Ladies and gentlemen, good day and welcome to Max Healthcare Institute Limited's earnings conference call. As a reminder, all participant lines will be in the 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 touchstone phone. Please note that this conference is being recorded. I now hand the conference over to Mr. Suraj Dikawlekar from CTR India. Thank you, and over to you, Suraj.
Thank you, Nishad. Good morning, everyone, and thank you for joining us on Max Healthcare's Q2 and H1 FY 2026 earnings conference call. We have with us Mr. Abhay Soi, Chairman and Managing Director, Mr. Yogesh Sareen, Senior Director and Chief Financial Officer, and Mr. Keshav Gupta, Senior Director, Growth, M&A, and Business Planning. We will begin the call with opening remarks from the management, following which we will have the forum open for an interactive Q&A session. Before we begin, I would like to point out that some statements made in today's discussion may be forward-looking in nature, and a disclaimer to this effect has been included in the earnings presentation shared with you earlier. I would now like to invite Abhay to make his opening remarks. Thank you, and over to you, Abhay.
Good morning, everyone, and thank you for joining us on Max Healthcare's second quarter and first half of financial year 2026 earnings call. We are pleased to report that the network has maintained its strong growth momentum through the first half of FY 2026. For the second quarter, revenue grew by 21% year-on-year, while operating EBITDA increased by 23%, thereby extending our track record to 20 consecutive quarters of consistent growth. Importantly, this performance reflects the continued strength of our core operations, with existing units achieving revenue growth of 14% and EBITDA growth of 19%. Building on this strong performance, we continue to enhance our capacity and service offerings through brownfield expansions. At Mohali, the new 160-bed brownfield tower has been commissioned, including the additional radiation oncology program.
At Nanavati Max, the new 268-bed brownfield tower is set to be commissioned this week, and at Max Mart, the new 400-bed brownfield tower will be ready for commissioning within the next 30 days. Alongside our expansion efforts, we also streamlined our corporate structure. Divestment of hospitals in Chitra and Anupshahr was completed in September 2025. Further, the merger of our two wholly-owned subsidiaries was approved by the Honorable NCLT, Chandigarh Bench, with an appointed date of October 5, 2024, which has resulted in a one-time benefit of INR 149 crore during the quarter. After long last, CGHS has revised the prices effective October 13. While some of it is still to kick in, we expect a favorable impact of over INR 200 crore once fully implemented. Further, with regard to insurance renewals, there was an impasse with certain players leading to temporary stoppage of cashless facilities.
The same has been resolved. Now, coming to the second quarter performance highlights, please note that the term "existing units" hereafter refers to the network facilities that were operational prior to Q3 FY 2025, while JP Hospital are categorized as new units. Average occupancy for the network stood at 77% compared to 79% in the second quarter last year and 76% in the trailing quarter. Existing units reported occupancy levels of over 79%. Occupied bed days were up by 19% year-on-year and 4% quarter-on-quarter. Average revenue per occupied bed for the quarter was INR 77,300, registering a 1% growth year-on-year. For the existing units, like-for-like ARPOB grew by 3% year-on-year and remained stable sequentially. Network gross revenue stood at INR 2,692 crore compared to INR 2,228 crore in the second quarter last year and INR 2,574 crore in the previous quarter. This reflects an increase of 21% year-on-year and 5% versus the trailing quarter.
Of this, new units contributed to INR 144 crore, while existing units delivered a 14% like-for-like revenue growth, driven by an increase of 11% in occupied bed days and 3% in ARPOB. Digital revenue from online marketing activities, web-based appointments, and digital lead management rose to INR 803 crore, accounting for approximately 30% of the overall revenue. Website traffic crossed 79 lakh sessions during the quarter, growing by 53% year-on-year and 15% quarter-on-quarter. International patient revenue reached INR 231 crore, registering a growth of 25% year-on-year and 11% quarter-on-quarter. Network operating EBITDA stood at INR 694 crore, reflecting a growth of 23% year-on-year and 13% quarter-on-quarter. Of this, new units contributed INR 23 crore, while existing units delivered 19% like-for-like growth in EBITDA. Network operating EBITDA margin was 26.9% for the quarter.
Existing units reported an EBITDA margin of 27.5%, higher by 90 basis points year-on-year and 200 basis points sequentially. Annualized EBITDA per bed for the network stood at INR 73 lakh like-for-like. EBITDA per bed for existing units was INR 76 lakh, reflecting a 7% year-on-year growth. Profit after tax for the network was INR 554 crore, again INR 349 crore in the second quarter last year and INR 345 crore in the previous quarter. This includes one-time favorable tax impact of INR 149 crores pursuant to the merger of Crosslay Remedies and JP Healthcare. Excluding this impact, PAT stood at INR 406 crores, reflecting 16% year-on-year growth. The network generated free cash flows of INR 291 crore during the quarter. There was a build-up of accounts receivable in the institutional segment, which impacted the cash flow from operations.
