Healthcare Global Enterprises Ltd
NSE:HCG
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Healthcare Global Enterprises Ltd
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Ladies and gentlemen, good day, and welcome to the Q1 FY '23 Earnings Conference Call of HealthCare Global Enterprises Limited.
This conference call may contain forward-looking statements about the company, which are based on the beliefs, opinions and expectations of the company as on date of this call. These statements are not guarantees of future performance and involve risks and uncertainties that are difficult to predict.
[Operator Instructions] Please note that this conference has been recorded. I now hand the conference over to Dr. B.S. Ajaikumar, Executive Chairman of HealthCare Global Enterprises Limited. Thank you, and over to you, sir.
Thank you very much, and good evening to everyone and welcome to all present on the Q1 F '23 Earnings Conference Call for HealthCare Global Enterprises. I have with me here Mr. Raj Gore, our Chief Executive Officer; Srini Raghavan, who is our CFO; and Ashutosh and [ Venkat ] from our management.
HCG is a leading Oncology care provider, which is patient-centric, technology-oriented and outcome based. Our focus has been on Oncology, and in conjunction with partners in areas -- some areas, which has built a strong legacy as a world-class oncology institution and go-to brand for oncological treatment and services across India.
We are also into infertility as well as few multi-specialty hospitals, which we are also strengthening. Our focus on strong clinical talent, good infrastructure, technology and timely upgradation of the same, has enhanced our ability to deliver exceptional clinical outcomes equal to or better than global standards. And in the very near future, we are putting together data on head and neck and breast cancer on these outcomes and see how we can challenge the global outcomes.
HCG is, today, not only a service provider but has taken a lead role in research and academics. Recently, we have acquired Next Generation Sequencer in genomics which is a sequencer of high end and in process of acquiring circulating tumor cell platform. These additions are already enhancing our capabilities in precision diagnosis leading to early detection of not only cancer, but also early detection of recurrent cancer and genomic-guided therapy. We have a separate tumor board for this with relevant expertise.
In addition, we have introduced Enterprise RIS PACS in collaboration with Siemens for the first time in this country for AI-based physician imaging which will enhance our research capabilities and also improve our [ asset ] on the patient outcomes and diagnosing the patients in proper staging.
Further, HCG is introducing first of its kind in the country, an AI Enabled Adoptive Radiotherapy in our Center of Excellence in Bangalore, which will again make a difference in how we precisely treat cancer patients.
Under clinical initiatives, we have achieved a sizable scale in terms of case load and patient outcome across centers and continue to enhance our in-house capabilities to increase the number of clinical trials carried out at present and work with the pharma companies on drug discovery and related matters back with significant data.
Talking of our environmental friendly initiatives, we have done a very successful implementation of 3.3 megawatt solar plant at our Bangalore facility -- related to our Bangalore facility slated to be commissioned in a couple of months, which will result in substantially cost savings also. We have already initiated a pioneering effort in genomics, metabolics and microbes to unleash indigenous research in India for Indians rather than extrapolating Western origin data and for sitting in the context of Indian populates.
In addition, we will be transing away from the conventional medical record system to electronic medical records, which will not only provide value for the patients in terms of their clinical management but also analytics and data intelligence will be gathered.
We are working on modus operandi to ensure that the last mile benefits for our acquisition and personalized medicine endeavors through tech-enabled innovations like HoloLens, a phenomenal technology that marks the super processing power and wider field of vision to provide help to our patients, not only in the Center of Excellence, but also in Tier 2, Tier 3 cities.
With these few remarks, I now hand over to Mr. Raj Gore, our CEO, Raj?
Thank you, Dr. Ajai. Good evening, everyone. A very warm welcome to all of you.
We are delighted to share healthy financial and operational performance yet again for Q1 FY '23. We are happy to report robust growth for quarters ended June 2022. Our consolidated revenues for Q1 FY '23 grew by 26% on a year-on-year basis, and we've reported PBT of INR 10 crores for Q1 FY '23 as compared to loss of INR 9 crores in Q1 FY '22.
We are also happy to report that we've been able to successfully accelerate the financial performance for HCG over the last 8 quarters. Our revenue has increased by 1.7x since Q2 FY '21 on a quarterly run rate basis. Correspondingly, our EBITDA in absolute terms have grown by 2.4x over the last 8 quarters and have been able to achieve consecutive PBT positive quarters.
