Ladies and gentlemen, good day and welcome to KIMS Hospital Q2 and H1 FY 26 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 the 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.
Hi, good morning, everyone. This is Rahul from IIFL Capital Services Limited. I welcome you all to the second quarter earnings conference call of Krishna Institute of Medical Sciences. From KIMS, we have with us Dr. Bhaskar Rao Bollineni, Founder and Managing Director; Dr. Abhinay Bollineni, Executive Director and CEO; Mr. Sachin Salvi, CFO; and Mr. Srinath Reddy, the Cluster Head for the Karnataka cluster. Over to you, sir, for your opening comments.
Good morning to everybody. I extend a warm welcome to all of you for the investors' meet. Today is World Science Day for Peace and Development, celebrated annually to emphasize science's contribution to society and development. Today also happens to be World Immunization Day, to promote the use of vaccines to protect people of all ages against preventable diseases and highlight the importance of immunization in global health. Both occasions are closely connected to healthcare. Let me first take you to the financial and operational results of Q2 2025-2026. I am pleased to state that results are good in spite of the fact that the second quarter of the year is usually done. Financial year Q2 updates: total revenue of INR 965 crore, a growth of 23.3% year-on-year, and 9.8% quarter-on-quarter.
EBITDA of INR 208 crore, a decline of 6.7% on year-on-year, and a growth of 4.3% on quarter-on-quarter basis. EBITDA margin at 21.6% versus 28.5% in Q2 FY 2025 and 22.7% in Q1 FY 2026. Flat at INR 72 crore in Q2 financial year 2026 against INR 121 crore and INR 85 crore in Q2 FY 2025 and Q1 FY 2026, respectively. Consolidated EPS for Q2 FY 2026 of INR 1.67, a decline of 37.7% on year-on-year basis, and a 14.7% on quarter-on-quarter basis, respectively. Cash and cash equivalents includes cash, bank balances, deposits with maturity less than 12 months, and investments in mutual funds at INR 120 crore as of 30th September 2025. Q2 financials 2026 financial highlights consolidated: consolidated revenue from operations of INR 961 crore, a growth of 23.6% on year-on-year, and 10.2% on quarter-on-quarter basis.
Consolidated EBITDA pre-INDAS INR 201 crore, a decline of 8.6% year-on-year, and a growth of 3.6% quarter-on-quarter. Consolidated EBITDA pre-INDAS , excluding other income, INR 197 crore, a decline of 8.5% and a growth of 5.3% year-on-year and quarter-on-quarter, respectively. Operational highlights consolidated: average revenue per operating bed grew by 9.8% and declined by 2.3% year-on-year and quarter-on-quarter, respectively. Average revenue per patient grew by 7.3% and declined by 1.6% year-on-year and quarter-on-quarter, respectively. IP volume 64,288 grew by 12.2% quarter-on-quarter and 15.3% year-on-year. OP volume 592,725 grew by 18% quarter-on-quarter and 25.1% year-on-year. The academic accomplishments historic win and provide movement for Indian rheumatology and KIMS.
This is the first time in India, first time India had won the Knowledge Bowl Trophy since its inception more than 40 years ago. KIMS team headed by Dr. Sarath Chandra Mouli, our Clinical Director and Head Department of Rheumatology and Clinical Immunology, has won the first place, that is gold medal, at the American College of Rheumatology ACR 2025 Knowledge Bowl Chicago, competing with teams from renowned international centers such as the University of Minnesota, Yale School of Medicine, Mayo Clinic, University of Toronto, University of Chicago, University of California, and many others. Our team also received the Team Spirit Award. The accomplishment is a matter of pride for KIMS as its nation. Dr. Manas Panigrahi, Head of the Department and a Senior Consultant Neurosurgeon, made a presentation at the Congress of Neurological Surgeons at Los Angeles that received wide acclaim.
