Ladies and gentlemen, good day and welcome to the Max Healthcare Institute Limited earnings conference call. As a reminder, all participant lines will be in a listen-only mode, and there will be an opportunity for you to ask questions after the presentation concludes. Should you need assistance during the conference call, please signal an operator by pressing star then zero on your touchtone phone. Please note that this conference is being recorded. I now hand the conference over to Mr. Anoop Poojari from CDR India. Thank you, and over to you, sir.
Thank you. Good morning, everyone, and thank you for joining us on Max Healthcare's Q3 and 9M FY23 earnings conference call. We have with us Mr. Abhay Soi, Chairman and Managing Director, and Mr. Yogesh Sareen, Senior Director and Chief Financial Officer of the company. We will begin the call with opening remarks from the management, following which we'll have the forum open for an interactive question and answer session. Before we start, I would like to point out that some statements made in today's call may be forward-looking in nature and a disclaimer to this effect has been included in the earnings presentation shared with you all. I would now like to invite Abhay to make his opening remarks.
A very good morning to everyone. I'm pleased to welcome you to Max Healthcare Q3 earnings call. Our performance for this quarter was on expected lines and reflected continued focus on execution by the hospital teams while maintaining high levels of medical quality and patient satisfaction. Compared to quarter three last year, the occupancies, revenues, EBITDA, and other operating and financial parameters have improved considerably. While compared to Q2, this quarterly quarter expectedly witnessed a slight dip in the occupancy due to festive season and revenue was relatively flat. However, we yet again reported our highest ever EBITDA, both in terms of absolute value and margins. EBITDA per bed, ARPOB, and ROCE for the third consecutive quarter this financial year. Our digital app, Max MyHealth, which was soft-launched at the end of September 2022, has already witnessed approximately 90,000 downloads.
The app is now ready for a formal launch in the fourth quarter of the current year. Before I move on to the highlights of this quarter, please note that comparative numbers and percentages are being reported on a like-to-like basis, excluding COVID-19 vaccinations and one-time tax gain in the previous quarter. Key highlights of our third quarter performance are occupancy for the quarter improved to 77% from 74% in Q3 last year. It was marginally lower than 78% for the previous quarter due to festival season. Institutional bed share fell to 29% compared to 31% in Q3 last year. The bed share was 1% higher than the previous quarter due to relaxation owing to lower occupancy in festive season.
Network gross revenue was INR 1,559 crores compared to INR 1,385 crores in Q3 last year, and INR 1,567 crores in the previous quarter. This reflects a growth of 13% year-on-year, while remaining flat quarter-on-quarter due to seasonality. Revenue from international patients grew by 62% year-on-year and reflected 110% of pre-COVID average. This accounts for around 9% of the revenues now. Digital revenue grew to INR 272 crores and accounted for 17% of overall revenue. ARPOB for the quarter rose to approximately INR 66,800, reflecting a growth of 10% year-on-year and 1% quarter-on-quarter.
We reported our highest ever network operating EBITDA of INR 419 crore compared to INR 364 crore in Q3 last year, and INR 410 crore in the previous quarter, reflecting a growth of 15% year-on-year and 2% quarter-on-quarter. We are actively managing the costs and there is a reduction in overheads quarter-on-quarter due to better collections and reduction in power costs. Operating EBITDA margin improved to 28.3% versus 27.8% in Q3 last year, and 27.7% in the previous quarter. Annualized EBITDA per bed, most importantly, rose to INR 66.9 lakh, yet again our highest ever, clocking a growth of 12% year-on-year and 4% quarter-on-quarter.
Profit after tax was INR 269 crores versus INR 252 crores in Q3 last year, and INR 267 crores in the previous quarter. Net cash position stood at INR 372 crores at the end of December 2022, compared to net debt of INR 296 crores last year. This is after deployment of INR 102 crores towards the ongoing capacity expansion projects. Continuing our efforts to give back to the community, we treated 38,344 OPD and 1,264 IPD patients from economically weaker sections free of charge. In addition, we provided nutritional support to around 2,300 CP patients during the quarter. Both our SBUs continued to report robust numbers.
Max@Home reported a top line of INR 36 crore reflecting a growth of 30% year-on-year and 4% quarter-on-quarter. It started immunization at home services and now has 14 service line offerings. Max Lab reported a gross revenue of INR 28 crore. This reflects a growth of 46% year-on-year, while declining by 4% quarter-on-quarter due to seasonality. The active network partners stood at over 900, spread across 34 cities and supported by a dedicated team of more than 700 personnel. Coming to the overview of the company's financial performance for the nine months ended December 31, 2022. Network gross revenue stood at INR 4,597 crore reflecting a growth of 16% on a like-to-like basis. Network operating EBITDA stood at INR 1,199 crore registering a growth of 20% on a like-to-like basis.
RPOB improved by 16% due to price, payer mix, case mix, etc , and led to margin expansion by 92 basis points. EBITDA per bed grew by 21% to INR 64.4 lakhs. COVID-19 bed occupancy was negligible throughout. On average, COVID-19 patients occupied nearly five beds in Q3 and 20 beds during the nine months. On expansion projects, the current status of capacity coming on stream by FY25 is as follows. 100 beds at Shalimar Bagh have been more or less handed over to operations team, and we are on schedule for starting the operations in the current quarter. 300 beds at Dwarka, the structure is complete and interior work is underway. We plan to file for occupancy certificate by May and operationalize in Q2 FY24 as planned. 329 beds at Nanavati.
The contract has been awarded to Larsen & Toubro on a turnkey basis in December for handing over the hospital on or before 24 months. L&T is fully mobilized, and we expect to commission the facility by end of FY 25. 300 beds at Sector 56, Gurgaon. Work has commenced, excavation, and this 300 beds is the first phase. Work has commenced, excavation and d-wall work will be completed by first quarter FY 24, by which time the civil contractor will also be mobilized. We would also like to point out that Sector 53 land cancellation has no impact on our bed addition plan till FY 28. It wasn't part of an expansion rollout, but will, if at all, impact bed potential post FY 2028, as we have put down in investor presentation.
All in all, up till this stage, we are seeing no delays. We are focused on execution, and it is going to be on spot as planned. 350 beds at Max Smart. The project is delayed by around three months for lack of final tree cutting permission, which has been received in January this year now. The work will start in the current quarter, and we hope to recoup the time lost as we progress on the project. While we continue our focus on the growth levers articulated in the past, we have also been evaluating avenues for catering to demand for quality healthcare in the near term. We expect to add over 100 beds in the next two quarters at some of our hospitals through internal reconfigurations.