We have been working on multiple fronts to take HCG to greater heights by constantly improving holistic value that we offer to our patients and thus create value for the business in a sustainable manner. We are confident of maintaining our growth momentum going forward.
Four key areas of our strategic road map that we are currently working on are: number one, digital transformation. It means 2 things: building digital capabilities, to build HCG brand online, to increase digitally influenced patient footfalls into our hospitals; and two, improving our processes from patient's perspective to deliver an experience that matches evolving consumer behavior and expectations. This initiative will involve omnichannel patient engagement with the help of multiple digital assets like websites, social media, WhatsApp [ Bot], patient app portal, centralized call center, integrated CRM and advanced analytics and business intelligence. We're already seeing some green shoots, for example, our website traffic is up by 2.7x over last 6 months.
The second initiative is cost optimization and efficiency enhancement. We have also been working on our structural cost optimization and efficiency enhancement program. We've been able to evaluate multiple areas for enhancing workforce productivity and optimize staffing accordingly in a scientific manner. Additionally, we have also relooked at our pricing and collectively, these initiatives should drive significant operational efficiencies to improve margin. We will [ cover it ] later, but we are targeting a healthy margin improvement from these initiatives.
The third initiative is growth of our medical value travel business. We have recasted our international business strategy starting a couple of quarters ago. Largely, the strategy is focused on enhancing our footprint, both geographically and channel-wise. We have set up 6 new information centers across our large contributing geographies for creating greater brand pool. Currently, we are averaging about 1.4x the monthly average during the pre-COVID times.
The fourth initiative is inorganic acquisitions. We are also scouting for a few inorganic acquisitions as a part of our growth strategy and are actively pursuing some. We will keep the market posted at appropriate time. Our history of successful partnerships and upscaling of the acquired businesses over a period gives us confidence to pursue this strategy.
To conclude, I would like to reiterate that we have strengthened our senior management team, our clinical team across the network and have been continuously upgrading our technology and capabilities in cancer care for providing all oncology-related services under roof.
With this, I would like to hand over the call to Srini to take you through the financial and operational performance highlights for the quarter ended June 2022.
Thank you, Raj, and very good evening to all of you. We have uploaded our Q1 '23 financial results, an updated investor presentation on the stock exchanges and company's website. I do hope everybody had an opportunity to go through the same.
We are delighted to share that we have been able to grow our revenues ahead of the industry growth due to the trust and brand created for HCG over decades.
On the revenue front, our consolidated revenues for Q1 '23 stood at INR 408 crores as compared to INR 323 crores in Q1 FY '22, a growth of 26%. Revenue split between HCG and Milann stood at 96% and 4%, respectively, for Q1 FY '23.
Revenue growth for HCG stood at 26% Y-o-Y and Milann stood at 43% Y-o-Y.
As mentioned on Slide 27, revenue from the existing center stood at INR 298 crores, a growth of 23% on a Y-o-Y basis. Revenue from new centers stood at INR 75 crores, a growth of 23% on Y-o-Y. We are delighted to state that our new centers are inching towards maturity and are seeing good traction across geographies.
Turning to Slide 33. Our revenues from Oncology business grew by 35% on a Y-o-Y basis to INR 343 crores and revenue from non-oncology business stood at INR 58 crores.
I now turn your attention to Slide 34, where we have for the first time disclosed bifurcation of our operational parameters across our existing network and new network. Our company-wide AOR stood at 64.6% and AOR for existing versus new center stood at 64% and 66.1%, respectively. Higher occupancy for new centers is due to only 70% of beds were operational in new centers. AOR on capacity beds stands at 49%.
Our ARPOB on company level stood at INR 38,454, and our ARPOB for existing network stood at INR 40,606, and for new centers, it stood at INR 32,968.
ROCE for existing network stood at 19% annualized for Q1 FY '23 as compared to 15.4% in FY '22, a growth of 360 bps. ROCE for new centers stood at negative 4.6% annualized for Q1 FY '23 as compared to negative 8.3% in full year FY '22. This, again, is an improvement of 370 bps.
Across geographies, we have given our revenue breakup in Slide 35 (sic) [ 36 ], Jaipur grew by 263%. Revenue from Ranchi grew by 112% and Mumbai grew by 53%. Bangalore Center of Excellence grew by 37%.