Dr. Aswini Dutt, Department of Nephrology, won the Dr. A. P. J. Abdul Kalam Award being adjudged as best nephrologist in Hyderabad. Our recently opened Thane Mumbai Center organized an open house to let people have first-hand knowledge about its facilities, resulting in a huge and encouraging response. The unit conducted more than 1,000 surgeries in less than 6 months, a testimony to the growing goodwill. At KIMS Kondapur, we introduced a Medtronic Mazor Robotic Guidance System. This is the first in Telangana and Andhra Pradesh states, opening a new era in spine surgery. We have launched Asia's first XR experience lab at our Gachibowli unit. The state-of-the-art facility enables clients to explore innovative applications in augmented reality and virtual reality across four key verticals: screening, diagnosed, therapeutic, and skill building. The pilot project of 6 months revealed positive outcomes in reducing anxiety, improving mobility, decreasing analgesia usage, and enhancing patient satisfaction.
KIMS Manavata Hospitals, Nashik, launched its comprehensive cardiac unit, and it is the only one center in entire North Maharashtra to have EP studies and ECMO facilities. An exclusive IVF center with the latest facilities opened by KIMS in Banjara Hills, attached to KIMS Sunshine Hospital. KIMS Secunderabad Cuddles and Dietetic Department conducted a conference on nutrition for the first 1,000 days of life, revolving around mother and child to a packed audience. KIMS Hospitals Kannur has achieved a series of firsts to its credit in rendering services that were hitherto not available there. In fact, it brought out a booklet highlighting such 32 first- in- kind accomplishments in the first 32 weeks. I will not burden you with understanding the list of complex surgeries and rare treatments taking place at our various units. Two of them are KIMS-SIKHARA Hospitals of Guntur, which performed its first multi-organ transplant procedure.
The unit is yet to complete its first year, and such transplants are well for progress in saving lives in urban centers and the surrounding areas. KIMS Mahadevapura performed the multi-organ transplant program in Bangalore within the first quarter of the inception of the organization. I would conclude now by mentioning an important thing which every Indian must know. Our national song, "Vande Mataram," was penned by Bankim Chandra Chatterjee 150 years ago, and just three days back, on 7th November, the nation celebrated its 150th glorious anniversary. The song aroused patriotic fervor among the masses and played an important role in freedom struggle. This 150th anniversary will be celebrated for the whole year. Thank you very much. Open for the discussion.
Thank you very much. We will now begin the question and answer session. Anyone who wishes to ask a question may press star and one on 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 a question. Ladies and gentlemen, we will wait for a moment while the question queue assembles. The first question is from the line of Piyush Kumar from Magnus Hathaway Investments. Please go ahead.
Yeah, I'm audible.
Yeah, you're audible. Please go ahead.
Yeah. Yeah. Hi, good morning, sir. Sir, my first question is regarding even though there is a revenue increase of 23.3% this quarter, the EBITDA and PAT decrease by - 6.7% and -40.3%. Can you just share some actual light why this is happening?
We have commissioned almost four or five new hospitals which are yet to break even, and because of which the revenue ramp-up in those hospitals is happening, but have not reached EBITDA break even. That is why there is a drag on the ASIN.
Okay. Sir, and my next question is currently regarding we are driving around INR 42,016 in average revenue per occupied bed. Can we just expect in the next few quarters or maybe next eight quarters, can this number touch INR 50,000 per bed?
Yeah. As Maharashtra and especially Thane and Bangalore scale up, there is, and because the current ARPOB in both these markets are around INR 50,000, and the potential for it to scale up will be around INR 65,000-70,000, like in the case of Hyderabad. There is all fairness, it can go up from the current INR 42,000-43,000 to almost INR 50,000 over the next eight quarters.
All right. Sir, just one last question. Currently, we are driving around 17% revenue from cardiac sciences, 14% from ortho, and 11% from neuro. Sir, can you just shed some light which one out of all these is more profitable for you as a hospital?
It's very difficult to look at it at a specialty-wise. At a hospital level is what we track. We don't look at it at a specialty level.
Okay, sir. Thank you, sir. All the best, sir.
Thank you. The next question is from the line of Sucrit T. Patil from Eyesight Fintrade Private Limited. Please go ahead.
