Shalby hosted a conference call on Oct 30, 2023. In the conference call the company was represented by- Dr. Vikram Shah, Chairman and Managing Director,  Mr. Sushobhan Dasgupta, Vice Chairman & Global President,  Mr. Shanay Shah, President and Mr. Amit Pathak, Chief Financial Officer.

Key takeaways of the call

Company’s hospital business revenue grew by 22% YoY in Q2 FY23.

In Q2 FY24, Arthroplasty contributed 42% to total revenue, Critical Care & General Medicine 11%, Cardiac Science 8%, Oncology 11%, Orthopaedic 7%, Neurology 5%, Nephrology 5% and Others 12%.

Company is well placed to achieve double-digit growth in the hospital sector while maintaining consistent profitability driven by launch of new products, increase in new accounts, and addition of new territories.

Company’s core specialties like Arthroplasty, Oncology, Cardiac Science, Orthopedic, Critical care & General Medicine, and Neurology contributed 83% to the revenues in Q2 FY24.

Its Homecare business continued to grow by 62% YoY in Q2 FY24. Company performed more than 275 transplants so far at SG and Indore units in addition to conducting critical surgeries across its units.

Going forward, management expects better Q3 and much better Q4 FY24.

In Q2 FY24, in patient count (incl. Day Care) was 22.652, growth of 21.6% YoY. Total Surgery count of 7,771, growth of 14.2% YoY.

Management indicated better payor mix with the higher self-pay and insurance patients. In Q2 FY24, Government contributed 21%, Self-Pay 35% and Insurance 44%.

Company’s Occupancy rate was 54% in Q2 FY24 compared to 49% in Q2 FY23.

ARPOB during the quarter was 36,136, growth of 8.1% YoY.

The number of occupied beds stood at 678 increased by 13.14% YoY in Q2 FY24 because of increased volumes.

Company has grown its international presence in other new geographies like UAE, Oman, Bangladesh, and Nepal through partnerships. Management expects increase in international revenue going forward.

Company started supplying implants to Indonesia market in Q2 FY24 against the bulk order received in last quarter.

In homecare business, company served 15,565 Patients in H1 FY24 compared to 12,686 patients in H1 FY23, up by 23% YoY. Physio, Diagnostics and Pharmacy are the major revenue contributor in Q2 FY24.

Company successfully operationalized Shalby Managed SOCE franchise unit at Ranchi with 60-bed capacity in the month of August 2023.

Company has plans to enhance and expand its presence by introducing Orthopedic units within the SOCE franchise segment, growing its implant business in current markets, and venturing into new territories in the coming fiscal year.

In Q2 FY24, total surgeries performed at SOCE units (operated and managed) have increased by 116% and 31% QoQ.

The contribution in sales mix from USA and India accounted for 66% and 34% respectively in Q2 FY24.

In terms of USA Customer Sales Mix, Wholesale contributed 46% in Q2 FY24 and retail 54%. In terms of Product Sales Mix, Knee contributed 82% and hip 18%.

20 clinical trials are currently underway across all its hospital units and 4 clinical trials are closed during Q2 FY24.

Management commentary: Mr. Shanay Shah, President said: “It has been a strong quarterly performance in Q2 FY24, where in our hospital business has delivered ever highest operating margin at 26% on account of operating leverage supported with increasing self-pay and insurance patients year on year and quarter on quarter which resulted into higher double-digit ROCE at 23% on an annualized basis. Hospital business revenue and EBITDA grew by 22% and 31.6% YoY respectively in Q2 FY23. The number of occupied beds at 678 increased by 13.14% YoY in Q2 FY24 on account of increased volumes. The payor mix is better with the higher self-pay and insurance patients in the second quarter of FY24 as compared to the previous quarter. Our core specialties like Arthroplasty, Oncology, Cardiac Science, Orthopedic, Critical care & General Medicine, and Neurology contributed 83% to the revenues in Q2 FY24. Our Homecare business continued to grow by 62% y-o-y in Q2 FY24. We have performed more than 275 transplants so far at SG and Indore units in addition to conducting critical surgeries across our units. I am happy to mention that Shalby has grown its international presence in other new geographies like UAE, Oman, Bangladesh, and Nepal through partnerships to conduct regular OPDs and healthcare camps in Q2 FY24 and have plans to conduct surgeries as well at these locations. I am very confident that these strategic locations will help us to increase our international hospital revenue significantly. Shalby also takes pride in nurturing young talent through our Shalby Academy vertical with 610+ students registered in the various healthcare programs during Q2 FY24. We have closed the quarter with a net cash balance of Rs.705 million at the group level and are well positioned to fund our strategic growth plans. Shalby continued to add many more milestones backed by clinical excellence and patient care. We stay committed to making a positive difference in people’s lives.”

Mr. Sushobhan Dasgupta, Vice Chairman and Global President said: “I am pleased to inform you that we have successfully operationalized Shalby Managed SOCE franchise unit at Ranchi with 60 bed capacity in the month of August 2023. Our SOCE Franchise business delivered an adequate performance in Q2 FY24. Total surgeries performed at SOCE units (operated and managed) have increased by 116% and 31% qoq. Total Revenue from operated and managed units has increased by 104% yoy and 27% qoq. I am pleased to report that our implant business has delivered positive EBITDA in Q2 FY24 because of the continuous improvement in operational efficiencies and better procurement costs. The revenue is at the moderate level of Rs. 14.7 crore in Q2 FY24, was impacted mainly due to delay in full commercial launch of our Uni knee across in India on account of delay in low-cost instruments manufacturing and an unanticipated delay in our full commercial launch of our new Knee brand in India and in the US. The contribution in sales mix from USA and India accounted for 66% and 34% respectively in Q2 FY24. We have started supplying our implants to Indonesia market in Q2 FY24 against the bulk order received in last quarter. We continued to strengthen our sales team by hiring new salespeople in the US and India. Further we remain confident to deliver the results with launching new products, bringing new accounts, adding new territories, gradually improving the operational efficiencies, and furthermore substantially bringing down our procurement and day to day operational costs to add more towards operating profits. Having established all the essential strategies, Shalby is in an excellent position to achieve double-digit growth in the hospital sector while maintaining consistent profitability. We plan to enhance and expand our presence by introducing Orthopedic units within the SOCE franchise segment, growing our implant business in our current markets, and venturing into new territories in the coming fiscal year. These initiatives collectively aim to generate lasting value for all stakeholders at Shalby.”