In an interaction with Raj Gore, CEO, Healthcare Global Enterprises Limited
Being one of the largest providers of cancer care in India combined with our focus on molecular diagnostics and genomic-driven treatment pathways, HCG is well-poised to lead the transformation in cancer care that India needs and deserves; asserts Raj Gore, CEO, Healthcare Global Enterprises Limited
What is your outlook on the Indian healthcare industry? Can you elucidate the impact of COVID-19 on cancer care? What are favourable industry dynamics of the Indian oncology market?
The biggest lesson from the COVID-19 pandemic is that each of us personally and governments at all levels need to make health the topmost priority and deploy resources accordingly. During this crisis, we also experienced the potential role that digital technology can play in addressing healthcare challenges around availability, affordability, and equity in India. As a result, the Indian healthcare industry will continue to be one of the fastest-growing industries and generate large-scale employment opportunities in the future.
Cancer treatment cannot be called elective and is in fact, time-sensitive. Delay in the treatment can lead to adverse outcomes and worsening quality of life for patients. We continued to treat cancer patients throughout the pandemic by overcoming the logistical challenges of lockdowns. However, COVID-19 did impact cancer awareness and screening activities. The resulting delayed diagnosis and treatment will have an adverse impact on cancer stage migration and outcomes. We will have to closely monitor this impact in the long run and address it appropriately.
Cancer is more under-reported, under-diagnosed, late-diagnosed, and under-served speciality than most other specialities in India. The demand-supply gap will continue to be a big challenge in the near future due to rising cancer incidence, growing & aging population, and increasing awareness & affordability. At the same time, cancer treatment is also evolving rapidly shifting away from the 'one-size-fits-all' approach to a more ‘personalised and precise’ one for an individual cancer patient. Being one of the largest providers of cancer care in India combined with our focus on molecular diagnostics and genomic-driven treatment pathways, HCG is well-poised to lead the transformation in cancer care that India needs and deserves.
Q4FY22 was the company’s fifth consecutive quarter with all-time record revenue and a third consecutive quarter with all-time record EBITDA. Which are the major factors that have contributed to your stellar turnaround as well as strong growth on a consistent basis?
Cancer patients are more discerning than ever in seeking the most advanced, comprehensive, and high-quality treatment. HCG has always had a specialised and differentiated value proposition in that regard. Our 400-plus oncologists have been constantly working on delivering better clinical outcomes with a multidisciplinary but integrated approach.
‘Early diagnosis’ and ‘getting the right treatment' the first time makes a world of difference in improving outcomes for cancer patients. During the past 18 months, all our hospital teams have made tremendous go-to-market efforts in reaching out to the larger population in our communities to create awareness about the causes of cancer, prevention & screening. As a result, the reach of the HCG brand as well as patient footfall has been increasing.
At the same time, we have taken several network-wide initiatives to improve productivity and cost/margin efficiencies across our centres by focussing on various levers in areas of operations, HR, supply chain management, etc. As a result of this, we have developed a growth mindset and operating rhythm to deliver good performance on a consistent basis.
In FY22, Karnataka and Gujarat cumulatively contributed approximately 62 per cent of the revenue mix. What is your strategy for geographical diversification in other states of the country?
HCG enjoys a market leadership position in 13 out of the total 18 cities where we are present. Karnataka and Gujarat are our biggest markets with the longest presence where we have increased market share in the recent past, solidifying our leadership position. Having said that, HCG has made a significant investment in Maharashtra, Kolkata in East India, and Jaipur in North India. These centres have been operational for less than five years and are in the early stage of their lifecycle. We expect these centres to be engines of growth in the future and as they grow, they will naturally create geographical diversification. For example, revenue contribution from Maharashtra has already grown to 18 per cent in FY22.
What are your debt reduction plans?
Our net debt (excluding capital leases) at its peak in the past was Rs 650 crore, which was 7.5 times our EBIDTA. Since then, we have been consistently reducing our debt and increasing our EBIDTA. We feel comfortable with our current net debt level of Rs 190 crore, which is 1.1 times our EBIDTA in FY22. Our current term debts are primarily in subsidiaries, which would undergo a normal repayment cycle as per the agreement with banks. At standalone, our term debt is negligible.
What are your key growth drivers?
HCG has recorded five consecutive quarters of highest-ever revenue during the period when India also went through second and third COVID waves. We are confident that our current go-to-market efforts will enable us to carry forward this growth momentum in the domestic markets. Moreover, we expect our seven new centres to grow much faster than the market. With the market opening up, we are experiencing stronger footfalls across these centres.
During the last two years, the international business has been muted due to COVID-related travel restrictions. Now that the international flights have resumed, seeding efforts that we put in existing and new international markets over a few quarters have started delivering growth and will improve the revenue contribution of international business in the upcoming quarters.
The COVID-19 pandemic accelerated the shifting of patient preferences and innovation of care delivery using digital technologies. We have embarked upon an ambitious digital transformation initiative a few months ago to create an omnichannel end-to-end patient engagement platform. We believe that through this initiative, we should be able to expand our geographical reach and addressable market within as well as outside India. We have seen early signs of progress and expect this channel to be a key driver of growth in the future.
Currently, what are your top three strategic priorities?
Our top three strategic priorities are
- Continue to enhance the clinical value proposition for cancer patients.
- Create digital capabilities to attract cancer patients and build a long-term relationship with them to be the trusted advisor over a lifetime.
- Develop organisational capabilities to deliver superior returns consistently.
What is your earnings outlook for FY23?
We normally do not give any future guidance. However, we are very confident of continuing with our growth momentum in the current year as well. We have set ourselves challenging and ambitious goals, which we are confident of achieving.