Ladies and gentlemen, good day and welcome to the HealthCare Global Enterprises Limited 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 call, please signal an operator by pressing star, then zero on your touch-tone phone. I now hand the conference over to Mr. Anoop Poojari from CDR India. Thank you, and over to you, sir.
Thank you. Good afternoon, everyone, and thank you for joining us on HealthCare Global Enterprises' Q3 and 9M FY 2026 Earnings Conference Call. We have with us Dr. Manish Mattoo, Executive Director and CEO of the company. We would like to begin the call with opening remarks from Manish, following which we 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 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 Manish to make his opening remarks.
Thank you, Anoop. Good afternoon, everyone, and thank you for joining us today. I hope you've had a chance to review our results presentation for the third quarter and nine months ending December 2025. We are pleased to be engaging with you once again, following our recent strategy interaction as we continue to focus on strengthening HCG's core oncology platform and driving consistency across clinical and financial outcomes. Over more than two decades, HCG has established itself as a focused oncology network with a pan-India presence, deep clinical expertise, and a multidisciplinary model of care. Consistent clinical outcomes, supported by technology and Tumor Board-led decision-making, remain central to how the organization operates. Building on this foundation, our strategy is centered on creating the most trusted outcomes-led oncology platform in India through a single specialty model.
Our emphasis remains on optimizing the existing network by deepening clinical programs, improving utilization and mix, and strengthening referral and patient engagement. Growth is expected to be driven primarily through existing centers supported by brownfield expansion in high-potential markets and calibrated greenfield additions over time. This approach is underpinned by a calibrated capital allocation framework, a sustained focus on patient experience, and operating leverage as scale builds across the network. Before we get into the financials, I want to briefly highlight the clinical capability that underpins HCG's performance and long-term moat. HCG operates a comprehensive cancer care model, and our strength lies in managing high-complexity cases at a large scale. In the last quarter, this capability was demonstrated across specialties.
As an example, in radiation oncology, we treated a tumor completely encircling the optic nerve using the most advanced version of CyberKnife, which achieved a tumor reduction without any loss of vision, highlighting the precision of our advanced radiosurgery platforms. In medical oncology, we achieved a complete response in a rare BRCA2-positive, HER2-positive, PIK3CA mutated breast cancer, which is a subtype that typically responds poorly to treatment. This reflects our depth in molecular oncology and personalized treatment protocols. From a governance and research standpoint, our KR hospital received NABH accreditation for its ethics committee, a highly selective recognition that strengthens our credibility in advanced clinical trials and research-led care. In surgical oncology, our robotic platforms continue to expand the boundaries of curative care.
A 97-year-old patient with advanced colon cancer treatment underwent robotic R0 resection, and in another case, a 10R robotic prostate surgery involving rectal encroachment also received an R0 resection. In neuro-oncology, for example, we performed diffusion tensor image-guided awake brain surgeries in critical regions, maximizing tumor removal while preserving neurologic function. Alongside clinical excellence, we are also focused on sustainable and responsible oncology. We launched a green radiation oncology initiative to reduce energy consumption and carbon footprint and introduce low-dose restorative radiotherapy for inflammatory and degenerative joint conditions, opening up new evidence-based applications of radiation therapy. Importantly, this clinical strength is now being efficiently monetized through our digital engine. In quarter three, digital revenue grew 26% year-over-year, despite a meaningful reduction in paid media spend. Our own channels strengthened materially.
The website remained the primary contributor at 67% of the overall digital contribution, while the mobile app scaled 4.5 x to contribute 13% to our digital revenues. Campaign efficiency improved sharply, with campaign-led revenue growing 38% year-on-year and increasing its share from 20%-27%. While traffic declined due to external disruptions in Google Ads, outpatient volumes grew 26%, and inpatient volumes grew 37%, clearly indicating higher conversion, better case mix, and superior demand quality. We also reduced aggregator dependence, with their share declining from 12%-9%, improving revenue quality and long-term margins. Taken together, this reflects a repeatable system-driven model where clinical excellence creates trust, and digital capability converts that trust efficiently into high-quality volumes and dominant market share in core catchments. Turning now to our Q3 financial and operating performance. The third quarter is typically seasonally softer for the healthcare services industry.