Our Milann business is also doing well. Revenues have increased by 43% in Q1 FY '23 on Y-o-Y basis, our new registrations grew by 139%. New centers revenue growth in Milann stood at 70%.
On the EBITDA front, our consolidated EBITDA for Q1 FY '23 stood at INR 72 crores as compared to INR 51 crores in Q1 FY '22, a growth of 41% on a Y-o-Y basis. Our EBITDA growth on quarter-on-quarter basis stood at 14%. We have also given bifurcation of our EBITDA across existing and new centers, I would request to participants to view Slide 27 for further details.
We are happy to report that EBITDA from our new centers is growing. EBITDA margins for Q1 FY '23 stood at 17.7% compared to 15.9% in Q1 FY '22 and 17.3% in Q4 FY '22. EBITDA margins expanded by 180 bps on Y-o-Y basis.
As the gross synergies from various cost-saving initiatives, including strategic efficiency projects that Raj talked about, we are confident of improving EBITDA margin by 100 to 200 bps over the next 12 to 18 months. Some element of these initiatives are reflected to higher margins for this quarter.
On profit before tax, we are happy to report PBT-positive number of INR 10.4 crores in Q1 FY '23 as compared to a loss of INR 8.9 crores in Q1 FY '22. We aim to be a profit-making company on a consistent basis from now onwards.
Happy to share that we are PAT positive by INR 6 crores in Q1 FY '23, which is fairly sustainable and likely to go in the coming quarters.
PBT on Q-o-Q basis increased by 11x. PBT margins for Q1 FY '23 stood at 2.6% as compared to negative 2.8% in Q1 FY '22.
Our net debt position, excluding capital leases as of 30th June 2022 stood at INR 191.5 crores compared to INR 293.7 crores on 30th June '21, and INR 190.5 (sic) [ 190.1 ] crores as on 31st March '22.
CapEx for Q1 FY '23 was INR 16.3 crores, bifurcated between existing centers and new centers at INR 12.2 crores and INR 4.1 crores, respectively. Our expansion of existing facilities at Ahmedabad Phase 2 and Whitefield Extension of Bangalore COE is on track, and we have incurred INR 7 crores and INR 1 crore, respectively.
Total planned CapEx for Ahmedabad is INR 85 crores. Expected date of operations being Q1 FY '25 and for Bangalore COE is INR 25 crores, expected date of operation being Q4 FY '24.
With that, I would now like to open the floor for question and answer.
[Operator Instructions] The first question is from the line of [ Shubham Ajmera from SOIC ].
Congratulation on a good set of numbers. Sir, I would like to get your view on the international patients, like have we reached the pre-COVID level here? And what kind of growth we are seeing here and what is the current percentage of revenue from international patients stood in our total revenues? If you can give us some broad idea on that?
Yes. Thank you, and thank you for this question. A couple of -- as I mentioned in my opening remarks, post COVID, I think we have Bangalore, we always had Bangalore as one of the destination to get international patients. Post COVID, today, we have Mumbai as well as Kolkata, 2 more destinations. And we have made significant efforts in expanding our geographical footprint as well as channel footprint, whether it's government tie-ups, insurance tie-ups, institutional tie-ups with different corporates as well as digital channels.
As a result, we have seen in quarter 1, our business is 1.4x the pre-COVID levels. I think today, at an HCG level, our international business is about 4%. But you will be happy to know that at our Center of Excellence in Bangalore, is at 15% of top line. And I think we are just getting started.
And second question is, like we have done some changes in the [ life of property, plant ] and equipment. So can you please elaborate on which categories we have done it? And what is the current life of [indiscernible] from the previous year?
Yes, this is -- it's not a major change. Basically, it's a [indiscernible] which we were depreciating over a period of 10 years, the companies that -- and the industry practice allows to kind of depreciate for a period of 13 years, which is what we have done.
The next question is from the line of Shyam Srinivasan from Goldman Sachs.
Just the first one, team, on AOR. I know you don't kind of look at it like how we look at other hospitals, but just that's been a significant jump. So is there something from an operational standpoint that's changing. We have reached like close to 65%, right? So I just want to understand what's happening on the occupancy. I don't know whether you have an outlook for it, but just would like to understand this one.