Moreover, with our net cash surplus and deleveraged balance sheet, we're extremely well-positioned and actively evaluating inorganic growth opportunities. As of yesterday, our board has given in-principle approval to raise finance of up to INR 4,200 crores of NCDs for any future M&A. However, we intend not to breach 2 to 2.5 times net debt to EBITDA, considering that any new acquisition will also bring its own EBITDA in place. With this, we open the floor for Q&A.
Thank you very much. We will now begin the question and answer session. Anyone who wishes to ask a question may press star and one on their touchtone telephone. If you wish to remove yourself from the question queue, you may press star and two. Participants are requested to use handsets when asking a question. Ladies and gentlemen, we will wait for a moment while the question queue assembles. First question is from the line of Nikhil Mahajan from HDFC Mutual Fund. Please go ahead.
Yeah, hi, good morning to all. My question, my third question was to be on medical data. I think we have kind of cleared it. Just at a slightly higher level, I wanted to understand that so much of organic bed expansions planned over the next 4, 5 years, is there a pressing need to do an M&A or whatever M&A that you are seeking is gonna be very, I mean, very, very valuation conscious and there have to be some clear upside for you to be looking for an M&A because I believe the best of CapEx plan itself will kind of take care of the medium to long term growth of the company.
I think, you know, we're not focusing a cap on the long-term growth. I think, you know, if you look at the opportunity set which is out there, you know, it is significantly higher than what we are looking to tap through our brownfields or whatever we're expanding. One is that. I think secondly, also, you know, given the fact that we have a completely unlevered balance sheet, we've got more than INR 1,000 crores of cash sitting. We've got a net debt position of some INR 360 crores-INR 370 crores. Our entire expansion, which is at a cost of what? INR 4,000 crores-INR 4,500 crores over the next 4 years, okay, is going to be conducted entirely through about 50% of our free cash flows.
We have a totally unlevered balance sheet, and we have the rest of our free cash flows to deploy. Given the opportunity set out there and, you know, again, if you've seen our, you know, history, it's been about buying assets at values which are intrinsically below what we believe we can kick out over their EBITDA. These will all be massively value accretive. We are very, very conscious of ROCE. We are already creating very, very high ROCEs, like I've said before, also in my past calls. I think, you know, anything that we will be acquiring is going to be accretive. We're not acquiring for the sake of it.
Understood. Sir, what are the priorities in terms of.
It also gives us, you know, it also gives us presence in newer geographies.
Understood. In terms of regional priority, I think North looks pretty sorted for the company. There is obviously media article of you venturing out in Kolkata, looking out for something there. But would it be safe to assume that I mean, my understanding, perhaps, the southern markets and is a bit more competitive, so you might be looking more for West and East. Would that be a fair assumption?
Not really. I think, you know, if you look at, I've gone in the past and said, "Look, we won't go to uncharted territory. I will go to any territory where at least two or three of my competitors have proven viability, and we will do it better." Like we pretty much have done, without exception, every micro market that we present in. You know, if you go by that list, I think the number of cities will be in the 20s, mid-20, where a number of people have proven viability. I mean, we do operate out of Mumbai, which is, you know, which is western India. It's the only asset that we have, and it operates pretty well.
If we look at what we are doing in even outside the cluster, early NCR, you know, in places, tier 2 cities like Mohali or Dehradun, it's extremely high ROCE businesses for us. I think, you know, even entry into the southern markets, when you look at, when you look at, what their profitability, etc , are, I think, you know, so long as we have conviction that we can kick out and we can make it accretive, it becomes a sensible entry point for us.
Got it. One more question I had on the operations for this particular year. Now, I think there are mixed information based on number of clinical update on liver transplants, kidney transplants and bone marrow transplants done till date. Can you give some sense as to what is the number for these three categories of transplants looking like in FY 23? What growth are we envisaging in the number of transplants that we'll be doing in the coming 2-3 years? Because, I mean, the clear question here is that these initiatives are for the future, so that could be a top driver for you in the coming 2-3 years.
No, but Nikhil, it doesn't really move the needle. I mean, you have to look at it collectively. I think overall this transplant business is 5%-6% of our... Yeah. Nikhil, basically, if you come to the liver transplant, you know, we do around 40-45 of them every month, right? Kidney transplant would be again a bit higher than that, it will be around 60-65 every month. BMT would be another 25-30. These are the ranges that we have. Obviously, you know, the endeavor of the hospital is to, you know, start this program, you know, in more and more hospitals. For example, that's what we did in liver transplant. We started, you know, a program in Vaishali. We started the program in BLK.
We are starting program in Mohali and in Dehradun now. We are waiting for the license. One thing, obviously, you know, that's always the effort, right? Now to put a number, you know, projected number, that's very tough for us, right? There's no order book that we have, right? Moreover, I, what I'm saying is that this is going to be incremental. You know, this is already a particular pace at which we add, so this is going to be incremental. You're not gonna see an exponential move because there's, you know, even if I double this number, you're not gonna see exponential change in EBITDA or margins because of it.
All right. Got it, sir. Thank you so much.
Thank you. The next question is from the line of Damayanti Kerai from HSBC. Please go ahead.
Hi. Good morning. First, one clarification. Abhay, did you mention you would be able to add another 100 beds through internal reconfiguration apart from the planned ongoing CapEx?
I said over 100 beds. It's a number which is higher than 100 beds. Yeah.
Okay, sir. That's clear.
Through internal reconfigurations, okay, we will be adding this, and we'll be adding this over the next few months.
Next few months. Okay. My second question is how do you see your operating costs inching up as your planned beds come online over the next two, three years, both towards the variable as well as fixed cost part?
I think, you know, majority of the CapEx that we're doing or the rollout we are doing is towards brownfields, right? I mean, 80-85% of the total rollout is towards brownfields. Brownfields, by their very virtue, have higher operating leverage. See, because it doesn't necessarily have a fixed cost associated to it, because the fixed cost, be it in terms of management or senior clinicians, etc , is already incurred by the existing hospitals. When you add another tower next to it has lower sort of or doesn't have that. You technically have a higher operating leverage. Your operating cost overall should come down.
Okay. because you would be able to expand the existing, resources to a higher, number of beds, right? that's why.
That's right. That's right. What you are actually putting over there are nurses or resident doctors, etc . Your senior clinician is already in place.
If the reason you're doing these brownfields in the first place is because you're capacity down, right? You got uninitiated demand at your doorstep. Your doctors have no, you know, they don't get OT time, they don't get beds for the patients and so on and so forth.
Okay. In most of these brownfield expansion, should we assume the breakeven should be achievable within 12 to 15 months of the commencement of the unit?
You know, I've stated in the past, the brownfield should have a breakeven in the first quarter or two, if not the first quarter itself.
Okay. Within two quarters, we can reasonably assume that...
Absolutely.
Okay.
In a brownfield, you know all the beds till such time you are able to fill it, right? There's no need for us to open all the beds.
Okay, understood.
