Krishna Institute Of Medical Sciences Ltd (KIMS) is one of the largest corporate healthcare groups in Andhra Pradesh and Telangana in terms of number of patients treated and treatments offered.
It provides multi-disciplinary integrated healthcare services, with a focus on primary secondary & tertiary care in Tier 2-3 cities and primary, secondary, tertiary and quaternary healthcare in Tier 1 cities.
The Company operates 9 multi-specialty hospitals under the “KIMS Hospitals” brand, with an aggregate bed capacity of 3,064, including over 2,500 operational beds as of March 31, 2021, which is 2.2 times more beds than the second largest provider in Andhra Pradesh and Telangana.
Further, the company offers a comprehensive range of healthcare services across over 25 specialties and super specialties, including cardiac sciences, oncology, neurosciences, gastric sciences, orthopaedics, organ transplantation, renal sciences and mother & child care.
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- Key events
- Executive Board Members of KIMS
- Shareholding Pattern
- Group Structure
- Competitors
- Revenue Segments
- Location of Hospitals
- Cost Structure
- Financial Parameters
- Management Discussion
- Strengths
- Weakness
(A) Key Events: Krishna Institute Of Medical Sciences Ltd
(B) Executive Board Members of Krishna Institute of Medical Sciences Ltd
i) Dr. Bhaskara Rao Bollineni
Dr. Bhaskara Rao Bollineni is the Managing Director of the Company. Dr BR Bollineni is 68 years old.
Further, he holds a bachelor’s degree in medicine and surgery from Andhra University and a master’s degree in general surgery from Madras Medical College, Chennai, Tamil Nadu. He has also been admitted as a Diplomate of the National Board of Examinations, New Delhi for the practice of cardio-thoracic surgery.
Dr BR Bollineni has over 27 years of experience in cardiothoracic surgery. Further, he has in the past held various positions with Apollo Hospitals, Austin Hospital, University of Melbourne and Mahavir Hospital and Research Centre.
Remuneration drawn by him in FY21 was Rs 2.20 Crore, i.e. 0.17% of Net Sales and 1.07% of Net Profit.
(ii) Dr. Abhinay Bollineni
Dr. Abhinay Bollineni is an Executive Director of the Company. He is 33 years old.
Dr Abhinay holds a bachelor’s degree in medicine and a bachelor’s degree in surgery from Dr NTR University of Health Sciences, Andhra Pradesh (Faculty of Modern Medicine) through Deccan College of Medical Sciences which was affiliated to Dr NTR University of Health Sciences, Andhra Pradesh at such time.
Further, he also participated in the ‘International Visitor Leadership Program on Oncology: Research, Prevention and Treatment’ held by the US Department of State. There he undertook training in diagnosis, treatment methods, alternative therapies, support groups and follow-up care for cancer patients and their families. Additionally, he played a key role in establishing KIMS Kondapur in 2014.
Remuneration drawn by him in FY21 was Rs 0.90 Crore, i.e. 0.07% of Net Sales and 0.44% of Net Profit.
iii) Ms Anitha Dandamudi
Anitha Dandamudi is a Whole-time Director of our Company. She is 51 years old.
Ms Dandamudi holds a diploma in business management from the ICFAI University and a certification for the six-sigma green belt. She also holds certifications for the auditing of quality systems as per ISO 9001-2000 and ISO 9004-2000. Moreover, she has completed a training program on internal quality audit for the NABH.
Indeed, She has over 16 years of experience in the hospital industry, having held various positions with our Company, and has also served as vice president of administration at e-Talent Software Limited.
Remuneration drawn by him in FY21 was Rs 0.36 Crore, ie 0.03% of Net Sales and 0.18% of Net Profit.
C) Krishna Institute Of Medical Sciences Ltd: Shareholding Pattern of KIMS
D) Group Structure - Krishna Institute of Medical Sciences Ltd
As on 3-MAr-21 Krishna Institute of Medical Sciences Ltd had 9 Subsidiaries.
Krishna Institute of Medical Sciences Ltd has acquired Sunshine Hospitals (M/s Sarvejana Healthcare private Limited) wef 1-April-22.
Sunshine Hospitals is a landmark hospital in orthopedic care founded by Dr. Gurava Reddy, Joint Replacement Surgeon, is a renowned personality in the field.
Moreover, Sunshine has a network or three hospitals in Telangana with a total bed capacity of 600 beds. Hospital's primary focus is on orthopedics.
Further, Sunshine Hospitals have become the 2nd largest giant replacement center from South East Asia. Also, it is only the second hospital in Asia to have a full membership of the prestigious society International Society of Orthopedic Centers.
