Medi Assist Healthcare IPO entails to raise Rs ₹1,171.58 Crore. The issue is entirely offer for sale. Medi Assist Healthcare Services Limited provides third-party administration services to insurance companies through its wholly-owned Subsidiaries. A third party administrator is an organization that processes health insurance claims on behalf of insurance companies. Third party administrators were envisaged as a link between the insurer, healthcare service provider, and the policy holder. The insurers are expected to take risks, set the premium rates, and undertake the marketing and enrolment, while third party administrators are expected to take over the claims processing function.

About Medi Assist Healthcare IPO:

• Medi Assist Healthcare Services Limited operates as a holding company in the healthcare sector, focusing on third-party administration (TPA) services for insurance companies.
• Their business is conducted through the Company, Medi Assist Healthcare Services Limited, which is a holding company and proposed to be listed following the Offer, and through our nine subsidiaries of which four are direct subsidiaries and five are indirect subsidiaries.
• We provide third party administration services to insurance companies through our wholly owned Subsidiaries, Medi Assist TPA, Medvantage TPA (from February 13, 2023) and Raksha TPA (from August 25, 2023). A third party administrator is an organization that processes health insurance claims for insurance companies and provides services such as policy administration, customer service and network management, among others.
• As a third party administrator, it acts as a facilitator between (a) insurance companies and their policy holders, (b) insurance companies and healthcare providers (such as hospitals), and (c) the Government and beneficiaries of public health schemes. Their Subsidiaries, Medi Assist TPA and Medvantage TPA, contributed to 96.32% of the revenue from contracts with customers in the Financial Year 2023 and the Subsidiaries, Medi Assist TPA, Medvantage TPA and Raksha TPA contributed 92.98% of revenue from contracts with customers in the six months ended September 30, 2023.
• They also facilitate other healthcare and ancillary services such as hospitalization services, call centre services, customer relations and contract management services, billing services and claims processing services through their Company and other Subsidiaries, IHMS, Mayfair India, Mayfair UK, Mayfair Group Holding, Mayfair Philippines and Mayfair Singapore.
• They have developed a pan-India healthcare provider network which comprises 18,754 hospitals across 1,069 cities and towns and 31 states (including union territories) in India and network across 141 countries globally, as on September 30, 2023.
• As of September 30, 2023, they engaged 6,219 personnel (4,840 personnel full-time employees).
• They have network of 97 branches spread across 18 states in India, as of September 30, 2023.

Medi Assist Healthcare IPO: Financials

Anchor: Medi Assist Healthcare IPO

Medi Assist Healthcare Services, raised Rs 351.5 crore from 36 anchor investors ahead of its initial public offering and evoked a good response. Those who participated in the anchor book include Goldman Sachs, Nomura, Jupiter India Fund, Pinebridge Global Funds, SBI Life Insurance Company, Bajaj Allianz Life Insurance Company, Aditya Birla Sun Life Insurance Company, HDFC Mutual Fund (MF), Kotak Mahindra MF, Aditya Birla Sun Life MF, Edelweiss MF, Tata MF, Sundaram MF, and Bandhan MF etc.

Medi Assist Healthcare IPO: Salient Points

• The selling promoters include company chairman Vikram Jit Singh Chhatwal, Medimatter Health Management, Bessemer Health Capital, and Investcorp Private Equity Fund. 
• Bessemer India Capital has transferred shares worth Rs 175 crore on January 10 to Denmark-headquartered Novo Holdings. As a result of which, the shareholding of Bessemer India Capital has reduced to 29.84 percent from 35.92 percent at the time of RHP.
• As a result of OFS, PE investor Investcorp 21% stake shall drop to 13%. Individual promoter: 31% stake will go down to 10%.
• Medi Assist covers over 18,000 hospitals across 1,069 cities and 31 states and has 35 insurers as partners. 
• Its primary clients are insurers and most of its business comes from group covers/ corporate and enjoys a 30 per cent market share in this, overall, including retail, its market share is around 7 per cent.
• The company is backed by an experienced management team and institutional shareholders.
• A Third Party Administrator delivering capabilities to the insurance ecosystem across geographies and networks for over two decades.
• Medi Assist Healthcare Services Limited is positioned to capitalize on the growing demand for efficient healthcare services and insurance claim processing.
• Their established network and collaborations with numerous insurance companies places it firmly in the healthcare services sector. T
• Their growth is also supported by company’s diversification into various healthcare and ancillary services, catering to a wide range of needs in the healthcare sector both domestically as well as internationally.
• Recent acquisitions may add to company’s topline and bottom line and its is possible it may get some attention being a first mover in its segment.
• As of September 2023, 16 third party administrators operate in India, providing services to public and private health insurance companies. Their services help improve efficiency and reduce costs for insurance companies while providing valuable support and assistance to policyholders
• Their fees are linked to the premiums serviced. These figures for the Company are shown below:

• As part of its growth strategy, they have been acquiring certain entities from time to time. In the last eight years, they have successfully completed several acquisitions, including the following

• Company has pursued both organic and inorganic growth strategies to consolidate its market share in India and serve the overseas requirements of clients. The Company’s has demonstrated ability to integrate acquisitions with its business and consolidating its position in the industry.
• Between FY21-23, Revenues grew at 25% CAGR while EBITDA was up at 26% CAGR. This translated to 23% + EBITDA margin.
• In general out of every Rs. 100 premium charged by insurance companies, Rs. 2-5 to Rs. 5.5 may be the portion of third party administrators like Medi Assist.
• Medi Assist Healthcare IPO is coming at a PE ratio of 39.9x (fy23 earnings) and 64x (fy24 annualized earnings).
• Company’s EBITDA margins are lower in H1Fy24 due to certain one times charges due to recent acquisitions and other one time expenses. It has indicated that 23-24% EBITDA margins as in the past can be expected going forward.
• Company is debt-free with cash and equivalents of ~ Rs. 140 cr. Company has till date has funded all acquisition through internal cash generation without resorting to debt financing.
• company is confident of going back to 23-24% EBITDA margin and 14-16% PAT margin levels
• Share of TPA in health insurance premiums serviced, was 52% in FY19 and stands at 55% at present. Rest was serviced by Insurance companies on their own. This share is expected to rise as TPAs like Medi Assist offer better value proposition.
• I intend to apply in Medi Assist Healthcare IPO even as present GMP provides little comfort. In recent times Investors have developed cold feet towards mainline IPOs and gains from these have been limited or even they have quoted below the issue prices. Investors are also wary of pure offer of sale. This along with overhang of sale by existing PE investors may limit gains from the IPO. However from a medium term perspective, company looks to be on a sound footing and has been continuously going for selective and focused acquisition in its area through internal accruals and strengthening its position. I also like the healthy EBITDA margins, zero debt status and good cash generation.
• Standard disclaimer: I am not a SEBI registered analyst and above analysis is for educational purpose only. Iam a postgraduate in engineering & Management . I have in the past cleared some exams like NISM-Series-V-A: Mutual Fund Distributors Certification, NISM-Series-X-A: Investment Adviser (Level 1) Certification and NISM-Series-X-B: Investment Adviser (Level 2) Examination. This post is my view on the subject matter and is only academic and exploratory in nature. It is not meant to influence investment decisions of investors. I may have bias/vested interest in covered Stock/Mutual Funds/NCD etc. due to my own investment or leaning. Further my understanding of the areas on which I write may be imperfect or incomplete and data could be wrong due to limited time and resources at my disposal. Do check the data from company’s RHP and exchanges before making any decision. Please do your own due diligence as stock market/MF investments have high degree of inherent risk.