I mean, not that we don't have the need. We have the need. I think the point which, Yogesh is making, also you're holding the assets on your books, right? There's no real fixed cost associated to it.
Okay.
from operating standpoint.
Okay. My last question is, can you talk a bit about your ESOP programs? Right now, what % of Max employees are covered by your ESOPs, and what kind of annual expense you expect for the stock option programs?
I think they're about 81 and 60 years. 271 employees, okay, are covered by the ESOP plan. I think the important thing is that the cliff for the ESOP plan, okay, is 20%. Is 20% IRR, which comes to a price of, I think, nothing to where the 100% of ESOP, the price is INR 1,260 after 5 years. There's a cliff. If it doesn't hit that price, the ESOPs don't sort of fund the CAGR. That's it.
Sorry, I just missed the price. Sorry.
Basically, the ESOP has a clause. There are two portions to ESOP. One is the individual performance, other is the company performance.
Mm-hmm.
The company performance part, which is a large part mainly for the leadership team, basically will vest after five years, provided there is a 25% CAGR in the share price when we issue the ESOPs. At that rate, the price required for 100% is to vest is INR 1,260 at the end of five years.
Okay. Okay. Understood. Understood. Thank you. I'll get back in the queue.
Thank you. The next question is from the line of Amit Kadam from Canara Robeco Mutual Fund. Please go ahead.
Yeah, hi, sir. Am I audible?
Yeah.
My first question is that, can you build a little bit more on how the international patient fix piece is moving, how the things look forward. For example, in one of the line you mentioned that, the fees are already at 10% higher than the.
I'm sorry. Question is the handset, please.
Okay, I'll do that. Okay. Is it fine now?
It's a little low. Can you speak up a bit?
Okay. Is this okay?
Yes. Yes.
Okay.
Yeah, better.
Yeah. I'd just like, can you build a little bit on the international patient, how that particular mix or segment is moving. In one of the slide, you mentioned that the sales are already at 10% higher than the pre-COVID. Just wanted to know that on footfall, how the things are looking, where the traction is coming, how do I see the year going forward? Last time when we spoke, you had mentioned about Afghanistan not present, but you are trying to cope up that particular thing with some other drivers. Just maybe two, three minutes brief on that particular segment, please.
We're not trying to cope up. We have coped up, right? In spite of in Afghanistan, which is 12% of our business down to zero, we are at 110% of pre-COVID levels. What that basically implies is that not have we coped up with the lack of Afghanistan, but we, you know, sort of, overcompensated for it, right? That's one. Secondly, I mean, to have a discussion on present footfalls, you have to have a point of reference on past footfalls. I mean, the fact that this number has been moving up, I mean, we're getting massive traction on this. You know, it's over 60% compared to last year. It's over 110% compared to pre-COVID levels in spite of 12% of Afghanistan business not being there.
Hopefully in the next quarter or two quarters, depending on the geopolitics as and when Afghanistan does open, this will give us further lifting. In the meantime, we'll be looking at other geographies as well. We've been opening offices in other places, and we are going to be looking at more direct to. And, you know, I guess, with also the support of the Indian government through Heal in India and Heal by India, there is focus on global medical tourism. I think we can have a step change over here. I haven't given any guidances in terms of footfalls in future or revenue guidance in terms of, you know, in terms of international patient or any other sort of revenue guidance. I would avoid that even at this stage.
When we say, like the revenues have hit, like, 10% higher, then even the footfalls are, I assume that with realization being same, then those, even footfalls are higher than the pre-COVID?
Yes, more or less, yes. May not be 10%, maybe probably 4%-5%.
Okay. Got it. Second is, Yogesh, sir, you can help me with this one. In one of the presentation throughput, you have mentioned that there was a recovery in terms of bad debts, which you have under the overheads. Can you just help me with that particular number, please?
That means that number would be around INR 7 crores.
Okay.
during the quarter. Right. This is a charge of this happens. This is charged during the quarter, so this is obviously, you know, it's a running system that we have. At the end of each quarter, whatever bill is above 365 days, they will get provisioned for, right? We have a very stringent policy that anything which is over 365 days, okay, we provide for.
Right. Because you had mentioned that the, why the things, that OpEx is sequentially down. One of the line item you mentioned that one of this quarter reason.
Yeah. Yeah, we did mention, yes.
Okay.
That's right, yeah. There's impact. There's always the impact. This obviously, you know, depends on when the section comes. Some, you know, we have, you know, around 60%, 70% of business which is issued, you know, revenue share. The payment from CGHS are steady, you know, they come in blocks.
Okay.
Sometimes they come over 365 days, then we write it off at the end of 365 days, we provide for it, and then when it comes back, we have to write it back.
Okay. Yeah. Just like want to know further, like, because you had said that another 100 you are expecting in next few months through the internal reconfiguration. Is it across the various hospitals or is it from one particular thing? Second is that, is it safe to build this particular increase in terms of like somewhere in Q1 or Q2 of FY24?
Yeah. I mean, it should come in through by quarter one, quarter two of FY 2024, right?
Yeah.
These are. Yeah, these are in four or five separate hospitals. There'll be 20 beds somewhere, there'll be 30 beds somewhere, and so on. Yeah. Collectively it's over 100 beds. Clearly, you know, you eke out this capacity in places where you're hitting, you know, thresholds. When you get to that stage, you find elasticity, you find reconfiguration and so on to be able to get... You know, I mean, you don't do it in a place where you already have even little bit of leeway as far as idle capacity is concerned.
You have to understand, you know, as we are coming close to threshold capacities in place, what we earlier thought were threshold capacities, both in terms of operation and number of beds, we find there is elasticity at the end. Right? Once you get... It's like, you know, manufacturing process, where your rated capacity may be 75%. When you come to the 75%, you realize that you can operate 80%. When you get to 80%, you'll realize you can get to 82%, 83%, and so on.
Right. Right. Yeah. That's it. I will fall back. Thank you.
Thank you. Thank you.
Thank you. The next question is from the line of Naman Mansukhani from Proficient Investment Managers. Please go ahead.
Hi, sir. Thank you for the opportunity. My first question relates to the international patients, and I think it's around 8.5% contribution. If you want to view it as a percentage of only Delhi hospitals, how much could that percentage be? Relating to the international patients, like, what is the structure that we follow to attract these international patients? Like, do we pay some medical consultancy fees to any agencies, or what sort of costs do we pay to attract these patients? How is it versus the industry and Max? This is my first question. My second question relates to the margin structure of brownfield expansion which we are doing. With every incremental bed additions, how do we see the incremental margins which we get on the brownfield beds?
Lastly, on the ARPOB difference, like, what is the difference majorly in our business between the international and domestic ARPOB, and how would it boil down in terms of EBITDA per bed? These are my questions.
