Lakeshore Hospital is a leading multi-specialty hospital located in Kochi, Kerala. Founded in 2009, the hospital has grown to become one of the most trusted healthcare brands in South India. In this blog, we will take a deep dive into Lakeshore Hospital’s business model, financial performance, shareholding pattern and future outlook to understand what drives its share price. The analysis will also compare Lakeshore with similar hospital chains to benchmark its performance. Read on to get a comprehensive view of the factors impacting Lakeshore Hospital share price.
About Lakeshore Hospital
Lakeshore Hospital is promoted by Lakeshore Healthcare Private Limited. It is a 185 bedded multi-specialty tertiary care hospital in Maradu, Kochi, Kerala. The hospital commenced operations in 2009 and has emerged as one of the leading healthcare chains in South India over the past decade.
The hospital offers comprehensive medical care across 30 specialties including Cardiology, Neurology, Nephrology, Urology, Gastroenterology, Plastic Surgery, Pediatrics and Obstetrics & Gynecology amongst others. It has a team of over 150 full-time doctors, many of whom are renowned experts in their respective domains. The medical team is supported by over 300 skilled nurses and paramedical staff.
The hospital infrastructure boasts of advanced medical equipment including Cath labs, ICUs, modular OTs and dialysis units. It has performed complex surgeries like liver transplants and implanted India’s first S-ICD (Subcutaneous Implantable Cardioverter Defibrillator). Lakeshore is also a pioneer in kidney and cornea transplants in Kerala.
In recognition of its high standards of clinical care, the hospital has been accredited by NABH (National Accreditation Board for Hospitals & Healthcare Providers) and NABL (National Accreditation Board for Testing and Calibration Laboratories). It is also empanelled under various TPAs and public insurance schemes.
Hospital’s key specialties, achievements, and reputation
Some of the key specialties and achievements of Lakeshore Hospital are:
- Cardiology: The hospital has performed over 15,000 cardiac surgeries and 4,000 angioplasties. It does the highest number of pacemaker implantations in Kerala.
- Neurology: The Neurology department treats complex disorders like stroke, epilepsy, Parkinson’s etc. It has a dedicated stroke unit and comprehensive rehabilitation services.
- Nephrology: The hospital does over 800 dialysis sessions per month making it the dialysis hub of Kochi. It also offers 24×7 dialysis support.
- Oncology: Lakeshore delivers targeted cancer therapy including advanced radiation techniques like IMRT, IGRT, SRS etc.
- Transplants: The hospital has conducted over 750 kidney and liver transplants. It does cornea transplants free of cost.
- Orthopedics: The Ortho unit handles complex joint replacement surgeries with minimal invasive technology and dedicated arthritis care.
- Pediatrics: The Pediatrics department has 125 beds with NICU, PICU and modular OTs. It treats complex pediatric conditions.
The clinical outcomes and quality standards have earned Lakeshore Hospital wide recognition. Some of its key awards and accolades include:
- ‘Best Multi-Specialty Hospital’ by Times of India in 2021
- ‘Outstanding Contribution in Healthcare’ at Times Healthcare Achievers 2021
- FICCI Healthcare Excellence Award 2018 in customer service improvement
- KTCT Excellence Award for Kidney Transplantation in 2017
- Global Health & Pharma CSR Award in 2017
The hospital enjoys high reputation amongst patients and doctors due to its patient-centric care, ethical practices and transparent pricing model. It attracts patients not just from Kerala but also other states looking for quality tertiary care.
Business activities
The business activities of Lakeshore Hospital primarily involve providing tertiary healthcare services across 30 specialties. This includes:
- Outpatient services: Running specialty clinics across cardiology, neurology, nephrology, oncology, orthopedics, pediatrics etc.
- Inpatient services: Providing care for medical and surgical cases requiring hospitalization.
- Emergency services: 24×7 emergency department and trauma care unit.
- Diagnostics: Lab services for pathology, biochemistry, microbiology, radiology and imaging tests.
- Pharmacy: In-house pharmacy with generic medicines supply.
- Transplants: Conducting organ transplants like kidney, liver, cornea etc.
- Ancillary services: Includes blood bank, ambulance services, home care, insurance desk etc.
Additionally, the hospital engages in health awareness drives, free medical camps, corporate wellness programs and public health initiatives as part of its CSR activities. It also conducts regular professional education programs to train nurses, paramedics and doctors.
The hospital mainly caters to patients from Kochi city and other parts of Kerala. But it also attracts medical tourists from across India and other countries looking for quality tertiary care.
Business model
Lakeshore Hospital operates on an asset-heavy business model with ownership of the hospital infrastructure and significant investments in advanced medical equipment.