Sunshine enjoys certain other unique accomplished like first hospital in India with ISOC membership, only two from India have this membership 4000 total joint replacements performed on an average every year, more than 10000 surgeries annually all the orthopedic specialties, more than 700 robotic knee replacements done in less than 18 months, fastest in the world.
Together KIMS and Sunshine hospitals in Hyderabad have 1,725 beds which further strengthens our prime position in healthcare sector.
About Revenue of Sunshine Hospitals:
In Q2 FY22 almost 50% of revenue of Sunshine is driven from orthopedics, 15% is driven from cardiac. The rest of the specialties contribute the rest 35%. However, the Management of KIMS wants to bring down Orthopedics to as low as 30%. They intend to make it a truly multispecialty hospital by bringing in more consultants in other specialty other than Ortho and Cardiac
E) Competitors of Krishna Institute of Medical Sciences Ltd
KIMS Ltd has leadership position in AP and Telangana, driven by (i) Clinical excellence and (ii) Affordable pricing
Among the companies in the graph above, Apollo Hospital Enterprise (AHEL) leads in terms of the number of hospitals (71 as of fiscal 2020). Among the key listed companies of the lot, AHEL has the most bed capacity at 10,261 as of fiscal 2020.
Moreover, KIMS Ltd is one of the affordable hospital chains, among the multispecialty hospital chains compared above.
Further, comparing the capacities of Krishna Institute of Medical Sciences Ltd and Koval Medical Center and Hospital Ltd, both catering to only the southern region, shows that the former’s number of beds is 2.2 times that of the latter (at 1,390 beds).
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(F) Revenue Segment
Income from hospital services:
The income from hospital services increased by ₹ 1,521.63 million, or 20.73%, from ₹ 7,339.77 million in fiscal year 2020 to ₹ 8,861.40 million in FY21. The increase was primarily due to longer inpatient stays and an increase in operational beds, which offset a decrease in inpatient volumes.
Revenue increased in the year despite the adverse impact of the COVID-19 pandemic on inpatient volumes during the first quarter of FY21.
Income from pharmacy:
The income from pharmacy increased by ₹ 563.43 million, or 15.24%, from ₹ 3,697.29 million in FY20 to ₹ 4,260.72 million in FY21, mainly due to the gradual normalization of operations in fiscal year 2021 under the impact of the COVID-19 pandemic.
Specialty-wise Revenue Break-up of Krishna Institute Of Medical Sciences Ltd
(G) Location of hospitals in AP and Telangana
Krishna Institute of Medical Sciences (KIMS Ltd) owns, operates and manages network of 9 multispecialty hospitals across AP and Telangana.
Most of KIMS hospitals provide a broad range of specialties, including cardiac sciences, oncology, neurosciences, gastric sciences, orthopaedics, organ transplantation, renal sciences, mother & child care, laboratory services, radiology and imaging, general surgery as well as diagnostic and critical care services and on-site pharmacies.
KIMS also provide outpatient services, including consultation for a range of ailments and preventive health screenings.
Thus, Geographically - All the hospitals of KIMS Ltd are located in South India.
(H) Cost Structure - Expenses as % of Net Sales
Krishna Institute of Medical Sciences Ltd engages a significant portion of its doctors on a consultancy basis. Compensation paid to such doctors is shown as “consultant/ In house fee”.
Also, Expenses on employee benefits constituted a significant portion of the total income, representing 16.56% in FY21.
Thirdly, Cost of medical and consumables, represents one of the most significant expenses. This includes disposable medical supplies, as well as drugs and consumables administered to a patient and includes GST, customs duty, other government taxes and freight charges.
(I) Financial Parameters
In terms of Operating Income, KIMS Ltd posted a growth of 21% CAGR over fiscals 2013-2021.
Further, in terms of PAT growth, there was a growth of 35% CAGR over fiscals 2013-2021.
Moreover, PAT margin of 15.45% is witnessed in FY21.
Krishna Institute of Medical Sciences Ltd experienced reduction in outpatient volume from 2019 to 2021 mainly due to COVID-19 related lockdown, quarantines and other travel related restrictions, which resulted in fewer people traveling to the hospitals to seek outpatient treatment.
(J) Management Discussion & Concall Highlights
Krishna Institute of Medical Sciences Ltd is the largest corporate healthcare groups in AP and Telangana in terms of number of patients treated and treatments offered.
KIMS provide multi-disciplinary integrated healthcare services, with a focus on primary secondary & tertiary care in Tier 2-3 cities and primary, secondary, tertiary and quaternary healthcare in Tier 1 cities.
Further, in FY21, KIMS nine hospitals recorded Average Revenue Per Occupied Bed (ARPOB) of ₹ 20,609, a bed occupancy rate of 78.60%.
