Healthium Medtech files draft papers to raise funds via IPO

Healthium Medtech, a global medtech company focused on products used in surgical, post-surgical and chronic care, has filed the draft red herring prospectus with capital markets regulator Sebi to raise funds via an initial public offering.

The public issue comprises a fresh issue of Rs 390 crore and an offer for sale of 3.91 crore equity shares by selling shareholders. Promoter Quinag Acquisition (FDI) will offload up to 3.9 crore equity shares and other selling shareholder Mahadevan Narayanamoni will sell up to 1 lakh equity shares through the offer for sale.

The funds raised from the fresh issue are proposed to be utilised for repaying debts (Rs 50.09 crore); investment in subsidiaries Sironix Medical Technologies BV, Clinisupplies and Quality Needles (Rs 179.45 crore); acquisitions and other strategic initiatives (Rs 58 crore); and general corporate purposes.

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Currently, promoter Quinag Acquisition (FDI), a company backed by funds advised by Apax Partners, holds 99.79 percent shareholding in the company.

Quinag Acquisition acquired Healthium Medtech in June 2018 from selling shareholders including TPG Growth, AAJV Investment Trust, Menu and founding members.

Frost & Sullivan report indicated that one in five surgeries conducted globally uses a Healthium product as of March 2021. Furthermore, as of FY21, it is the largest independent medical device company and the second-largest company overall, in the surgical consumables market
in India with a 7.91 percent share based on value.

It is also the largest non-captive surgical needles manufacturer, with a 22.30 percent share in overall volume sales globally, and a 45.41 percent share of the non-captive market.

The company in its Sebi filing said it has gained market share across its markets and focus areas between fiscals 2019 and 2021, while improving profitability over this period.

Its revenue from operations grew at a CAGR of 10.52 percent between FY19 and FY21. It increased revenue from operations and EBITDA (earnings before interest, tax, depreciation and amortisation) by 11.61 percent and 61.06 percent during FY20 and FY21, despite the negative effects of the Covid-19 pandemic on the overall economy, and particularly on surgical volumes.

Profit after tax of the company grew significantly to Rs 85.43 crore in the financial year 2020-21, from Rs 36.76 crore in FY20 and Rs 13.73 crore in FY19.

The demand for its products is based on the volume of patient treatment and surgical procedures. The global market for products in focus areas is expected to grow at a CAGR of 4.99 percent between 2021 and 2025 and is estimated to be $28.75 billion in 2025. The key drivers for this growth are the ageing population and increased incidence of lifestyle diseases across the world, and improving access to healthcare in developing markets.

In particular, the market for surgical consumables and arthroscopy products in India is estimated to be $455.84 million in 2021 and estimated to grow at a CAGR of 9.60 percent between 2021 and 2025, driven by surgical volumes growing at 9.83 percent over this period. This growth is likely to be driven by improving access to surgical procedures in India, where the per-capita surgery rate is less than half of that in other similar developing markets (2,000 surgeries per 100,000 people compared to 4,500 surgeries per 100,000 people for other similar developing markets).

ICICI Securities, CLSA India, Credit Suisse Securities (India), and Nomura Financial Advisory and Securities (India) are appointed as the book running lead managers to the issue.