Good morning to the team. I have two questions. First is for Mr. Rao. As more hospital chains are expanding across India, what is KIMS doing to build a strong edge, not just through the bed count or regional dominance, but something deeper, like a way of working or thinking that grows over the time and makes your competitors hard to copy? I just want to understand a forward-looking view.
Basically, what we are looking is healthcare is a very, very important one. We should not be able to compare like a business. Even the previous person, we have asked an individual-based department-wise, which is the good and bad. Our entire aim is in healthcare, there are four, five important things that are there for a human being. Today, most of us are doing only the curative care. There is a lot more we need to insist on the preventive actions, how we can be able to shape so that whether we can be able to create an awareness or further checking and creating a diet and other things. Second important thing is after the discharge, there is one more important thing to improve the quality of the patient is we need to be able to look into the rehabilitation program.
Basically now today, oncology is growing, the need of oncology is expanding and growing need. We need to also see whether the palliative care and end-of-life care should be able to do that. To improve the quality care for the patients and the employees and everything, we need to move on to a different platform of what we are doing, like AA generator and even the digital platform where the patient should be able to be eased out so that they should be able to come back. Now the patients are also expecting a good infrastructure and a good technology. We are always on the forefront to provide a good technology as well as the good infrastructure. Good infrastructure will keep the patients very happy as long as they stay in the hospital and supported by good services, as I mentioned about AA and digital thing.
The good technology, whichever is available, will be able to help the patients to see that they will recover much faster, not to be able to stay longer period in the hospital. We can attract that good doctors also. Like if you see in the last one or two quarters, we were able to acquire a Gamma Knife, Magnetic Resonance- Focused Ultrasound, and TULSA-PRO. These are all the good equipment which can be able to even a 25 robotic missions with da Vinci so that each unit, whether it's a Type 1, Type 2, Type 3, that is our main aim of healthcare that we should be able to sustain.
Okay, thank you. My second question is to Mr. Salvi, sir. I believe he's on the call today.
Yes. Yes, I'm there.
Yeah, thank you. I just want to understand about the margins and cost measuring that you will be doing in the future. As operating cost and margin transactions keep affecting the profits, how are you planning to protect the margins? Are there any smart internal methods that you will be implementing, like tech platforms or clinical protocols that will help you keep the service quality high but not putting pressure on the thing? Even if they do not show the numbers on your balance sheet, I just want to understand how you want to balance cost pressures with keeping the margins strong over the time. Thank you.
As far as the margins are concerned, we are not compromising on the quality. That is the first thing, which is very clear to us. If you see our business and if you typically divide our business into different clusters, different clusters are following different margin trajectory. As far as the core clusters are concerned, like Telangana and Andhra Pradesh, they are into something like 25-30% EBITDA margin, which is sustainable EBITDA margin. In fact, we are seeing for the last couple of quarters, the margins are improving. We are ensuring that this margin trajectory remains there. As far as the new hospitals are concerned, and mainly into Maharashtra and Kerala and Karnataka, these are very large formatted hospitals. It takes some time for them to ramp up. Typically, we assume that from the day of start, it takes at least 12 months to ramp up.
Within this time, typically any hospital, any newer hospital makes an EBITDA loss somewhere ranging from INR 20 crore-INR 30 crore. As far as we are covering that loss of EBITDA in our overall consolidated balance sheet, I think we are through. As Dr. Rao has also mentioned in the initial comment, already Thane has started seeing a good ramp-up. If the same ramp-up continues for the Bangalore and other clusters, I think as a consolidated financial statement, which you are seeing, we will continue to do about 27%-30% kind of an EBITDA margin over the next at least, say, 2 or 3 years.
Okay. Thank you for the guidance, and I wish the entire team best of luck for Q3.
Thank you.
Thank you. The next question is from the line of Amey Chalke from JM Financial. Please go ahead.
Management. First question I have, I joined call late, but have we given existing EBITDA margins for the new hospitals, like absolute EBITDA and the EBITDA margins, and how it has performed year-on-year?
