Ladies and gentlemen, good day, and welcome to the KIMS Hospitals Q1 FY 2026 Earnings Conference Call hosted by IIFL Capital Services Limited. 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 this conference call, please signal an operator by pressing star, then zero on your touch-tone phone. Please note that this conference is being recorded. I now hand the conference over to Mr. Rahul Jeewani from IIFL Capital Services Limited. Thank you, and over to you, sir.
Thank you, Shruti. Hi, good morning, everyone. This is Rahul Jeewani from IIFL Capital. I welcome you all to the first quarter earnings conference call of KIMS Hospitals. From KIMS, we have with us today Dr. Bhaskar Rao Bollineni, Founder and Managing Director, Dr. Abhinay Bollineni, Executive Director and CEO, and Mr. Sachin Salvi, CFO. Over to you, sir, for your opening comments.
Greetings and a hearty welcome to you all. Next week, we are going to celebrate 78th Independence Day. The air is full of fervor of Independence Day and other ensuing festivals. You will be pleased to know that this is our silver jubilee year. We started our journey in 2000 with our first hospital in my native town of Nellore, in Andhra Pradesh, with the overall objective of providing affordable and accessible healthcare. Encouraged by the overwhelming response, we expanded to other towns and opened our flagship hospital at Secunderabad in 2004. Today, we have 25 centers across five states with a bed capacity of 8,000 and a strong workforce of 20,000 +, and all set to grow further in the near future.
All this is made possible due to the trust and confidence of patients arising out of our clinical excellence, outcomes, and latest technology, and of course, support of you, investors. Let me now rush to the present, the financial and operational highlights. Total revenue of INR 879 crore, with growth of 26.8% year-on-year and a 9.6% on quarter-on-quarter basis. EBITDA of INR 200 crore, with growth of 8.5% year-on-year and a degrowth of 1.4% on a quarter-on-quarter basis. EBITDA margin at 22.7% versus 26.6% in quarter one, financial year 2025, and 25.3% in quarter four, financial year 2025. PAT at INR 85 crore in quarter one FY 2026, against INR 95 crore and INR 106 crore in quarter one 2025 and quarter four 2025, respectively. Consolidated EPS for quarter one FY 2026 of INR 1.96 with degrowth of 9.2% on a year-on-year basis.
Cash and cash equivalents include cash, bank balance, deposits with maturity less than 12 months, and investment in mutual funds, INR 70 crore, as on Q1 FY 2026. Q1 FY 2026 financial highlights, the consolidated one. The consolidated revenue from operations of INR 872 crore, with growth of 26.6% on year-on-year and a 9.4% on quarter-on-quarter basis. Consolidated EBITDA pre-Ind AS of INR 194 crore, with growth of 9.8% on year-on-year and a degrowth of 1.5% on quarter-on-quarter basis. Consolidated EBITDA pre-Ind AS, excluding other income, of INR 187 crore, with growth of 8.6% and a degrowth of 2.9% on year-on-year and quarter-on-quarter basis, respectively. The new units, the quarter was packed with action. We launched our Thane unit, and it has made a promising beginning.
We also launched our two units at Bangalore, done the Puja in Mahadevapura and Electronic City, with a bed capacity of nearly 800 beds, both the units put together, and maybe operationalized in quarter two, and almost all the licenses and everything has come, so we are in a position to start very soon, and our new units in Kannur and Kollam in Kerala are receiving encouraging response. We also opened our new units in Seethammadhara at Visakhapatnam, along with fertility center, Cuddles, childcare, and a specialty unit. We also opened 120 beds, 100 beds in Srikakulam, the new facility. Maybe in the next couple of quarters, we may be opening in oncology in Anantapur and Ongole, so these are all our new things which we planned are going in a proper manner.
Maybe we're one or two months getting delayed because of the licenses to get from the organization, I mean, the governments. And we also have very good clinical achievements we achieved in this last quarter. A lot more are there. With all these clinical achievements, we are growing much faster, starting from a one-year baby to an 85-year-old male. And with all these clinical achievements, there is a proper growth which is going to come up. And these stories make the achievements that much. Interaction with international experts is a regular phenomenon at our hospital. Last week, Professor Kelly Hunt, Professor and Chair, Department of Breast Surgical Oncology, The University of Texas, MD Anderson Cancer Center, hosted and visited KIMS and delivered a lecture on advancing surgery through collaboration and science. There was a lively academic interaction, which we greatly appreciate, the expertise and latest infrastructure.
So I come to now assuring you of our continued efforts to expand our reach and pursue excellence for even better performance in the future. Thank you.
Thank you. 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 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, good morning, and thank you for the opportunity. My first question is on your new units related cost. So it appears that the losses which you have booked from these new units in Q1 is high. So how should we see? Especially in Nashik, Thane is something which, as I understand it, contributed to the losses. So if you can share, how do you see operations scaling up at these units, and what kind of losses you are expecting, say, for this year and FY 2027?
