I think it's going to be a mix of mid-teams growth and focus on increasing our margins.

Next question is on your outlook on the expected loss from the greenfield facility for FY27 and also now that the ESOP plan is approved, how do you expect the quantum to be charged going forward and yeah these are the two questions.

Can you repeat your second point of the question?

The ESOP plan that was approved, how do you expect the charge to sort of hit the P&L going forward?

So, on your first question, Anitia, we are really excited about the way North Bangalore is starting to ramp up. You know, as I had mentioned earlier, we've done nearly 7 crores within the first quarter itself, you know, for a comprehensive cancer center, that's a good ramp up. And we're really excited by the quality of clinicians that we have on board. We have, you know, South India's second and perhaps India's most modern MRAD, which is a very sharp clinical differentiation. We are among the very few hospitals in this part of the country to have organ-specific surgical teams, and we've got very good response from the community so far. So, very excited about the ramp-up. How the early infraction has been. We've onboarded key doctors, you know, that process is complete. MRI, linear commissioning happened in July. So most of the cost has been incurred. And now we are focusing on creating awareness in the market through related campaigns. So that process is on. So as I think most of the costs have been built in, I think we've reached the peak EBITDA loss in this quarter. So from here on, we feel as we ramp up clinician practices, insurance impenetraps happen, and revenue, you know, goes up meaningfully, I think the losses will come down quite reasonably in the next few quarters. So that's our projection for North Anger. And on the second question, you know, the Gisop policy is undergoing final stages of approval, and that charge will impact the company's P&L in quarter two.

One last question was about the likely impact of the discontinuation of some of the chemo drugs. How much of the impact are we expecting in the current financial year from those?

That's So, the impact in Q1 has

been about 1.5% on our top line, and that's why I think if we were to plow that back, the top line would have been around 15%. But having said that, we have discontinued those drugs because while they were high value, they were low margin. So, while the impact is about 1.5% on the top line, it has been margin-equipped for us, which is reflected in our margin expansion on a like-to-like basis.

Thank you and all the best.

And, I mean, for the next few waters, it will remain in the same vicinity. It might marginally come down also as it gets replaced by higher margin cashless.

Noted, thanks.

Thank you.

Participants, if you wish to ask a question, you may press star and then one. The next question comes from the line of Jyothish Vijayan with Moat Financial Services. Please go ahead.

So, my question is on the operational excellence side. On the third page of your investor presentation, you mentioned that there are some key initiatives are underway. The first one is cost optimization, and the second one is driving productivity improvement, and the third one is enhancing the patient experience. So, could you please add some color on what kind of initiatives are undergoing in the cost optimization side?

See, on the cost side, we see there is an opportunity across all the cost side items today, and the work is happening both on manpower costs and other fixed costs across centers. We have been using a lot of automation and data analytics on that. As far as patient experience is concerned, cancer is a very serious mess, and I think there is never enough that we can do to make our patient experience better in our hospitals. So we've set up a dedicated team to look into areas where we can make the experience inside the hospitals better when it comes to infrastructure, the services we are delivering. While many of our hospitals are doing a great job, I think there is still a headroom for us to improve that. And the third piece is around productivity. So, we are looking at both the clinical and the non-clinical productivity. How do we assist our clinicians with better technology and sales and marketing accelerated efforts to improve their practices? So, that's one part. And the other part is the non-clinical productivity that will come through better conversion and, you know, plugging the revenue leakage. So, all that work is happening across the organization, which will be a bit of an indicator at the end of the day. But more importantly, I think the big piece is that how do our patients, how does their experience in this area work? We come together with the family.

Got it. And my second question is on the revenue growth side. So, how much the revenue contribution, the increased revenue contribution from the RPOB increase or the patient product, the mixed increase or the volume increase? Could you please break down that also?

So, the growth will be in line with our implementation,

and I think that's all the projection that I gave you today as of now.

Okay, so, are you there on the line? Yeah, I'm here, okay.

On the last customer side is, in this quarter, you completed the strategy exit from Milan, so how that exit will, you mentioned that that strategy exit will sharpen the focus on CoreGR, enhance the management focus and execution, so how that exit will guide or what will be the... Strategy for that, or what to go to exit from Milan.