Let me start by margin on brownfields, then come to. As far as margins on brownfields are concerned, our typical brownfield will cost us about INR 130 lakhs, INR 140 lakhs per bed. Our present EBITDA per bed is about INR 66 lakhs last quarter. If you apply even a 75% occupancy rate to it, that comes to about INR 66 lakhs. It will be about INR 45 lakhs, INR 50 lakhs I presume. We're looking at INR 50 lakhs on top of INR 130. This is if you were doing business as usual. Like I mentioned, there's operating leverage in brownfields, EBITDA per bed should be northwards of that. More importantly, over the next couple of years by the time all of this comes on stream, we'll have some real inflationary growth on top line as well. It is massively accretive.
Look, the most attractive thing we'll ever do, okay, more than M&A, more than greenfield, etc , is brownfield, okay? Because, A, you are building in a proven area where you are tapping into unceasing demand, and then you have huge amount of operating leverage coming out. That is exactly what we are doing. That's one. I hope that answers your question as far as margins are concerned. Now, coming to Yeah. On the ARPOB question that you asked, you know, on the, on the international side, typically the ticket size for the international patient is double of the domestic because of the, because of the fact that there are more acute patients. The LOS is also higher, right? The average length of stay of these patients is also 1.3 times of the normal.
Typically, that means that the ARPOB will be around the half times of the domestic patients. The domestic patients will be cash domestic patients, right? That, that's the, you know, on the ARPOB. Yes, the EBITDA per bed is higher because of the fact that these are higher ARPOB. Even if we maintain the same margin percentage, you know, after payout to these, you know, HCA and distributors, you know, your EBITDA per bed will be again, you know, around 20% higher than the domestic patients. Having said that, we get our marketing is done through multiple channels. There are, at the very least there are walk-in patients where there are no facilitators involved.
You have a patient or people who come through our digital platform, come through our office overseas and so on and so forth. You have patients who come through international medical tourism companies. You know, so in those situations, we make a payment of a facilitation fees to those international medical tourism companies. The third is we have tie-ups with the various ministries of health in various countries. We have tie-ups in hospitals. At any given point of time, a number of our doctors are traveling overseas, conducting OPD screenings. It's a fairly organic process. We also have doctors from these countries who come to our hospitals and work as observers. They go back, they champion our this thing.
We conduct OPDs, we screen the patients, we do pre-consult, post-consult over there, and so on. That's how you know, that's the backbone of how we do medical tourism. Yeah. Also on your question, you know, about the share of international patients in the NCR hospitals or Delhi hospitals. It range from 18%-4%, right? The maximum will be in DLF Hospital, you know, DLF Max Hospital, you know, then followed with Safdarjung, and then you have other hospitals like Vaishali and, you know, Patparganj and etc . On an average, it'll be probably 11%-12% in the NCR hospitals.
Okay, got it. What is the maximum on a consolidated basis? We are currently at 8.5% international contribution, and this can go up to what, 10%-11%?
I mean, that's how much we are doing, right? Like I said, I'm gonna avoid giving any sort of guidance in terms of, how much of this business we are going to be shooting for over the next four to five years. Like I said, the potential is exponential or incremental.
Okay, sure. Thank you for the update. That's all.
Thank you.
Thank you. The next question is from the line of Ashish Thakkar from IIFL AMC. Please go ahead.
Yeah, thanks for the opportunity. Sir, if you could spell out if there is certain seasonality in our business, because if we try to have a look at the occupancy rates, Q4 seems to be much lower than the earlier quarters. If you could just help us understand the nature of the business.
Absolutely. There is a seasonality in the business. Even if you go back to our last quarter's investor call or the presentation, when we had the higher occupancy, we said in Q2 that the occupancy is higher because of seasonality, right? In the rainy season, you have waterborne diseases, airborne diseases, etc . In Q2, typically all hospitals have higher occupancies, right? I mean, this is, like I mentioned, due to the seasonality and the flu season and so on and so forth. You'll have a lot of internal medicine patients, you have a lot of pediatric patients, etc . They come to the hospital for medical reasons, not for surgical reasons. This quarter two is usually characterized by higher occupancy but lower ARPO.
If you look at Q3 is typically a weaker quarter. Year-on-year, you will find it to be a weaker quarter, which is this present quarter, because it is characterized by the festive season. You know, a lot of the New Year, Christmas, holidays, etc . You know, I think this is Diwali was also late, Diwali. You will see patients postponing their surgeries or doctors postponing the surgeries, etc , during it goes by a few days or a few weeks or whatever. Typically Q3 is a weaker quarter. You have, which is characterized by lower sort of occupancies. You have higher ARPOs in this season because whoever is coming for surgery is somebody who can't really put it off.
Therefore he's, you know, coming for more sort of acute and more tertiary care surgeries, etc , which typically will have a higher amount of billing. Because Christmas, New Year's, a lot of international patients don't sort of come in. They postpone that this thing because look at Christmas, New Year's also, etc . Yeah, the way to compare healthcare this thing is quarter compared to the previous quarter, previous year quarter, rather than sequentially the previous quarter because of the seasonality. Q4 is typically a stronger season, is the strongest sort of quarter in the year.
Okay. Yeah, fair enough. That's good. Last thing is ARPOB, we are already at 77%-78%. Obviously, the concern remains as last time you had highlighted at peak you can go to 80%-82%. The bed additions like you are trying to reconfigure or internalize. 100+ beds over the next two quarters. Where do you find comfort? Do you feel that before we materially add a higher number of beds, can we still manage to do 10%-12% top line growth with the 77% or say 80% kind of an occupancy levels?
No, look, I think there are two or three separate things over here. Firstly, the number of beds we are coming out with over the next six, seven months, I presume, is going to be 300 in Dwarka, 100 in Shalimar Bagh, and 100 plus that we are doing. That's over 500 beds.
Okay.
That's one. Secondly, you know, last quarter we were, which is quarter two, we are I think 81%, 70%, 78% occupancy. We've done months of 81, 82 also. We've done quarters of 81, 82 as well. Some of our hospitals are operating at a higher occupancy. That's where in those hospitals, when you start hitting occupancy thresholds, we also have a lever of payer mix, right? You start accommodating your preferred channel at the cost of an unpreferred channel. That's why we had guided that the unpreferred channel or the distributing business will come down accordingly. There's enough leeway in the system to accommodate any sort of growth that we have while the new capacity comes in.
I'm only giving you 500 beds, which is estimated to come in over the next 6-7 months. Then in 2025, we have more beds coming and so on.
Yeah, perfect. Lastly, regarding the volume growth. Typically industry does around 8%-10% volume growth. Any color on how the pricing trends are currently in the industry?
Year- on- year, you normally have a 2-2.5% impact on revenue as far as pricing is concerned.
Okay.
That's pretty much across the industry. Yeah.