INR 456 crore was deployed towards ongoing capacity expansion projects and facility upgrades at new units, while INR 146 crores was distributed as dividend. As a result, net debt for the network stood at INR 2,067 crore compared to INR 1,755 crore at the end of June 2025. Continuing our effort to support the local communities, we provided free treatment to approximately 44,000 patients from economically weaker sections of the society, worth INR 61 crores at hospital tariff. Both our strategic business units continue to deliver steady growth in revenue and profitability. Max at Home reported revenue of INR 63 crores, reflecting a robust 20% year-on-year growth. It offers 15 specialized service lines across 15 cities with over 60% repeat transactions. Max Lab reported a revenue of INR 54 crores, reflecting a 16% year-on-year growth. It provides services in over 60 cities and serves more than 600,000 patients during the quarter.
Now, coming to the status of expansion projects. Max Lucknow. The current capacity of the hospital stands at 413 beds, and we expect this to increase to 550 beds by the end of this financial year. The on-call radiation program, including PET-CT, will be launched in the next two weeks. 500 beds at Sector 56, Gurgaon. The project is progressing well at site, while graft had some impact on the pace of work. 100 beds at Max Nagpur. We have received the environmental clearance and are awaiting the consent to establish. We expect to complete the project within 24 months post-receipt of the CTE. 397 beds at Patparganj. All approvals have been received, and barricading work is complete. The project is expected to be completed by FY 2028. 550 beds at Max Vikrant Saket. The project will start immediately upon commissioning of the 400 beds at Max Mart.
We expect to complete this project within 40 months. 400 beds at Zirakpur, Mohali. Project is continuing faster than anticipated and is now expected to be completed by the end of calendar year 2027. 140 beds at Max Vaishali. Demolition of the existing structure is complete, and approvals are in process. We expect to complete this project in 24 months post-receipt of the requisite approvals. 500 beds at Thane. Master plans for the site have been finalized by the partners. The project is expected to be delivered in 42 months. 250 beds at Pitampura, Delhi. The partner is expecting the building plan approvals during the quarter, post which the project is expected to take 36 months. Finally, moving on to the overview of the company's performance for the first half of financial year 2026. Network gross revenue stood at INR 5,266 crore, reflecting a growth of 24% year-on-year.
Of this, new units contributed INR 278 crore, while the existing units delivered a 17% like-for-like revenue growth. Overall, network operating EBITDA grew by 23% year-on-year to INR 1,308 crore, translating to a margin of 25.9% and EBITDA per bed of INR 71 lakh, while existing units delivered an EBITDA margin of 26.5% with EBITDA per bed of INR 74 lakhs. In the first half, we generated INR 679 crore of free cash flow from operations after interest, tax, working capital changes, and routine capex. INR 891 crore was deployed towards ongoing expansion projects and facility upgrades at new units. INR 131 crore was spent towards land purchases and brownfield expansions at Max Vaishali, and INR 146 crore was distributed as dividend. With this, we open the floor for any questions that you may have. Thank you.
Thank you very much, sir. We will now begin the question and answer session. Anyone who wishes to ask questions may press star and one on the touchstone phone. If you wish to withdraw yourself from the question queue, you may press star and two. Participants are requested to use only handsets while asking a question. Ladies and gentlemen, we will wait for a moment while the question queue assembles. The first question is from the line of Damayanti Kerai from HSBC. Please go ahead.
Hi. Thank you for the opportunity. My first question is to Abhay. What we have heard, there has been some senior doctor departure from your team in NCR hospitals. First, have you rehired the required doctors, and what kind of impact was there, if any?
Yeah. That level of isolation is normal. You'd have certain teams always sort of move out, new teams come in almost immediately. That is what has happened. We don't expect any impact.
Approximately, what is the attrition rate in your doctors' team, which you said is in line with the normal trends?
1% of doctors, less than 1% of the doctors.
Yeah. When a new facility comes, another half a percent happens with it.
Yeah. Some new facility comes, another half percent.
You could say between 1%-1.5% at best . I mean, anecdotally, two or three doctors leave, or certain doctors leave, it doesn't change. We have got close to 6,000 doctors, right?
Okay. Okay. So no impact as such, and then it's a normal trend. Okay.
Absolutely.
Okay. My second question is on your settlement with the issues on the insurance company. Has all the matters now been put to rest, and do you have any further contracts which are coming up for negotiations, and there might be some updates there?
Damayanti, first of all, whatever we have in terms of these three small companies, that we already sorted. Not only sorted for now, but we also sorted for future in the sense that when we maybe concluded this arrangement, now we also agreed the next reason with them, right? Yes, there are other companies also which are up for renewal this time, for example, including JIPSA and other insurance companies. Those negotiations are underway, I would say.