So, the focus is on building our technology, our clinical capabilities, starting new programs like hearty cell therapies in our major centers, starting bone marrow transplant programs in major centers, improving the robotic surgical work that we are doing. And for the multidisciplinary. How do we advance that in all the centers? So I think it's going to be a mix of all that, the idea being... How do we invest more in precision diagnostics, in precision oncology, through, you know, targeted cell therapies, more, you know, advanced radiation therapy technologies? So all that is aimed at giving the clinicians more tools so that they can perform better, more complicated procedures and deliver on better outcomes, which we are known for in any case. So I think that's really the focus on core oncology, if you're referring to that in the presentation.

Okay, got it. Okay, thank you, thank you. That's all for my time. I will be in the queue for the next question.

Thank you. Your next question comes from the line of Himanshu Binani with Anandrathi. Please go ahead.

Hi, sir. Thank you for taking my question. So, sir, you have, like, mentioned in your opening remark as well as into the press release in terms of, like, there has been a record improvement or record quarterly revenues from 16 centers out of the 25. So, maybe if you can, like, help us understand in terms of, like, which market of the centers have actually moved up the value chain. So, what I believe is that in last quarter we used to like report the 10 crore, 5 to 10 crore monthly revenue and below 5 crore bucket. So, maybe if you can like help us understand like that.

So, actually, Hivanshu, the growth has been brought with across workers. From the smallest-sized hospitals to the largest, most of the hospitals have done well. So it's not restricted to any bucket. But what has particularly happened is that three hospitals particularly have moved up from the 5 to 10 crore trajectory to 10-plus crore trajectory. That's been a plus. So you can see the quantum of growth that some of these three hospitals must have had. But again, just reiterating that the growth has been broad-based across regions and across the size of the hospitals.

Okay. Okay. And second, if you can elaborate on the FY28-29, we have 340 brownfield beds additions. So maybe, but then if I actually look at the slide 12 of your presentation, so the brownfield details which you have like given, so that is actually not adding up to 340. So maybe what are the extra beds where you are like adding up?

So, The addition of, you know, 340 beds will be across our 25 centers. We have mentioned a few of the centers, but then there are other additional centers where we have the capacity. So we will operationalize more beds during the later part of 528, 1029.

And maybe if you can, like, help the same person, most likely the birds can bear.

So, just to add to that, what Ravi had just said, I think, you know, this is where the best need to be added is also an activity of assessment on an annual basis, on the basis of the capacity and its utilization. And that's the reason why we have actually left certain that where there is a certainty, complete, that is given, and as a part of the annual exercise that we actually will undertake, let's say, in the month of January. We will actually look at where are the other facilities required in various facilities, and we will take a conscious auditory as in those. Brownfield expansion is concerned, and we know that there are a lot of facilities where brownfield capacity is available, which is indicated very clearly that they would be 525 addition between the two years.

And, you know, I'm actually discovered just six hospitals, and these are the major meaningful additions in terms of quantum, but there are many other hospitals in this which, you know, which are not mentioned here, like Valoda. Katak, Ranchi, or many other hospitals, which will have patients from 10 to 15 beds, which we haven't mentioned here. And I think there's a long tail, which, as they improve their occupancy levels and all, and will have benediction coming at the right time.

Thank you.

Thank you. Participants, if you wish to register for a question, you may press star and then one now. The next question comes from the line of Devang Patel with Samiksha Capital. Please go ahead.

My first question was on CAPEX. How much did we spend in Q1? And apart from the CAPEX mentioned in the presentation, what would be our CAPEX for maintenance and operation per annum?

We have incurred a capex of approximately

750 million, 750 million. And as far as it particularly is concerned, yeah, between the growth and the maintenance, we have incurred almost 35 crores on account of growth capex and almost 40 crores in terms of the maintenance capex.

And also, if you can indicate for the full year, what would be our

spend on just maintenance and upgradation?

So, on the year of the BCP, as you look at, dimensions capacity is likely to be approximately 100 crores in each year, and that's what we really target to have.