Yes. So thank you, Prashant (sic) [ Shyam Srinivasan ] , I think we've been mentioning in the last several quarterly calls. But there is a lot of effort that we have taken, our last 4 to 6 quarters in improving our clinical strength in each hospital, adding more technology, adding more services. But mainly, a lot of effort has been taken on our go-to-market strategy. .
Our number of empanelments with different TPAs, different corporates, different payer channels. There's a lot of groundwork that has happened. There is a lot of activation activities that happened to create awareness about HCG's capability in treating cancer patients. And I think we've seen a consistent growth in our footfalls as a result of all these efforts. And as a result, the occupancy is growing. If you see the trend in occupancy is consistent over last few quarters.
Sure, Ajai, I get the factual point, but I'm just saying from -- is this how should we look at it going ahead? That's one because we are now breaking new ground, right? I don't know whether I have at least seen historical numbers of this high. So how does it actually impact our business model either in terms of what growth you can kind of aspire to versus and the kind of margins because I'm assuming generally simple that higher utilization means better margins?
Yes. As you know, Shyam, past the question has been asked about our occupancy, and we were always in the 50% or so. We were said it is because a lot of outpatient therapy going on. But with -- now with as you can see on a revenue growth of 26% in the last 8 quarters and like what Raj said, increasing footfall, essentially, this is what we were expecting.
We have a state -- we don't have space constraints. We don't have to put more brick and [indiscernible]. So this occupancy is happening as per our expectation, as the revenue grows from each center because of our Center of Excellence and areas in Jaipur and all are reaching historic growth. So naturally, the occupancy by natural fault will increase. It won't remain stable at 50%. So that is the growth we are seeing.
And going forward, yes, we still have -- we have 64, some consider in the 75 as the maximum. So we will -- I think we may reach that at that point when all other centers do, but it also could be depending on centers. For example, Jaipur now we are almost full. So we are at capacity so also in our Ahmedabad center. So as you know in Ahmedabad, we are building a new center. So all of this will also take care of this, but it is a healthy growth. It is expected, and we are obviously happy about it.
Got it, sir. Very helpful, Dr. Ajai. So my second question is on ARPOB dynamics and slightly different trends. So for example, new centers, we have not seen ARPOB grow. But if I were to look at existing centers, they have grown well. Blended is 6%. So can you walk us through some of the dynamics here? What's happening either in terms of price, mix? What is being done here?
So Shyam, just one more data point on the previous question that you asked. I think we have a capacity of about 1,974 (sic) [ 1,979 ] beds right now. We have operationalized 1,737 beds. So if your question was anyway indeed -- or if your question was related to how much upside of growth is, as and when we increase our occupancy, we will continue to commission more beds that are already built. So I think I don't see capacity as a concern going forward.
On ARPOB, I think that has happened on -- improvement in ARPOB has happened due to 2, 3 levels. One is pricing increase. Second is, I think we have pricing for cash as well as TPA revision. Then we are seeing some positive mix change in -- are more NAVH -- we have more hospitals, which are any day accredited which gives us additional pricing ability. As a combination, I think our ARPOB is improving.
Fair enough. Sir, Raj, you mentioned in the opening comments, as we have looked at pricing. So cash and TPA, what's the revision? Like, is it like linked to 4%, 5% medical inflation or higher?
Yes. So usually, year-on-year, we do about 2% to 3% inflationary increase. But we've also done a -- we've also -- I talked about operational efficiency improvement program. Under that program, we have done a more structured pricing revision starting with our Bangalore market. And I think that's also contributing to higher margin. Now we are in the process of rolling out that initiative across 10 more centers in the network. So you will see additional improvement on realization because of that.
Just my first question is still pending, which is why the difference between existing versus new ARPOB. I'll stop there.
So a new center, if you look at the growth, I think Jaipur has really picked up. And Jaipur, I think is the mix -- is more in favor to scheme business. And as a result of that, the realization is constant.
And also, I think the way we are approaching at Jaipur if we want more and more patients to experience our services and all, and optimization will happen as and when we go closer to the utilization level -- higher utilization levels.
Regarding your question of why ARPOB has increased more in our existing centers, it is because of the mix, technology and price increase. Obviously, our Center of Excellence, Bangalore will have a much higher ARPOB even as we go forward, and we look at ARPOB in the conventional way. That could be the reason also the differences there, Shyam.