So we have five hospitals which are new in the system and which are contributing to these small margin of losses. Coming to Maharashtra cluster, we have Nashik and Thane. The ramp-up at Nashik has been a little slow because of tie-up from insurance, delayed tie-up from insurance and corporate. But otherwise, if you look at the cash business ramp-up, it is quite decent, and we're pretty happy with the response so far. But there are some losses from the Nashik unit, which we feel will be neutralized by the end of Q2. As far as Thane is concerned, the ramp-up has been significantly good. The month of July, we closed with a revenue of INR 9 crore from the Thane facility, which is much better than what we had expected. We see a very positive trend as far as Thane is concerned.
So by end of Q3, we should neutralize the losses from Thane as well, and it will be EBITDA neutral. In the Kerala cluster, we have two units. One is Kannur, which is EBITDA positive. We have Kollam, which was an EBITDA drag in Q1, which also was because we were doing a lot of renovation work, but Q2, we should neutralize the EBITDA losses from the Kollam facility, which is commissioned in Kannur, and from Q3 onwards, it will start contributing to EBITDA.
Okay, so all these put together and plus two new units in Bangalore, which you are going to start in the next few days or so, what kind of losses should we be looking for this year from the new unit?
As far as Q2 is concerned, I think from both Nashik and Thane, we should have a loss of around INR 8 crore- INR 10 crore in Q2. And as far as Kerala is concerned, we should have it neutralized, so there won't be much losses, maybe INR 1 crore at best. And as far as Bangalore is concerned, because we will start commissioning the hospital now, we got our Pollution Control Board license just yesterday. In another week, we should get our KPME license a week to 10 days. And once we get it by towards the end of August, we should commission both the hospitals. So that will be another 10 crore drag for the month of September, INR 10 crore- INR 15 crore drag in the future.
INR 10 crore-INR 15 crore. And these Bangalore units, should we assume cost within, say, two to three quarters of operation, or it could take slightly longer?
Because we should assume September is the first full month of operations, given that in August, we will take time to get all these licenses. So from there, 12 months, we should positively take even in both the facilities and Bangalore. We should at least become EBITDA neutral.
Okay, so within 12 months, say, you are going fully operational from September, so 12 months from there onwards.
Correct.
Okay. My second question is on your mature cluster of Telangana. So there, we have seen improvement in output over the last, I think, few years. However, my question is that the IP volume and occupancy looks more range-bound. So how should we look at these two KPIs? Because I understand ARPOB, but hello?
What did you say about occupancy? I couldn't follow that.
Yeah. So I'm saying we have seen improvement in ARPOB in Telangana cluster hospitals. But occupancy and IP volume, if we look at, I think, last few quarters' number, they look more range-bound. So how should we look at these two metrics? That was my question. Thank you.
Telangana, like you said, is a very mature cluster. So we're still growing at a 5%, 6% volume growth on a year-on-year basis. So which is in line with what we predict. And with the Kondapur hospital getting commissioned next year and some expansion happening in the Gachibowli hospital, we should see next year good volume growth in the Telangana cluster. But since it's a mature cluster, we're not anticipating growth beyond a 5%, 6% kind of a volume growth.
Okay, so mid-single-digit growth for a mature cluster is something which we should assume.
By volume.
Yeah, by volume.
Because we are running out of capacity in most of these facilities. When Kondapur comes in and then Secunderabad comes in, we will then get more beds in our operations.
Okay. Thank you. I'll get back in the queue for more questions.
Thank you. Our next question is from the line of Eknath Shinde, an Individual HNI Investor. Please go ahead.
Good morning, this is KIMS team. And I just want to understand a telescopic view. My question is, as KIMS expands its footprint across tier one and tier two and tier three cities, how are you leveraging the digital health platforms with AI or remote care models to enhance the scalability and patient outcomes? And could these tech-led innovations become a structural moat for KIMS over the next three to five years? Yeah. Thank you.
Yeah. I think we're using AI and technology to help improve patient outcome and patient care monitoring within the hospital. I think as a company, we're very focused on delivering tertiary and quaternary care. And we do not want to digress from we will use technology, embrace technology as much as we can within the hospital. But the key focus is to get to tier two, tier three, build capacity because there's a lot of unmet capacity demand and focus on being able to service both tertiary and quaternary care. But embrace as much technology as we can. We have always invested very high on technology, both on AI-related stuff as well as new equipment that are coming in the system.
Okay. Great. Thanks. Thanks. Thanks a lot.
Thank you. Our next question is from the line of Rahul Jeewani from IIFL Capital Services. Please go ahead.
Yeah. Thanks, sir. So the EBITDA losses which we indicated from these new hospitals in 2Q, that number, I think, would be closer to INR 20 crore-INR 25 crore for 2Q. So can you also quantify the combined losses which we had from these new hospitals in 1Q, just so that we better understand in terms of how these losses are moving from 1Q to 2Q?
So the combined losses in Q1 is INR 21 crores.
Okay. So this INR 21 crore hit you have already seen. So the incremental hit in 2Q then would be around, let's say, INR 5 crore kind of a number.