CAPEX: Krishna Institute Of Medical Sciences Ltd
In FY20, the capital expenditure per bed of Krishna Institute of Medical Sciences Ltd was ₹ 6.35 million for hospitals in Tier 1 cities and ₹ 2.21 million for hospitals in Tier 2-3 cities. However, the industry average was that of ₹ 5.00 – 8.00 million in Tier 1 cities and ₹ 1.00 – 5.00 million in Tier 2-3 cities.
In FY21, KIMS capital expenditure per bed was ₹ 6.91 million for hospitals in Tier 1 cities. Further, it was ₹ 2.21 million for hospitals in Tier 2-3 cities.
Krishna Institute of Medical Sciences Ltd expects to remain disciplined with expansion.
Q2 FY22
By Q2 FY22 the business normalised as COVID related cases came down and elective surgeries picked up.
Gross profit grew 4% YoY & down 10% QoQ to Rs 326 Cr in Q2FY22.
EBITDA margin came in at record level of 31.3% (v/s est. of 29.7%). This happened mainly on account of tighter control on medical consumption cost, high occupancy and robust IP/OP volume.
KIMS reported record PAT of Rs 84 Cr, on account of higher EBITDA margin and lower finance cost (down 58% YoY).
The number of operating beds stands at 2,246 in Q2 FY22.
Rs 230 Cr upfront payment was made for the Sunshine acquisition and balance Rs.132 Cr will go over a period of time.
KIMS is an established leader in providing cardio, neuro, and renal care, oncology. Now with Sunshine in the Management of KIMS Ltd expects to make a vital contribution to the field of Orthopedics as well. The occupancy as on Q2 FY 22 at Sunshine is 40%.
(K) Strengths
i) Krishna Institute Of Medical Sciences Ltd: Established market position
KIMS has a strong presence in South Indian Market. It has a network of 9 hospitals under the “KIMS Hospital” brand, the group has an established presence in the South Indian market.
The group also has a long operational track record of 16 years in the tertiary and the quaternary healthcare segments. KIMS also benefits from the strong brand reputation and the extensive experience of the group’s promoters in the healthcare industry.
Further, in terms of specialties, cardiac treatments account for the highest share of revenues at ~20%, followed by neuro sciences ~16% and renal sciences ~11%.
The balance is spread across oncology, mother and child, gastric sciences, orthopedics and others.
Further, with addition of Sarvejana Healthcare Private Limited (SHPL, Sunshine hospitals group), KIMS will have 12 hospitals across 9 cities with 3666 beds and over 1,200 doctors and 12,000 plus employees. The acquisition is further expected to enhance market presence in Hyderabad, which is a core market of KIMS
ii) Krishna Institute Of Medical Sciences Ltd: Sound operating efficiency
KIMS has the policy of providing equity partnership to its key doctors. This policy enabled the company to attract talents in Tier II locations and maintain low attrition levels and tight control over costs.
These factors coupled with prudent capital spending have helped KIMS to turn around acquired hospitals as well as achieve break-even at newer hospitals in a short span of time, translating into healthy operating capabilities.
Despite bed additions both through organic expansions as well as strategic acquisitions, occupancy levels have improved to 73% in fiscal 2021 compared to 63% in fiscal 2015.
The presence of highly qualified professionals enables a low average length of stay (about 4.0 days during FY21), which is comparable to large hospital chains.
Healthy profitability and increasing occupancy levels, have enabled a steady improvement in the group’s return on capital employed (RoCE). ROCE stood at ~30% in FY21, which has improved as compared to earlier years.
Further, during the Q1 FY22, KIMS achieved revenue of Rs.473 Cr and operating profit of Rs.148 crore (operating margin: 31.3%).
L) Weakness
i) Geographic Concentration
The group has high reliance on its flagship hospital in Secunderabad, which contributed 50% of the revenues in FY21 2021.
The contribution of Secunderabad unit has reduced in the recent years. Recently there has been addition of 3 hospitals from SHPL. Further, the flagship hospital is likely to continue to be the key revenue and profitability driver over the medium term. Thus, this exposes the group to the revenue and geographic concentration risks.
Besides, all of the company’s other hospitals too are concentrated in the states of Telangana and Andhra Pradesh. This renders operations partly vulnerable to any regulations imposed by authorities in these states. Also owing to these reasons, geographical diversification is modest compared to other peers in the healthcare space.
The group is trying to address this. KIMS is proposing new hospitals in neighbouring states of Karnataka (Bengaluru) and Tamil Nadu (Chennai), as well as Mumbai.
ii) Regulatory Risk
The group, like other hospital chains, remains exposed to regulations which may come into play, as introduced. For instance, the performance of private hospitals was significantly impacted on account of price caps cardiac stents and knee implants imposed in Q4 FY17. However, Regulatory actions and their impact will remain monitorable.
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