HCG Gains Control of Mahatma Gandhi Cancer Hospital in Strategic Partnership

HealthCare Global Enterprises Limited (HCG), one of India’s largest cancer care networks, has announced the acquisition of Mahatma Gandhi Cancer Hospital & Research Institute (MGCHRI) in Vizag, Andhra Pradesh, for an Enterprise Value of ₹4,140 million. Initially securing a 51% stake, HCG plans to acquire an additional 34% stake over the next 18 months. This strategic move positions HCG as a leader in a highly promising micro-market with a strong primary catchment area and significant secondary demand from neighbouring states.

Established in 1986, Mahatma Gandhi Cancer Hospital & Research Institute has become the foremost provider of comprehensive cancer care in Vizag, holding the largest market share. This acquisition is expected to substantially enhance HCG’s annual EBITDA by ₹3 per share and consolidate its leadership with a dominant position in the Vizag region.

The hospital currently operates 196 beds and is equipped with advanced medical facilities, including 2 LINAC machines, 1 PET CT scanner, 1 Robotics Surgery System, and a dedicated Bone Marrow Transplant (BMT) unit. Its clinical team comprises 31 doctors, including 12 Surgical, 6 Radiation, and 4 Medical oncologists.

Sharing his thoughts on the acquisition, the Executive Chairman of HealthCare Global

Enterprises Ltd, Dr B.S. Ajaikumar, said, “This acquisition is a significant milestone for HCG, emphasising Vizag’s strategic importance in their growth journey. This expansion strengthens HCG’s presence in the region, enhancing its capabilities and reinforcing its commitment to providing high-quality treatment and support for cancer patients.”

Dr Ajaikumar noted that the combined market leadership of HCG and MGCHRI would enable better utilisation of doctor bandwidth and medical technology consolidation. Additionally, HCG aims to augment tech capabilities to further improve the region’s cancer care quality. He expressed enthusiasm for continuing their mission to expand cancer care services and integrate innovative solutions to ensure exceptional, patient-tailored care.

The Managing Director and Chief Surgical Oncologist of Mahatma Gandhi Cancer Hospital & Research Institute, Dr Murali Krishna Vonna, said, “Today marks a significant milestone for Mahatma Gandhi Cancer Hospital & Research Institute as we join forces with HCG, a leader in oncology care. This union represents our shared vision to provide the highest quality cancer treatment and care to our patients in Vizag, a city that ranks among the top 10 cities by GDP. By combining our strengths, we are poised to enhance our medical expertise, expand our services, and continue our commitment to patient-centric care. I am excited about the opportunities this partnership brings and jointly remain dedicated to our mission of offering hope and healing to those affected by cancer.”

The partnership seeks to address the significant demand-supply gap in radiation therapy equipment, which has a penetration rate of less than 0.6 per million in Andhra Pradesh and Orissa. Mahatma Gandhi Cancer Hospital & Research Institute, located in a robust primary catchment area and benefiting from substantial secondary demand from neighbouring states, aligns closely with HCG’s rigorous cancer care protocols, ensuring seamless integration post-acquisition.

HCG aims to expand its multi-modality programs and enhance customer engagement strategies through this acquisition, leveraging operational synergies and scale advantages. The integration will utilise established technology platforms for digital marketing initiatives, thereby strengthening EBITDA margins and enhancing EPS growth.

On June 28, 2024, the share price of HealthCare Global Enterprises Limited opened at ₹371.00, touching the day’s high at ₹388.25, as of 1:26 PM on the NSE.

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