These sort of impasses happen once every few years. We do not expect a repeat of this.
Okay. We have not heard such instances in recent past, so that is what I was a bit curious about, whether things are now put in place permanently, and then we might not see similar situations coming up.
We've had suspension of cashless facilities of others in the past also. That happened three years ago, and it happened seven years ago.
We had JIPSA 1.9.
Everyone has. They resolved actively active cashless disaster.
Okay. Okay. My last question is, you said CGHS revision when it happens fully for your portfolio exposure, that will be additional INR 200 crore kind of revenue which will come in.
That's right.
Okay. Approximately in your portfolio, what has been the tariff increase after this revision comes into effect? Very broadly.
Damayanti, I can't give you the numbers of what the increase is because obviously it's a negotiation with the insurance companies. I think CGHS part is there, right? CGHS is around 10% of the overall revenue which we operate. We have around INR 2,000 crore of revenues. We will have a 10% jump up there because of this additional revenue. This is a net increase because certain medicines, etc., also they've capped the rate. This will be a net increase.
Okay. Okay. That's helpful. Thank you. I'll get back in the queue.
Thank you. The next question is from the line of Tushar Manudhane from Motilal Oswal. Please go ahead.
Thanks for the opportunity, sir. Firstly, on the international patient side—
Tushar, I'm sorry to interrupt you. Tushar, your audio is not clear.
Am I audible?
Yes.
Okay. Sorry, sorry for that. Just on the international patient side, where the growth has been quite robust, even this quarter, almost 25%. If you could just sort of help break down into volume and realization growth.
Most of it was volume growth. I don't think there's any increase in the ARPOBs there in that segment. You can assume that 25% volume growth.
If you could also elaborate in terms of the geographies, in terms of diversification.
No. So broadly, the geographies remain the same. Like we mentioned in the past, it's the Middle East, it's Eastern Europe, it's the African cluster, and so on. I don't want to give specific countries because that's privileged information.
Got it. And just lastly on this clarity, the MSSH Saket 400 beds hospital, in terms of the timeline for the commissioning, or I probably missed it on the opening remarks if you had already highlighted.
Yeah. So perhaps you did. So both Nanavati Max, that's the Bombay hospital, is doing deep cleaning there. So within this week, we're expecting it to be commissioned. And Max Mart within the next 30 days.
Got it. How do you see the scale-up now that post-commissioning, not little in terms of numbers, but in terms of the timeline, in terms of ramp-up of occupancy or maybe the EBITDA break-even?
EBITDA break-even is almost immediate. I don't think there's any, we've stated that in the past also, in brownfields, you don't have EBITDA drags necessarily.
Understood, sir. Thanks. That's it from my side.
Thank you. We'll take the next question from the line of Andrey Purushottam from Cogito Advisors . Please go ahead.
Hi. Congratulations for a consistent set of good results. I had just two questions. One is that your profit growth after correcting is 16% year-on-year, which lags a little behind EBITDA and revenue growth. Is there any insight you can provide to us on this?
Obviously, you would have seen that the finance costs have gone up, right? Also, depreciation has gone up because we have new hospitals added, right, in the quarter three last year. The EBITDA margin is lower, and we have borrowings to really fund those acquisitions. I think that is, as the EBITDA growth comes in level with the other hospitals, you find that this number will also start to grow in the same factor.
Yeah. Last year, JP wasn't there, right? So that's about INR 2,000 crore of acquisition was done.
Okay. My second question was, I wanted your view on ARPOB. Are you getting a feeling on what is the internal discussion in the company that the ARPOB is kind of the rate of growth of ARPOB is becoming slower? At least that's what optically it looks like. I just wanted to know whether this assessment from our side is something that you share. If so, is there any discussion on what to do about ARPOB going forward?
The ARPOB growth, it's year-on-year 3%, but it's also the impact of the new hospitals that we acquired and we started last year, right? If I take that out for a minute and say all the existing hospitals, existing hospitals means the ones which were operating before December 2024, then the ARPOB growth is 7%, right? It's basically the impact of the mix which is bringing this number down because last year, due to, so the share of the new hospital has grown up now. For example, Nanavati Max, and Nagpur, and Dwarka, and that's what is bringing down. On like-to-like basis, we don't have any concerns, right? It's still in the range of 6%-7% that we used to have earlier.
Thank you. Thank you once again, and congratulations on a good set of results. I also like the disclosures that you make in your presentations. They are very comprehensive, so we appreciate that as investors.
Thank you.
Thank you. The next question is from the line of Amit Thawani from Clear Blue Capital Advisors LLP. Please go ahead.
Hi. Thank you for taking my call. My first question is on insurance. I think you have spoken about the issues in insurance that we had this quarter. Because of that, our growth in insurance has actually been one of the lowest amongst all our peers. You have mentioned that the cashless has been reinstated. Can you confirm that for December quarter, we've already done with half of November and October, are we back on track? I mean, with industry-level growth in our insurance business?
