I have decided to move forward with only 2 sectors Healthcare and Alco Bev as it wasn't very practical to track 3 sectors at the same time.
In this blog i talk about how to evaluate healthcare sector. Here we will understand about how the hospitals model work, Comparing KPIs used to evaluate stocks across the spectrum and finally valuation multiples to evaluate the company.
Low cyclicality business - Demand in hospitals business is rarely affected by the market conditions because economic conditions have nothing to do with people getting sick, as it was witnessed that even during periods of recession where revenues remained constant with minute adverse effect in Margins.
Capital requirements - To establish a hospital huge sums of capital is required to invest in land, building, Highly specialized Doctors, Intricate Medical equipments, high working requirements to keep the hospital up and running. Investing in substantial amount of capital means investing for long term which requires long term commitment from the promoters to even bear losses in initial years as hospitals have a big gestation periods.
Economies of scale - Hospitals are generally
Mature Hospitals
Insurance Coverage
Regulatory Risk
Occupancy Rate
ARPOB
Avg length of stay
Payor Mix
Revenue Growth
Earnings growth
EBITDA Margin
Capex
EV/EBITDA
No comments:
Post a Comment