PremiumIn FY22, the GCC business was back to the pre-covid levels with good traction in the first quarter, which is usually a lean quarter, says Dr Azad Moopen, founder CMD, Aster DM Healthcare
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NEW DELHI : Aster DM Healthcare, a publicly traded Indian conglomerate health care provider based in Dubai, is focusing to grow its business, both in India and Gulf Cooperation Council (GCC). However, there is an apparent greater focus to expand the business in India. Dr. Azad Moopen, Founder Chairman and Managing Director, Aster DM Healthcare talks about expanding the capacity in India, with increased capital allocation planned in the coming 3-5 years. Moopen explained how the company plans to increase India’s share of the consolidated business to around 40%. Edited excerpts from an interview.
What are your expansion plans?
The India growth strategy would be through a combination of focused cluster approaches, new revenue streams and inorganic growth opportunities. We have put in place a new structure with 5 clusters namely the Kerala Cluster, the Karnataka and Maharashtra Cluster, the Andhra and Telangana Cluster, the Pharmacy Cluster and the Aster Lab Cluster. As part of the strategy to have more focus on India.
In line with the greater India focus, we have recently started a dedicated 77-bed ‘Women and Children" wing at our Aster MIMS hospital in Kottakkal, Kerala which adds to the existing 244 bed capacity at that facility. This launch is a part of our strategy to provide specialized care for women and children in boutique facilities attached to our main hospitals. In Kolhapur, Maharashtra, we have operationalized 24 additional beds in October 2021 as part of Aster Aadhar Hospital’s expansion. An additional 36 beds will be operationalized within the next few months. In Kerala, we are planning to expand capacity at our other hospitals - Aster Medcity, Aster MIMS Kozhikode and Aster MIMS Kannur.
Our diagnostics vertical, Aster Labs in India has established its footprint in the states of Karnataka and Kerala by setting up 1 reference lab, 6 satellite labs, and 31 patient experience centers as on 30th September 2021. We expect to have around 21 labs and 200 experience centers by the end of the current financial year. A central processing lab for GCC is also in the process of being established, in Dubai.
We have also ventured into the wholesale pharmacy business by acquiring a majority stake in the Hindustan Pharma Distributors Private Limited. Through this wholesale pharmacy vertical, we intend to optimize our supply chain function which will benefit our hospitals. Aster has entered into an agreement with Alfaone Retail Pharmacies Private Limited (ARPPL) to license the ‘Aster Pharmacy’ brand to run the retail stores and online pharmacy operations. 55 pharmacies in Karnataka & Kerala have been launched by ARPPL thus far, with the number expected to reach around 130 by the end of the financial year
In GCC, the 80-bed Aster Hospital in Sharjah is in the advanced stage of completion and is expected to start in Q3 of FY 22. In Muscat, Oman, the construction of a 145-bed hospital is in progress and is expected to start by Q4 of FY 22. In Qatar, we have planned to expand our existing Doha Hospital by adding 60 beds which is expected to start by Q4 of FY 24.
How are hospital revenues going amidst the pandemic?
The impact of the pandemic was spread over the year varying across geographies at different times of the year. In India, in FY21, both first and second quarter revenue and profitability contracted, due to the imposed lockdown and travel restrictions. During the third and fourth quarter, however, there was a recovery in India business as the first wave had receded. In FY22, the second wave happened during first quarter which led to restrictions in many parts of the country, including states like Kerala and Karnataka, where we have large part of our India business. This, however, didn’t have an impact on our business performance. Furthermore, in second quarter of FY22, with the second wave receding, Aster India business continued to improve, delivering good operational performance. Since most of our hospitals are now reaching maturity with ramping up of occupancy, the revenue, EBITDA and EBITDA margin have seen a marked improvement in first half of FY22.
In GCC, in FY21, the revenue and profitability were impacted in the first quarter due to the introduction of lockdowns and suspension of elective procedures, though pent-up demand led to a significantly better second quarter. Our business was impacted in the third and fourth quarter in the GCC. In the third quarter, travel restrictions were eased, and people started travelling out while in the fourth quarter, we saw the second wave hit the region. In FY22, the GCC business was back to the pre COVID levels with good traction in the first quarter which is usually a lean quarter due to people traveling out of GCC. This continued in the second quarter, where GCC revenue and profitability continued to improve as compared to previous quarters.
How did Aster DM Healthcare respond to the pandemic?
Covid-19 brought home the point that we have to be always prepared for the worst especially in healthcare. Healthcare witnessed a rapid change and Aster has been at the forefront of leading that remaining at the epicentre of serving patients in the 7 countries where we operate. One of the most important measures was to make sure that the staff are protected so that they can serve the patients. Till date we have served 28,000 Covid-19 positive patients and screened over 1.6 million people across 7 countries in the Middle East and India. In a matter of few days, Aster set up field hospitals in major Covid-19 hot-spots during the second wave like New Delhi, Kerala, and Bangalore, in addition to the efforts to serve more and more patients through the 14 hospitals across all 5 States that we are present in. In GCC, we re-purposed some of the hotels to make them Covid specific units and ensured that some of the specialty hospitals of ours are retained Covid free. This allowed us to further our need of patient care for both Covid as well as non-Covid patients. Through digitization, we adopted strategies such as our telemedicine facility through which we were able to care for large number of patients through this platform in India and GCC. The Aster COVID Self-assessment tool was built within 48 hours to assess the risk profile and monitor patients during quarantine. Other health-related services such as remote medical care, home care services, and E-ICU were also adopted. Aster labs, a NABL accredited lab in India received ICMR approval for RT-PCR testing for covid-19 which also witnessed significant increase in volumes. We implemented conservative financial management to enhance our cost efficiencies while staying true to our service levels.
How would you describe the experience of your company?
Although one of the toughest crises in the history of our company, the pandemic proved to be a catalyst in helping us rethink our strategy and integrate digitization and technology into the core of our business model to be able to serve as many patients as possible as per their convenience. Using technology and digitization, we have been instilling efficiency and optimization into core operations. We were one of the first private players in UAE to introduce the telemedicine facility which saw tremendous growth. We also leveraged our capabilities for providing advanced care for patients in ICU through Tele ICU services. While Covid took a major toll on our business, we maintained a close watch on all capex and operating costs in the last financial year to ensure we conserved cash and focused on maintaining smooth operations necessary to serve patients. We also focused on diversifying our business in India and now have an integrated offering through Aster Hospitals, Aster Clinics, Aster Labs, pharmacies, telemedicine and homecare.
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