I think you need to look at it on an overall basis, right? I mean, your insurance growth may have come down, but your cash growth may have decreased. If you're not doing cashless, what happens? It's not necessary that you lose the patient. The patient also gets converted to cash paying, right? Because he'll go claim later. It doesn't necessarily change the hospital because of it. I think what you need to look at is the overall occupancy between cash and this, what was the impact? You won't see any major impact on the occupancy of the hospital, right? That's what you need to see.
Right. Just by, I mean, my only worry is that are we doing more institutional business because the insurance patient is not coming? That does not seem to be the case.
That does not seem the case. You see the cash business has moved up. You will see what the occupancy between cash and insurance, because that is fungible, right?
Right. That is fungible.
If you come to me as a doctor, okay, you'll use your insurance when you can. If you can't, then you just sort of pay cash, right? You see that sort of impact. If you do believe there was impact, the point is this that going forward, you'll see the benefit of it because all of it is now back to normal, right?
Got it. Got it. Our cash flows were weak, and as you rightly mentioned, it's because of our institutional business. Just wondering, because now we are coming up with Nanavati and Saket, do we expect some kind of further deterioration because of this?
No, no. Institutional payments have historically also been lumpy, right? They do not necessarily come on this thing. There are certain months where they build up because various PSUs and so on and so forth, whether it is ECHS, CGHS, and all, they run out of budgets, then they write to the ministry, get the budget, get the replenish, and then they pay. They have been lumpy in the past as well, so it is nothing to be sort of concerned about.
We don't expect further deterioration in the cash flows?
No, not at all. I mean, even this is not a deterioration. You see it at the one-time listing, next quarter, you'll probably see a larger amount of cash flows come through.
Got it. Got it.
If you look at a year, okay, it'll pretty much be the same number of days. This sort of quarter, at a point of time, lumpiness happens in institutional payments.
Got it. Got it. I understood. My last question is on Mohali. We added 160 beds, but the presentation shows an operational increase of 53 beds only. Is it that the next 107 beds will move into operational in Q3? Mohali is an O&M agreement with the government. I mean, because in O&M, the entire revenue does not get recognized, does that mean that these beds really do not have a material impact on our P&L?
No, no. Two things. One is Mohali is a revenue share, right? We say 5% of our revenue is given to the government. We're recognizing the whole thing. That's one.
Okay.
Second is, as far as the beds are concerned, the entire tower has 160 odd beds. Now, all of those, you do not wait for the last bed, last light to be put to commission the whole thing, okay? For example, on 160, if the first four floors are ready, I will start the first four floors, okay? And the rest of the floors, as and when they come online, you start them.
In Q3, how much will get operational in Mohali?
If there are 90 beds which are operational out of that 53, right? Out of that 160, 53 were made operational for the first of all of us. That means the impact in the quarter is around 35 beds because you will have to do it with weight leverage, right? That is the reason why you see the number to operational capacity to be lower. I think going forward, it's, I mean, we obviously not short of beds there. As we see the occupancy, we'll open more beds.
With quarter three, you'll be having all the beds ready.
Yeah. We'll be ready. We'll open them as we see the demand there, right?
Okay. Got it. Got it. In Lucknow and Noida, we are seeing a lot of interest from a lot of our peers as well. They're coming out with some big capacities. Any comments on the competitive intensity out there?
Not really. I think the Noida capacity, I mean, it does not come overnight, right? It has been under construction for the last four years. I mean, any competitor coming up with any capacity has been constructing for the last four to five years. It has always been the thing. In fact, we purchased JP later. That was like we fell from the sky and purchased it, right? I mean, that was a cold start.
Okay. My last question on the ARPOB growth. Yogesh, you mentioned we are trending at about 6% now this quarter. Is that a fair comment for our existing units?
We are around 7% ARPOB increase if I take the existing units. When I say the existing units, these means units which were operating December 2024 before.
This December quarter is clocking at 7% on our pre-existing units.
Not December quarter. I'm talking September quarter. We have not spoken or given any guidance on Q3. I'm saying that in September quarter, that the number of 3.3% that we have ARPOB increase, if I take out the impact of the new hospital that we added, right, in quarter four of FY 2025, then the increase in the existing hospital is 7% in the ARPOB, around 6.8%.
Understood. Thank you. Thank you so much.
Thank you. A reminder to all the participants that you may please press star and one to ask questions. The next question is from the line of Kritika Damani from Prospero Financial Solutions. Please go ahead.
Thank you. Congratulations on a strong quarter. My first question is that you have an occupancy of over 75% and a consistent trend on the ARPOB because of the strategic push in your high acuity care like the new oncology-focused hospital. Since the richer case mix naturally increases the average length of stay, how are you balancing its trade-off to maintain patient throughput at your already busy hospitals?