INR 5 crores-INR 10 crores. Because there will be some improvement in the Maharashtra cluster, Kerala cluster, but also a drag from the Karnataka cluster.
Sure, Dr. Abhinay . And Dr. Abhinay , you said that Nashik ramp-up obviously has been slow, so because of insurance delays. So when do you expect these insurance contracts to get formed up in Nashik? Because I think Nashik we commissioned last year in September. So yeah, apparently.
Actually, the real commissioning started only from January now. So last month, we have ramped up to almost INR 7 crores of revenue. So we're pretty happy with the progress made as far as the cash only as a payer. But with insurance and CGHS, which both account for typically 60% of the volumes in most hospitals in that cluster, we are expecting both improvements to be done over the next three to six months' time.
Okay. So that INR 7 crore revenue for Nashik is just from the cash business. So with these incremental insurance contracts, the business should further ramp up.
Correct. Correct.
Sure, Dr. Abhinay. And on Sangli also, did we book any losses for the quarter, or Sangli we did not have much of losses?
Since Sangli is an O&M contract, and we just get the revenue we get a revenue share. But when you look at Sangli independently, we have no losses in Sangli for the full quarter.
Okay, and what was this quantum of revenue which you booked from Sangli this quarter?
4.3 crores.
Okay, so Dr. Abhinay , can you just guide us in terms of how we, because we have some of these O&M contracts, so I think in the Telangana cluster, Telangana AP cluster as well, I think Guntur is again an O&M contract, so for these O&M hospitals, for which the capacity doesn't get added, but we will be seeing this revenue accretion, so across all these O&M hospitals, what kind of a revenue number should we be factoring in, let's say, from a next 12 to 24 month perspective?
So we'll start sharing that detail separately, Rahul, in the presentation from next time onwards. We got that feedback from some investors. We'll put O&M revenue separately from.
Okay. Sure.
Two months.
Okay. Sure. Sure, Dr. Abhinay. I will join back this week.
Thank you.
Thank you. A reminder to all participants. Anyone who wishes to ask a question may press star and one on their touch-tone telephone. I repeat, anyone who wishes to ask a question may press star and one on their touch-tone telephone. Our next question is from the line of Karan from GE Shipping Family Office. Please go ahead.
So thank you for taking my question, and congratulations on a good set of numbers. So I just wanted to double-click on the Kerala cluster. As we are aware, there's a brand already present in that cluster. So I just wanted to understand what our strategy will be going forward, attracting better volume growth in that particular geography. So that's my first question.
So I think the state as such is a very large state. We have seen good volume growth in both our facilities. And competition is not present in all the districts of Kerala. And if you look at where all we are commissioning hospitals, like in Kollam, we don't see sorry, in Karnataka, we have no competition from any large corporate issue that we're setting up. We have no competition. So there is enough space for two, three players to coexist and be able to scale significantly.
Sir, from that perspective, since we are a relatively newer brand in that state, if you can just talk about the initiatives that you've taken to reach out to the residents and the geography over there so as to make a brand presence.
Just like we're always focusing on those micro-markets where there's unmet demand, and when we go there with the right infrastructure, right technology, and the right model to attract talent, the talent themselves attract a lot of patients, and they're old patients and new patients, and seeing the infrastructure, there's a lot of unmet demand in those micro-markets, so a lot of these retail activities need to increase in footfall in these hospitals.
And sir, just one last question on the Bangalore Karnataka cluster. We're commissioning 800 beds there. And you mentioned there'll be some EBITDA losses that will kick in from Q2 onwards. So sir, at what occupancy level do we feel that in 12 months we can see EBITDA margins kind of neutralize there and help us in the consolidate profile?
Yeah. I think around a good 30%, 30, 40% occupancy, we should become EBITDA neutral. 20, 30% occupancy should become EBITDA neutral. It depends on the initial doctor cost and the timeline we look to doctors are joining and stuff.
And from the perspective of talent hiring, etc., we are already, I'm assuming, on track for that. So that.
Talent hiring for phase one of the growth, we are pretty stocked. Once the licenses are in place, those doctors will have to start resigning from their current organization and then come on board, so that onboarding will take two, three months or one, two months, so that's where we are foreseeing some losses, and because also Bengaluru is a heavily insurance-dependent market, so there could be some initial delay in ramp-up because we have to get the empanelments, and that's a time-consuming process, but overall, the kind of talent we've been able to attract, I think we're pretty confident within 12 months we should neutralize EBITDA losses from both the hospitals and Bangalore.
That's great to hear. Sir, one last question if I can squeeze in. From the 800 beds, are you looking at opening them in a phased manner? And if so, what would be the timeline of that?
Sorry, in which? In Bangalore?
In phased manner. Yeah, in Bangalore.
We will only commission 50-75 beds in each hospital to begin with, and as we ramp up those occupancies, we'll add more beds.
Okay. Thank you, investors.
Thank you. Our next question is from the line of Nancy Yadav from Equirus Securities. Please go ahead.