Okay. This is over and over the case mentioned for brownfield and greenfield case, right?

Yes, so the capex that I mentioned is 75 floors,

which is actually a growth and ventures get exposed.

Okay. Our utilization level for the southern cluster was at 68% in FI26. I know you put up a new hospital in North Bangalore, but does your existing cluster, till what level of utilization can you take it without growth getting affected?

The existing facilities can manage the utilization level up to 75-80%. So there is ample headroom for growth in

our clusters across the board.

The other question was on marketing and promotion spends. One of the targets was to increase brand visibility. So have you seen a step up in those spends, a meaningful step up from earlier?

Yes, definitely. We have a double down on sales and marketing efforts because it's a speciality which relies a lot on these channels for bringing patient volume. And STG enjoys a very strong brand recall in many markets, but it needs to be percolated down to all our consumers. So we have double down on sales and marketing efforts and in branding efforts too. And you can see that in the spend.

Could you give us just a broad sense of how much percentage point increase has happened in the expense?

While we actually don't give the specific each and every expense, I can tell you that as per series of marketing is concerned, on a year-on-year basis, the expenses have increased by a meaningful more than almost 20% plus.

Okay. Just lastly, the new hospital opened at Mark Bangalore, you mentioned, you will break even in a few quarters. By what time period do you see that reaching full utilization or an optimum utilization?

I think full utilization would be very difficult to

predict right now because it's dependent on many factors, but I think the optimal utilization of 60-65%, we should be anywhere between third to fourth year of operations.

But just to add to that, what we expect is the kind of form that we have got initially in our North Panglore facility. We certainly expect to have a monthly break even in this year.

Last question, now that we have the funds in the bag, is MNA also a part of our focus in the next two years, or that is something

more beyond near term?

No, definitely it is.

Whenever we get a value-accretive opportunity which aligns with our values and helps us expand our presence in the new market or existing market, we'll definitely go for it.

Thanks for having me. Thank you.

Thank you. Participants, you may press star and want to ask a question.

Your next question comes from the line

of Aditya Cheda with Ingrid Asset Management. Please go ahead.

Hi. From the following the rights issue, what is the cash levels today and how have we utilized that? And the second question is within the finance and depreciation, how much is attributable to the relief expense for this quarter?

In terms of light issue proceeds,

which we actually had, we have used 170 crores for the purpose of debt treatment, which is 170 crores. We also increased our shareholding in our budget facility from 51 to 85 percent. Then also we use over 150 crores. And almost 50 crores we actually used for the purpose of basically expenses and 95 crores were used for the purpose of general corporate purposes and specified in terms of the use of the right issue receipts.

And on the depreciation and finance, least component within the total amount of roughly 110 crores.

Could you please come again?

The lease component, that will be the, that will be lying in the depreciation and finance cost for quarter 1 FY27. What would be the lease component if you have to divide the depreciation into depreciation on assets and the lease component?

So I think in terms of the depreciation, if you actually look at,

during this particular quarter, the depreciation is, it actually includes the depreciation on our new facility as well, and, but over a period of time, this will, this would actually include the, this will also include the capitalization of certain recent growth investment that we have got, as well as, as well as in future when we have these new properties. But today, it will be in the region of over 9%, which has been there as a passive consent.

Thank you. Okay, got it.

A reminder to everyone once again, if you wish to register for a question, please press star and 1.

Our next question comes from Devang Patil with Tamiksha Capital.

Please go ahead.

In the comments you mentioned in the West, institutional share of revenues had gone down, pulling down overall revenue. Is it related to a particular state or a hospital? Is there a change in now or is that something, an effort that we have made from our side?

That's why we have some

of the growth, which we talked about in moderated growth, is largely on account of some of the reduction is on account of reduction in the scheme business, which is largely room budget immunotherapy therapies, and that's what has largely impacted the value of growth.

And, you know, Maharashtra has actually grown well. It's only in Gujarat region, which had a good high proportion of this kind of business, which we have deliberately cut down on. And hence, the growth, as the growth is muted, the margins have expanded.

Right, sir. Thank you so much.

Thank you.

To ask a question, you may press star and 1. The next question comes from Rajat with Tata Mutual Funds. Please go ahead.

