Forward-looking Statements
This report contains forward-looking statements which may be identified by their use of words like plans, expects, will, anticipates, believes, projects, estimates or other words of similar meaning. All Statements that address expectations or projections about the future, including, but not limited to, statements about the companys strategy for growth, product development, market position, expenditure and financial results are forward looking statements. Forward-looking statements are based on certain assumptions and expectations of future events. The Company cannot guarantee these assumptions and expectations are accurate or will be realized. The Companys actual results, performance or achievements could thus differ materially from those projected in any such forward looking statements. The Company assumes no responsibility to publicly amend, modify or revise any forward looking statements, on the basis of any subsequent developments, information or events.
Economy and Industry Overview
India is one of the fastest-growing economies in the world, as well as home to approximately 35 percent of the worlds poorest people. Although Indias health care sector is growing rapidly driven mainly by private players public spending has remained quite low and resulted in inadequate infrastructure and manpower in public health facilities, especially in rural areas. Indias current spending on health care is expected to remain stable at the equivalent of 4.1 percent of GDP in 2015-2019. This is below the average of 6.5 percent expected for the Asia and Australasia region, and is seen by many (including the current government) as inadequate. In the Union Budget 2017-18, the overall health budget increased from INR 39,879 crore (US$ 5.96 billion) (1.97% of total Union Budget) to INR 48,878 crore (US$ 7.3 billion) (2.27% of total Union Budget).
Indias health care industry (which includes hospitals, medical infrastructure, medical devices, clinical trials, outsourcing, telemedicine, health insurance and medical equipment) is developing at a great pace and is expected to reach $160 billion by 2017, according to Frost & Sullivan. The countrys healthcare sector is poised to grow to $280 billion by 2020 while it is expected to be a leader in e-health by 2019. In the coming years it is expected that:
- Health care organizations in India will need to turn to innovative business models to improve access, increase quality, and simultaneously maximize resource utilization to ensure growth.
- Some enterprises are already starting to move in this direction emerging operating models such as hub and spoke have great potential to expand reach, especially in tier two and tier three regions, while asset-light models and other frugal innovations can reduce the cost of health care significantly.
- Health care delivery models such as day care and short- stay surgery are also revolutionizing the space by improving patient convenience and turnaround time.
- Finally, the innovative use of technology such as telemedicine is helping care providers maximize limited resources at a low cost.
- Rural India, which accounts for over 70% of the population, will be a significant contributor to the countrys incremental healthcare spending going forward on account of being significantly underpenetrated at present, the researchers believe.
Indias healthcare technology infrastructure is gradually improving and the industry is transitioning from paper files to electronic mediums. The Indian healthcare IT market is valued at $1billion (about Rs 6,650 crore) and is likely to grow about 1.5 times by 2020, according to a report by IT industry body Nasscom. Comparatively, the worldwide health tech market is estimated to grow at a CAGR of 6% to $25 billion by 2020 from $17.36 billion in 2014.
A. Industry Structure and Developments
Healthcare technology extends and improves life. The recent developments in this domain have progressed from diagnostics and imaging to real time data analysis and clinical decision support. This is driven by customer demand for better and more affordable care as well as continuous medical research that is changing the way patients are treated, administered and cared for.
Continuous innovation in medical technology is enhancing the quality and effectiveness of care rapidly.
The medical technology industry as reports from Deloitte are predicting a whopping 172.5 billion rise in the industrys worth by 2020. The current estimated value of the industry is set at approx. $60.8 billion and is expected to rise to $233.3 billion by 2020.
Healthcare information technology market in India is expected to reach $1,454.7 million in 2018 from the present $381.3 million, mainly due to fast adoption of technology by stake-holders, according to Frost & Sullivan.
As per a report by Nasscom, within the market, the healthcare software segment generated revenues of $96.8 million in 2014 and is likely to grow at a compounded annual growth rate (CAGR) of 11% over the next five years.
However, this industry is still undergoing a lot of changes and rapid development. It has not been well documented in the Indian context and estimates of industry size and growth vary significantly across different sources. While a wide range of medical products are covered under the medical technology industry, classification of key segments differs widely across the industry.