Hi. Thank you for taking my question, Tim. Just two short questions. Firstly, I wanted to reconfirm the net debt number. I think I missed that part.
The net debt as of 30th June 2025 is INR 2,020 crores.
2024. Okay.
2024. 2020.
All right. Thank you, sir. And I also wanted to ask that, like you mentioned, the EBITDA losses are INR 21 crore. So could you give an approximation of how much of this is coming from Thane, or is there any other asset also adding to this?
We have Thane, Nashik, and Kollam adding to this. Thane would be around INR 11 crores because we had only one month revenue, but we commissioned the hospital from May. Nashik will be around INR 7 crores. And then you have Kannur will be around 3.5 crores.
All right. Sure. Thank you so much, sir. Very helpful.
Thank you. A reminder to all participants. Anyone who wishes to ask a question may press star and one on their touch-tone telephone. Our next question is from the line of Bino Pathiparampil from Elara Capital. Please go ahead.
Hi. Good morning. A couple of questions. One, Srikakulam 120 beds, have we commissioned it? Because I haven't seen any addition in the AP cluster.
Yeah. We commissioned it in Q2. July 22.
Oh, July 22.
Q2 is the come-up.
Okay. Second, Dr. Abhinay , what are the plans of expansion beyond the 5,271? Because right now, all the announced projects are ending by Q4 of FY 2027. So.
Sorry. Your voice is not very audible. Could you speak up a little bit?
Hello?
Hello, sir.
Hello?
This is Mufling.
Hello. Is it better now?
Yes. Now it's clear. Please go ahead.
Okay. Thanks. I was wondering about expansion plans beyond FY 2027. Now, all our announced plans are now getting commissioned by end of FY 2027. So have you started working on more greenfield projects, and what sort of areas are you looking at?
We are exploring more opportunities, but the focus area in the clusters remains the same. More work in Karnataka, Kerala, Maharashtra. And obviously, a lot of brownfield addition in Telangana and Andhra. But our intent is to first stabilize a lot of the greenfield hospitals that got commissioned this year or will get commissioned this year. So towards the end of the year, when we are more stable from all of these operations, we will then start closing on a lot of the other greenfield hospitals, which will anyway take three, four years. And that's a good enough time for us to stabilize operations.
Got it. One last question. In these new hospitals that are coming up, say Thane, Bangalore, etc., when you go for insurance empanelment, is there a rate negotiation that happens, or is there a standard slab which applies to that many-bedded hospital and it just gets fixed?
There is a rate negotiation that happens.
Okay. Got it. Thank you. Thank you.
Thank you. Our next question is a follow-up question, and it's from Damayanti Kerai from HSBC. Please go ahead.
Hi. Given your experience in Nashik for some delays in insurance empanelment, etc., what are your expectations for Bangalore to get the intended coverage which you're looking for? Like how much time it might take? Yeah. Yeah.
Thane, Bangalore, Nashik will all take similar time. It will take us anywhere between nine to 12 months for full operations to be completed. That's the typical timeline that we're seeing even in Thane. Nine to 12 months, we should safely assume for full operation.
So in Bangalore, we are starting in September. So initially, we should assume it's more cash patient who might be scattering. And then as you build up on the insurance empanelment part, that will come gradually.
Correct. Correct.
Okay. That's helpful. My second question is in Andhra Pradesh cluster. So in the last few quarters, again, because of your focus with improving mix etc., it has gone up from the historical level. But when we look at its output, it's still there is a meaningful gap between Andhra Pradesh cluster and the network-level output. So do you think there is more room to cover up this gap, and what could help you to achieve that?
I don't think that gap will ever get bridged. These are two independent micro-markets, and the potential of the patients in that cluster is only so much. We will never be able to get to a Telangana or a Maharashtra kind of outputs. Even within Maharashtra, the outputs in Thane and Nashik are very different. I think we'll have to look at it from a micro-market point of view.
Sure. But right now, I think you are at 24,000 or so, 24,000-25,000 outputs. So if we look at AP cluster on its own, we can assume some more growth at this number, like 25,000 outputs.
Yeah. There's definitely potential growth in the current from where it is currently. But it may not get to 69,000 like we've seen in Telangana because case mix is also going to change. Oncology is going to become a significant part. We're focusing on trying to reduce ALOS economy in that each of these districts are also improving. Paying potential is improving. It will definitely improve, but there will always be that gap that lets us look in Telangana and Andhra.
Sure. And I think oncology is one segment which you're focusing a lot to improve mix in the AP cluster. So has it been launched across all the units there, or do you have some room to improve them?
We have only commissioned oncology in one of our hospitals. The others are yet to get commissioned.
Okay. Okay. So that is yet to come. Okay. Thank you. Thank you for your response. I'll get back in a few.
Thank you. Our next question is from the line of Abdulkader Puranwala from ICICI Securities. Please go ahead.
Hi, sir. Thank you for the opportunity. Also, first question with regards to your AP cluster. So if we look at the margins for this particular quarter, there has been some bit of a softening. So can you help us understand why has that happened this quarter?