Yeah, hi.

Am I audible?

Yes, sir. You're audible? Yes, sir. Yes, sir.

Yeah, hi. Manish, my first question is that now that you have already spent close to one year or maybe more than one year in the system,

I just want to understand from you that do you think things so

far have progressed in line with what you would have expected, or has that been a little slower both on the top-line front and on the margin expansion front? That's my first question. My second question is, now that you spend a decent amount of time, do you think that at a console level, SCG can at some point in time, let's say two to three years down the line, can operate, this business model can operate at a 23, 24, 25% sort of margin level? Yeah, those are my two questions.

Yeah, thanks. A very interesting question.

I would say I think we could have done better on both fronts, but particularly on the top line where we did face a couple of headwinds on the price capping and a couple of those factors. But I think on margin expansion, our trajectory has been quite good, I would say. To navigate those challenges and still grow at, you know, 13%, 14% so far, I would say, you know, I would say reasonable growth, but definitely we could have done better. But to answer your second question, we are very confident that with the levers that we have in place, the opportunity that lies within the oncology segment across. Thank you.

Just to understand, can you tell us that out of the 25 hospitals we have right now, how many hospitals would be actually closer to that 25% margin level?

Hello?

So, yeah, while, I mean, we have refrained from giving centers specific details in the past also, but I would say that numbers would be, you know, I think definitely the numbers increased over the last year, you know, and the fact that our team business, institutional business has come down by 200 dips. Have meaningfully added to our EBITDA margins at a central level also and overall at a control level too.

I'm out.

20% of us ankles today, more than that, actually, are in that range of 24-25 things, 20%.

Lastly, on the operating cash front, can you tell us what was the cash generation during this quarter? That's my last question. Thanks.

Look at, in terms of the cash

generation that actually they have got, we have almost got a pretty healthy cash generation when you have to convert from EBITDA to actually cash generation, and we almost had an operating cash flow before we were able to change it, if you really look at, almost at work grows, almost at work grows.

Sorry, 125 crores. 125.

125 crores?

Yeah, it is 125 crores. Yeah, 125 crores of operating cash flow before reversing level changes. And if we look at the overall net cash flow for operating activity, it will be in the region of over 70 crores or so.

70 crores.

Yeah, it will be approximately 70 crores from operations. Yeah, 70 crores from operations.

Okay.

Thank you.

Thank you. Your next question comes from Aryan Jain, an individual investor. Please go ahead.

Yeah, hi.

Am I audible?

Yes, sir. You're audible. Please go ahead.

Yeah, sorry I joined the call late. I'm not sure if this was discussed earlier, but in this presentation, you've disclosed that almost 30% of your revenue has come from government business. I just wanted to ask you how much of this would be attributable to the CGHS division. The reason for asking this is that I just wanted to know if there was any impact from the CGHS type division.

Yeah, we answered this earlier.

The impact was about one and a half percent on the top line because of the price capping, but there was a positive impact on the margins.

Will you be able to quantify this, the margin impact?

Not right now, but we can get it often, but not right.

Okay, understood. And the second question was, what steps are we taking to improve our case mix, considering that our ARPP this quarter was mainly impacted by the case mix? Please want the question.

So, the case mix is being driven by infusion of technology in many of our centers, whether it's, for example, MRI-Lenact that we've got in North Panglore, as well as the tomotherapy, the surgical robots that we are getting in some of our centers, establishing the CAR-C cell therapy programs in several other centers, building the bone marrow transplant program, setting up diagnostics, again, a part of the precision oncology overall ecosystem, All these will add to improving the case mix. We're also proactively looking and have recruited several physicians who come with, you know, specialized

skills, which will help us improve case mix further. Arian, sir. Yes, thank you.

Thank you so much. Your next question comes from the line of Sumit Gupta from Antique. Please go ahead.

Yes, sir. Thanks for the opportunity. So, just want to understand what was the utilization levels in all the C++?

Can you repeat the question, Sumay?

What would be utilization levels in all the peak clusters, southwest and east?

So, we actually don't give, you know, the utilization levels at the top of time, and this is only an analysis site, and certainly we would be giving this information while presenting the March 27th images.