[Operator Instructions] The next question is from the line of Kaustubh Pawaskar from Sharekhan by BNP Paribas.
And congrats for good set of numbers. So my question is on the structure pricing revision you just talked about in Bangalore center. So can you elaborate it and how you are planning to implement it into other centers?
Yes, so there are 2 types of pricing exercise. One is annual inflationary price increase. But every 2, 3 years, we would like to do a more structured pricing increase. What does that mean? That means we map the competition. We look at the pricing. We map our positioning in the market, our value proposition in the market versus other players. We look at our capacity utilization for particular services and see if there is an opportunity to increase pricing premium. We go line item by line item in a more structured manner and identify items where we can optimize our pricing.
Now that's the methodology that's specific to a particular market. Therefore, we've started with Bangalore, and now we will take it to other markets. It does take some time to study the market and map it, and we will take it to more markets as we move forward in this year.
Right, sir. My second question is on your cost optimization strategy, which was explained in the initial comments of the management. So can you just elaborate on how you're planning for this cost optimization strategy? Because these are some of the levers, which will help us to drive the margins. And as sir said, that you are focusing on achieving around 150 to 200 bps improvement in the margins. I think these are the levers which will help you to drive the margins. So can you just elaborate on your cost optimization strategy?
Absolutely. So you know that as an industry, we've been facing increasing competition, price regulation, pressure on margins. And therefore, we believe that we must do everything to increase margin. And the key in that is identify micro efficiencies, which in aggregate helps us to improve overall margin.
So there are several levers we are looking at it. One is workforce productivity. Workforce cost is one of the major cost item in our P&L. Second is indirect cost optimization, the long tail of fixed cost. And what we do in that is basically go line by line, identify duplication-based non-value-adding activities, redesign processes, introduce technology to improve the productivity of certain processes, do shared services, introduce shared services so that we can have economies of scale.
So we do a very structured program line item by line item. And I think again, we started this initiative in Bangalore cluster first. And we will now take it to other markets.
Right, sir. Right. My second -- my third question is on sir -- I've gone through all the clusters. We have seen that most of the clusters have done great -- done strong growth. Maharashtra, we have seen only the growth of just 10%. Any particular reason for it?
Maharashtra growth?
So I think if you look at Maharashtra, Nashik is one of our big centers. I think it's the biggest center for us in Maharashtra in terms of top line. Last year, Q1, we had a significant COVID business in that hospital. And this quarter, that is not there, and that's why the percentage is looking lower.
Okay. It is because of the high base of the COVID?
Yes.
Okay. And sir, one last bookkeeping question. This quarter, we have seen tax rate a little bit higher at INR 7.9 crores. So is there any one-off into it?
The thing is more from a consolidated point of view, we don't take any deferred tax asset on our loss-making business. That's the reason why we take the -- so that is the reason why it is like that.
Okay. Okay. So what would be a normalized tax rate for the year?
We are at about 34.5%, which is the normal tax rate [indiscernible], at this point in time. At an appropriate time, we will evaluate the lower tax of 25%.
Okay, sir. Okay. And sir, lastly, if I can ask, sir. Sir, as you mentioned that optimum capacity utilization is something what -- which you are looking at all the centers. So when you think about putting the CapEx, what kind of utilization you have in front of you for a particular center? For example, Ahmedabad as you said that currently, it is now fully utilized capacity. So when you come -- when you do an expansion or when you come out with a greenfield project next to a particular hospital. What kind of capacity utilization or occupancy you normally look into that after which you have to expand the capacity?
See, in the capacity utilization, as we discussed previously about occupancy rate [ beds ], our focus going forward in the greenfield, if we do will be less beds and more outpatient facility day care because the whole cancer care is moving towards that. So when we talk about capacity utilization, it is not only about beds anymore, but it is about how many linear accelerators, what is the amount of [indiscernible] 100 patients because some of the newer technology and all can use -- give you that kind of capacity.
So when we are running, for example, in Jaipur, we are at capacity utilization on the 2 units. We are now trying to bring a third unit, so we are reaching there. And another important thing is, as you know, our CapEx is, actually, we have discussed this in the past meetings where it is now pay-for-use model majority of the time, even though there may be exceptions. With this model, the CapEx actual requirement in terms of what is actual CapEx becomes less, [ it is more of ] sharing the revenue.
