Broach Lifecare Hospital coming with IPO to raise Rs 4.02 crore

Broach Lifecare Hospital 

• Broach Lifecare Hospital is coming out with an initial public offering (IPO) of 1608000 equity shares of face value of Rs 10 each for cash at a fixed price of Rs 25 per equity share.  
• The issue will open on August 13, 2024 and will close on August 16, 2024.
• The shares will be listed on BSE SME Platform.
• The share is priced at 2.50 times higher to its face value of Rs 10.
• Book running lead manager to the issue is Fedex Securities.
• Compliance Officer for the issue is Swati Sharma.

Profile of the company

The company operates its boutique Hospitals under the brand ‘Maple Hospitals’ and provide dedicated round-the-clock services to patients with heart ailments consisting of non-invasive cardiology services such as, 2D Echocardiography, Electrocardiography, Tread Mill Test, Holter monitoring, Ambulatory Blood Pressure Measurement, Stress test, Dobutamine Stress Echocardiography. Subsequently, in the year June/July 2023 it ventured into interventional cardiac services such as, coronary angiography and stenting, percutaneous coronary intervention (PCI) and primary PCI for acute myocardial infarction as a division. It also provides Ballon mitral-valvuloplasty, permanent pacemaker implantation, cardiac resynchronisation procedures, implantable cardioverter-defibrillator (AICD) implantation and procedures for congenital ailments such as coarctation of aorta, stenting and posterior descending artery closure. It also offers a complete range of diagnostic and therapeutic options such as endovascular revascularization, deep vein thrombosis treatment and peripheral angioplasty.

The company’s hospital in Bharuch is an ultra-luxury hospital with 25 beds for in-patient treatment and is also equipped with diagnostic devices for performing test such as, 2D Echocardiography, Electrocardiography, Tread Mill Test, Holter monitoring, Ambulatory Blood Pressure Measurement, Stress test, Dobutamine Stress Echocardiography & high end Coronary care with life-saving equipment such as Intra-aortic Ballon Pump Machine, Biphasic Defibrillator, Ventilators, BIPAP machines, Syringe Pump, Volumetric Infusion Pumps and Multipara Monitoring Machines. It has capabilities to undertake complex intervention procedures using Cutter ballons for In-Stent blockages, Implanting Drug eluting Ballons in previously implanted stent, fractional flow reserve & rotablator technology for hard calcified blockages. The company’s Satellite Hospital at Ankleshwar is a 15 bedded nursing home which act as a referral centre and offers non-surgical day-to-day treatment to its patients. The Satellite Hospital is also self-sustaining as they are strategically located to fulfil demand for basic tertiary care. Its hospitals are certified by the National Accreditation Board for Hospitals & Healthcare Providers (NABH) as a primary-level small healthcare organization. Its hospital is having Certification of Atomic Energy Regulatory Board for PACS System & Fire safety certificate from local regulation bodies for safety of its patients. The company is also a member of Globe Bio Care for the disposal of biomedical waste.

Proceed is being used for:

• Purchase of Machineries.
• Development of Medical Tourism Web Portal.
• General Corporate Purpose.

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 as private players. India’s healthcare delivery system is categorised into two major components - public and private. The government, i.e., the 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 the majority of secondary, tertiary, and quaternary care institutions with a major concentration in metros, tier-I, and tier-II cities. India's competitive advantage lies in its large pool of well-trained medical professionals. India is also cost-competitive compared to its peers in Asia and Western countries. The cost of surgery in India is about one-tenth of that in the US or Western Europe. The low cost of medical services has resulted in a rise in the country’s medical tourism, attracting patients from across the world. Moreover, India has emerged as a hub for R&D activities for international players due to its relatively low cost of clinical research.

The Indian health care sector is expected to record a three-fold rise, growing at a CAGR of 22% between 2016–22 to reach $ 372 billion in 2022 from $110 billion in 2016. As of August 18, 2023, more than 2.20 billion COVID-19 vaccine doses have been administered across the country. By FY22, Indian healthcare infrastructure is expected to reach $ 349.1 billion. As of 2021, the Indian healthcare sector is one of India’s largest employers as it employs a total of 4.7 million people. The sector has generated 2.7 million additional jobs in India between 2017-22 over 500,000 new jobs per year. India’s public expenditure on healthcare touched 2.1% of GDP in FY23 and 2.2% in FY22, against 1.6% in FY21, as per the Economic Survey 2022-23. India climbed to the 63rd rank among 190 countries in the World Bank’s ‘Ease of Doing Business’ rankings in 2020. The World Bank’s Logistics Performance Index (LPI) 2023 has ranked India at 38th position (out of 139 economies), recording an improvement of 6 positions. As of 2024, the Indian healthcare sector is one of India’s largest employers as it employs a total of 7.5 million people. Progress in telemedicine, virtual assistants, and data analytics is expected to create 2.7-3.5 million new tech jobs.

Pros and strengths

Clinical Excellence and Affordable Healthcare: The company delivers cardiology & clinical excellence through quality healthcare service supported by a combination of experienced medical talent, strong clinical and patient safety protocols and investments in new medical technology. Its hospital provides comprehensive cardiovascular healthcare services in a state-of-the art and ultra-luxury facility at an affordable price. Its treatment range include, 2D Echocardiography, Electrocardiography, Tread Mill Test, Holter monitoring, Ambulatory Blood Pressure Measurement, Stress test, Dobutamine Stress Echocardiography. It is currently doing Interventional Procedures like Angiography, Angioplasty, Pacemaker Implantation, Cardiac Resynchronisation therapy, Arrhythmia management, Peripheral Angiography as well as Peripheral Angioplasty, Congenital Heart disease Interventions. It has capabilities and has done some Complex Intervention Procedures like Using Cutter ballons for In-Stent blockages, Implanting Drug eluting Ballons in Previously Implanted stent, Fractional Flow Reserve & Rotablator technology for hard calcified blockages.