We have had the pre-operative expenses on some of the Srikakulam hospitals which got commissioned. So we had hired a lot of doctors in Q1. When the hospital got commissioned on July 1st, we were onboarding these doctors for Srikakulam. So the doctor cost went up there. And QNRI, which is a hospital that we acquired, over there we had seen some incremental doctor onboarding. And a lot of renovation work which happened. So there's been some delay in being able to complete the renovation work as a result because of which the ramp-up is also getting slightly delayed. But we should complete renovation soon and then ramp up in QNRI will happen. But it's largely because of these two efforts, onboarding of talent.
Got it. And so when you talk about your EBITDA losses of Q2, we see somewhere around a cumulative range of INR 30 crore-INR 35 crore. That even factors the new hospitals at Andhra Pradesh.
There are no losses in Andhra. There are no losses in Andhra. There are no hospitals in negative EBITDA. It's just that there has been some EBITDA drag because of this incremental cost.
Okay. Okay. Understood. And sir, in terms of your guidance, how should we look at your EBITDA margins to plan out for the current fiscal? Can you color on that one?
I think anywhere in the 22%-25% range is what we're looking at.
Got it, sir. Thank you.
Thank you. Our next question is from the line of Harish Bihani from Kotak AMC. Please go ahead.
Yeah. Hi. Hi, Doctor. Good morning. A couple of questions from my side. First is on the insurance part for the new units. If I understood correctly, we were also trying to tie up with some intermediary who can help solve this issue at least for the foreseeable future. So anything on that that you would like to highlight?
Yeah. So that is happening, Harish. We're using a couple of vendors to actually help do a reimbursement for all the insurance patients. But still, a lot of patients, we're losing a lot of patients because they don't want to go through this cumbersome process. They just want complete cashless, like even in Thane, which is fully commissioned. We are losing a good number of patients in spite of which we've been able to ramp up. But they don't want to go through this whole cumbersome process. They just want to do either cashless or go to a different hospital. So that leakage also will get plugged once we have full empowerment of all these.
Sure. And this issue takes time largely because of challenges with regard to a new hospital and the insurance companies taking a bit longer. So why does this happen, essentially?
One, there are some bilateral negotiations that happen on tariffs. And two, the process itself is quite cumbersome. And now a lot of changes happening at the insurance level also. It just becomes a little more cumbersome than before. Even traditionally, it has always been very cumbersome to get empanelment for new hospitals.
Sure, but for a hospital like us, which we are there in multi-city, is it possible that some of this can be fast-tracked, or you are giving an outer limit of, say, nine to 12 months, and it could be fast-tracked a bit earlier?
It could be, but it's safe to assume a longer timeline given there's a lot of bilateral negotiation on what the tariff should be, what the potential of that micro-markets are. Because, though we operate in, we have multiple hospitals empowered with these companies, they all focus on each of these micro-markets very differently.
Sure. And you don't want to give up on a particular number simply because that becomes the base for any future negotiation, though.
Correct.
Understood. And in terms of the ramp-up of some of the existing units where we are setting up incremental beds like Ongole, Anantapur, Kondapur, let's presume, say, you stated in the presentation that it'll come in Q2, Q4, Q1 2026, and 2027. So we should assume that it starts a quarter later. And how soon will these ramp up? Will it take, say, six months, a year, a year and a half, obviously depending upon the number of beds too, but just some flavor on that?
See, Ongole is a very small addition that should ramp up in three, four quarters. But Anantapur, Kondapur, Rajahmundry will be building really large capacity. So full occupancy, 70% of that, 70%-75% occupancy of those beds will take a good four to five years' time before we get there, we get to a 70% kind of an occupancy.
I think 40% more incremental beds.
Incremental beds. We are almost doubling capacity in each of these locations.
Right. Sure. Understood, and on the losses for the new units, so let's just assume that it's around, say, INR 80 crore this year. How will this look like, say, next year and a year after that, ballpark in terms of the absolute size changing from 80 to X number, 2X number, some positive number in 2028?
See, I think beyond Q1 of next year, we will have some drag from Bangalore, or even that should be neutralized by Q2 of next financial year. But beyond Q2, we have no greenfield effects that are getting commissioned. So we don't see these losses continuing beyond that up until 2028, 2029 when we look at more greenfield hospitals that come.
So somewhere like INR 20 crore for the full year, or will it?
For FY 2027? For FY 2027? Yeah. I think INR 20 crore is a good number, INR 20 crore, INR 30 crore.
Understood. Sure. Sure. Thanks so much. All the very best.
Thank you. Our next question is from the line of Bhavya Gandhi from Dalal & Broacha Stock Broking. Please go ahead.
Yeah. Thanks for the opportunity. So just wanted to understand what would be the peak revenue at realistic level of occupancy because different capacities are coming at different point in time. If you can provide a cutoff date when everything will be operational and what sort of revenue can we generate and EBITDA that we can generate at that point in time once all the facilities come on stream, maybe even if it's 2028, 2029, some ballpark number if you can provide.