So with all this, I think we are very well positioned to handle even capacity needed, putting extra technology without actually putting extra CapEx in it. So it will be risk reward sharing. So all of this, I think, will help us to grow very fast in future, depending on where the need is, and it is very specific. For example, we may be reaching capacity in Jaipur, but we may not have reached capacity in Kolkata or South Mumbai. So we will now also focus on that, which areas needs to be focused and the management is putting an extra effort to these areas to reach capacity.
The next question is from the line of [ Ashit Jain ] from [ Jain Capital ].
I have a couple of questions. Firstly, can you elaborate on digital initiatives seeking to increase the revenue? And how do we see the overall technology planning a major part in the increase in revenues?
Yes. So thank you for asking that question. See, the whole genesis of HCG is bringing the most advanced medical technology to cancer patients in India. This is something that we are pioneering. I think if you look at what has happened parallelly in other industries, is digital technology has been used to meet evolving consumer needs. Consumer needs around self-service, consumer needs around online billing, consumer needs about information requirements, consumer needs about comparing different products, services. But mainly, providing convenience to consumers when they avail the services.
This is one area we feel that we want to really invest in through multiple channels, right? So right from creating awareness about HCG's oncology capabilities online. Or to the customer base, which every year, you have about 15 lakh to 20 lakh new cancer patients in a population of 140 crores.
So our ability to reach to them in traditional sales or marketing methods is very limited and will not be as productive. But today, we know that patients want -- patients and their families want to learn about their disease, want to do research online, want to take second opinion and are willing to travel any corner of India or world if they feel that's where they get the right treatment. So it gives us an avenue to reach out to our fragmented, thinly dense patient group in a very effective manner.
We have -- historically, we have a very good track record. We treat for more than 1 lakh of patients every year. That patient base is spread all over India and the word of mouth has helped. We are -- in addition to this, this is another thing that we are deploying.
The other part is we know that the mix around digital, is it mainly a domain of millennial male in metropolitan cities. But we know that post-COVID, the rural users of Internet have surpassed the metro users of Internet. We know that people with age group of more than 45, that group is as big as millennial, which is 20 to 35 in terms of Internet usage.
So things are changing. The Internet penetration is almost doubled over last couple of years. And now half of India's population is covered under that. It will continue to grow. So we feel that with our kind of differentiated and specialized products. It gives us a very good channel to reach out to masses across India, in fact, across the world through digital channels. So that's one thing.
Second is we -- cancer patient's journey starts before HCG and will continue while they are getting treated at HCG. But they will always have this sword hanging over them, and they will have to do follow-ups once they finish the treatment for the rest of the life.
Through digital assets, it gives us ability to make sure that their journey before HCG, during HCG and after HCG, is convenient, and we can help them by giving them the right advice, okay? Doing a follow-up with them, sending reminders, bringing them back because early detection gives them best chance to improve their outcome.
So there are several aspects of this initiative. We've started working on it. We are seeing some of the green shoots. And we've seen that with changing consumer behavior, I think this will become a growing channel for us going forward.
Understood. Second question, when can we expect the new centers perform as the mature centers? And maybe at what scale and within what time frame?
Sorry, can you repeat your question again?
Yes, so my question is, when can we expect the new centers perform as the mature centers? And at what scale and within what time frame?
So as you think, this time, we have given a breakup between existing and mature centers -- sorry, existing and new centers. You see how the traction on new centers has been. Year-on-year growth has been fantastic. Occupancy rates are going up. This bucket was loss-making, now EBITDA positive.
One by one, we will turn all centers around -- Kolkata is our newest center. We expect that to be turned around this year. So I think we are on the right force. And unfortunately, for us, the 2 years of COVID pandemic slowed down our ramp-up on these new centers. But as soon as the COVID is going away, we've seen immediate acceleration in this turnaround story.
So we expect one negative EBITDA center Kolkata, the newest center to be turned around this one. And ramp-up has been fantastic. You see Nagpur ramp-up. You see Jaipur. Jaipur has done fantastically. So we are very confident that in the next 12 to 18 months, this bucket will start getting pretty close to existing centers.