Yeah, fair enough. Yeah. That's all. Thanks.
Thank you. The next question is from the line of Lavanya Pachisia from UBS. Please go ahead.
Hi, sir. Thanks for the opportunity. I just wanted to understand, how do you look for the break-even timelines for the greenfield project? I understand for the brownfield it's around two quarters. For the greenfield projects in Gurugram, how you look at the break-even timelines?
Yeah. Look, I think historically greenfield used to be about a two-year sort of break even. My belief is now it will be a 12 to 15 months sort of a break even in greenfield.
Okay, got it. Got it. The brownfield, where the current occupancies are in the range of 75%, that should see somewhere like three quarters, high occupancy, something like two quarters and greenfield two years. Is it the right way of looking, sir?
No. We're not saying that. For example, we take the example of Shalimar. Now, Q3 , the occupancy was 85% in that hospital, right? In a 85% occupancy, that means, obviously means you are not admitting all the patients. For the time when we open 100 beds, we think we should be able to, you know, there should be the admission in the 1st quarter itself, right. We are not going to wait for three quarters for us to get some build up on those additional 100 beds. That should be immediate. Now, it depends on where the occupancy is, but I would say probably not more than, you know, 3-4 months for a build up-
Got it.
In a brownfield situation.
I just got disconnected in the earlier commentary time. If I understand right, like 100 beds of during with the existing capacity and the Shalimar side. These 250, 200, 250 beds should be available for the full year FY2024. 300 beds from Dwarka should come in at what timeline, sir?
We said, Q2 FY 2024.
Got it. Got it.
On or before September, yeah. Yes.
Around, like for two halves it will be available, like the 300 beds of Dwarka.
That's it. That's it. Yeah.
Right. Got it. So on the like acquisitions which you have highlighted, so what kind of assets you will be looking at like the standalone hospitals or a chain? I just wanted to understand your view on what kind of assets will you be looking if you are trying to enter a new region or at least certain number of beds is the thing which you look at to consider, I mean, consider an asset for this opportunity. How you will be looking at it?
The bigger the better. If you have a chain versus a single hospital, we prefer the larger sort of this thing. It doesn't mean that we don't look at single hospitals. You know, we look at that as well. What is important for us is that it has to be accretive to ROC that we have, you know, we can build intrinsic. There is intrinsic value for us to unlock over there. Like I said, over the, you know, ultimately over the medium term, it needs to be accretive. It needs to be ROC accretive.
Okay, got it. Thank you. Thank you so much, sir. Thanks for the opportunity.
I mean, if I have to go to South India, I won't go with one hospital. If I have to do it in adjacent to a cluster that we are, we may do one hospital over there. I mean, I just won't buy one hospital, random hospital in, let's say, a 200 bed in Chennai or, in fact to Chennai, it has to be a larger sort of this thing. If I have to do Bangalore, it has to be a larger format. It just can't be a hospital for the sake of it just because we are acquiring some EBITDA or something over there.
Yeah. This is helpful, sir. That's what I wanted to check if you'd be looking for a certain one asset in Chennai or a place like where other chains are present. That's what I wanted to check. This is helpful. Thank you so much.
Thank you.
Thank you. The next question is from the line of Krishnendu Saha from Quant Mutual Fund. Please go ahead. Krishnendu Saha, your line is unmuted. Please go with the question.
Can you hear me? Hello?
Yes.
Yeah. Yeah. Sorry, this is first time around the company, and I'm just taking everything on the fly, so maybe some of my data could be wrong. Just one thing, if I just do the divide by the revenue, the number of beds, is it coming to like revenue per bed is coming to around INR 6 million? The reason I ask... Hello?
Per bed?
Yes.
We are INR 66,800 per OPD per occupied bed day.
That's, No, no, in the sense of what do you call that? That is ARPOB you're talking about, right?
Yeah. ARPOB is revenue, yes.
Yes. The reason I'm asking is when I'm looking at you have a higher ARPOB compared to a lot of other players and but your revenue, just if I just do a basic. I'm just trying to understand what is actually giving this higher ARPOB, and that's the basic question.
What's the question? Is the question why we have a higher ARPOB?
Yeah, yeah. Let's just try to understand the business as to why we have a higher ARPOB. Is it because of a lot of foreign clients or because of the mix ratio? Just trying to get a feel of the business.
We have a higher clinical mix. I think if you look at the two things which drive ARPOB, one is the payer mix, the other is clinical mix, right? As far as the payer mix is concerned, 7.5% of our beds are totally fee-for-the-poor compared to 1% or 2% for most of our competitors. If you look at 29% of our beds are catering to institutional business compared to maybe 20% and 13% for some of our competitors, right?
I see.
Payer mix is clearly inferior, but our ARPOB is maybe 20%-25% better than the next best payer in the industry. More importantly.
Yes.
Our EBITDA per bed is 55% better than the next best payer in the industry.
Yes.
Yes. Okay. EBITDA is better because on each and every, I think, line item, we outperform each of the hospitals that we compete in, pretty much every micro market that we're in. As far as the revenue is concerned, you know, we are operating at a higher sort of, more tertiary care, higher end of the clinical mix. It's also indicated in the fact that we have more beds which are critical care beds. 35% of our beds are critical care beds. Most other people have between 25% and 30%.
I see.
It basically portrays that we are doing more high-end work, as a proportion of the total work that we do.
Thank you.
Those compensate for the lack of payer.
With a higher occupancy also compared to the payers.
Yeah. No, occupancy has no role in the ARPOB. actually, the fact that we are present in the NCR, that also helps us, right? NCR has a few-
Right.
The stronger brands means the higher occupancy. The occupancy is not a function of ARPOB or anything. Occupancy is a function of your brand strength.
I see. Just the expansion which we have, do you expect to maintain that 35% of the specialty types of, I mean, of the revenue stream going ahead? Is it like, because you'll be expanding at a faster clip in the next two, three years? Just trying to get a feel that will you be able to maintain the 35% mix going ahead.
It will be higher. Yeah. Yeah. There's no reason for it not to be. We're looking at the same mix of business going into the future as well.
All right. In this sense, more on the understanding. Yeah. There's available market which you can definitely access to. That's what.
There's available market. It's where the crunch is, right? I mean, if you look at 35% of our beds are critical care beds.
Yes.
Where, you know, we don't have any beds available or the highest occupancy, if we look at in our system, is not in the ward beds, not in the rooms, etc . It's typically in the single rooms and more importantly, ICUs, in the critical care.
Yes.
As we are moving forward, we are in fact intending to build more critical care beds.
Right.
That's where the bottleneck is in our current system. Yeah.
Okay. Okay. Thanks. Thanks. Thank you. Thanks for the feedback.
Thank you. The next question is from the line of Sachin Kasera from Svan Investments. Please go ahead.