Despite this, HCG delivered revenues of INR 633 crore, representing a year-on-year growth of 13.4%. Excluding the fertility business, HCG delivered revenues of INR 618 crore, supported by healthy patient volume growth of 8% year-on-year, underscoring resilient demand for Oncology Care across the network. In addition to volume momentum, revenues benefited from improving utilization across centers and a steady mix of complex cases. This demonstrates continued progress in strengthening clinical programs and expanding service depth across hospitals, particularly in larger and more mature clusters. During our strategy discussion, I had mentioned that our existing network has achieved about 60% of its revenue potential, and there continues to be headroom to grow within these hospitals, which we are seeing in our quarter-on-quarter performance. Average revenue per patient, including our fertility business during the quarter, stood at INR 84,000, marking a year-on-year increase of 5%.
ARPP trends were influenced by case mix dynamics and regional payer mix variations, alongside the ongoing scale-up of services across the network. Adjusted EBITDA for the quarter was INR 111 crore, reflecting a 20% year-on-year growth, with EBITDA margins expanding to 17.5% from 16.5% in Q3 of FY 2025. Margin expansion during the quarter was driven by operating leverage as the utilization of the hospitals improved. This was achieved through continued investments in clinical talent, technology, and infrastructure, which remain essential to supporting long-term growth. Going forward, margin expansion at HCG is expected to be driven by scale benefits and a gradual improvement in case and payer mix. From a regional perspective, performance across clusters remained healthy. In the South, the cluster delivered a 9% year-on-year growth, year-on-year revenue growth driven by continued momentum at our Bangalore cluster, and Vizag, despite temporary disruptions in Andhra Pradesh related to the state-sponsored scheme.
These disruptions impacted volumes during the quarter but were resolved within Q3, and the region is now back on track. Excluding Andhra Pradesh, the South cluster grew volumes at 11% year-on-year in Q3 FY 2026. During this period, the case mix continued to improve, supported by a higher contribution from high-end medical oncology work, including immunotherapy and CAR-T cell therapies, particularly at the Center of Excellence in Bangalore. In addition, a relatively favorable payer mix with lower exposure to scheme volumes in Andhra Pradesh supported ARPP growth for the cluster. On the growth front, preparations for launch of our North Bangalore and Whitefield greenfield projects are progressing well. The North Bangalore facility, with a planned capacity of over 120 beds, is expected to commence operations by the end of Q4 FY 2026, with clinician hiring largely completed.
It will be the first in Bangalore to offer MR-Linac technology, creating a strong clinical and technology-led differentiation. Additionally, we will also be adding about 20 beds to our existing Center of Excellence in Bangalore by reconfiguring the specs of the hospital, and we believe this would further add to our profitable growth. In the West, the cluster delivered strong revenue growth of 17% year-on-year, supported by robust patient inflows across hospitals in Gujarat and Maharashtra. Performance was led by healthy demand across centers and continued strengthening of our regional footprint. Volume growth in the quarter stood at 11% year-on-year, driven by the expanded capacity in Ahmedabad, addition of key clinicians, and focused sales and marketing initiatives. These factors together supported higher throughput and improved utilization across hospitals, contributing to the overall momentum in the cluster.
Moving to East, the cluster reported a 12% year-on-year revenue growth, driven by strong patient inflows in Cuttack and Ranchi, alongside the continued ramp-up of operations in Kolkata. Volume growth during the quarter stood at 16% year-on-year, supported by sustained demand and expanding reach across catchment areas. ARPP, however, declined by 3% year-on-year, primarily due to transition in the Odisha state government scheme and a case mix change. However, this impact was largely offset by a strong volume growth. During the quarter, cluster leadership in the East was further strengthened with the appointment of a new regional business head, bringing over three decades of experience in East India markets, which is expected to support execution and performance consistency going forward.
