Firm overview

Medi Help Healthcare is a third-party administration (TPA) service supplier to insurance coverage firms by way of wholly owned subsidiaries Medi Help TPA, Medvantage TPA (from February 13, 2023) and Raksha TPA (from August 25, 2023). A TPA is a company that processes medical health insurance claims for insurance coverage firms and offers companies equivalent to coverage administration, customer support and community administration, amongst others. As a third-party administrator, the corporate act as a facilitator between (a) insurance coverage firms and their coverage holders, (b) insurance coverage firms and healthcare suppliers (equivalent to hospitals), and (c) the Authorities and beneficiaries of public well being schemes. It additionally facilitates different healthcare and ancillary companies equivalent to hospitalization companies, name centre companies, buyer relations and contract administration companies, billing companies and claims processing companies. The corporate has developed a pan-India healthcare supplier community which includes 18,754 hospitals throughout 1,069 cities and cities and 31 states (together with union territories) in India and community throughout 141 nations globally, as on September 30, 2023.

Objects of the supply

• To hold out the Supply for Sale of as much as 28,028,168 Fairness Shares by the Promoting Shareholders.

• Obtain the advantages of itemizing Fairness Shares on the Inventory Exchanges.

Funding Rationale

• Effectively-established third-party administrator in India – Medi Help Healthcare’s key subsidiaries Medi Help TPA, Medvantage TPA and Raksha TPA are well-established TPAs in India. The three subsidiaries contribute the foremost portion of the corporate’s consolidated income. Medi Help TPA and Medvantage TPA, contributed to 96.32% of income from contracts with prospects within the FY23 and Medi Help TPA, Medvantage TPA and Raksha TPA contributed 92.98% of income from contracts with prospects in H1FY24. Medi Help TPA had a market share of 14.83% of the retail medical health insurance market and 41.71% of the group medical health insurance market, and a cumulative retail and group phase share of 33.67% serviced by third get together directors, as of FY22.

• Insured Member Expertise – The corporate’s know-how platforms supply to people, and corporates and their workers’ enrolment and modification of beneficiaries, enrolment and administration of flexi-benefits, pre-authorization to avail coverage advantages, custom-made and safety integration with the company intranets, scheduling appointments, submission and reimbursement of claims and cashless declare settlement. Cashless declare settlement is a profit prolonged completely to insured members searching for medical therapy at 166 healthcare services that are below an energetic community contract. This association facilitates direct monetary settlement by the insurer with the treating hospital, eliminating the necessity for speedy out-of-pocket funds by policyholders for the bills lined below the phrases and circumstances of their respective insurance policies. Because of the measurement and scale of operations and contracting capabilities, it is ready to negotiate discounted charges with hospitals for the advantage of insurance coverage firms and insured members, thereby managing medical inflation higher.

• Expertise pushed infrastructure – The corporate’s technology-driven infrastructure and companies are custom-built, and help numerous stakeholders equivalent to insurance coverage firms, hospitals, insurance coverage brokers and insurance coverage brokers of their operations, and are scalable, complete, straightforward to make use of and safe. The corporate has been profitable in leveraging its technical capabilities and area experience to enhance its operational efficiencies. The overall variety of claims intimated to the corporate in FY21-23 has grown from 3,134,056 to six,090,526 at a CAGR of 39.40%, a rise in quantity with out having to incur a proportionate enhance in value. The corporate acts as a portal the place insurance coverage firms have actual time entry to claims processed and examine paperwork submitted, and queries raised amongst others. Insurance coverage firms can research traits, examine historic efficiency, conduct evaluation and make knowledgeable selections to optimize their well being advantages portfolio. It has additionally begun to make the most of synthetic intelligence and machine studying to reinforce fraud detection functionality, which strengthens the reliability and integrity of claims processing operations.

• Monetary efficiency – Through the six months ended September 30, 2023, the corporate helped settle 3.05 million claims, comprising 1.37 million in-patient claims and 1.68 million domiciliary or out-patient claims. The corporate reported a income of Rs.519 crore in FY23 as towards Rs.412 crore in FY22, a rise of 26% YoY. The income has grown at a CAGR of 23% between FY2021-23. The EBITDA of the corporate in FY23 is at Rs. 119 crore and EBITDA margin is at 24%.  The PAT of the corporate in FY23 is at Rs. 74 crore and PAT margin is at 14%. The CAGR between FY2021-23 of EBITDA is 25% and PAT is 68%. The ROCE of the corporate stands at 25% in FY23. Complete medical health insurance premium serviced by the corporate grew at a CAGR of 19% between FY18-22.

Key dangers

• OFS danger – The IPO consists of solely an Supply for Sale of as much as 28,028,168 fairness shares by the Promoting Shareholders, together with the corporate Promoters. All the proceeds from the Supply for Sale will likely be paid to the Promoting Shareholders, together with Promoters and the corporate is not going to obtain any such proceeds. The supply includes the sale of two,539,092 shares by the corporate promoter Dr. Vikram Jit Singh Chhatwal, 12,468,592 shares by promoter Medimatter Well being Administration Non-public Restricted and 6,606,084 by promoter Bessemer Well being Capital LLC. Remaining of the shares are offered by Investor and Different Promoting Shareholders.

• Regulatory danger – The corporate and its subsidiaries engaged within the actions as a TPA are topic to regulation by the Insurance coverage Regulatory and Growth Authority of India.

• Dependence on subsidiaries –The corporate is very relied on the efficiency of its three key subsidiaries. Any unanticipated occasion that may adversely have an effect on any of those subsidiaries would possibly influence the revenue and income of the corporate.

Outlook

In line with RHP, the corporate doesn’t have any listed competitor in India and it’s not potential to supply an trade comparability in relation to the corporate. On the increased worth band, the itemizing market cap of Medi Help Healthcare will likely be round ~Rs.2878 crore and the corporate is demanding a P/E a number of of 38.22x based mostly on submit difficulty diluted FY23 EPS of Rs.10.94. The corporate appears to be overvalued. Primarily based on the above views, we offer a ‘Impartial’ score for this IPO for a medium to long-term holding.

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