Unihealth Consultancy
- Unihealth Consultancy is coming out with a 100% book building; initial public offering (IPO) of 42,84,000 shares of Rs 10 each in a price band Rs 126-132 per equity share.
- The issue will open for subscription on September 8, 2023 and will close on September 12, 2023.
- The shares will be listed on NSE Emerge.
- The face value of the share is Rs 10 and is priced 12.60 times of its face value on the lower side and 13.20 times on the higher side.
- Book running lead manager to the issue is Unistone Capital.
- Compliance Officer for the issue is Prajakta Bhor.
Profile of the company
The company is a healthcare service provider based out of Mumbai, India and have operational presence in multiple countries across the African continent. Its business segments include Medical Centres, Hospitals, Consultancy Services, Distribution of Pharmaceutical & Medical Consumable Products and Medical Value Travel. Under the flagship ‘UMC Hospitals’ brand, it operates a combined capacity of 200 operational hospital beds across its two multi-speciality facilities i.e. UMC Victoria Hospital in Kampala, Uganda, having a bed-strength of 120 beds and UMC Zhahir Hospital in Kano, Nigeria have a bed strength of 80 beds. In addition to these, it operates ‘Unihealth Medical Centre’ a dedicated dialysis facility, in Mwanza, Tanzania. It is currently providing Project Management Consultancy Services to set up a 300+ bedded Health City in Undri, Pune (Maharashtra, India) for PHRC Lifespaces Organization along with a few other healthcare consultancy projects in Kenya and Angola. It exports and distributes pharmaceutical and medical consumable products in Uganda, Tanzania and Nigeria. It is distributors in different African countries for various pharmaceutical and consumable manufacturing companies based out of India.
Proceed is being used for:
- Investment in joint venture, Victoria Hospital (VHL), Kampala, Uganda for funding its capital expenditure requirements for proposed expansion and working capital requirements of VHL.
- Investment in joint venture, UMC Global Health Limited (UMCGHL), Nigeria for funding its capital expenditure requirements for proposed expansion.
- Investment in subsidiary, Biohealth (BL), Tanzania for funding its capital expenditure requirements for proposed expansion.
- General corporate purposes.
Industry overview
Healthcare has become one of India’s largest sectors, both in terms of revenue and employment. Healthcare comprises hospitals, medical devices, clinical trials, outsourcing, telemedicine, medical tourism, health insurance and medical equipment. The Indian healthcare sector is growing at a brisk pace due to its strengthening coverage, services, and increasing expenditure by public as well private players. India’s healthcare delivery system is categorised into two major components - public and private. The government, i.e., public healthcare system, comprises limited secondary and tertiary care institutions in key cities and focuses on providing basic healthcare facilities in the form of Primary Healthcare Centers (PHCs) in rural areas. The private sector provides majority of secondary, tertiary, and quaternary care institutions with major concentration in metros, tier-I, and tier-II cities.
Growing incidence of lifestyle diseases, rising demand for affordable healthcare delivery systems due to the increasing healthcare costs, technological advancements, the emergence of telemedicine, rapid health insurance penetration and government initiatives like e-health together with tax benefits and incentives are driving the healthcare market in India. Current market size of Indian Medtech industry is estimated to be $ 11 bn with a CAGR of 15% over last 3 years with potential to reach $ 50 bn by 2030. Healthcare industry in India comprises of hospitals, medical devices, clinical trials, outsourcing, telemedicine, medical tourism, health insurance, and medical equipment. The healthcare sector is growing at a tremendous pace owing to its strengthening coverage, services, and increasing expenditure by public as well private players. The hospital industry in India, accounting for 80% of the total healthcare market, is witnessing a huge investor demand from both global as well as domestic investors. The hospital industry is expected to reach $132 Bn by 2023 from $61.8 Bn in 2017, growing at a CAGR of 16-17%.
Pros and strengths
Growth opportunities in existing facilities and diversification into new inter-linked verticals: The company has inherent strength that it derives from having access to infrastructure required to expand and add new services with minimal capital investments, thereby allowing it to generate incremental revenues. The addition of super-specialty services at its hospitals in Uganda and Nigeria will allow the company to add high-revenue generating departments by investing only in the required equipment and working capital. The company will benefit from available space within its hospitals as well as the existing administrative manpower to oversee these departments. Furthermore, these departments will be able to generate revenue on an immediate basis post commissioning in view of the existing patient-base of the hospitals. Furthermore, the existing facilities provide great opportunity for the company to add inter-linked verticals like distribution of medical consumables and pharmaceuticals and health-tech solutions.
Continued Investment in Medical Equipment & New Specialties: In order to extend the highest quality of care and services to its patients, it is extremely important to continually invest in upgrading its infrastructure and equipment and add key specialties to cater to the requirements of the patients. UMC Victoria Hospital in Kampala, Uganda, has been designed with key focus on creating a safe environment for the patients. The hospital is the only facility in the region to have modular operating theatres with automated sensor-enabled controlling systems and scrub sinks aimed at minimising the chances of cross contamination and providing patients a safe environment to undergo advanced surgical procedures. The company has invested in medical gas systems and nurse calling systems to extend utmost care and comfort to its patients. The company places a high focus on infection control practices across its facilities and has installed dedicated air-handling units for operating theatres.
