The Funding Opportunities in Healthcare

June 2015

2Private & Confidential

OVERVIEW

FUNDING OPPORTUNITIES IN HEALTHCARE

Funding options based on life cycle of the business

Funding options

Equity(Including OCPS, CCPS, Options, Warrants)

Debt(Including NCDs, OCDs, CCDs)

Larger inflow of capital leading to faster ramp up of operations

Dilution and Exit Pressure and valuations

Board directives and control clauses

Tax deductibility of expenses

Leverage to enhance return

Option for conversion into equity

Challenge obtaining long term finance

Mezzanine financing

In the nature of debt capital

Gives the lender the rights to convert if the loan is not paid back

Costly source of funding

Ideas Micro Business SMEs Mid Cap BusinessesMature Businesses

Incubation funds by Promoters

Family & Friends, Angel Investors,Venture Capital

Private EquityCapital Markets – Mutual

Funds, AMCsPrivate Equity

Capital Markets – Mutual Funds, AMCs

NIL Up to USD 5 Mn USD 6 – 20 Mn USD 20 – 200 Mn > USD 200 Mn

Stag

e o

f b

usi

ne

ss

Revenue

Equity

Difficult to source Difficult to source Bank loans Bank loansNCDs, OCDs, CCDs, Bank

loansDebt

HNIs, PE/ VC Funds, IPO Banks, NBFCs, Public Markets High Yield Funds

3Private & Confidential

CAPITAL STRUCTURE PLANNING FOR VARIOUS SEGMENTS IN HEALTHCARE

FUNDING OPPORTUNITIES IN HEALTHCARE

PrimaryPure

PathologyAmbulatory (Eye Care)

Pure Radiology

Secondary

Capex

Revenue

Pay back period (months)

In INR Mn Ambulatory (Maternity)

Peak^Revenue p.a. and Capex

PeakEBITDA and

Pay back period

Note: ^Typically 4th – 5th year of operations *300 bed tertiary care facility

Tertiary*

Source: Company data and Spark Research

Servicing principal/ interest before achieving break even

Cash flow management – Expansion vs. Debt repayment

Asset-liability mismatch

Ch

alle

nge

s

Challenges Mitigation

Moratorium option/ Ballooning repayment schedule/ Long term debt

Equity would be a more preferable option

Business planning (Expansion strategy), Capital structure planning

12% 22% 35% 35% 22% 23% 17%

60 60

48

30 30

60

80

0

20

40

60

80

100

0%

10%

20%

30%

40%

18 1875 90

240

320

400

8 1270 70

100

180

350

Asset Turnover

High

Moderate

Low

EBITDA Breakeven (no. of months)

8 6 10 24 12 18 15

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