Strategic location: The company’s hospital is strategically located near the industrial belt of Bharuch and Ankleshwar, Gujrat surrounded by Chemical, API, Fertilizers and Pharma manufacturing unit where employee health is a great concern. The strategic location of its hospitals, with focused treatment for heart ailments gives it an advantage with walk-in patients and also to engage, associate and empanel with public sector undertakings and private companies for treatment of their employees and also for holding routine medical check-ups. Further, it will have advantage with the development of industrial cluster at Dahej. 

Strong empanelment: The company has associations and affiliations with insurance companies that process insurance claims admissible under policy for its patients. As on the date of this Prospectus, its hospitals are empanelled with 4 PSU insurance companies, 15 Private Insurance companies, 8 Third Party Administrator (TPA). While the empanelment is in the name of Proprietorship Firm, it is in the process of transferring these enrolments in the name of the company.

Risks and concerns

Highly dependent on doctors and other healthcare professionals: The company operates in an industry which is dependent on the availability of quality human resources, particularly doctors and other healthcare professionals. Its performance and the execution of its growth strategy depend substantially on its ability to attract and retain leading doctors and other healthcare professionals. There is no assurance that the attrition amongst its doctors will not increase in the future. It competes for healthcare personnel with other healthcare providers. The market for doctors is highly competitive and there is a general shortage of doctors in India. The factors that doctors consider important before deciding where they will work include the level of compensation, the reputation of the hospital and its owner, the quality of the facilities, research opportunities and community relations. It may not compare favorably with other healthcare providers on these factors. Many of these healthcare professionals are well- known personalities in their fields and regions with large patient bases and referral networks, and it may be difficult to negotiate favourable terms and arrangements with them. 

Significant portion of revenues comes from tie up arrangements with insurance companies, third party administrators and corporations: The company’s revenue comes from in-patient and out-patient and also through tie-up arrangements, insurance companies, third party administrators and corporate entities. As on date, it has entered into empanelment agreement with 4 PSU insurance companies, 15 private insurance companies, 8 third party administrator (TPA) companies to provide medical treatment and healthcare as per the terms of their agreement. While its in-patient and out patients cannot be categorised under the top ten category however based on the patients who come through insurance companies, TPA’s and corporate entities under the tie-up arrangements, its income relating to such entities contribute to 0%, 10%, 20%, 55% and 42% of its total revenues during financial year ended 2024, the three months period ended June 30, 2023, 2023 and 2022 respectively. Such contracts are typically for a specified term and it is exposed to the consequences of early termination.

Depends on limited number of external suppliers: The company relies on the limited number of suppliers for purchasing of medicines and consumables, which in turn, rely on third party suppliers for sourcing of products. Its reliance on a limited number of suppliers for its business exposes it to risks, that may include, but are not limited to, reductions, delay or failure on the part of its suppliers to deliver products in a timely manner, deterioration in the financial condition or business prospects of these suppliers, failure to negotiate favourable terms with its key suppliers, all of which could have a material adverse effect on the business, financial condition, results of operations and future prospects of the company. It does not have any long-term supply contracts with its suppliers. It generally makes its purchases with suppliers through purchase orders. Thus, its suppliers may be unable to provide it with a sufficient quantity of medicines and consumables, at prices acceptable to it.

Outlook

Incorporated in 2023, Broach Lifecare Hospital operates boutique hospitals under the brand name 'Maple Hospitals. It takes immense pride in being at the forefront of healthcare, with a dedicated focus on cardiac ailments. Its state-of-the-art facility boasts an ultra-modern cathlab, a testament to its commitment to providing the highest quality care to its patients. Its hospital features 25 beds, strategically designed to cater to diverse healthcare needs. These include specialized units such as Medical ICUs, a Intensive cardiac care unit (ICCU), a comfortable general ward, and private rooms in various categories. It understands the importance of creating a healing environment that caters to the unique requirements of each patient. The company boasts a well-trained paramedical staff dedicated to supporting the holistic well-being of its patients. Its world-class infrastructure is designed to facilitate seamless healthcare delivery, and its efficient systems and processes are in place to ensure that every aspect of experience with it is smooth and effective. On the concern side, radioactive procedures are commonly used in medical applications. The company’s hospitals routinely use equipment that deal with radioactive substances. It is required by various regulations promulgated under the Atomic Energy Act, 1962, and administered by the Atomic Energy Regulatory Board (AERB), to obtain certifications, licences and registrations for various processes and medical applications involving radioactive substances.

The company is coming out with an IPO of 1608000 equity shares of face value of Rs 10 each for cash at a fixed price of Rs 25 per equity share to mobilize Rs 4.02 crore. On performance front, total income increased by 35.37% 2023 to Rs 260.58 lakh for the Financial Year 2024 from Rs 192.49 lakh for the Financial Year primarily. It recorded increase in profit by 403.68 % to Rs 69.76 lakh for the Financial Year 2024 from Rs 13.86 lakh for the Financial Year 2023. Meanwhile, as the company’s strategy to increase its service offerings and number of patients treated, it proposes to add a Cath Lab. Accordingly, it will use a part of its Net Proceeds towards the purchase of Cath Lab machines. It will strive to increase its association with insurance companies and its empanelment with companies in and around Bharuch and Ankleshwar industrial belt.