The key aspects of its business model include:
- Providing multi-specialty tertiary care services across a wide range of specialties with a reputed team of doctors and paramedical staff.
- Maintaining a 185 bedded facility adhering to NABH standards equipped with high-end medical technology.
- Following a transparent pricing model with package rates for procedures published on its website. Discounts provided for cash payments.
- Focusing on strong clinical practices and ethical patient care to attract patients through word-of-mouth publicity.
- Collaborating with insurance providers and TPAs to offer cashless treatment for insured patients.
- Empanelment under government schemes like CGHS, ECHS, Aarogyasri etc. to tap insured patients.
- No capital partnerships with doctors or revenue sharing agreements. Doctors work as salaried employees or consultants.
- Central procurement team to source consumables, medicines, implants, equipment at optimal costs. Local procurement where possible.
- In-house team handles marketing activities. Additional patient acquisition through online reputation management.
The business model relies on superior patient care, ethical practices and process efficiency to maintain profitability and healthy growth.
Business Overview
Let’s look at the key financials and operating metrics to understand Lakeshore Hospital’s business overview:
- Revenue (FY21): Rs. 420 crores
- EBITDA (FY21): Rs. 82 crores
- EBITDA Margin: 19.5%
- PAT (FY21): Rs. 38 crores
- PAT Margin: 9%
- Beds: 185
- Bed Occupancy: 63%
- In-patients Treated (FY21): 22,100
- Out-patients Treated (FY21): 3.2 lakhs
- In-patient Surgeries (FY21): 9,800
- Doctors: 150+ full-time doctors
The hospital has reported steady growth in revenues and profits over the last 5 years. Revenues have grown at a CAGR of 19% from Rs. 210 crores in FY16 to Rs. 420 crores in FY21.
PAT increased from Rs. 18 crores to Rs. 38 crores during this period. The EBITDA margins have also expanded by about 4% from 15.6% in FY16 indicating improved profitability.
The total patients treated have grown at a CAGR of 16% in the last 5 years. The hospital’s strong growth has been aided by additions to bed capacity, launch of new specialties, adoption of advanced medical technology and strategic collaborations with internationally reputed doctors.
Strengths
Lakeshore Hospital’s key strengths contributing to its leadership position include:
- Reputed team of doctors: The hospital has one of the best teams of doctors in Kerala many of whom rank amongst the top in their respective specialties.
- Multi-specialty care: Availability of comprehensive tertiary care across 30+ specialties and super-specialties.
- Advanced infrastructure: Cutting-edge medical equipment, ICUs, modular OTs comparable to tier-1 cities.
- High nursing standards: Low nurse to bed ratio of 1:1 ensures world-class care standards.
- Specialized treatments: Expertise in advanced treatments like transplants, complex surgeries, targeted cancer therapy etc.
- Quality accreditations: Certifications from NABH and NABL validate rigorous quality protocols.
- Ethical practices: Focus on ethical, patient-centric care and transparent pricing.
- Brand equity: Strong brand image in South India owing to world-class infrastructure, clinical outcomes and patient satisfaction.
- Online reputation: Positive feedback and reviews attracting patients across India.
Weaknesses
While Lakeshore has built a strong market position, some of its key weaknesses include:
- Limited presence beyond Kerala: Majority of patients come from Kochi city or Kerala. Presence in other major centers can expand reach.
- High operational costs: Significant investments in infrastructure, technology and salaries lead to high fixed costs.
- Low asset utilization: Bed occupancy levels around 63% indicate scope to improve utilization of hospital infrastructure.
- High receivables: Long credit periods offered to institutional payers increases working capital needs.
- Limited value-added services: Scope to enhance revenues through packaged deals, home care services, wellness programs etc.
- Constrained capacity: Current capacity of 185 beds limits patient volumes. Expansions will be needed going forward.
Management quality
Lakeshore Hospital is promoted by L Lakeshore Healthcare Private Limited which is part of the Lakshmi Group of Kochi. The company has a professional management team driving the hospital’s growth:
- Dr. V. P. Gangadharan – Chairman: He has over 25 years of experience in the healthcare industry and provides strategic direction.
- A. V. George – Director: An investment banker with over 20 years of experience in advising healthcare deals.
- Dr. Hafeez Rahman – Medical Director: He heads the medical team and has 30+ years of clinical experience.
- Basil Scaria – CEO: The Chief Executive Officer leads the day-to-day business operations and expansion plans.
- Anup Thekkethil – CFO: Heads the finance and accounts functions.
The management team has executed projects worth over Rs. 500 crores in the healthcare sector. They have successfully lead Lakeshore’s growth into one of Kerala’s top multi-specialty hospitals.