Sorry, what's the question exactly? What do you intend to say the occupancy to is there?
What I want to know is how are you balancing the trade-off to maintain the patient throughput in your because your average length of stay is really high, so I just want to know about that.
You do it by opening new capacities. You do it through improving your patient services, your discharge times, and so on and so forth, right? Having said that, you have to keep in mind one thing. When a hospital is full, it's not a hotel. It's not like people are sitting in the emergency and I say, "Look, 12 o'clock, I can send them away by saying my hotel is fully booked. Please go somewhere else," right? There will be a point of diminishing returns where patient people will wait in emergency, waiting for the beds. Then they have to wait sometimes for six hours, sometimes for one day, for one and a half days. Complaints increase. You try to do your best, but we are also in the job of serving every patient who's coming over there. I think that is very important differentiation.
Okay. My second question is that for the first half of your FY 2026, can you quantify what percentage of your total hospital revenue came from the international patients? And what is the yield profile of this business? How does the ARPOB and the average length of stay for an international patient compare to that of a domestic patient portfolio?
It's about 9% of the revenues. I think the typical ARPOB is about 30% higher for international patients compared to our normal, compared to our average. I think ALOS is what? ALOS is 1.2x because people who come for international visiting are coming from more acute diseases, right?
Right. Last question is that your asset-light divisions like the Max Lab and Max Home are posting excellent revenue growth. My question is about their profitability and capital efficiency. For the first half of FY 2026, what is the converted EBITDA margin? What is your long-term margin target for these segments as it scales?
I think that's already there in the investor lead, right? The Max Lab reports an EBITDA margin of around 16%, right? The TGO business, the AMLA EBITDA would be around 20%. If I take the global EBITDA, that would be probably more than the hospital EBITDAs, right? That's the EBITDA margin that we have.
I mean, these are also subdued right now because, like you mentioned, we are growing at a fast pace because we're investing for the growth, right?
All right. Thank you. I'll get back in the queue.
Thank you. The next question is from the line of Neha Manpuria from Bank of America. Please go ahead.
Yeah. Thanks for taking my question. At the last call, you'd mentioned that in probably six months' time, we should start seeing traction in Noida with insurance impanelment. Is that on track? Should we start seeing that improvement in Noida, let's say, in the December-March quarter? At what point do you see Noida getting to, let's say, mid-25% margins?
I think Noida is already at 25% margin.
Noida is around 18% margin.
18% margin. Yeah. I think insurance empanelment, all of that has happened as far as Noida is concerned.
On Q1, you see that there is an 8% growth in Noida, right? The EBITDA margin has also grown compared to last quarter. We do expect that, and if you split up the revenue of this hospital since January of this year, every month is higher than the previous month. I think we've seen the traction. We hope that this will come to that level.
I think it was not insurance empanelment. It was licenses for various sort of clinical programs which had to come through, such as transplant and so on and so forth. All that has come through. Now we are seeing the sort of, seen higher seeking with that.
What's the occupancy in Noida currently then?
It's around 62%.
62%.
64%.
Okay. Okay. This therefore should improve as we see these, I mean, as you've seen these new clinical programs getting added, right?
That's right.
Okay. Understood. My second question is on Dwarka. What's the occupancy in Dwarka on our operational bed? And what margins are Dwarka at currently?
I think we're doing about close to 80%. What is the occupancy? Dwarka is 81% plus occupancy in the quarter. We have 285 beds operational now. It is a 300-bed hospital. Once we get the oncology log, then we'll be able to rotate some oncology beds and move them there and have this hospital capacity restored to 300 beds. The EBITDA margin, you want to mention the EBITDA margin for this hospital? I would say it'll be around 15%.
Okay. Okay.
Yeah.
Okay. Understood. I was just sorry.
The trajectory for a greenfield would be that you sort of ramp up the occupancy, right? And then.
That's correct. Yeah.
After that, you see expansion of margins.
Yeah. So it would then, in that case, given that we are at 80% occupancy already for Dwarka, Dwarka should weigh, I mean, by next year, it should be in line with corporate average in terms of margins. Would that be a fair assumption?
Hopefully, we'll be getting, yeah. No, that should be the case. Yeah. Do keep in mind, even Oncology Bunker is not operational over there right now, right?
Okay. Okay.
I mean, that has been so that will be, I think. Yeah. It also has very high level of, I would say, the ESU bed occupancy. We have to bring that down as we, so basically, the idea was for us to fill up this hospital and then start to distill the payments. I think we are at a stage where we have to, we started to do that now. Yeah. You are going to see higher ARPOBs. You are going to see improvement or expansion of margins. You are going to see that happening through both patient mix and clinical mix, including higher amount of share of oncology once the radiation oncology starts over there. You also want to see us planning and implementing another 200 beds in that site. I think the idea is to do the brownfield.