I'm also happy to announce that, in line with our earlier communication of brownfield expansion in existing high-potential centers, we will be adding about 60 beds to our Cuttack hospital, which is expected to be functionalized by the end of FY 2027. Overall, the company exited December on a strong footing across clusters, with a nine-month FY 2026 revenue at INR 1,893 crore and a year-on-year growth of 16%, and adjusted EBITDA of INR 346 crore with a year-on-year growth of 20%. The EBITDA margin for the YTD period is 18.3%, an improvement of 60 basis points versus the same period last year. We expect operating momentum to continue into the March quarter, supporting solid full-year performance. In terms of returns, pre-tax ROCE stood at 13.3% for the nine-month period in FY 2026.
We expect ROCE to continue to trend higher over time, as incremental growth can be achieved with relatively limited capital deployment, enabling returns to improve as fixed costs are absorbed more efficiently. Our focus remains on achieving the full potential of our existing network, disciplined capital allocation, and a faster ramp-up of newer centers, which together provide a clear pathway to sustained improvement in returns. I would like to reiterate that there is sufficient headroom and incremental growth in existing centers to improve ROCE. Also, in the near to medium term, a number of centers will reach threshold size, enabling this margin and ROCE expansion. From a broader perspective, it is important to emphasize that, while quarterly performance can vary with differences in scale, utilization, and seasonality, the structural drivers of the business remain firmly intact.
Demand for high-quality cancer care continues to grow faster than supply, and the resilience we have seen even during a seasonally softer quarter reinforces our confidence in the underlying strengths of the business. To summarize, Q3 represented a steady financial and operating execution, continued progress across regional clusters, and improving scale and clinical depth. We remain focused on scaling responsibly, strengthening clinical leadership, and improving operating leverage over time while staying anchored to our core objective of delivering superior outcomes for patients. With that, I will conclude my opening remarks and would request the moderator to open the floor for questions. Thank you.
Thank you very much. We will now begin the question and answer session. Anyone who wishes to ask questions may press star and one on the touch-tone telephone. If you wish to remove yourself from the question queue, you may press star and two. Participants are requested to use handsets while asking questions. Ladies and gentlemen, we will wait for a moment while the question queue assembles. To ask questions, please press star and one. Ladies and gentlemen, if you'd like to ask questions, please press star and one to join the question queue. The first question is from Alia sgar from Motilal Oswal Mutual Fund. Please go ahead.
Yeah, thanks for the opportunity. Hi, Manish. Thank you so much for the detail and explanation of the quarter and outlook. I have three questions. First question is on growth. Now, in the previous call, in the analyst call that you did, you had indicated that you would aim to grow at about 15%. Now, when I break it up, there are three, four levers in which you are exploring growth. Point number one, you mentioned even today that the potential of the existing facility is only 60%. So there is a lot of scope to grow from here, right? Second thing is, we have a plan to add about 1,000 beds from, I think, close to about 2,500-600 beds. So cumulatively, if I see the operational bed base, we are probably 2,000-odd.
To the overall bed capacity that we will increase to probably about 3,500, there could be about close to almost over three to four years, a CAGR of approximately high-teens growth that we can get from here, plus ARPP growth, as you have mentioned, about 5%-7%. So when I add all of this, I see that there is a potential to grow at probably about 22%-25% annually for the next three, four years. So when you are guiding 15% growth, is it that we are a bit conservative over here, or are there any risks in the business because of which you are building your growth that we are not able to see? If you can just throw some light here.