[Operator Instructions] Next question is from the line of [ Raj Joshi from Ace Securities ].
Sir, what will be our strategy for expansion in the form of greenfield, brownfield and inorganic? Can you elaborate on the same? And what will be the CapEx guidance for the next coming 2, 3 years? .
CapEx guidance. We have refrained from giving a CapEx guidance going forward. However, on your greenfield question.
Today, we have 2 of Mumbai centers as well as Kolkata centers, which are greenfield centers for us. And we are in process of ramping them. We have also further announced 2 centers. One is an extension center in Whitefield for our Center of Excellence, which is a greenfield project. And then our Ahmedabad Center of Excellence has peaked out in terms of utilization.
We are relocating in a newer site with an expanded capacity. That's another greenfield project we are doing. I think beyond that, we will focus on inorganic acquisition route. As and when we find targets that we feel fit in our strategy, we feel that we can either ramp them up quickly or turn them around quickly, and we can get it at a good valuation in a value-accretive manner. So that's our plan for brownfield growth. As and when we have more definitive development, we'll share it with you.
Okay. And sir, what are the changes taken to improve the revenue and the margin from the new centers, especially from the Mumbai and Kolkata center?
Yes. So again, both of these centers were relatively new before they entered into COVID pandemic era. The playbook for us has been very simple. Get the right clinical talent, introduce more treatment capabilities, more technology, enhance the customer base by your go-to-market activities with tie-ups, institutional tie-ups with TPAs, insurance, PSUs, different payer channels, brings for Mumbai and Kolkata, especially I mentioned it earlier, prior to COVID, we had only Bangalore as a destination to bring international patients with Mumbai and Kolkata are very well connected across the world. And we are already -- as a result, we are able to bring in international patients to these 2 more locations that has helped us to improve our international business 1.4x the pre-COVID level. And we will -- we will continue to drive that growth going forward. So the playbook is pretty simple for turning around these new centers.
[Operator Instructions] The next question is from the line of [ Priyanka Gandhi from Ace Capital ].
I just have a couple of questions. Sir, you mentioned about cost rationalization, but can you quantify on the same, what will be the uptick in margins due to the decrease in cost and increase in efficiency?
Yes. Thank you, [ Priyanka. Priyanka ], as I mentioned, we started this project with our Bangalore cluster sometimes -- a couple of quarters ago. And we've already seen -- just in Bangalore cluster, we're seeing about 20 to 30 basis points improvement in our margins in quarter 1 alone.
We will take this initiative to more locations. We expect about 100 to 200 basis points improvement in our margins as we roll out these initiatives across all centers and ramp them up to their full capacity or potential.
All right. My next question will be scalability and industry growth for cancer. Can it be scaled up and across the country as a multi-specialty hospital brand?
Sorry, as a multi-specialty what? Can it be scaled up as what?
Can you repeat your question?
Yes. Can it be scaled up across the country as a multi-specialty brand? Hospital...
We are very focused as an Oncology brand. We don't see need to really incorporate multi-specialty because when you look at Oncology being focused factory, that is how we have grown from a very small enterprise in 2005, '06 to this level because we always believe a focused factory approach is what drives the excellence -- the center of excellence, the quality outcome and that attracts real cancer patients to come to the Center of Excellence.
On a multi-specialty, as you know, it's usually an implant model where they do cardiac surgery to renal to oncology. So the oncology itself can never -- rarely it attracts patients to come for oncology care. The exceptions are there. So usually, in a multi-specialty patient goes with a symptom of abdominal pain, lump in the breast and ends up being cancer and gets the treatment there.
But that issue is there for all the time. That is why we don't have like 120,000 patients driving through this -- through oncology is what we see. There is no way a multi-specialty can drive that number of patients. So we are very clear in our focus, and that is how we have driven it. And in future also, categorically, we are going to drive multi-specialty only -- and we feel there is enough -- single specialty, sorry single specialty only. And we have enough need for it.
Like if you look at HCG itself today, we have nearly 50 crores people can access, but there is a lot of need for it to expand. We are not even in certain parts of India and also within where we are, further expansion can happen there, including in Tier 2. And we are one of the few which are in Tier 2, Tier 3 cities also in Oncology, which is not there in many multi-specialty. So we are very clear, and we are very positive for the future growth of Oncology specialty, okay?