Focus on geographies with a skewed supply-demand gap: In line with the mission of delivering world class healthcare services, the company has established medical centres and hospitals in countries having a skewed supply demand gap, allowing it to cater to an under-served population and make an impact on the healthcare services sector of the country. As per the last available data, as per World Bank Databank, the number of hospital beds available per 1,000 people in Uganda in 2010 and in Nigeria in 2004 was 0.5 compared to the WHO recommended standard of having 3 hospital beds per 1,000 people. The number of physicians per 1,000 people in Uganda in 2017 was 0.2 and in Nigeria in 2016 was 0.4 compared to the WHO recommended standard of having 1 physician per 1,000 people. These statistics indicate the supply-demand gap in the countries where the company has invested in to set up advanced tertiary care facilities, thereby underlining the available opportunities for growth in the coming years.
Risks and concerns
Rely on third party suppliers: The company relies on third-party suppliers for the sourcing of its medical consumable products, including medical supplies, pharmaceuticals, and equipments. While this arrangement provides it with access to a wide range of products, it also exposes it to certain risks that potential investors should be aware of when considering investment decisions. Dependence on third-party suppliers means that its supply chain is susceptible to bottlenecks, delays, and disruptions. Issues such as production delays, quality problems, transportation challenges, or changes in supplier availability can impact the timely delivery of essential medical consumables. Any interruption in the supply chain could lead to product shortages, affecting its ability to provide necessary healthcare services to patients and potentially resulting in reputational damage. The actions or failures of its third-party suppliers can have a direct impact on its business. Quality control issues, such as substandard or defective products supplied by its vendors, could harm its reputation, expose it to legal liabilities, and jeopardize patient safety.
Face competition: The healthcare industry in Uganda and Nigeria is characterized by the presence of established hospitals and healthcare providers that have already gained a significant market share. These competitors may have established brand recognition, patient loyalty, and a strong network of healthcare professionals. As a result, they may attract a substantial number of patients, which can potentially impact its patient volumes and revenues. The competition in the healthcare industry extends beyond hospitals. Various healthcare providers, including clinics, specialized medical centers, and outpatient facilities, offer alternative options for patients seeking healthcare services. These providers may focus on specific medical specialties or offer more affordable or convenient services, thereby drawing patients away from its hospitals. Competition among hospitals and healthcare providers can lead to pricing pressures. Competitors may engage in aggressive pricing strategies to gain a competitive advantage, resulting in reduced pricing power for its services. This can potentially lead to a decline in revenues and profitability.
Require high working capital: The net working capital of the company’s joint-venture company, Victoria Hospital (Uganda) consisted of Rs 1,608.41 lakh, Rs 1,698.53 lakh and Rs 2,789.21 lakh for the financial year ended 2021, 2022, and 2023 respectively. The net working capital requirement for the financial year 2024 and 2025 is projected to be Rs 1,196.23 lakh and Rs 1,152.83 lakh, respectively. A significant portion of its working capital is utilized towards trade payables and trade receivables. In case there are insufficient cash flows to meet its working capital requirement or it is unable to arrange the same from other sources or there are delays in disbursement of arranged funds, or it is unable to procure funds on favourable terms, at a future date, it may result into its inability to finance working capital needs on a timely basis which may have an adverse effect on its operations, profitability and growth prospects.
Outlook
Incorporated in 2010, Unihealth Consultancy is a healthcare service provider based out of Mumbai, India, and has an operational presence in multiple countries across the African continent. Unihealth Consultancy's business segments include Medical Centres, Hospitals, Consultancy Services, Distribution of Pharmaceutical and medical Consumable Products, and Medical Value Travel. It operates a combined capacity of 200 operational hospital beds across two multi-specialty facilities i.e. UMC Victoria Hospital in Kampala, Uganda, has a bed strength of 120 beds, and UMC Zhahir Hospital in Kano, Nigeria has a bed strength of 80 beds. In addition to these, it operates 'Unihealth Medical Centre' a dedicated dialysis facility, in Mwanza, Tanzania. The company is currently providing Project Management Consultancy Services to set up a 300+ bedded Health City in Undri, Pune (Maharashtra, India) for PHRC Lifespaces Organization along with a few other healthcare consultancy projects in Kenya and Angola. On the concern side, the company is governed by various laws and regulations for its business and operations. It is required to obtain and hold relevant licenses, approvals and permits at state and central government levels for doing its business and must continue to maintain them. The approvals, licenses, registrations and permits obtained by it may contain conditions, some of which could be onerous.
The issue has been offered in a price band of Rs 126-132 per equity share. The aggregate size of the offer is Rs 53.98 crore to Rs 56.55 crore based on lower and upper price band respectively. On performance front, the company's total revenue from operations for the financial year 2022-23 is Rs 4,393.86 lakh. This represents a 19.29% increase compared to the previous financial year's total revenue from operations of Rs 3,683.21 lakh. Profit after Tax (PAT) is Rs 768.00 lakh for the financial year 2022-23 in compared to Rs 382.02 lakh in financial year 2021-22. Meanwhile, the company intends to invest in marketing strategies and enhance its executional capabilities by attracting and engaging professionals across its operating departments to fast-track and support the growth of its consultancy services and medical value travel vertical. These verticals will allow the company to grow its revenues and profitability without incurring intensive capital investment, providing the company with an asset light global growth model.