It's a very difficult, uncertain guidance because we keep adding capacity. I don't think that the capacity addition will continuously happen.
At least for the existing capacity, when can we expect everything to come on stream and what could be the peak revenue at realistic occupancy?
We'll have to look at that. We'll come back to you on that.
Sure. And just wanted to understand at least two, three years hence, how would the output look like? Some number if you can provide.
I think a healthy 4%-5% level output is what we should factor into.
Okay, and even for the, I mean, for the upcoming facilities, what kind of ROCE are we targeting at least once the ramp-up happens?
A 20%-25% kind of an ROCE.
On a full year, if you include the mature as well as the upcoming facilities, what is the steady-state ROCE one should work out with?
so we should look at it cluster by cluster. As the hospitals mature because hospitals are coming in different timelines, we should look at each hospital, each cluster by cluster. Each cluster, we should be able to deliver a 20%-25% kind of an output.
Fair enough. And so for the upcoming facilities, have we faced any, I mean, competitive intensity in any of the geographies? I understand few geographies we don't have competition, but at least for the mature markets, where there is healthy competition, or are we seeing differentiated approach or something of that sort? Yeah.
I think where we see a lot of competition is in our Telangana cluster. But fortunately, we've been able to grow by both revenue and volume in the Telangana.
For the newer clusters, sir, actually, I was looking out for newer clusters.
Newer clusters, we don't see much. At least the hospitals that have gotten commissioned, we're not seeing any competition, at least in competition.
Okay. Fair enough. Thank you so much. That's it from my end. Yeah.
Thank you. Our next question is from the line of Nikhil Mathur from HDFC Mutual Fund. Please go ahead.
Yeah. Hi. Good morning, all. So my first question is on your.
Nikhil, sorry to interrupt, Nikhil. Your voice is sounding very low.
Is it better now?
Yes. Now it's better. Please go ahead.
Thank you so much. Good morning, all. So my question is on the relationship between ALOS and occupancy in your Telangana cluster. So assuming that 3.4 is the ALOS that remains, I mean, it remains at that level for the foreseeable future, what kind of peak occupancy can you achieve on this sort of an ALOS?
65%-70% occupancy at Telangana cluster is what we can achieve.
Okay, so 50% theoretically can go to 65%-70%. That we can expect.
Correct.
Got it. So would that mean that the margins in the Telangana cluster can continue to trend up? I mean, Vijayawada is already up, but if that occupancy were to be achieved at some point in time, the margins or EBITDA per bed can continue to trend up in this cluster?
Yeah. It should potentially trend up.
Okay. Despite the competitive intensity, lead to poach or anything of that sort, that might happen?
Yeah. Whatever competition capacity had to come in has come in in the last two, three years, and we have not seen any loss of doctors from our hospitals, at least our network of hospitals.
Okay. Okay. Got it. Thank you. The second question is on the oncology mix for the company. I mean, my understanding might be wrong, but what we hear is that oncology is a mix that most of the corporate chains are kind of focused on and increasing that part in the overall mix. So the first question is, in the entire oncology mix, what is the ARPOB difference versus corporate level? Let's say if you are in Telangana, your ARPOB reported this quarter is somewhere around 69,000. What can be the ARPOB of the oncology specialties? I'm very ballpark number. I'm not looking at an individual specialty level ARPOB at a very ballpark level.
Nikhil, sorry, we don't have that information offhand with us, but we'll share it with you also.
But in some broad sense, I mean, 2X, 2.5X, 3X, depending on some sense you have on the average billing of a patient over a 3.5 days kind of a time period.
It will definitely be 20%-30% higher than the blended ARPOB, and there will be a drag on the other broad specialties, which account anyways for 30% as a revenue.
Okay. And at a company level, your oncology share is somewhere around 58%. I would imagine that Telangana would be much on the higher side, and all the other clusters would be much, much lower. So this 58% can settle at 65%-70% in the coming years?
Yeah. Correct. But most of our hospitals, whether new or old, the oncology specialty is around 60%-65%. 60%.
So even in Maharashtra, Andhra Pradesh as well, let's say in Maharashtra, empanelments are still missing in certain regions.
Yeah. Yeah. Still the revenue from these specialties are probably the same. It's not going to change. That's not going to impact.
But then, how will the I mean, you're guiding to a 5% kind of ARPOB increase at an overall level. So would it be more specialty mix driven then, or it will be more payer mix driven then?
It will be a blend of both. I said 5% on ARPOB is pricing, but once the stability in specialties, payer happen, it will take a while for the ARPOB to change. At a mature cluster, I'm saying it will grow at a healthy 4%-5%. I'm not talking about a company level. At a company level, there will be significant change because almost two to three thousand beds have gotten added in different micro-markets. So by the time it stabilizes, it takes some while, and the ARPOB in both Bangalore and AP are significantly higher than what our company ARPOB is today.
Okay. Understood. And then what is the mix between surgical and medical today? I mean, and how will that change in coming years?
I think it will remain constant. I don't see that changing.