Thanks, Ali, for that question. I think our, of course, ambition is obviously to grow higher than what we have committed. But looking at historical trajectory, looking at the competitive intensity, and all of it, the expansion will not happen at once. I mean, it'll be in a phased manner. Looking at the pricing sensitivity around cancer care and all, we believe 15%+ growth should definitely be achievable. But of course, we'll gun for our ambition is, of course, aspiration is to do more than that.
Got it. So I'm not asking probably from a short term, but from a three-year point of view, certainly, growth could be much higher, right, with the capacity addition that we're doing and the potential in our existing facility.
We continue to maintain our guidance of 15%+. But as I said, our aspiration would be to do better than that. But as of now, the guidance stays the same.
Got it. Second question on margin. Again, here as well, the room to improve in terms of margin from probably about the mid-high teens that we are to close to about where the competition is, upwards of about 25%, is fairly high. So while I understand that, I mean, there is a lot of existing capacity that we're trying to fill, but would you say that in the long term, probably three, four years, the potential to reach mid-25% is there, or inherently, you think that a standalone facility would have lesser potential for margin improvement?
So Ali, as I've said earlier also, if you see the trajectory this year also, the fact is that we started at 17.5%, we are trending at 18.5% for the year so far. And the trajectory will continue to be upwards. So our aspiration, of course, is to be 23%-24%+ in the three to four year period. And we are very confident of delivering that. But comparing exactly like-to-like to multispecialty, that's one way to look at it. The other way is to see how the trajectory of the margin is from 17.5% to go up to 24%-25%. I think it's quite steep, which we are gunning for. And I think that trajectory is what I think should be interesting rather than the absolute margin itself.
I've said it in the past also, our mature centers, some of our mature centers are at 26%-27%. They have delivered that margin consistently over the last couple of years. We are sure that eventually, the organization will converge towards that.
Understood. Which is very clear and very useful. Last question, sir. You have announced board meeting for a rights issue. I'm just trying to understand. I mean, our leverage position is very, very comfortable. The growth plans also that we have, I think, should be very well managed. If I do the math, probably about September, we are about INR 680 crore, right, of net debt. Probably if the kind of growth guidance that we have, we should be landing at a Pre-Ind AS EBITDA of upwards of INR 500 crore probably next year, which is, I mean, less than 1.5 x of net debt EBITDA, which should definitely take care of our payments coming up for Vizag next year, plus any maintenance CapEx, and still leave you with at least INR 200 crore-INR 300 crore of cash available for further growth CapEx.
I'm just trying to understand what is the reason for this fundraise? Do we have any concrete plans to, I mean, utilize these funds for growth?
So Ali, we believe that an equity infusion at this stage will strengthen the company balance sheet and the capital structure. That's directionally why the rights issue is there. At this point in time, that's all I can divulge. Very shortly, we will share the specifics after our board meets.
Understood. Got it. So very clear. Thank you so much. Very helpful. I'll come back and let you go.
Thank you.
Thank you, Ali.
Before we take the next question, a reminder to participants that you may press star and one to join the question queue. The next question is from Nitin Agarwal from DAM Capital. Please go ahead.
Hi. Thanks for giving me a question. Manish, on our growth plans, which are, I mean, when you think about growth, obviously, apart from when you say talk about the brownfield and the greenfield, so which are, if you can probably just characterize, what are the sort of areas in the current unit in the net unit in the current network where you would like to add capacities over the next couple of years? And where are the, and what kind of characteristically are the newer markets that you probably would want to reach out to in terms of adding up new units?
Yeah. Thanks, Nitin, for your question. See, I mean, we are very, very confident of our platform, which is the USP of our platform, which is to deliver clinically superior outcomes, treat high-complex cancer cases, and deliver the best clinical outcomes in the country today as far as cancer care is concerned. And hence, as I said, marrying that with the existing capacity, there is enough headroom for growth in our existing hospitals at our current utilization rates. So the growth will happen across our centers, whether it's South, East, or West, the major cities being Bangalore, AP, Mumbai, Ahmedabad, Ranchi, and Kolkata. Those will be our main drivers for growth.