Like I said, we already run out of capacity, right?
Understood. Okay. Because I was just wondering about the ARPOB growth of 3%, including all hospitals except for Noida, right? That's what your existing ARPOB growth that you mentioned. Given that I'm assuming Lucknow and Nagpur should have also seen very strong ARPOB growth, the 3% number and the 7% that you mentioned for existing network, how should I read those two numbers?
By the way, the Dwarka ARPOB has come down. When we started it, we did not have any institutional business, right? The institutional business actually started. Yeah. So actually, it has come down.
All right. Okay. Understood. Okay.
Because typically, when you do a cold start, for you to get any institutional business, it takes you about six months to sign that up, to get empaneled with institutions, right?
Okay. Yeah. Understood.
You start off immediately with high ARPOB, low occupancy. Yeah. Only self-pay business. Only self-pay business. Because you do not even have insurance contracts in the first six months.
Okay. I'd assume that we'll probably do more emergency cases, which then move to higher acuity.
That's right. The first two quarters, we started in July last year. Till the end of the year, it was high ARPOB simply because you were not even any BHA at that stage. You do not have institutional impanelments. You do not have sort of insurance impanelments and so on. The cash-paying business, high ARPOB, low occupancy. That starts changing thereafter. That drags your ARPOB down, actually, at the latest.
Okay. The CGHS, you said INR 200 crore upon completion, so once fully completed. What's the duration by which this will fully get reflected? Would it be a phased manner in which we will see the realization of these price increases?
No, not really. They have a new category called super specialty hospitals.
Correct. Correct.
On that quarter, they don't have, they haven't done the, I mean, they haven't completed the codes for that. We are expecting that in the next maybe 15-20 days or whatever.
Okay. Okay. That's the only thing that is pending for this to be implemented?
Yeah. It's more, yeah. It's partially implemented. Partially, the super specialty rate will be implemented once they update their portal.
Got it. Okay. Thank you so much.
Thank you. The next question is from the line of Sumit Gupta from Centrum Broking. Please go ahead.
Hi. Good afternoon. Thanks for taking my question. The first is, what was the growth on the ARPOB growth of the segments? Be it international or institutional?
Sorry?
For the segment, ARPOB growth of the segment basically with cash or institutional mix. What was the ARPOB growth?
Which segment? The working business, both insurance and the self-pay, is grown by around 7%-8%, right, on a regular basis. It is basically the impact of the new hospital that got added into the existing hospital now, which has brought the growth to 3.3%. Yeah?
Yes, sir. No, no. With respect to institutional mix, have you witnessed any ARPOB growth?
No. The ARPOB growth is flattish in the institutional. The institutional does not see any ARPOB growth, right? It will have going forward, right? Because the rate got raised only in October, in quarter two, there is not a growth in the institutional ARPOB. In the self-pay and the insurance, it will be a range of 8-10%.
Understood. Understood. The second question, what was the performance of the Lucknow and Nagpur unit in this quarter?
No. We do not share the hospital-wide performance. Suffice to say that Lucknow did grow over the previous quarter. On a quarter-on-quarter basis, it is a 70%-80% growth that we reported. The EBITDA has also grown by more than 30%.
Okay. Okay. You're maintaining the 30%+ margins in Lucknow. We can expect this to sustain?
Yeah.
Okay. Okay. And for Nagpur?
Again, we don't give specific hospital-by-hospital numbers.
Okay. Understood. Thank you, sir. All the best.
Thank you. We'll take the next question from the line of Prashanth Kshirsagar from UNIWAY Corporate Research Private Limited. Please go ahead.
My question is on Noida hospital facility. In one of the earlier presentations, you had mentioned you have land parcels with further bed potentials in Greater Noida, 400 beds, and Sector 128, Noida, 700 beds. I just wanted to ask you, is the land adjacent to the existing hospital facility, or it's at a different location?
No. The present one we have in Noida is 18 acres of land, right? I mean, you can imagine we can keep building over there. That is all adjacent. It is all contiguous land parcel. Similarly, in Lucknow, it is 27 acres of land. We can pretty much keep going for the next another 2,000-2,500 beds. We have another location in Lucknow.
In Noida?
In Noida. Of course, in addition to that, we have land in Greater Noida.
That's what I'm seeing. The location is different from the existing land?
From the Noida hospital. Greater Noida and Noida are separate locations.
In your question, the 700-bed site, which is a very far project, is the adjacent site to the Noida hospital, the JP Noida Hospital. What you mentioned as a 500-bed site, that's a separate site in Greater Noida.
Is the Sector 128 adjacent to the hospital?
It's the same complex. Yeah. That's the 18-acre complex.
Yeah. That's the 18-acre complex. Fine.
Yeah. Yeah. You don't have to worry about it.