Understood. Great. Thank you so much.
Thank you. Our next question is from the line of Rahul Jeewani from IIFL Capital Services Limited. Please go ahead.
Yeah. Thanks, sir. So sir, you indicated that the Telangana cluster would see, let's say, a 5-6% kind of an IP volume growth, which would accelerate with, let's say, Kondapur and Gachibowli next year. So can you similarly talk about the Andhra clusters? So what kind of IP volume growth do you see in Andhra, given that we have been adding these Onco and Mother and Childcare specialties as well in some of these AP hospitals?
A similar growth profile, Rahul, because these are both mature clusters for us, though there are some new greenfield opportunities in Andhra. But since they're all brownfield capacity addition currently, we should assume a similar growth profile in both these clusters.
Sure, Dr. Abhinay. And Dr. Abhinay, while, let's say, within both these clusters, there would be a few hospitals which would be operating at peak occupancies, but there would be hospitals within these clusters which are at a lower occupancy. So let's say Sunshine in Telangana or some of the other tier two, tier three hospitals. So if we look at occupancies for both these clusters, it is around 55%-60% only. So given that we are only at 55%-60%, don't you think that the IP volume growth could be slightly better than what you are indicating?
So some of the secondary bed, we have some limitation on the beds because some of the beds are being rebuilt. So we don't have that bed capacity. Though on the beds that we have, we are at a higher occupancy. But unless the new beds get commissioned, though it's part of the overall capacity, unless the new beds get commissioned, it will be difficult for us to ramp up in this hospital. And both in Gachibowli and Begumpet, which is the Sunshine Hospital, we are adding new technology like cancer and some other specialties for more growth to happen in the future.
Okay. Sure. Sure. And on this ARPOB growth for this quarter at a company level, we saw 11%-12% kind of an ARPOB growth. And you indicated that the mature markets or the clusters should see a 5% ARPOB growth. But because we are entering into these markets where inherently the ARPOB is higher than the company average, if you had to put out a number to overall ARPOB growth at a company level, what would that number be, let's say, over the next two- to three-year period?
We haven't really put that number through, Rahul, but I think it should safely assume a 50-55 thousand.
Okay, so this company-level ARPOB, which is right now at around 43,000, that you think can improve to a 50-55 thousand kind of a number?
Correct.
If you ramp up.
Yeah, but that will happen once ramp-up in both Bangalore and Thane happen.
Okay. Sure. That's it from my side, Dr. Abhinay. Thank you.
Thank you. Our next question is from the line of Alankar Garude from Kotak Institutional Equities. Please go ahead.
Hi. Good morning, everyone. So out of the 300 beds at Thane, how many are operational? Is it just 100 beds?
Yeah. 100 beds.
Dr. Abhinay, when do you expect to increase the operational beds to, say, 250-300 beds? I mean, typically, it takes a year or less than that. What's the initial sense?
You see, right now, on 100 beds, we are at around 50%-55% occupancy for the month of July. So as we reach 70% occupancy on 100 beds, we'll open another 50 beds. But I think three to four years for a full 300 beds to be fully commissioned and to reach 70% occupancy is what we're looking for.
Got it. The other question, again on Thane and even on Nashik, has the doctor recruitment in both these hospitals largely been done?
In Thane , it's largely done. Just some onboarding is left, which will happen in August, September. At least the phase one of the growth is fully sorted as far as Thane is concerned. For Nashik, we have two, three specialties that are still pending, which will potentially happen once we have these insurance companies on board.
Got it. And maybe it's very, very early to ask this question, but just taking a chance on ARPOB at Thane , how is the ARPOB looking like initially at this point of time, comparable with the other peer in the market, higher, lower, any sense on that?
Yeah. It's very early because the specialty mix is yet to stabilize. But it will be similar. It will be very similar to what the other peer in the market is.
Fair enough. The second question is, see, given you have opened hospitals in quite a few new markets in Maharashtra and Kerala over the past few quarters, and you will be opening more as well, especially the Bangalore ones, can you take us through some of the initial learnings? You spoke about insurance empanelment. But apart from that, any learnings you would like to share, especially if you compare these new hospitals with your existing AP Telangana facilities?
Yeah. Like we have always indicated, Maharashtra has been always slightly more difficult than the rest of South in doctor onboarding. But that's because culturally, the things are very different in both these micro-markets. South is more of an institutional practice. In Maharashtra, this is a new system that's evolving. So we have anticipated that it will take that much time when we set up the first few hospitals. But in one, it has been quite good. The response has been very impressive. We've got good traction from a lot of doctors, leading doctors in those micro-markets. So we're pretty positive about long-term growth in Maharashtra. And also the other micro-markets, Karnataka and Kerala.
Got it. And one final question. When you talk about Sunshine and Nagpur, in terms of occupancies and resultantly in terms of margin expansion, is there any further scope for expansion at both Sunshine as well as the Nagpur facility?
Sunshine and Nagpur both have more scope for expansion. As incremental revenue comes in, 40% of that the fixed costs go to.
