About Dr. Agarwal Health Care Limited

Business Overview

Dr. Agarwal's Health Care Company provides a comprehensive range of eye care services, including cataract, refractive, and other surgeries, along with consultations, diagnoses, non-surgical treatments, and the sale of opticals, contact lenses, accessories, and eye care pharmaceutical products. As per the CRISIL MI&A Report, the company held a 25% market share in India's eye care service chain market in FY 2024.

Facilities are categorized into Primary (non-surgical), Secondary (surgical), and Tertiary (super-specialty surgical), which include three Centres of Excellence (COEs). The business operates on a hub and spoke model with 28 hubs (Tertiary Facilities) and 165 spokes (53 Primary and 112 Secondary Facilities) as of September 30, 2024. Primary Facilities focus on diagnosis and clinical investigations, Secondary Facilities handle cataract surgeries and other services, and Tertiary Facilities specialize in advanced surgeries like retinal, corneal, and refractive procedures. The COEs additionally offer academic programs and training for ophthalmology professionals.

International operations commenced in 2012 and include 16 Facilities across nine African countries, offering treatments for cataract, glaucoma, diabetic retinopathy, retinal detachment, dry eye, refractive surgeries, and paediatric and neuro-ophthalmological conditions. As of September 30, 2024, the Company have 737 doctors and 4,858 employees (including paramedical staff). The Bankers to the Company are HDFC Bank Limited and ICICI Bank Limited.

Industry Analysis

THE EYE CARE INDUSTRY IN INDIA
According to IAPB, India has the highest number of visually impaired people in the world as nearly 1 out of every 5 individuals in India face vision loss disorder. There is a high burden across eye related ailments and diseases in India with increasing need for medical intervention. Because of high prevalence of eye disorder in India population, eye care is an integral part of the Indian health care system. The eye care market in India has grown at CAGR of 11.5% between Financial Year 2019 and 2024 to reach the value of ₹378 billion in Financial Year 2024. This market includes surgical and non-surgical treatments for patients suffering from various eye disorders. Surgical treatments in this industry includes cataract surgery, glaucoma, retina surgeries, refractive surgeries, cornea and other eye related surgeries. Cataract surgery has the largest share of eye care surgery in India. Non-surgical treatments in the industry includes general checkups, pre-treatment assessment, post-treatment follow ups, diagnostics etc. In the eye care industry, qualified staff and experienced ophthalmologists is one of the key critical factors patients consider while selecting a hospital for treatment. Additionally, patient-focused approach is a key factor in how patients choose their eye care services provider.

The growth in the industry is led by factors such as high prevalence of eye related disorders in India, rise in incomes levels, shifting age demographics, lifestyle changes, emerging eye care service chains, government and non-government organisation initiatives to promote awareness about eye health in India. Rise in income levels enable higher spending by the individuals on the health care, including eye care. With changing lifestyle such as increase in time spent on electronic devices may increase the eye disorders. With rise in diabetic patients in India, there will be higher prevalence of diabetic eye diseases such as cataract, glaucoma, diabetic retinopathy etc. Eye care is a critical healthcare need in India today, with increasing requirements for healthcare providers to tackle the problem of vision impairment and blindness. Emerging eye care service chains enable access to quality eye care treatments with standard operating procedures to maintain high quality services to their patients. These eye care service chains have multiple branches in or across cities to ease the eye care treatment procedure for their patients. In India, government is playing a key role in promoting eye care treatments with multiple initiatives to support patients suffering from eye related disorders. Basis these factors, the eye care industry in India is projected to grow at CAGR of 12-14% between Financial Year 2024 to 2028. This growth is higher than the CAGR growth rate of 9-11% projected for the healthcare delivery market in India during the same period. The size of the Indian eye care services industry was approximately ₹378 billion in the Financial Year 2024 and is projected to grow to ₹550-650 billion in Financial Year 2028. As of the Financial Year 2024, eye care formed approximately 6% of the overall healthcare delivery market in India.

In India, blindness and vision loss are part of the key challenges in the nation’s healthcare system. Nearly 1 out every 5 persons in India faces vison loss disorder, which stood at 275 million people as of 2020. Compared to India, nearly 1 out of 20 persons in United States have vision loss disorder.

According to WHO, globally there are at least 2.2 billion individuals with near or distance vision impairment and in 1 billion individuals among these, vision impairment could have been prevented or is yet to be addressed.

The surgical treatments in the eye care industry are the majority contributor to revenues for eye care hospital as about 80-85% of revenue in the industry comes through these treatments. Key surgical treatments in the eye care industry include the cataract surgery, retina surgery, refractive surgery, glaucoma and cornea-based surgery. The non-surgical treatment in the eye care industry is essential for regular check-ups, proper screening and timely identification of key eye disorders which may require a surgical procedure to prevent vision loss. The non-surgical treatments also support the patient in the recovery post-surgical procedures with regular check-ups and monitoring of healing process.