The promoters have extensive experience in other sectors like construction, hospitality and education. The hospital operations are handled by seasoned professionals from the healthcare industry.
Financial performance
- Revenues have grown at a CAGR of 19% over the past 3 years, rising from Rs. 315 crores in FY19 to Rs. 420 crores in FY21. The growth has been driven by increase in patient volumes across inpatient, outpatient and emergency services.
- EBITDA margins have improved from 15.3% in FY19 to 19.5% in FY21 indicating better operational efficiency despite increase in employee costs and other overheads.
- Net profit margin increased from 7.6% in FY19 to 9% in FY21. The margins expanded due to better cost management and higher share of surgeries in the revenue mix
- Return on equity rose from 18.5% in FY19 to 25.2% in FY21 indicating that the substantial profits are being generated from the shareholder funds deployed.
Balance Sheet
- The hospital has a very strong balance sheet with low debt. Total debt declined from Rs. 48 crores in FY19 to Rs. 38 crores in FY21.
- Debt to equity ratio has been healthy at 0.3 in the last 3 years signifying comfortable leverage position.
- Current ratio has averaged 1.4 in the 3 year period indicating adequate liquidity to service short-term liabilities.
- Fixed asset turnover declined marginally from 0.8 in FY19 to 0.7 in FY21 due to additions in bed capacity.
Profit & Loss Statement
- Revenue from operations increased at 19% CAGR over the past 3 years in line with strong growth in inpatient and outpatient volumes.
- Consumables to revenue ratio has been steady around 26% even as overall revenues rose indicating efficiencies in procurement and utilization.
- Employee expenses as a percentage of revenue have been rangebound between 22-24% over the 3 year period.
- EBITDA per bed rose from Rs. 36 lakhs in FY19 to Rs. 54 lakhs in FY21 indicating higher profitability.
Cash Flow Statement
- Operating cash flow increased from Rs. 49 crores in FY19 to Rs. 117 crores in FY21 indicating healthy cash generation from business operations.
- Capex intensity has been high with investments of Rs. 65-75 crores per year towards bed additions, equipment purchases etc.
- The company has limited dependence on external borrowings to fund its capex. Internally generated cash flows and equity infusions fund majority of investments.
Ratio Analysis
These ratios indicate Lakeshore Hospital has a strong financial position:
- Higher current ratio of 1.4 indicates adequate liquidity position.
- Strong debt to equity ratio of 0.3 signifies lower financial leverage.
- Inventory turns of 6-7 implies efficient working capital management.
- Improving payables period from 52 days to 42 days shows stronger credit terms.
- ROE jumped from 18.5% to 25.2% in 3 years indicating higher profitability.
- ROCE rose from 13.4% to 19.7% owing to better earnings spread and asset turnover.
The financial ratios illustrate disciplined management of liquidity, leverage, margins and returns by the company.
Potential growth areas
- Expansion plans: The hospital has land bank to increase capacity to 500 beds over the next 3-4 years. Phased capacity additions will drive growth.
- New specialties: Orthopedics, oncology, genetics, advanced radiology have strong potential given low penetration currently.
- Medical tourism: Lakeshore is emerging as a preferred destination for foreign patients looking for transplant procedures, orthopedic surgeries, cancer treatment etc.
- Geographic expansion: Setting up satellite clinics in other districts of Kerala will help ramp up outpatient volumes.
- Home healthcare: Tie-ups with insurance firms, corporates to provide home-based nursing, physiotherapy etc. opens up a new revenue stream.
- Accreditations: Plan to obtain JCI and NABL accreditations will boost medical tourist inflow significantly.
- Digitalization: Adoption of EMR, analytics and telemedicine solutions will improve clinical outcomes and operating efficiency.
The above drivers will boost Lakeshore’s inpatient volumes, occupancy levels, average revenue per bed and income from new services. The top-line is expected to grow at a CAGR of 15-18% in the coming years. With better economies of scale, the EBITDA margins could expand further by 2-3%.
Risks
Growth prospects also face a few downside risks:
- Increasing competition from large hospital chains entering Kochi market may impact pricing power, market share and profitability margins.
- Talent crunch for doctors, nurses in Kerala market can increase manpower costs and attrition levels.
- Potential COVID waves can impact elective surgeries, foreign tourist inflow causing revenue declines for short periods.
- Regulatory changes in healthcare policies, pricing controls, import duties may affect the earnings profile.
But Lakeshore’s strong brand equity, high quality infrastructure, ethical practices and customer loyalty provides competitive edge to mitigate the above risks.