Where are we in the journey on Sunshine when it comes to changing the specialty mix away from?
We've reached now a healthy number. When we first commented, we then anticipate also to grow as well at similar growth rate. But that has continued to grow. But whatever we wanted to achieve in most of our other specialties, we have done. We need to create more space in the new Begumpet hospital at Sunshine. This is to add more specialties such as oncology and pulmonology. As far as Gachibowli is concerned, we want to expand to a slightly we want to add more beds again to add more oncology. So with that expansion, I think what we had earlier in research for Sunshine will be fully done.
Got it. That's very helpful, Dr. Abhinay. Thank you and all the best.
Thank you. Our next question is from the line of Harith Ahamed from Avendus Spark. Please go ahead.
Hi. Good morning. Thanks for the opportunity. Dr. Abhinay, can you talk a bit specifically about our O&M units? We've signed a few arrangements under the O&M model. So which among the three or four are currently operational? What is their, if any, contribution for the quarter? And if you can also talk a bit about what exactly our involvement is in these units. Do we have our own people at what level and what kind of CapEx commitments on our side?
So there's no CapEx commitment from our side, Harith, on these efforts. We have two hospitals that are operational. One is Sangli and one is Guntur. There is one more hospital in Hyderabad that will get operationalized soon. But from both Guntur and Sangli, the response has been quite good. We've been able to break even in both the hospitals. And both the hospitals today are doing a top line of around INR 17 crores-INR 18 crores per month. And we see the potential for that to double over the next three to four years. So that's the contribution from both these hospitals. And they're also both have broken even now.
What exactly is the arrangement we have? Our people at what level?
So we have full control over the P&L, the hospital operations, the clinical talent hiring. All of that is under the scope of O&M. And we manage the entire hospital for the promoters, and we take a certain share of the revenue.
Okay. And are we looking to add more units under this model? I'm asking because from an operational bandwidth standpoint, would there be a constraint given we have a ramp-up hospital with Nashik, Thane , and the upcoming hospital with Bangalore?
We're adding one in Telangana, but I don't see anything at least for the next three quarters. We don't see any more O&M contracts happening.
Okay. That's all from my side. All the best.
Thank you. Our next question is a follow-up question from Nancy Yadav from Allegro. Please go ahead.
Hi. Thank you for the opportunity again, sir. Like we spoke about the acquired beds from Thane, Nashik, and Kollam, I also wanted to get the revenue numbers for the three facilities.
Hello? Am I audible?
Yeah. You're audible.
Sorry, sir. There's some.
The top line, as far as the top line number is concerned for Thane, we did INR 5.5 crore. For Nashik, we did about INR 15.5 crore. And in Kollam, we did INR 9 crore.
Kollam, you did INR 9 crore?
Yes.
Okay. Sure. Thank you so much.
This is quarter- on- quarter?
Thank you. Ladies and gentlemen, this was the last question for today. I now hand the conference over to the management for closing comments. Over to you, sir.
Very good interaction. And then the updates, what you have given the questions, we're able to think through. And what we are trying to achieve, as I mentioned many times, that we believe that we can be able to achieve what we have been achieving this year of top line and bottom line in the last decade. We are also planning to achieve that. That's why we are doing the executive models. And Andhra units are basically purposefully we put there is a lot of scheme patients and the ARPOBs and the CapEx what we invest in Begumpet is also less than compared to the rest of the Maharashtra and Telangana and Karnataka. And the other important things, the medical and surgical branches, when you see, there is nothing like only oncology that is able to give more.
Even some of the non-oncology specialties, then the complexity of the case, it will also give more of a value, and the ARPOB growth also will be there from 5%-10% growth will come because of the new things which have been added. As we anticipated, there will be a lot of tough time for us in Maharashtra and Karnataka to align with the doctors, but after seeing that, what the learnings we learned, they are also very happy with the culture what we built in KIMS. They're also moving towards this side. That is a very good positive note on us, so that we have more encouragement to develop more and more in Karnataka and Kerala and Maharashtra because they're also aligned and what we have been planned, what we are doing with our things in the South, in Andhra and Telangana.
That is a very, very positive so that it will be easy for us to move forward a little further. And we also look for some strategy of O&Ms where because we have a lot of expansion plans, with a lot of debt sitting on the books, and the O&M model is a better model so that we can also build and have total control at the same time we are getting some money for the capex. And we are looking around in a few years that maybe INR 100 crores top line per month. So nearly INR 9 crores will come from there with the 9%. With all those things, what we look at, there is a very, very positive look from our side.
The plan and the growth, very meticulously, very cautiously and consciously deploying the CapEx and also the operational leverage without causing inconvenience to the patients, without going back on our affordability, accessibility, quality. These are all there. I think we are very, very pretty and good spot as far as healthcare is concerned. KIMS is in a good position. Once again, thank you very much for all our questions and the knowledge that you have been given in the form of questions. Thank you.
Thank you. On behalf of IIFL Capital Services Limited, that concludes this conference. Thank you for joining us, and you may now disconnect your line.