Medanta Operator Global Health's IPO: All You Need To Know

Global Health Ltd. will launch its maiden public offering on Thursday to raise as much as Rs 2,250 crore.

The operator of the hospital chain under the brand name 'Medanta' will offer fresh shares worth Rs 500 crore and an offer for sale of shares worth Rs 1,750 crore.

The New Delhi-based company is seeking a market value of Rs 9,000 crore at the upper end of the price band of Rs 319-336 apiece.

Post-offer, the promoter shareholding will be 33%. The Carlyle Group through Anant Investments is selling its entire stake and exiting its initial investment at more than double its per share investment price.

The company has reserved around 35% of the net offer for retail, 50% for qualified institutional buyers, and 15% for non-institutional buyers.

Issue Details

• Issue opens: Nov. 3.

• Issue closes: Nov. 7.

• Issue size: Rs 2,250 crore.

• Face value: Rs 2 apiece.

• Lot size: 44 equity shares and multiples.

• Listing: BSE and NSE.

• Lead managers: Kotak Mahindra Capital, Credit Suisse Securities, Jefferies India, JM Financial.

• The company plans to utilise Rs 375 crore as investment in the form of debt/equity for repayment and/or prepayment of borrowings, in full or part, in two of their subsidiaries i.e. Global Health Patliputra Pvt. and Medanta Holdings Pvt.

• The remaining IPO amount may be used for creation of additional beds at existing facilities or towards funding capital expenditure for its underconstruction facility at Noida.

• General corporate purposes.

Global Health is a private multi-specialty tertiary care provider operating in the north and east regions of India.

Its key specialties are cardiology and cardiac science, neurosciences, oncology, digestive and hepatobiliary sciences, orthopedics, liver transplant, kidney and urology, according to a Crisil report.

It was founded by Dr. Naresh Trehan, a world-renowned cardiovascular and cardiothoracic surgeon.

Under the “Medanta” brand, the company has a network of five hospitals currently in operation at Gurugram, Indore, Ranchi, Lucknow and Patna. They also have a hospital in Noida, which is under construction and intended to commence operation during fiscal 2025 with an expected installed capacity of 300 beds.

As of June 30, 2022, the hospital chain provides healthcare services in over 30 medical specialties, engages over 1,300 doctors led by experienced department heads and has an installed bed capacity of 2,467 beds.

Of the currently operational hospitals, the Lucknow and Patna hospitals are in the developing phase, while the remaining three properties are mature. They also operate six multi-specialty clinics at DLF Cybercity in Gurugram, Delhi Airport, south Delhi, Darbhanga, Patna, and Subhash Chowk in Gurugram.

The clinics support the specialty hospitals through referrals for advanced procedures and specialised care, strengthen brand presence and expand reach to areas where their hospitals are not located.

In FY21, the company took outpatient department pharmacy in-house at Gurugram, Lucknow, Indore and Ranchi hospitals as well as launched an outpatient department pharmacy at a south Delhi clinic and, in FY22, at the Patna hospital. It also has telemedicine and remote delivery of healthcare services.

The company also provides home care services that include sample collection, preventive health checks, paediatric vaccinations and nursing services at the patient’s home.

Global Health recently incorporated a wholly-owned subsidiary, called GHL Pharma, through which they aim to run all of their out-patient pharmacies in the hospitals and clinics. They also intend to explore opportunities for expanding their ‘out-of-hospital’ laboratory diagnostic services.

Other Highlights (Q1 FY23)

• Revenue from the three matured hospitals in Gurugram, Indore and Ranchi and from the multi-specialty clinics and outpatient facilities stood at Rs 472 crore.

• Of the developing facilities, the Lucknow facility earned a revenue of Rs 117 crore, while Patna earned Rs 28 crore in the quarter.

• The average revenue per occupied bed or ARPOB is Rs 58,961 for Q1 FY23 and for FY22 it was Rs 54,547.

• The average occupancy levels are 59.57% and for FY22 it was 60.50%.

• Out-patient to in-patient ratio is 17.4 : 82.6.

• Domestic to international patient revenue ratio is 94.5 : 5.5.

• Income from healthcare services is Rs 596 crore in the quarter, while revenue from outpatient pharmacy business is around Rs 19 crore.

• Out of the installed bed capacity of 2,467 beds, as on June 30, 2022, 1,866 are operational and 1,111 are occupied.

• There are 69 operating theatres and 523 ICU beds.

Global Health has listed peers such as Apollo Hospitals Enterprise Ltd., Fortis Healthcare Ltd., Max Healthcare Institute Ltd. and Narayana Hrudayalaya Ltd.

• Medical and legal risks associated with the operation of medical facilities and in-house pharmacies, including negative publicity.

• Developing or underconstruction facilities may experience delays in construction, in reaching full operational capacity, and may not achieve the synergies and other benefits as expected.

• Non-compliance with and changes in government, state and local environmental and occupational health and safety, and other laws and regulations.

• Covid-19 restrictions may impact footfalls, international patients, and disposable income.

• High dependency on healthcare professionals could impact business in case of inability to retain them.

• High competition. They have to compete with government-owned hospitals, other private hospitals, clinics and hospitals operated by non-profit organizations.

• Also, in case of any new healthcare laws on lowering prices of services provided, it could adversely impact margins.

• Dependence on third-party suppliers and subcontractors for medical supplies could cause supply-chain bottlenecks, quality problems and reputational damage.

• Contracts with third-party administrators and governments for provision of healthcare services are on renewal basis and could thereby impact revenue.

• Delays in receiving payment of outstanding dues from third parties may affect financials.

• Outstanding legal cases against the company.

• Any social, political, economic disruption, natural calamities or civil disruptions can impact demand for services.

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