The Indian eye care industry consist of government-based hospitals, charitable/trust-based hospitals, single speciality hospitals, multi-speciality hospitals and standalone clinics. The eye care service chains are part of single speciality and multi-speciality hospitals with network of eye care centres within/across various cities. These eye care service chains have strong brand equity as these hospitals work on standard operating procedures, offering reliable and quality treatment of patients at their centres. While standalone hospitals/clinics are, typically, doctor owned hospitals/clinics rather than large corporations or healthcare networks. These hospitals/clinics are located in a single location and focus on performing high volume procedures. These hospitals and clinics can also be single or multi-speciality healthcare centres. Consistent clinical outcomes are a key success factor for eye care service providers. The eye care industry is highly fragmented with presence of few eye care service chains. The share of eye care service chains in India is about 13-15% of the total eye market as of March 31, 2024, which was estimated to be 12-14% in Financial Year 2023, signifying the headroom for growth for organised eye care service chain market in India.

With rise in income levels and awareness about the eye care health, the share of these eye care service chains is expected to rise as more individual would prefer convenience and reliability offered by these eye care service chains. This industry is also witnessing merger and acquisitions activities along with investments for growth.

Overview of hub and spoke model in the eye care industry and its advantages
The hub and spoke model in the healthcare industry is a model with multiple practising sites. In this model, a hub acts as a site of speciality area and the spoke are the connecting secondary centres. The hub and spoke arranges service delivery assets into a network with central hub providing a full range of services, supported by satellite spokes offering limited services, directing patients requiring intensive care to the hub for treatment.

In the eye care industry in India, the hub and spoke model works across the network of primary, secondary and tertiary centres. The primary centres provide outpatients services such as screening and consultation services, including eye examination, medicine prescription, foreign body removal, intraocular pressure measurement etc. These primary centres provide affordable eye treatment at the patient doorstep in the rural and smaller towns. These primary centres also reduce overcrowding of patients in the secondary and tertiary centres by conducting primary screening and filtering tasks.

Business Strengths

1. Largest Eye Care Provider in India
Dr. Agarwal's Health Care is India's largest eye care service chain by revenue in FY 2024, generating 1.7 times the revenue of the second-largest provider. It holds a 25% market share and operates the highest number of eye care facilities in India as of September 30, 2024.

2. Comprehensive Eye Care Services
Offers end-to-end ophthalmic services, including cataract, refractive, and other surgeries, along with consultations, diagnostics, non-surgical treatments, and sales of opticals and pharmaceutical products.

3. Scalable, Asset-Light Hub-and-Spoke Model
Operates on a hub-and-spoke model with leased facilities, supporting scalability with minimal upfront investments. The network expanded to 193 facilities in India by September 30, 2024, from 91 in March 2022.

4. Clinical Excellence and Surgical Innovations
Maintains standardized clinical outcomes across facilities through a clinical board chaired by Dr. Ashvin Agarwal. Oversight is provided by an international advisory team and specialty experts, ensuring strategic direction and consistent quality.

5. Doctor-Led Team and Acclaimed Leadership
Founded by Padma Bhushan awardee Dr. Jaiveer Agarwal, the organization is led by Dr. Amar Agarwal, a pioneer in ophthalmic innovations and recipient of multiple global awards, including the Norman Galloway Award (2024).

6. Proven Financial Growth and Profitability
Achieved 30.86% revenue growth from FY 2023 to FY 2024, with revenue rising to ₹13,321.52 million. EBITDA grew by 43.22% during the same period, reaching ₹4,065.55 million. Recorded 26.05% revenue growth in H1 FY 2024, making it the only specialty eye care provider to improve operating profit margins during FY 2023–24

Business Strategies

1. Geographic Expansion
Expand geographic presence in India by establishing new facilities, leveraging a capital-efficient hub-and-spoke model.

2. Brand Equity Enhancement
Enhance brand equity by improving market presence, patient experience, and awareness programs, supported by multi-lingual communication services and advanced technology.

3. Strategic Acquisitions
Scale operations through strategic acquisitions and restructuring, using established facilities as hubs to set up additional spokes.

4. Talent Acquisition and Retention
Strengthen recruitment, training, and retention of skilled doctors and paramedical staff through partnerships with medical institutions and targeted recruitment channels.

5. Profitability and Operational Efficiency
Focus on profitability and operational efficiency by centralizing procurement, upgrading technology, and optimizing resource utilization to reduce costs and improve margins

Business Risk Factors and Concerns

1. Doctor Retention Risks
Dependence on retainership arrangements with doctors creates uncertainty in retaining skilled medical professionals, posing risks to operations and financial stability.

2. Geographic Concentration
A significant majority of facilities are concentrated in Tamil Nadu, Maharashtra, and Karnataka, making operations vulnerable to adverse regional developments.

3. Hub-and-Spoke Model Challenges
The hub-and-spoke model's success is uncertain, and any failure to expand into new regions may impact business performance and growth prospects.

4. Revenue Dependency on Surgeries
A significant portion of revenue (over 65%) depends on surgical procedures, exposing operations to risks from potential declines in surgical income.

Dr. Agarwal's Health Care Company faces key risks related to doctor retention, geographic concentration, operational model scalability, and revenue dependency on surgical procedures. These risks could significantly impact the company's business performance, financial condition, and cash flows.