HealthCare Global – the value unlocking story

CVC is the promoter of the company , so they bought the stake from the co-promoter (Dr. Ajai) which is a good thing in my opinion.

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Capex to Depreciation ratio chart:
hcg c2d

Depreciation can be used as a proxy for maintenance capex. Hence, the ratio of capex to depreciation indicates the proportion of growth capex to maintenance capex. A high ratio suggests that a higher proportion of the total capex is done for increasing supply

Disc- tracking position


This is expected to significantly reduce the turnaround time (for screening), standardise reporting quality and increase efficiency multi-fold. Further, this solution will enable pathologists to collaborate seamlessly across geographies thereby ensuring that every HCG centre will now get access to expertise across the network within seconds!


Reading through this company, did anyone have a view on Related Party Transactions that AR 2021 lists?

See, if the related party transaction is within limit of 10% of the total annualised consolidated profit of the company then it is not an issue. Approval of shareholders through special resolution is required if the related party transaction during a financial year exceeds this limit.

In above case, company’s turnover is 10,304 mn. Total transaction reported to related party is approx 208 mn which is less than that limit, So there is no issue as such. :slightly_smiling_face:

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I was doing a comparison of net fixed asset turnover for listed hospital chains and this is what I found

Apollo and NH have superior NFATs in excess of 1.5x whereas HCG lags behind along with Fortis at below 0.9x. Since HCG is specialized on cancer care, it may have lower AORs (occupancy rates) than multispecialty hospitals but I guess with increased specialization their ARPOB should be superior, thus driving NFAT up?

Can any experts (Tagging @Worldlywiseinvestors) comment on future NFAT outlook for a specialty hospital like HCG? Is it likely to remain at 1x or below levels or is there scope to expand? Any insights on asset turns of specialty hospitals versus multispecialty hospitals? Asset turns is a key lever towards improving ROCE as HCG ROCE is still quite low.


I think the NFA for an oncology speciality hospital will be skewed because of cost of establishing radiation oncology facility which requires strict adherence to AERB rules.

Hence, comparison with multi speciality hospital can be misplaced.

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Dear all,

I am trying to understand how capping of cancer drug prices by regulator in 2019 affected hospitals. Found this note in FY 20 annual letter but I am unable to understand in what way price capping affected HCG.

Any guidance will help.

Thank you,

A few things to consider while comparing fixed asset intensity of HCG vs others:

  1. Oncology focused hospitals are more capital intensive than multi specialty hospitals as the investment required in PET CT and linear accelerator itself can be to the tune of 20 cr. So, even if the land and structure is on lease model, the investment in equipment is far higher. The good thing is that higher investment limits the competition from small clinics which makes onco hospitals a viable business proposition in tier 2 cities that most multi specialty hospital chains have found a tough nut to crack.
  2. For HCG, the overall FA turnover is 0.9x but if you split that between turns of mature and new hospitals, the picture is not as bad. Mature hospitals have FA turns of 1.3-1.4x, while the new ones are still operating at 0.3-0.5x. This is increasing for both new and old hospitals and should drive ROCE increase going forward.
  3. Occupancy for oncology hospitals is not always the right metric to track. Chemo and radiation therapies contribute to a meaningful proportion of revenue and these are out-patient therapies. That implies the bed occupancy is low but the linear accelerator might be fully or optimally occupied.
  4. For the same reason, ARPOB might look artificially inflated for onco hospitals as the revenue captures OP treatment revenue without the bed being occupied. Numerator is higher with no corresponding increase in denominator.

Patho and pharma are important sources of profit for most hospitals. That’s why hospitals won’t allow outside medicine, you need to purchase from their own pharmacy while you were admitted.

The price cap was very severe for hospitals & pharmacies (which seems excellent for patients). For example decade back one tab named Femera from Novartis was costing Rs. 200/tablet which is now Rs. 42/tablet. Earlier some cancer patients may have required 1-5 lakhs of medicine every 6 months. They do PET CT, Dr prescribes medicine and many patients need to continue for a lifetime or till they cure completely.

Numbers are from memory, hence take them approximately.

Does anyone have revenue/profit share of patho, radio and pharmacy in the overall P&L of hospitals? if so please share.


These are regular ESOPs grant and not open market purchase

You may check details here(will delete this as doesn’t add value to thread)