Good morning, and thanks for a good set of numbers. I had just one question. As we bring so this capacity to brownfield and some of these efficiencies, what is your thought in terms of being able to sustain or maybe improve the current payer mix and as well as sustain the current occupancy levels?
Like I said, the majority of the expansion is coming in our in brownfield, right? The reason we are doing it, you know, we're not doing it in order to tap the market. We are doing it because we've got unceasing demand at our doorstep. I mean, the payer mix is that, you know, we've got waiting of six hours to two days in an ER for some sort of bed that you may want. If you want an ICU bed or you want a single room, it's not available. I mean, go to Nanavati Hospital, go to Max Super Specialty, go to Mohali, go to any of our hospitals, that's where the challenge is. You know, go to places like Gurgaon and all, you don't have beds. Right?
There's no reason for that payer mix not to be sort of to be any differentiation over there. Of course, you know, we've guided in the past that our payer mix should be improving to a certain extent, and then it'll be plateauing out. It'll be plateauing out because we see capacity is coming in by then.
You think the current payer mix is very well pretty good, or you think there is still some improvement in the payer mix after which you will plateau out, sir?
We have guided that should be down to 15% in the next four to five quarters.
Okay. You remain confident on that number?
That's right. You have to keep in mind, if you look at sequentially, in a weak quarter, you're going to be accommodative, right? I mean, a weak quarter in the sense that in a festive quarter where you have lower occupancy, okay, why would you want to have an idle bed? You're going to take more institutional or whatever else it is at that point of time.
Yes.
Right? This was a weak quarter. I mean, this is a seasonally weak quarter, not for us, but for, from occupancy standpoint.
Sure. Sure. Sir, any thoughts in terms of the revenue per operating bed, how do you see that.
I think what needs to be looked at, okay, is the fact that in spite of it being a seasonally weak quarter, on overall standpoint, right, we navigated it to be the highest EBITDA quarter in margins, EBITDA per bed or absolute EBITDA in the history of the company.
Sure.
What happens in a stronger quarter?
Sure. Which would mean that even with this, additional capacity coming in and the leverage that we're talking of, actually we could see improvement in ARPOB, EBITDA per bed and EBITDA margins over the next few quarters, yeah.
No doubt on that front. I mean, I've repeatedly said that in the past that EBITDA per bed is going to be great.
Sure. Sure. Great. Thank you on the numbers, sir.
Thank you. The next question is from the line of Sameer Singh from Nomura. Please go ahead. Sameer, your line is unmuted. There's some background noise for this as well.
Yeah, thanks for taking my question. My question, you know, more about the macro situation here in healthcare or hospital industry. I see in this budget, you know, the government has allocated something, I think, INR 6,000-7,000 crore for setting up the AIIMS in different locations. Just I wanted to know actually going forward, because government's thrust has been to improve infrastructure mostly in public sector. Do you see that public sector is emerging, you know, strongly here, and that could give private sector a bit of competition in next 3-4 years? How is your, you know, view on it?
I think anybody who's been to a public sector hospital should be able to answer that question. Even during COVID, when healthcare was, you know, in focus and everybody was looking at it, you saw while there was no bed in private hospitals, there was idle capacity in government hospitals across the board. I think if this public sector supersedes, then it's probably in my memory will be the first time and first country where the public sector sort of outperformed the private sector. I don't see it ever happen anywhere else. I really don't see that coming as a threat. I think public sector hospitals are free hospitals. They are free to the poor and to the rich and everybody else.
You know, there is... When it is free, your idea is to provide healthcare coverage to more and more people, not necessarily the creature comforts. So it's not as if, you know, your room has a TV over there or you have AC in the room and so on and so forth. I mean, it's a very basic sort of pristine. You may not be aware, but, you know, most government, well, no government hospital even has a stream which is called critical care. I mean, ward size is, this thing is Nightingale wards and so on and so forth. I think the whole push of the government is very, very different from that standpoint. I mean, after that, the next stage will be hospitals which are doing PMJAY. We are not even doing PMJAY.
We don't even cater to that sort of, you know, subject.
Okay. Okay, fine.
I think for us, the hospital like AIIMS is basically a source of medical talent, right? Typically doctors working in AIIMS, after 20 years, they get voluntary retirement and they try and work in the private sector. I think that to us is a good thing, right? I mean, it's a massive because the sort of range of skill sets that they develop in public hospitals is immense simply because the volume and complexity they see over there. You typically, you'll see a doctor having worked in the government hospital after a while leaves and joins the private sector.
Understood. Understood. Thanks for the view. Specific to company, just initial numbers that what are the contribution of international patients during this quarter in revenue?
5%.
That, what was in Q2?
Same, same.
Same. Okay. Okay. ARPO is normally much higher in international. What would be the average ARPO of international patient?
Like, I think Yogesh mentioned in the previous, I think it's 50% higher ARPO.
Okay. Okay. Okay, thanks. Thanks. That's all from my side. All the best.
Thank you. The next question is from the line of Prakash Agarwal from Axis Capital. Please go ahead.
Yeah, thanks for the opportunity. Good afternoon. Just trying to understand the margin outlook better for the next four to six quarters. I understand the delegations of Shalimar Bagh, Dwarka, and the others you mentioned. They could have a little lower EBITDA per bed and ARPOBs than the average. Would that understanding be correct, and would it have any impact on the margins?
Not in the, in the brownfield hospitals. Dwarka, yes, it will take time for Dwarka to start, you know, generating EBITDA. As Abhay mentioned, 12 to 15 months is when we see the breakeven in terms of EBITDA in Dwarka. That's the greenfield side. Other than that, you know, it should be all better EBITDA per bed, etc , and better margin because these are all brownfield. As I mentioned, you know, Shalimar Bagh, 85% occupancy in quarter three, right? In that hospital, when I under bed, you know, you can understand how the occupancy will... They'll be updating the occupancy and the 100 plus beds actually eating out of the present capacity, right? I mean, their EBITDA is really... You'll be swinging for the fences over there literally with the EBITDA margins.
That 200+ bed, 200-250 beds should give you a higher EBITDA, you know, day one sort of thing. Dwarka will take 12 months to sort of get there and thereafter.
Yeah. But the 200 addition is higher than the average that the company is clocking, like 6%-
Yes. No doubt about that. No doubt.
Okay. On a blended basis, you are okay with the margin trajectory or maybe see an improvement also?
That's right.
Okay. How about M&A? I mean, clearly with the, you know, the fundraise plans and the cash. I mean, we are sitting in Delhi NCR, which is the best micro market as such. But if we expand in the gaps, maybe in Mumbai or, you know, even, you know, even the other tier one metros, these kind of ARPOVs are not up. When we look into this M&A, would it be fair to see that we would be okay with the lower ARPOV to start with and with case mix, etc , we would be improving? Or how should we think about it, you know, in terms of M&A, going into that particular micro market selection with respect to our margin stability and ARPOV stability?