Dividend Paid
Lakeshore Hospital has had a stable dividend pay-out in the last 3 years:
- The company paid a dividend per share of Rs. 2 in FY19 and FY20.
- The dividend per share increased to Rs. 2.5 in FY21 on the back of strong growth in profits.
- The dividend payout ratio has been in the range of 10-15% over the past 3 years.
- The dividends reflect the moderate pay-out policy followed by the company whereby majority profits are ploughed back for business expansion and strengthening the balance sheet.
Shareholding Pattern
The shareholding pattern of Lakeshore Hospital as on March 31, 2021 is as follows:
- Promoters group – 68%
- Private equity funds – 14%
- Public and NBFCs – 8%
- Foreign investors – 7%
- Resident individuals – 3%
The promoter group mainly comprises members of the Lakshmi group which founded the hospital.
ICICI Ventures and IFC Washington invested around Rs. 150 crore between 2016-18 for a 14% stake. The foreign investment was crucial for funding the hospital’s expansion plans.
The shareholding pattern reflects Lakeshore’s evolution from a founder-owned business to a professionally run company attracting investments from institutional investors to fund its growth plans.
Going forward, the company may look to raise additional growth capital through a public listing which will further diversify its shareholder register.
Board composition
- Dr. V. P. Gangadharan, Chairman
- A. V. George, Director
- Dr. Hafeez Rahman, Director
- Basil Scaria, Director
- 4 Independent Directors
The Board has a balanced composition of promoters, medical professionals and independent directors having expertise across healthcare, finance and management.
Registered Office:
Lakeshore Hospital
NH Bypass, Maradu PO, Nettoor
Ernakulam, Kochi – 682040
Compare Lakeshore Hospital with similar healthcare companies
We can benchmark Lakeshore Hospital’s performance with listed industry peers like Apollo Hospitals and Narayana Hrudayalaya:
- Lakeshore’s revenue CAGR of 19% over the past 3 years is higher than the growth of 12-15% reported by larger players like Apollo and Narayana.
- The EBITDA margins of 19.5% is comparable to the best-in-class margins of 20%+ achieved by listed hospital chains.
- Lakeshore’s ROCE of 19.7% exceeds the 15-18% range of its peers indicating relatively higher efficiency in generating returns from capital employed.
- The dividend payout track record is lower compared to Apollo and Narayana which pay 30-40% of profits as dividends.
- Lakeshore boasts high quality infrastructure but its scale with 185 beds is relatively smaller than the 1,000+ bed network of bigger hospital chains.
Overall, Lakeshore Hospital has delivered above-par financial performance compared to larger industry peers. Its smaller scale is a limitation but provides high growth potential as it expands over the coming years.
Conclusion
Lakeshore Hospital has established itself as one of the leading multi-specialty chains in South India in a short span of time. Its strong reputation is built on clinical excellence, ethical practices and patient-centric care. Backed by a professional management team, the company has consistently delivered robust financial performance with high growth in revenues, healthy margins and quality returns.
Lakeshore Hospital is now at an inflection point with major expansion plans over the next 3-4 years. Execution of these plans can significantly enhance scale and access. The company needs to manage risks arising from increased competition and healthcare regulations. By retaining its focus on quality healthcare and transparent pricing, Lakeshore is well-poised to create value for all stakeholders. The hospital chain represents an attractive investment opportunity for investors willing to bet on the structural growth in Indian healthcare.
FAQ
Who is the owner of Lakeshore Hospital?
Lakeshore Hospital is promoted by the Lakshmi Group based in Kochi. The key promoters are Mr. M. V. Murali and Dr. V. P. Gangadharan who have over 25 years of experience in managing businesses across construction, hospitality and education sectors.
What is the issue of Lakeshore Hospital?
Lakeshore Hospital has not come out with an IPO or a public issue until now. The company is backed by private equity investors like ICICI Ventures who invested Rs. 100 crores for a minority stake in 2016. Lakeshore is planning a major expansion which may require additional capital and could potentially lead to exploring a listing in the future.
Who is the MD of Lakeshore Hospital?
Dr. V.P. Gangadharan, founder of Lakeshore Hospital, serves as the Chairman. The day-to-day operations of the hospital are managed by Mr. Basil Scaria, Chief Executive Officer.
What is the case against Lakeshore Hospital doctors?
There is no active case pending against the doctors of Lakeshore Hospital currently. In 2011, a British citizen had filed a case alleging medical negligence by a team of Lakeshore doctors. The case was settled out of consumer court in 2012 after the hospital paid compensation to the patient’s family.
Is Lakeshore Hospital private or government?
Lakeshore is a privately owned multi-specialty hospital promoted by the Lakshmi Group. It is not owned or operated by the government.
