Key highlights from Dr Lal PathLabs Ltd (LALPATHLAB) Q4 FY22 Earnings Concall
Management Update:
- LALPATHLAB said it saw significant shift towards direct-to-home business, with home collections now contributing nearly 12%, which used to be in the range of 5-6% during pre-COVID days. Also the company saw bundled packages continuing to rise.
Q&A Highlights:
- Prakash Kapadia of Anived Portfolio asked why the growth was lower in organic non-COVID revenues for the company that was only up 4% YonY. Arvind Lal EC replied that in the month of January non-COVID was fairly low, mainly because of Omicron wave, however, the company exited on a good note in 4Q.
- Prakash Kapadia of Anived Portfolio also enquired about Suburban in terms of the milestone payout. Arvind Lal EC clarified that that piece is already closed now. It was linked to FY22 performance and the company is not paying anything over and above what it had paid in the first tranche, primarily because there were certain numbers, which were not achieved.
- Chirag Dagli from DSP Mutual asked about the profitability of the COVID business vs. the rest of the business for FY22. Arvind Lal EC said it’s very difficult to segregate COVID profitability. COVID business gave a huge operating leverage and clearly INR396 crores of COVID business in FY22 definitely contributed to the bottom lines. But as this slides down, it will have impact on the overall number in FY23.
- Sriraam Rathi from BNP Paribas asked if the company could look at non-COVID business of INR160 -170 crores going forward. Ved Prakash CFO said the company is changing the recording of revenue from gross to net which will not be strictly comparable with INR170-180 crores that was pre-COVID. However, the company is trending much higher than what it used to do in the past.
- Sriraam Rathi from BNP Paribas also asked if the INR30 crores non-COVID revenue for Q4, would have been impacted to some extent by Omicron also. Ved Prakash CFO said that INR30 crores, plus the net revenue because this is not gross. There is a 20%, 25% kind of gross absorption.
- Sriraam Rathi from BNP Paribas asked if the 14-15% base business growth could be achieved from FY23. Arvind Lal EC said that the company feels that it is in the mid-teens range going forward. So LALPATHLAB believes it should be in place for that kind of growth.
- Sriraam Rathi from BNP Paribas asked if the margins that was lower in Q4 was impacted by Omicron only or something else. Ved Prakash Goel CFO said that one reason was largely the impact of Suburban consolidation and also the impact of Omicron on non-COVID business.
- Neha Manpuria from Bank of America asked about the non-COVID realization being down low-single digit YonY and if the trend is similar ex Suburban and including Suburban. Ved Prakash Goel CFO said that like to like revenue per patient is almost flat. So non-COVID utilization is almost same that the company used to have pre-COVID.
- Pooja Bhatia from Morgan Stanley asked that over the next 2-3 years, where does the company think margins could settle at. Arvind Lal EC replied that there is not scope to improve margins. But LALPATHLAB believes that margins would probably make what it used to have pre-COVID times.