Yeah. Okay. That's what I wanted to clarify. Thanks a lot, sir. All the best.
Thank you.
Thank you. The next question is from the line of Kunal Dhamesha from Macquarie. Please go ahead.
Hi. Thank you for the opportunity. One clarification. Can you please share the international patient bed share for this quarter?
Yeah. So it's similar to what it used to be earlier, I suppose. Yeah. It'll be around, yeah, 6%-6.5%.
6.5%. Sir, for other channel, we have just shared for institutional. Can you also share for?
Kunal, 5.5% there.
5.5%. Sir, for other channels, like self-pay and TPA, if we can share?
Yeah. Self-pay is around 26%-27%. The insurance is around 34%-35%. And the institutional side.
Right. Right. Right. Thanks for that. Second one for Mr. Soi on the sorting of issues with the insurance. Sir, how should we think now with whatever negotiation which would have gone between you and the insurance companies for the next one or two years? For us, the procedure rates, do we keep getting similar hikes to what we had taken historically in the last two, three years? Is it going to be higher, lower? If you can share some color, it would be great.
I'm not going to give you specifics. Yeah, it's in line with what has been happening historically. We won't take anything over there. Within the band, yeah.
Sir, let's say the four insurance companies which at least media suggested had suspended cashless, all four of them are now on them? They are doing cashless?
That's right. Yeah.
Are they material in terms of, let's say, out of our 35% insurance revenue, are they material in terms of contribution to our top line?
Yeah. I mean, they are material. But like I said, you need to look at cash and TPA as a homogeneous body, right?
Right.
I mean, when you don't do, when you can't do cashless, then patients, the question is, do the patients not come, or do the patients come and pay out of pocket and then claim later from the insurance companies? With cashless, they get suspended, not insurance.
Sure. Sure. So patient did come. It's just the change of the channel for now. Now it will be went back.
Yeah. We saw a spike in our cash ratio.
For now, basically, the share of the insurance came down, and the share of self-pay went up in terms of bed share, right? The overall nobody's also due on quarter-on-quarter. That means it's not a major impact, right?
Sure. Sure. And sir, the 7% ARPOB growth on a like-to-like basis, I know you shared that Dwarka has gone down a bit, and hence the overall is 3%. Wouldn't the specialty mix also help us given the medical patients are down quite a bit in this quarter on a year-on-year basis?
Yes. The patient will count that, right?
Right. Right. But then with medical going down, shouldn't the growth be higher for our existing hospital? Is this my question? Because oncology has also gone up in terms of the contribution. Shall we continue to maintain this around 7% plus or minus 1% going forward for existing hospitals?
That has been historical as well, right?
Mm-hmm.
I don't see any changes there.
Sure, sir. Sure.
If you think that internal medicine was basically the impact that you just used to have in quarter two. The new hospital, the share of internal medicine is low. While there is some impact, you can see the earnings update also. Otherwise, it is not that much.
You're saying new hospital, it grew, and existing hospital, it was not that? It went?
Yeah.
Okay. And lastly, sir, on the operationalized bed, because we are opening the capacity at Nanavati and Maxarcase, how should we look at operational beds in Q3 and Q4? The potential number from where we are in Q2?
No, tough to really give you the exact number because we've got to also see how many days do we open those beds for, when do we get the approvals, the OC, etc. I want to avoid any forward looking statements.
Okay. Is the trajectory, should it be in line with more like Dwarka? Is it something like in one year, we are almost up with all beds?
The infield versus the ground field, right? It's a very different sort of thing.
Sure.
Because your Rampap and your Bidda Rampap are two very different. Normally, it's more positive in the ground field. Yeah, I'm going to avoid giving you any forward-looking statements.
Sure, sir. Thank you for all the clarity and all the best.
Thank you.
Thank you. Participants, you may please press star and one to ask questions. The next question is from the line of Neha Manpuria from Bank of America. Please go ahead.
Yeah. Thanks so much, sir. Just a quick question. What was our network CapEx intensity in the first half?
We spent around INR 900 crore.
Okay. Second half would be a similar number?
A bit higher probably. Hopefully, around INR 1,100 crore. Yeah. Yeah.
All right. Okay. Got it. Thank you so much.
Thank you. We'll take the next question from the line of Gourav Bhama from JM Financial. Please go ahead.
Hi, sir. Am I audible?
Yeah. Yeah. We can hear you.
Yeah. Hi, sir. Good morning. First of all, congratulations on a good set of numbers. I just wanted clarification on two fronts. The first being that when we said that the ARPOB this quarter was subdued, that was largely due to the insurance issues and the impact of the new hospitals, right?
Not so much the insurance, I would say. Like I said, any reduction in insurance, perhaps you made up because you had that much people shifting to cash patients. I think, yeah, perhaps because of the new hospitals.