Okay, but directionally, can you highlight, like, has the improved or what the frequency has more or less been at the same level? Like, just want to understand, at least on the qualitative aspects.

Yes, definitely they have improved sequentially also, and vis-a-vis last quarter too. Also, you need to look at the volume growth. So, as we have highlighted, 7% is the overall volume growth. That's also an indicator that, you know, the athletes are performing better utilized.

No, no, that's fine. So, within that, obviously, south would be discussing more, or, I presume, west would be having higher, basically, rate of improvement, higher rate of improvement in west versus south. Is this understanding correct?

So, cluster-wise, it will be difficult to give right now, Sumit, but overall, at the company level, suffice to say that both the utilization levels, occupancy levels have improved.

Under social. Good. Thank you.

Thank you. The next follow-up question comes from the line of Jyotesh Vijayan with Moat Financial Services. Please go ahead.

So, my question is on the EBITDA margin side. So, despite a nearly only 2% growth in ARPP, the adjusted EBITDA margin nearly expands 120.82 points to 90.4%. And which is mostly driven by the air mechanic revenue part. So, as the North Bangalore hospital ramps up and the company executes a significant effect, Expansion over the next few years. So what do you believe is the sustainable EBITDA margin range over the next two to three years, and which will be worth that expectation?

See, we've already stated our

long-term aspiration is to get past the 21%, 22% and, you know, reach the 24%, 25% of the better margin. And given our performance in Q1, we are confident that we'll get there. And I think we're very confident that we are on track to hit those numbers.

May I know the number? It's 2122 and 2224.

So, I said in the next two years, we're looking at a 21-22% EBITDA margin. For the next four to five years, we're confident of clocking the 25% margin number.

Okay, got it. So, the next question is on the marketing spend. How much is right now the marketing spend as a percentage of revenue, and is there any target that you need to get over for the marketing spend?

So, because of the North Sandlot launch, you know, we're obviously doubling down on marketing in that place. So, it's gone up by 20% with every last quarter. It's today at 2.9% of our sales. And we want to kind of keep it around that mark, given the nature of our speciality and the competitive intensity in several markets that we operate in.

So, you are checking the same 2.9% for the longer term also?

Right? It will be in the 2.5 to 2.6% range.

Okay, got it, got it, got it. Okay, thank you.

Thank you. Your next question comes from the line of Vedant Nilekar with ICICI Securities. Please go ahead. Hello, I'm audible.

Thank you for the opportunity and congrats to the management for great numbers. I have just one question on the long-term margin guidance that the management just mentioned.

What would be the levers for the margin expansion in the next four to five years?

So, the big piece will come from improvement in our pair mix. That's the biggest fever, and we've already seen that happen consistently over the last couple of quarters. Particularly in this quarter, we've changed the pair mix by 200 basis points positively, and I think it's going to improve. The other piece is investing in the right clinical and technology to improve our clinical work, the complexity of clinical work, whether it's installing tomotherapy units like you've done, or the MR-LINAC, or the surgical robots that have come in this quarter and will continue in subsequent quarters as well, or in the right clinical talent, right? In the last quarter, in the last four, five months, we've onwarded about 20 oncologists. So I think investing in all those things will definitely help us improve the case mix. So on back of the pair mix improvement, then, of course, the better operating leverage that will come and help us from the existing centers as they mature. And we have seen that happen as a better growth is outpacing the revenue growth because of that leverage, coupled with the other factors that I mentioned. And this year, particularly, as the North Randall was to come down as it matures next year, that will be another level for margin expansion for us.

Got it, sir. Thank you so much. Thank you. Ladies and gentlemen, as there are no further questions from the participants, I now hand the conference call over to the management for closing comments.

Thank you so much. Thank you, everyone, for joining the call. If any of your questions remain unanswered, please please reach us on the email ID and the number provided on the back of the presentation. Thank you, everyone. Thank you.

Thank you. Thank you, members of the management. On behalf of Healthcare Global Enterprises Limited, that concludes this conference. Thank you, everyone, for joining us, and you may now disconnect your lines. Thank you.