A significant development in healthcare will be in the area of predictive healthcare analytics wherein the vital components of a human body can be monitored and any deviation that may result in a medical emergency is detected in advance. The entire process, the researchers say, can work without human intervention through wearable devices that monitor a persons vitals and using the data available on a cloud platform to warn the patient in case of anomalies or even inform a doctor who can then monitor the patient remotely. Medical records which are available on cloud platforms or with the patients can be used by private companies and the government to establish healthcare trends (epidemic diseases, deficiencies prevalent, etc.) in the country. This will help channelize funds through various government and corporate programmes in the right direction.
In the coming years, the Deloitte report expects significant adoption of e-commerce in the retail medicine sales market, which is expected to reach $55 billion in 2020. Medicine e-commerce is likely to see high growth as more firms enter the segment with innovative business models, backed by global investors. Also, the market for pharma e-commerce will grow 10 times to $400 million in 2017-18.
India is fast emerging as a global medical tourism hub with international patient base growing in double digits year on year. This rising trend has resulted in an increase in investments by healthcare providers in installing best in class Healthcare IT, upgrading technology and seeking quality accreditation.
Sources:
http://www2.deloitte.com/content/dam/Deloitte/in/ Documents/life-sciences-health-care/in-lshc-medical- technology-in-India-noexp.pdf
https://www.projectusconsulting.com/blog/2016/03/ medical-technology-market-set-to-rise-like-no-other
https://www.ibef.org/industry/healthcare-india.aspx
Netscribes HIS Market in India 2015
Dinodia Capital Advisors Indian Healthcare - IT Sector April 2014
https://www2.deloitte.com/content/dam/Deloitte/global/ Documents/Life-Sciences-Health-Care/gx-lshc-2016- health-care-outlook-regional.pdf
http://www.dnaindia.com/money/report-india-s- healthcare-sector-poised-to-grow-to-280-billion-by- 2020-report-2204400
http://www.gartner.com/newsroom/id/3352217
http://timesofindia.indiatimes.com/tech/tech-news/ Healthcare-IT-market-in-India-may-touch-1454-million- Study/articleshow/24142487.cms
http://economictimes.indiatimes.com/tech/ites/ healthcare-it-now-a-1billion-market-says-nasscom/ articleshow/52051209.cms
Healthcare IT
At HealthFore we are driven by the belief of saving and enriching lives, we provide easy to adopt technology products and solutions for healthcare and related service providers that enable them to build long term engagement with their customers, deliver superior quality of care and clinical outcomes and enhance business performance, efficiency and productivity.
As a provider of Technology solutions in the healthcare sector, we put our clients at the center of everything that we do. As a team we understand the needs and the problems of the client and the reality of healthcare industry. Our special focus goes on making the product it easy to use, adapt and adopt.
To be able to reach our objectives, HealthFore addresses our strategy involves creating solutions which:
Help improve quality of care and clinical outcomes delivered
Provide a great experience to our customers and their stakeholders
Empower people with relevant and meaningful information
Make healthcare efficient and productive
Our Solutions
We currently provide technology products that can be easily adopted by healthcare providers and enable them to delight their customers and provide our customers with solutions and service around our products.
Our Company, in FY 2010-11 had acquired the healthcare division of SRIT comprising the Magnum suite of products. Coupled with the new HIS product introduced by us, we have the capacity to address the full spectrum of a Digital Healthcare. Our Core offering branded as Magnum Infinity is a comprehensive healthcare information system for managing processes across the healthcare enterprise. It is a fully web based, cloud enabled product with a modular design. Magnum Infinity is capable of retrieving and disseminating patientcentric clinical and financial data across the entire healthcare enterprise. Radiology Information Systems (RIS) & Picture Archival & Communication Systems (PACS) are part of our key Healthcare IT offerings. Value adds to the core product suite are in the form of integration engine, kiosk and portal solutions. Our Imaging solution branded as Magnum Imaging is a web based RIS-PACS solution, offering a comprehensive and fully integrated solution for digital imaging and information for hospitals, clinics and diagnostic centers. Magnum Imaging enables hospitals and clinics to acquire, distribute, store and display medical images and diagnostic reports.