But in addition to that, I've mentioned earlier also, there are two very exciting greenfield projects coming up in Bangalore itself, which is our core market and which has done very well in the past, one in North Bangalore and one in Whitefield. Between the two of them, we will be adding about 240-250 beds. Now, besides that, we are also looking at newer markets. There is a pipeline of cities that we are looking at in the West, which is a growing territory for us, and also some of them in the south too. And that was in the investor deck. So I would say there are four, five cities too beyond our existing markets where we feel we can grow. And the brownfield expansion, as I said, will happen across our major centers in Ahmedabad, in Bangalore, in Cuttack, and in Bombay as well.
Okay. If you can just give us a little bit more update on how the progress has been in the business in the Mumbai and the Kolkata markets, because I think these were two large metros where we ventured relatively recently. There has been always this question around what could be a competitiveness versus the larger multispecialty players in the bigger cities.
The Bombay market has done exceptionally well for us. We've grown quite strongly in the whole of last year at high teens, and not just in revenue terms but in EBITDA terms as well. It's been an exponential growth for us. We feel Bombay market will continue to deliver for us in the years to come. So hence, the brownfield expansion in that market is on the cards. In Calcutta, I mean, overall, the east market has done well for us. Calcutta, we've kind of consolidated our position now. It will need infusion of additional clinical talent because we feel east market, Calcutta being the center in the eastern part of the country, has a lot of potential. We made a change in the leadership there. We are confident that with that change, we should be really able to ramp up a Calcutta business too.
For our Manish, when you look through our network, what proportion of the network, if there is a way to characterize that, I mean, where we are probably significantly below our what you call optimal EBITDA levels, where there is opportunity rather to really move up meaningfully? What proportion of our revenue would you characterize would probably fall in that bracket?
So see, both east and south clusters are doing very well for us as far as EBITDA is concerned, delivering more than 25% of EBITDA, 26% of EBITDA. The west, we've seen a significant ramp-up happen in the last year or so, which continues to be slightly lower than our average EBITDA. But I think with our growth plans, our investment plans in that market, we should be able to ramp it up closer to our average company EBITDA, even exceed that number.
And lastly, once you sort of have taken over the business, while there are these unit-level opportunities which are really there, but are there any sort of corporate-level, network-level low-hanging fruits that you can target in terms of profitability improvement that you can probably highlight?
Yeah, of course. So we've started work on that already the last four, five months. We've started work on several value creation initiatives around revenue leakage, reducing revenue leakage, improving conversions. There is work that's being done on procurement optimization. And we've seen that flow into our margin and EBITDA as well. We are working on enhancing our clinical density. So these are three, four initiatives which we are driving from the corporate level. And we are already seeing impact of that in our expanded EBITDA margins across clusters. We are also, across our network, we have a large pool of data coming in from patients. We see about 70,000-80,000 patients annually that we treat in our network, which is a huge, huge pool of data. We are using that to drive more data analytics and AI, improve our outcomes.
That's another initiative that we are driving besides the ones that I mentioned earlier.
Thank you so much.
Thank you. Participants who wish to ask questions, please press star and one. The next question is from Devang Patel from Sameeksha Capital. Please go ahead.
Hi, sir. Could you delve a bit into what factors led to slower growth in the southern cluster this quarter? And again, if I heard you correctly, you mentioned excluding AP, the growth was 11%, whereas in first half, the growth was almost 19%. So would our growth, excluding these one-off factors, be again similar to H1? That's my first question.
So Devang, thank you for that question. As I mentioned, our growth, excluding the normalizing for the AP effect, was 11% year-on-year. Bangalore cluster did really well. The strike did impact our volumes because the Vizag market is a big market for us where we are the dominant players. The strike continued for 20-25 days. And it did impact the subsequent month volumes as well because for cancer, that's the kind of nuance we have. For a YTD basis, you're looking at a growth of 16% volume growth year-on-year, which also had a base effect of MG coming in, MG Vizag, MG Hospital Vizag, which we acquired last year. But going forward, we expect the growth that you mentioned about 8%-10% definitely happening in the subsequent quarters with Vizag ramping up and Bangalore continuing to do well.