Understood. The second question regarding the impact of CGHS, the INR 200 crore positive impact that we are expecting. I know you answered it before, but there were some disturbances. Just wanted to clarify again, what is the estimated timeline we are expecting for that to reflect in our numbers?
I think some of it has already started from 30th of October. I think there's a super special rate that goes to Kitchen. That will Kitchen, I think, by the end of this month. I mean, we don't know how much time will take, but I think the expectation is that by the end of November, that rate should also be up and working time.
Understood. Thank you, sir. That's all from my end. Thank you for the opportunity.
Thank you. Thank you. Ladies and gentlemen, we'll take the next question from the line of Nitin Agarwal from DAM Capital. Please go ahead.
Thanks for taking the question. Just following up on the CGHS question, sir, the CGHS impact you talked about, it is largely for CGHS, or you've also included possible, I mean, the expectation is similar rate revisions will happen for other central government agencies also. Is that over and above this?
No. All central government agencies are linked to CGHS. Okay? This is number for CGHS and CGHS-like accounts. This includes ECHS. This includes others. Some of these super specialty rates, some of the notifications, etc., on ECHS are also expected because they are in line normally with this thing, but they have to go through the paperwork.
Okay. So that essentially our estimate pretty much includes that inflation also.
That's right. This is CGHS and like accounts and linked accounts.
Okay. Thanks. Perfect. Okay. Thank you so much.
Thank you. The next question is from the line of Shaleen from UBS. Please go ahead.
Yeah. Hi. Just continuing regarding the past participant, is it fair to assume that the benefits start tickering in from FY 2027, the whole of the benefit we should talk about, of around INR 200 crores?
Of what?
The CGHS pricing increase benefit. You said in the next 15-20 days, we should resolve it. Then beyond CGHS, also the similar CGHS-like institutions will follow it. FY 2027 is the year where we can expect the total benefit to come in?
Yes. Yeah. 100%.
What kind of a flow-through will it have on your operating profit, Abhay?
Pretty much 85-90% flow-through. Yeah.
If you're looking at roughly INR 200 crore of top line, something like INR 150-160 crore of EBITDA addition can happen through this.
Yeah. INR 200 crore. And hopefully, yeah, good numbers will flow through.
Got it, sir. Got it. Regarding our Smart and Nanavati, I understand both are brownfield, but there is a bit of a cost. Is it fair to assume that a large part of cost is already in our P&L reflecting in 2Q? Or can we expect some more increase in 3Q as well?
I mean, you're talking about fixed costs or variable costs?
Variable costs.
Variable costs, of course. Variable costs will be related to the.
Sorry. Fixed costs. Sorry. I misheard.
No. I mean, these are ground fees, right? So your fixed costs are larger by existing hospitals.
Yeah. Yeah. So my point is, right, because we've been in a process of keep on adding new beds, right? So our top line grows, then our EBITDA, and then our PAT. I think the point we will be there where most of our hospitals reach a stage where our EBITDA start going faster. I think we are reaching that stage. Is it a fair assumption that even in 3Q, we should see the same kind of phenomena, that margin expansion despite adding to or despite starting to greenfield?
I didn't understand the question. Yeah, you're right. There will be a bit of operating leverage that will kick in once those brownfield tasks start getting full up. That will be 15 days here and there. Yeah, operating leverage should come in. That's the whole concept of brownfield.
Yeah. Yeah. You should have expansion of margins with.
Basically.
Greenfield will give you higher margins than existing hospital beds.
Yeah. Yeah. There are two things happening, right, in our growth journey, right? One, our new hospitals, which we have added in the past, we are significantly improving in their profitability. At the same time, also, we are adding new hospitals, right, which are coming in at a lower margin, right? They are two balancing acts. Given that we have added a substantial amount of beds over the past 18 months, where the flow-through of the profitability can be higher and will negate any negative impact of these new beds, that's what I'm trying to understand.
That's right. My point is something even better, right? That the new beds, because largely what is brownfield, do not necessarily have a drag on EBITDA that you're trying to subsidize via your previous expansion.
For sure. For sure. No, that I understand.
Not only will you have expansion or benefits coming out of what you expanded or capacity addition over the last 15 months or 17 months, that is over 30% capacity. The majority of the capacity coming up now, another 30%, is brownfield. That brownfield capacity should be, soon after commissioning, should get into higher EBITDA margin business to start with.
Got it. Got it. All right, sir. That's it. That's it from my side. Thank you so much.
Thank you.
Thank you. As there are no further questions, I would now like to hand the conference over to the management for closing comments. Thank you and over to you, sir.
Thank you, everyone, for joining us today. We appreciate all your time and look forward to interacting with you again next quarter. Thank you.
Thank you, members of the management. On behalf of Max Healthcare Institute Limited, that concludes this conference. We thank you for joining us, and you may now disconnect your lines. Thank you.