Our products are installed in many hospitals across multiple regions. Our clients range from medium sized individual multispecialty hospitals to large sized multi-campus enterprises across South Asia, Middle East & Africa. We also offer cloud based solutions to our customers.
B. Segment-wise performance
i) Primary Segment - Business Segments:
Segments have been identified in line with the Accounting Standard on Segment Reporting (AS-17), taking into account the organization structure as well as the differential risks and returns of these segments. Segment revenue and results figures include the respective amounts identifiable to each of the segments and also amounts allocated on a reasonable basis. Other un-allocable expenditure includes expenses incurred on common services provided to the segments which are not directly identifiable to the individual segments as well as expenses incurred at a corporate level which relate to the Company as a whole. The business segment has been considered as the primary segment.
Information about primary Business segments (In INR.)
Particulars | Knowledge Services |
IT Services |
Healthcare |
Unallocated |
Total |
|||||
March 31, 2017 | March 31, 2016 | March 31, 2017 | March 31, 2016 | March 31, 2017 | March 31, 2016 | March 31, 2017 | March 31, 2016 | March 31, 2017 | March 31, 2016 | |
(i) Segment Revenue | ||||||||||
External Revenue | 184,298 | 271,808 | 174,614,325 | 190,079,457 | 11,599,712 | 38,796,489 | 186,398,335 | 229,147,754 | ||
Inter-Segment Revenue | ||||||||||
Total Revenue | 184,298 | 271,808 | 174,614,325 | 190,079,457 | 11,599,712 | 38,796,489 | 186,398,335 | 229,147,754 | ||
(ii) Segment Results | (2,603) | (34,022) | 123,416 | (10,277,905) | 29,094,621 | 41,750,050 | (918,907,759) | (767,409,785) | (889,692,325) | (735,971,662) |
Total Segment Results | (2,603) | (34,022) | 123,416 | (10,277,905) | 29,094,621 | 41,750,050 | (918,907,759) | (767,409,785) | (889,692,325) | (735,971,662) |
Income taxes (Current, Deferred and Fringe benefit tax) | ||||||||||
Profit/(Loss) after tax | (2,603) | (34,022) | 123,416 | (10,277,905) | 29,094,621 | 41,750,050 | (918,907,759) | (767,409,785) | (889,692,325) | (735,971,662) |
(iii) Segment Assets | 100,000 | 2,603 | 2,660,131 | 371,971 | 804,855,669 | 594,797,970 | 807,615,801 | 595,172,544 | ||
Unallocated Corporate assets | 207,488,557 | 386,569,966 | 207,488,557 | 386,569,966 |
Particulars | Knowledge Services |
IT Services |
Healthcare |
Unallocated |
Total |
|||||
March 31, 2017 | March 31, 2016 | March 31, 2017 | March 31, 2016 | March 31, 2017 | March 31, 2016 | March 31, 2017 | March 31, 2016 | March 31, 2017 | March 31, 2016 | |
Total Assets | 100,000 | 2,603 | 2,660,131 | 371,971 | 804,855,669 | 594,797,970 | 207,488,557 | 386,569,966 | 1,015,104,358 | 981,742,510 |
(iv) Segment Liabilities | 127,657 | 120,071,960 | (93,259,245) | 6,315,452,439 | (5,419,338,418) | 6,435,652,057 | (5,512,597,662) | |||
Total Liabilities | 127,657 | 120,071,960 | (93,259,245) | 6,315,452,439 | (5,419,338,418) | 6,435,652,056 | (5,512,597,663) | |||
(v) Capital Expenditure | 2,277,777,777 | 114,055,777 | 2,277,777,777 | 114,055,777 | ||||||
Unallocated Capital expenditure | ||||||||||
Total Capital Expenditure | 2,277,777,777 | 114,055,777 | 2,277,777,777 | 114,055,777 | ||||||
(vi) Depreciation/Amor- tisation | 2,603 | 34,022 | 1,058 | 1,491,722 | 59,794,278 | 54,398,765 | 8,577 | 152,581 | 59,806,515 | 56,077,090 |
Total Depreciation | 2,603 | 34,022 | 1,058 | 1,491,722 | 59,794,278 | 54,398,765 | 8,577 | 152,581 | 59,806,515 | 56,077,090 |
(vii) Non Cash Expenditure other than Depreciation | (2,084) | 951,738 | 2,548,727 | (1,753,078) | 822,728 | (354,770) | 3,369,372 | (1,156,110) | ||
Total Non Cash Expenditure | (2,084) | 951,738 | 2,548,727 | (1,753,078) | 822,728 | (354,770) | 3,369,372 | (1,156,110) |
C. Outlook
The fundamental strategy that will drive Healthcare Technology business is based on:
Quality of Care and Clinical Outcomes: Becoming the right partners for our clients to make sure that our products help them deliver better. We will invest in R & D, operations and people to ensure this.