Sorry. I did not understand. What kind of continuing growth we would see in this cluster?
Going forward, volume growth of about 10% we are expecting from this market in the subsequent quarters.
Okay. Understood. Understood. My second question was on.
Sorry to add one more point. This will further get augmented as North Bangalore gets operationalized at the end of this financial year.
Okay. Okay. My other question was on gross profit margin. In the previous two, three years, it was hovering around 75%. And this quarter or last two, three quarters, it's been trending down. And it's at 72% now. Could you explain what is leading to lower gross profit margin?
So Devang, it's largely driven by our case mix change, which is favoring medical oncology. The ramp-up in medical oncology and pharmacy costs has been slightly margin dilutive. But we are working towards increasing our case mix and improving our payer mix, which should offset that in the ensuing quarters. But the benefit of medical oncology is that we also draw operating leverage from it, which contributes positively to our EBITDA. And our main focus is obviously to drive EBITDA margins upwards. And there, I feel it's net, net a positive impact.
Okay. Just lastly, I request that with the change in reporting format, we've done away with bed or occupancy-related metric. If you could just help us add that in the presentation, it gives us a sense of capacity utilization for every quarter. Thank you. That's it from my side. Thank you so much.
Yeah. So Devang, as we had mentioned, going forward, we will stick on two metrics, which is largely around volume and ARPP for cancer patients because they are they have a long-term association or dependence on the hospital. So the long-term value realization is of more importance to us than the episodic treatment, which gets captured in RPOP. Hence, we'd like to stick to these metrics. And we will continue to report progress on them every quarter.
Fine, sir. Thank you.
Of course, there are every potential metric too which we have been reporting every quarter.
Thank you. Participants who wish to ask questions, please press star and one. The next question is from Gaurav from Ambit. Please go ahead.
Yeah. Hi. Good day. The first question is, have we seen any impact of the new CGHS norms excluding covering treatment of some high-value chemotherapy drugs into this quarter's numbers? And secondly, also, with the GST cut on a lot of these medications, has that impact also been felt in this quarter on the revenues and EBITDA?
Yeah. Thanks, Gaurav, for the question. So I would say as far as GST is concerned, there was a marginal impact on the top line as well as margin. But we were able to offset that by some initiatives that we took within the organization around pricing and consumption. So that's been offset because of that. As far as CGHS is concerned, yes, there was some immediate impact. But we've been able to offset that too by changing consumption patterns in our hospitals. And also, the fact that overall, at an overall company level, it does not contribute much to our business for now. So it's a neutral impact, so to speak. A lot of work has happened on these two fronts to make sure that it doesn't impact us going forward as well.
Got it. Got it. Separately, with this strike in Andhra, can you just quantify how many days did that kind of affect the business? And is that also that that's had an adverse effect on the working capital also being stretched, at least for Q3, with some receivable days going up and that payment should happen in the next few quarters?
So it did have a material impact on our volumes because we lost about 20-25 days of working. And that did have an impact on the November volumes as well. But now that growth is coming back to us, I mean, that effect has been normalized. As far as receivables are concerned, in fact, we've got a good flow of money coming in from that segment, the fact that Q3 had a billing of about INR 25 crore, but we had a net receivable addition benefit of INR 5 crore. So net- net, there is a positive flow from the government side as far as receivables are concerned. And Q4 also looks very good from that perspective for us, for that market.
Got it. Very encouraging. Last two clarifications. So I think first one would be, within this quarter, there was an announcement of one-time amendment to the founders' contract of INR 2 crore. So is that one-time impact in the Q3 results? And secondly, it's an absolute margin. So this quarter, despite these disruptions or transient impacts, Q4, with the new Bangalore greenfield coming on, would that be a temporary drag that you see in Q4 margins versus Q3?