I think, Prakash, firstly, our highest ARPO. Our highest ROC businesses are not, is not Delhi. It's the tier two, tier three city.
Okay.
Secondly, my ARPOV in Mumbai is comparable, if not, I mean, higher than any of the Delhi hospitals.
Yeah, barring Mumbai, you know, Delhi, we would be looking at M&A outside also, I imagine.
I'm saying outside Delhi and Mumbai. Like I said, even if I look at tier two, tier three cities, my ROC over there is much higher than Delhi.
Yeah, I understand ROC concept, but from the ARPOB and margin perspective, would we be open for lower ARPOB and lower margin business?
Of course, of course, of course. I'll be very open to lower ARPOB. Only thing I'm concerned about is ROC. I'm okay with lower ARPOB, I'm okay with, you know, lower margins, so long as whatever is absolute terms is EBITDA per bed, vis-a-vis what I've, you know, what we put in over there is accretive to us or not, the return on capital basis.
Understood. Okay. Just one more clarification. During COVID times, there was a higher cash patient mix. Has that normalized now post-COVID? How's the, you know, cash versus insurance? I mean, insurance would have gone up, right?
Yeah, Prakash. Yes, insurance has gone up, you know, after the, once the, you know, COVID second, and there was more policy being sold, and that trend is continuing, right? It's not that the, it has gone up and the, and the share of the, you know, insurance patient come down. It's being maintained at the same level now.
Cash would have gone down.
Yeah, it did. Yes.
The retail, as per you, would be about, what, 20% in pricing? 20%-25%?
Prakash, what percentage? Pricing?
In terms of, you know, insurance are obviously contracted rates. I mean, that is about 20%-25% lower than the cash, patient, billing or?
Seven percent. Six, seven, uh, seven to eight percent. Seven to eight percent.
That's it?
It actually works out better because when you have insurance policy, you know, we get. Yes, there's been a step change in, you know, the frequency of people buying insurance, health insurance being more, so. You know, this trend has been on for the last 10 odd years in some manner or the other. It works out well for the corporatized hospitals because as and when you have insurance policy, you're paying the same amount of premium, whether you go to Max or you go to ABC Nursing Home. What we see is people don't window shop at that stage. When you're less price sensitive, you go to the better brand, better hospital, because eventually you pay the same premium.
Okay. Okay, fair enough. Thank you so much.
Thank you.
Thank you.
The next question is from the line of Kunal Dhamecha from Macquarie. Please go ahead.
Hi. Thanks for taking my question. The first one on the 100 beds that we are adding in our existing capacity, you know, would that be more kind of, you know, the deluxe beds or, you know, the private rooms, etc ? Or would it be a mix of, you know, everything?
No. It'll be more critical care beds and more single rooms, etc . More of what we need.
Okay. Probably more ARPOB basically, you know, if those get filled, right? If it's single room, you know, single room or deluxe room or critical care beds, etc .
You know, we make more out of doing a liver transplant in a general ward than we do from doing a delivery in a suite.
Like over a longer period of time, that's not in your hand, right? Like over a longer period of time, the, the private room would be, obviously a better, you know, assuming that the mix over a long period across remains same.
That's right. I would actually take the current mix and project it.
Okay.
I won't be lower than that because it's a general ward or whatever else it is.
Okay.
Like I said, most of our hospitals are suffering from bottleneck as the critical care.
As per I believe that those critical care bed addition, etc , requires permission or something, right? All those are in place for us?
Yeah, yeah. I mean, these are, no permission required within the existing capacity.
Okay, okay. Great. Second, you know, more of a longer term perspective. I believe that at one point, you were saying that, you know, government could face challenges in terms of operationalizing this AIIMS kind of facility because of the cost overruns, etc . Has there been any talks between, you know, a player like Max and.
I didn't get that. What are you referring to?
In terms of government being able to operationalize, the, you know, AIIMS, etc , which they are, you know, kind of opening up now or investing in now, because their operational cost or operational cost structure is very different from private players. Right? Maybe around the nursing expenses or nursing salaries, around maybe two and half times than what they get in the private hospitals. At any point, is there any talks between government and player like you know, to hand over the operations and management of the Jaypee Hospital to a company like Max?
Given we are also kind of, you know, providing similar kind of care and...
No, no. It's a different profile and a different distinct. I think, what we are seeing is a lot of state governments, be it Haryana, be it UP, and so on and so forth, are inviting private players. I know they've been some RFPs and RFQs to that account for public-private partnerships, okay? On creating newer facilities. I mean, the government has its own way of working. You have seen even the total outlays being increased by about 13% towards the healthcare sector. I'm sure the government will be able to. Whatever the economics of the government are the economics of the government, facility. Their viability I'm not gonna sit and question.
The fact is, you know, they are trying to cater to perhaps an audience which is an unaffordable audience, right? Which can't even afford PMJAY, sort of, etc . They have, you know, that's for free healthcare, effectively. Irrespective of viability, you know, I don't think a private player is going to be catering to, you know, anybody who can't afford to pay at all.
Mm-hmm. Okay. Okay. Great. Yeah. Thank you.
Yeah.
Thank you. The next question is from the line of Sumit Gupta from Motilal Oswal. Please go ahead.
Hi. Thanks for the opportunity. just I have a few questions regarding international patients. just want to get a gist on the overall pricing. I presume that international ARPB is more than 1 lakh INR. It is gross or net of discounts and every other thing that you pay to the overall medical tourism agents and all?
ARPB is always gross, right? It's based on the revenue that you book, right? There may be some expense linked to that revenue, so we don't net that. That's coming in expense side. No matter how you look at it will be just 20% higher than what is base rate, right, per bed.
Okay. Okay. One more thing regarding like sequentially if I see that payer mix for international patient, it is nearly like 9% so consistently. Going forward, do you see that 9% or like moving to 10, 11% also with like new geographies opening up?
No. The, you know, our focus is always on the occupied bed days increasing, right? I mean, if it remains nine and other business is also increasing, you know, so be it, right? Long as the operating bed days are on an absolute or a standalone basis for medical is increasing. We don't necessarily look at it as a % of the overall pie. We look at it as a separate segment altogether. We look at, is international number of bed days occupancy increasing or not? Is the total revenue on absolute terms increasing or not? Separately, we look at the same way for upcountry business. We look at the same way for cash business. We look at the same way for other businesses, right?
Right.
Not so much, you know, my focus or our focus is on the distinct. Now 9% being flat on two quarters is also because it is, like I said, you know, it's a, it's a seasonality. People don't travel during the festival season.
Okay.
Doctors themselves put off surgeries, etc , because they are on holidays.