Providing a Great Experience: Our approach is to lead by domain expertise best practices in our products, solutions and services and we leverage the experience of our team and partners in the segment to continuously improve and innovate.
Empower people with relevant and meaningful information: Ensure that our healthcare services are able to act as right platform for knowledge exchange across all stakeholders like nurses, hospital administration, payers, labs pharmacies and patients. We will also build solutions both rural and urban consumers as well as public health establishments in order to provide quality continuing care to patients from all walks of life.
Making Healthcare efficient and productive: We plan to serve our customers by adapting our solutions and services to meet their needs and requirements. Ensuring that our clients have streamlined workflows leading to better performance is a primary goal of our enterprise solutions.
D. Risks and Concerns
The Company remains dependent on human capital and the challenges associated with maintaining this capital in a global market place with high demand for skilled Technology and Healthcare resources.
The Company needs to address its capital structure as it grows. In the short term, there will be significant capital requirements to fund investments in R&D, technology and market growth. While a healthier pipeline of orders and revenue is forecast, this will not be enough to provide the funds required for product and business development.
E. Internal Control Systems
The Company is equipped with adequate internal control systems for its business processes, which determine the efficiency of its operations, strengthens financial reporting and ensures compliance with applicable laws and regulations.
The internal control systems are supplemented by extensive audits conducted by internal auditors. Moreover, regular internal audit and checks ensure that responsibilities are executed effectively across the organization. The Audit Committee of the Board of Directors reviews the adequacy and effectiveness of the internal control systems and also suggests improvements for strengthening the same.
F. Financial Overview of the Company
The total turnover of the company for the Financial Year 2016-17 was Rs.186.40 Million as against Rs. 229.15 Million in Financial Year 2015-16. The Company has recorded a net loss (before tax) of Rs. 889.69 Million during the year under review as compared to net loss (before tax) of Rs. 735.97 Million in Financial Year 2015-16. The increase in loss is mainly due to decrease in turnover of the Company. Our product and services offering needs continued investment to bring cutting edge innovative solutions and grow into an integrated IT Product and Services Company addressing Healthcare IT.
G. Human Resources
At HealthFore Technologies Ltd, we aim at becoming the employer of choice for which we have continuously strived to create robust policies and processes and engendered two way communication flows. To achieve this we have taken numerous steps to have an engaged, empowered and enabled team driving the Company forward. We have also articulated three organizational behaviours - Passion, Candidness and Speed - that define us as a Company. We further define our behaviours as:
Passion: We do everything with our heart and soul and bring our true selves to whatever we do
Candidness: We call a spade a spade and are transparent, honest and fair in all our interactions
Speed: The success of our stakeholders depends on us having done things yesterday
To enable a positive work culture we continuously relook and refine all processes, policies and structures impacting our people and make modifications where required. As a "gradeless" company, all our policies are based on roles and not position, driving ownership of decisions and actions to the relevant roles. We nurture an energetic and knowledge driven environment and inspirational leadership. Hence, we invest in our intellectual resources and consciously put efforts to build the best-in class talent pool.
In conclusion, the Company is beholden to its Shareholders for this opportunity to be in a vibrantly growing segment at a time of great technology change. Technology is transforming Healthcare around the globe and we are eminently poised to make the most of this opportunity.
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