So to your first question, the impact of that amendment will come in Q4. We've not taken that in Q3. And to your second question, obviously, Q4 is trending better than Q3. And our hope is that it will be the best quarter for us this financial year. But the impact of North Bangalore will only be able to see in Q1 coming in because from the time of operationalizing to the business impact will probably take us about a quarter.
Got it. Thank you so much. All the best. I'll join back to Q.
Thank you, Gaurav.
Thank you. Next question is from Sumukh from Korman Capital. Please go ahead.
Hey. Hi, team. Am I audible?
Yes, you are. Please go ahead.
Yes, sir. So my question is on the operating margins and the ROCs, sir. So it's been historically low when I compare it to a multi-specialty hospital. So is there anything structurally different in cancer care specialty hospital because it's more equipment-heavy and you have relatively smaller hospitals, which is leading to lower margins and ROCs?
Yeah. So see, traditionally, if you see, historically, many of our centers of excellence have done extremely well when it comes to ROC. They are clocking an ROC of 28%-29%, close to 30% also. So structurally, I don't think there is anything wrong. It's just that 50% of our centers, if you see today, are in that eight to 10 year they're around eight to 10 years old. And that's why the impact that we will see in the ensuing years, as they mature and we see more operating leverage coming in, the ROC will significantly improve. And we've stated that as well. So I feel it's not a question of any fundamental issues with the business. It's a question of the maturity of our centers that is impacting the ROC to this level.
Second point is that with our CapEx outlay that we have planned now for the next four, five years, after FY 2027, the EBITDA growth rate will outpace the CapEx deployed, capital deployed growth rate by a good margin. That will flow directly into ROC. We feel we are confident of delivering the ROC margins that we have committed in our investor day deck of about 20% in the next four to five years.
Okay. The 30% margins, sir, so at what maturity would the hospital ideally be achieving this?
We have seen that when a center crosses INR 10 crore per month revenue, the ROC impact improves significantly. We've seen that trend in the last year as well. Going forward, as more and more centers mature, I feel from a current 13.5%, we should be progressively moving towards 20% margin at a company level.
Okay. So I got it. That was my question.
By maturity, I mean the revenue threshold, not the age of the hospital.
Okay. Thank you.
Thank you. The next question is from Rajat Srivastava from Tata Mutual Fund. Please go ahead.
Yeah. Hi. Thanks for taking my question. Manish, my first question is that what percentage of your revenues is coming from patients who have probably had the first line of treatment or first treatment in some multi-specialty hospital? And for whatever reason, they were not happy with the treatment, so they have come to HCG for and I just want to understand how much of your revenues is coming from those patients because you claim that probably you are one of the best in cancer care. So I think that would address.
Yes. Rajat, very interesting question. So actually, a good chunk of our patients come in after having taken an opinion at a multi-specialty hospital. I would say that I can come back to you with exact figures, but my estimate is around 45% patients come there, which is a large chunk. But going forward, we want to kind of focus on the first opinions also strongly because that's a big pipeline that we see growing. While our centers of excellence will get these second and third opinions, which is really the moat that we build on. But I think going forward, this will come down a bit while the overall pie will increase.
All right. And also, what percentage is medical tourism for you? And probably, if you can tell us, what are you doing to promote that? Because that turns out to be a big part in the healthcare system.
Currently, it's about 3.5%, Rajat. Our endeavor is to take it to about 7% in the next four years. The way that we are thinking about is that there are some traditional markets which have drained into HCG hospitals. Today, oncology comprises about 25%-30% of the overall medical value travel in the country. It is the largest, fastest-growing specialty on MVT on an overall basis. We feel this segment is going to grow even further. Hence, we are deploying the resources, both people and infrastructure, in our major six to seven markets to draw into this growth.