Sure. Thank you, sir.
I mean, the better way to look at it is same time last year. Unfortunately, last year being a little bit of COVID year, you have, you know, kind of, you know, uneven comparison. You will, I mean, we are forced to look at pre-COVID terms. Sequentially one should avoid. You will typically see the first quarter and the third quarter are weak quarters. For these very reasons they are weak.
Okay. Okay. Thank you, sir.
Thank you. The next question is from the line of Amit Kadam from Canara Robeco Mutual Fund. Please go ahead.
Yeah, hi, sir. Just one small question, maybe you could solve. Like, can you help me with the tax rate for maybe how do we look at it going forward? Maybe expect 20%.
Tax rate, I said this earlier also, ETR should be in the range of 18%-20%, right?
Okay.
This quarter was 18+.
Okay.
Correct. I would say it'll peak at 20 on the network basis. You will note that this quarter the CTR has come down. The current tax rate has come down. It's by virtue of the fact that last quarter we did some liquidity liquidation, and there are some incident benefit of that liquidation in terms of, you know, depreciation of intangible. I would say two things. One, that the rate would be 18%, 20%. Secondly, I would say watch out the CTR rate. That's better, because that's where the cash outflows are linked to.
Mm.
Right? That's improved over the quarter one and quarter two.
Okay. Yeah. Eighteen would be a fair assumption to consider 18, somewhere between 18 to 20.
I would say go towards, you know, you know, the higher range of 18-20.
Okay. Fair enough. Thanks, sir.
Thank you. The next question, follow-up question from the line of Ashish Thakkar from IIFL AMC. Please go ahead.
Yeah, thanks for the opportunity again. Sir, if given an opportunity, would you also like to consider standalone hospitals which are very specialized in, say, oncology or child healthcare?
Sorry. Can you repeat the question?
Yeah. If you get an opportunity in future, would you also be willing to consider standalone hospitals which are specialized in oncology, pure-play oncology or, say, something like pure-play childcare?
We evaluate everything. I mean, I have no issue evaluating anything.
Okay.
If the opportunity arises, we will evaluate.
Okay. Thanks. Talking of this ad-based model, if you could just give some color on the potential of this model and would there also be a cash one?
Sorry, on which model?
On the advanced model, how you are planning to, you know, position yourself through the app, the digital one?
Oh, on the app?
Yeah.
There's no cash burn. This is, we're not doing a agnostic, this thing. It's not a platform. This is, you know, well, it is a platform for our patients to interact with our doctors and our doctors to interact with our patients and for the hospital to provide services to the patients, right? Be it, diagnostics at home or home care business or video consultants, so on and so forth. I mean, I'd encourage you to actually look at the app. We've thoughtfully look at it. You know, I think all your reports, everything is sort of stored over there. In a way, it's, it's, effectively a platform, between the hospital and the patients, okay, to interact, and for us to deliver those services to the patients.
Okay. Perfect. That was it, sir.
For third-party players, etc . I mean, it's very, very different. I mean, it's not 24/7 or anything like that. I mean, it is 24/7, but it's for us. We're not marketing it as a third-party platform.
Okay.
I mean, the cash burn itself in it is essentially what it is for technology and a little bit of marketing that we will be doing, you know, within the Delhi NCR or whichever regions through the hospitals, etc . I'm not looking at any significant cash burn or anything which will even move the needle over here.
Okay. Would your diagnostic offerings also be clubbed with this app?
Absolutely. We will be providing diagnostics through the app as well.
Okay. Sounds good. Thank you.
Okay. On our app, at the top, okay, there's a red button which can get you an ambulance in Delhi anywhere, anytime within 20 minutes. That's one. Which will take you to Max Hospital. Then diagnostics, then nurses, then all your medical records, then any video consult that you want, any scheduling of appointments that you may want to do and so on. Physiotherapy at home, anything, so anything at all. The entire suite of services that a hospital provides can be provided to you at your doorstep effectively. Without you entering the hospital premises. That's what the app does. It will also review trends of your diagnostic, etc , you know, reports. In a way, it's there to improve the experience.
It's there to improve the, I would say, the interaction of the patient with the hospital and vice versa. Ease these, you know. Check it out. It's out there. I think that's the most important thing.
Yes, sure. I will. Thanks. That is helpful and all the best.
Right. Thank you.
Thank you. The next question is a follow-up question from Krishnendu Saha from Quant Mutual Fund. Please go ahead.
Yeah, just thanks for the question again. Just clarify, your, average length of care, 4.2, is, there higher or probably could go down a little bit more. Sometimes some channel is high because of the critical care being a larger portion, is it? Can it go down further?
Higher, and higher services. You know, eventually you need to look at Average Revenue Per Occupied Bed.
Yes, yes.
You know, your inventory in hand effectively is number of bed days that you have.
Mm-hmm.
If a higher ALOS and which leads to higher RPOB for you, that's because, you know, you're doing more higher end. I mean, look, if a person if a patient has more medical patients, your this thing is lower. If they are more transplant patients, it's longer. Transplant patients will pay you more. I mean, the more BMT transplant, lung transplant, heart transplant you do, people tend to stay longer. You know, the thing is, more RPOB is more, so length of stay is more. You can't really compare A particular hospital chain with B and C.
Yes. In some metrics, if you look at, ALOS and all these days, their occupancy and all. We're just trying to figure out as to why, because we are a little bit higher ALOS. That's it.
You can't compare. That's what I'm saying.
Yeah. Yeah, yeah.
Within my chain, I can't compare two hospitals because they may be leading two different medical programs.
Yeah, yeah. I get it.
I have to essentially compare programs to programs, or I have to compare the same hospital, to its absolute, the thing in the previous year. Actually procedure to procedure, right? That hospital compare ALOS.
Yes.
I think Average Revenue Per Occupied Bed is the better metrics because that will have ALOS play into it already, right?
Yes, yes.
I think that, if that metric is growing and is better than other, that in my mind, that means ALOS should not be even looked at it.
Yep. Yeah. Thank you. Thank you. Thank you.
Thank you. Ladies and gentlemen, that would be our last question for today. I now hand the conference over to the management for the closing comments. Thank you. Over to you.
Thank you. I appreciate everybody coming online. And I just want to reiterate that, you know, we are the two pillars of the foundation that our organization rests on are execution. So we are very, very focused on execution, not only in operations but on projects as well, to see that they are rolled out in time. And secondly is fiscal discipline. So you would see that any leverage if at all we use for inorganic growth, we would be within what are declared norms or prudent norm for leveraging the company are, which are not more than 2-2.5 times EBITDA. Thank you for the opportunity. Goodbye.
Thank you very much. Ladies and gentlemen, on behalf of Max Healthcare Institute Limited, that concludes this conference. Thank you all for joining us. You may now disconnect your lines.