Just to add to what Dr. Ajai said, [ Priyanka ], if you look at -- healthcare is usually characterized as demand-supply gap sector in India. And that demand-supply gap when you talk about Oncology is even higher. Now you look at what HCG has been able to achieve. We already have 22 cancer centers across 19 cities, 9 states.
That's scalability. The market has been growing over the last few years with a CAGR of about 12%. This is growing about 16% CAGR. That's HCG's brand pool, that's HCG's differentiated and specialized product. And the fact that we've been able to achieve this with an Oncology-focused care model, in big cities, in Tier 2, Tier 3 cities with double-digit revenue growth, which is higher than market growth at 20-plus percent EBITDA in our mature centers with high-teen ROCE, has higher EBITDA in our Center of Excellence, more than 25%, it explains the scalability, viability and strength of HCG's unique model. And I think the opportunity for growth is plenty out there for HCG. We are a market leader on many parameters, and we will continue to be market leader and consolidate our position going forward.
[Operator Instructions] the next question is from the line of Rishabh Parekh from Sunidhi Securities & Finance.
Congrats on an exceptional set of numbers. [Technical Difficulty]. Now that we have a 25%...
Mr. Parekh, this is the operator, your audio is breaking. Please check.
Can you hear now? .
Yes.
Yes.
So my first question was on our mature centers. We are at a 25% EBITDA margin, INR 40,000 crores ARPOB and a 65% occupancy. So what is the [Technical Difficulty] in terms in the next, this year, then...
Sorry to interrupt you, there was an audio loss from your line. Please repeat the last part.
Hello.
Yes, yes, please go ahead.
No, my question was around the mature centers. Now that we are at a 25% EBITDA margin and INR 40,000 crores ARPOB, 65% occupancy. What is the growth we can expect from a mature centers? And what are the levers that we can use to drive growth?
See, the growth in the mature centers, certainly, there is there, Parekh, because of: a, these are all becoming centers of excellence or hubs where new technology will be put in, new areas of diagnosis, genomics and others will take place. Because of that, new talent acquisitions will happen. And look at, for example, putting in mature centers, there are a lot of mature centers don't have robotic surgery, may not have very high-end therapy and genomics.
As we do this, obviously, the revenue impact will be higher and occupancy may increase to -- up to 75%, 80%, but more than occupancy, the footfall will increase, the radiation load will increase. The outpatient chemotherapy load will increase, our cost will increase. So we are seeing, like in our Bangalore center, our ARPOB is INR 66,000 crores. So there is an opportunity for that to reach INR 66,000 crores.
So we have to aim for the gold, as they say. And because nowadays patients also look for high-end oncology centers near them, and I think the fact we are building a very big center in Ahmedabad itself is a [indiscernible] but how opportunity exists for us to expand the existing centers as hubs.
And even, we're -- we've even talked about expanding in Cuttack, making it a Center of Excellence, how it has grown, so there are -- and of course, Mumbai, I think, in the next few years will become a center with clinical talent acquisition and all happening.
So I think the mature centers, I believe, still have an opportunity for growth and particularly what Raj talked about digital coming in, all of this will only enhance the footfall. And definitely, it can increase. So we are very positive on the mature centers growth in the future.
That's very helpful outlining the headline of the headroom that the mature centers have to grow.
My second question is on ARPOB. Does the base quarter, which is Q1 FY '22, have the impact of any vaccination revenue, which was not there in this quarter. Hence, optically, the ARPOB increase was only about 5%, 6%.
Yes. No, that's not the reason.
In Q1, we did not have any vaccinations. Vaccination primarily started from Q2.
Okay. So Q1 FY '22 did not have vaccination, okay, got it, okay, okay.
As there are no further questions from the participants, I would now like to hand the conference over to Mr. Raj Gore for closing comments.
So thank you, everyone, for joining the call. We'll keep updating the investor community on a regular basis for incremental updates on HCG. I hope we've been able to address all your queries. For any further information, kindly get in touch with us or Strategic Growth Advisers, our Investor Relations advisers. Thank you once again. Stay safe.
Thank you, ladies and gentlemen, on behalf of HealthCare Global Enterprises Limited, that concludes this conference call. Thank you for joining us, and you may now disconnect your lines.