Any reason, Manish, that this number is at 3% right now? Because I think for other hospitals, it is closer to 10% already. Was it not a focus area for us till now, and it is now? Can you elaborate on it?
So yes. I mean, for us, domestic has done extremely well. That was the focus area. But we feel that since oncology, post-COVID particularly, has grown rapidly. Hence, our focus is now on leveraging on this channel as much as possible.
Sure. Thanks.
One more factor why we haven't done so well is that our centers, except for Bangalore Center, are not located in metros, which typically get the drainage of these patients like Delhi and Chennai, for example. So now, our expansion in Mumbai, for example, and Kolkata expanding its footprint and increasing in size, and Bangalore, of course, is our center of excellence. We are confident of increasing this piece of business for the organization.
Great. Manish, if I can squeeze one more. So you mentioned that your best centers are operating at 25%-26% EBITDA margin levels and probably closer to 30% ROCs. Can you tell us what is the number of beds out of the 2,200 beds which we have currently? How many beds would be operating at that level?
Rajat, if you can, I can come back to you with the exact number. But our investor deck has a reference to this. You may want to check that. Otherwise, we can come back to you with more specific details. I don't have that number offhand, the exact number of beds, I mean.
Got it. All right. Thanks, Manish, and all that.
Thank you. The next question is from Aditya Chheda from Incred Asset Management. Please go ahead.
Hi. Good afternoon. Beyond the two facilities in Bangalore that those are mentioned in the investor presentation, can you share some more granular details on where we should expect the incremental beds to come from?
Aditya, the incremental beds will come from across the organization. As an example, Vizag, Kolkata, Cuttack I've mentioned. Ranchi will have some bed expansion. KR Road, which I said Bangalore are flagship, Ahmedabad, Bhavnagar, and Borivali. I would say across seven, eight centers, we will see bed expansion varying between 20-60 beds.
Right. And my next question is on the.
The large chunk will come from Bangalore. The largest chunk will come from Bangalore.
Right. Over the last three years, incremental part of our revenue was from the established centers. The mix was north of 80%-85%. On our outlook on directional improvement in margins, how do we think about balancing growth and margins going forward, whether we should be balanced about the fact that there is going to be material growth in new beds, which would impact EBITDA margins going forward?
So going forward, about 80% of our margin expansion or growth, sorry, margin growth in absolute terms is going to come from existing centers. About 10-odd% is going to come from 10%-12% is going to come from brownfield expansion in the centers that I mentioned. And about 5%-6% will come from greenfield expansion, which is going to be a very calibrated and prudent approach as far as capital allocation is concerned.
I think about it. Those are my questions. Thank you.
Thank you. Participants who wish to ask questions may press star and one. The next question is from Aryamaan from Prudent Investment Managers. Please go ahead.
Yeah. Hi, sir. So we had called out the 15% sales growth number. So can you maybe just break this down into ARPP growth and volume growth? That would be really helpful. And maybe if you could call out future CapEx for FY 2027 and 2028, that would be really helpful.
So the breakup for the 15% plus is about 10% will come from volume growth and about 5% will come from ARPP growth. For CapEx this year, our expected closure is about INR 275-280 crores of CapEx. Next year, probably about 10%-12% higher than that.
Okay. Sure. Thanks, sir. Thank you.
Thank you very much. That was the last question in queue. I would now like to hand the conference over to the management team for any closing comments.
Thank you so much. I would thank everybody who participated and asked some very insightful questions. It was a wonderful interaction. I hope that we continue to exchange these insights from time to time, not just on these calls. Look forward to meeting you again next quarter. Thank you so much. Have a wonderful day. On behalf of Team HCG, we would like to thank you all. Thank you.
Thank you very much. On behalf of HealthCare Global Enterprises Limited, that concludes the conference. Thank you for joining us, ladies and gentlemen. You may now disconnect your lines.