Sorry, Amaya, we lost you. Could you repeat the question again, please?
Have we given the existing EBITDA margin for the existing hospitals, for the new hospitals, the year-on-year performance, how it has done?
Yeah, the presentation has cluster- by- cluster. Within that also, we have given details of each asset by asset, the newer assets, how they are ramping up.
Sure. The second question I have is on the Telangana cluster, where the growth seems to be around single- digit in terms of revenue. The occupancy is also in the range of 50s. What optimized occupancy should we assume here for the Telangana clusters and how can we improve performance here?
Telangana, we've always been historically guiding. It will continue to grow at a high single-digit number only, like we have mentioned in the past. The reason you have seen the bed capacity at 50% is because in Secunderabad, where the flagship hospital is, we are rehabilitating almost 300 beds, which are not completely functional today, which were operational before. Once the rehabilitation of those beds is completed and the new Kondapur hospital is commissioned, which is expected to happen in Q1 next financial year, we can expect a little better growth in the Telangana cluster. Since it's a very mature cluster with a large format hospital, I think we are only guiding towards a high single-digit kind of a growth.
Sure. The second, another question I have on the Andhra. Here, the revenue growth has been good, largely strong double digit, but it is largely led by the ARPOBs. However, the occupied beds have fallen by almost 100 beds. How should we think about the Andhra region going ahead?
Andhra region, there is still a lot of opportunity for growth. We are adding capacity in almost all our current hospitals. Either we are adding oncology, we are adding mother and child, and we are adding other specialties that do not exist. I think healthy growth rate and high teens, mid- teens is what we are looking at Andhra that will consistently continue to grow in the same format.
The occupied beds which have fallen, that what you would attribute to? Is it like the case?
Bed capacity has increased. A loss has reduced. I think the better indicator is to look at the IP volume and OP volume, which is consistently growing.
Sure. Sure. Is it possible to give the occupancy we are currently operating the Thane Hospital at?
Thane currently is hovering around 80 beds being occupied. 80-90 beds. I'm talking about the month of October.
Okay. Got it. Got it. Sure. Thank you so much. I will join back.
Thank you. The next question is from the line of Damayanti Kerai from HSBC. Please go ahead.
Yeah, hi. Good morning, and thank you for the opportunity. My first question is on EBITDA loss at the new facilities. I think last quarter, you mentioned by June next year, all the new units should be cost- neutral. Do you hold on to that, or do you think that time can shift a bit? Any comment on the margins trajectory, please?
We are still sticking to that. We don't see any hospital that can slip beyond, except for one hospital in Bangalore, which is still not commissioned. What we had always committed earlier is within the first 12 months, we are pretty confident that we can break even. Looking at the growth trajectory of all the hospitals that are commissioned, we're very confident that all hospitals within the first 12 months will become EBITDA neutral. One of the Bangalore facilities will get commissioned by end of this month. We're assuming a 10-month break-even timeline so that one facility can slip beyond the first quarter.
Okay. Meanwhile, the margins will likely stay in early 20s the way we have seen for this quarter, or with Thane picking up, we continue to see pickup over that time as well?
I think maybe the next two quarters, it will be similar. From Q1, because most hospitals would become EBITDA positive, things should start getting better. The margin expansion should happen.
Sure. My second question is a clarification. In your presentation for the Maharashtra cluster, a census bed came down to 442 compared to 645 last quarter. In contrast, the non-census bed grew to 195 from 85. What has happened? If you can help us understand that.
Sorry, one second.
Yeah. For the Maharashtra cluster, there has been some bed relocation.
No, no, I think there's been a typo there.
Okay. So can you?
It continues to remain the same as what it is in Q1.
Like both the census and non-census bed, it's similar?
Correct. We'll again re-verify this data point and come back to you after this call, but there is no change on the ground from Q1 to Q2.
Okay. My last question, the margin profile for Andhra cluster, very strong set of numbers. I think when I look at how your drivers have moved, except the OP volume, which has seen very strong sequential growth, your ARPOB just grew, say, 2% or so. I think your ARPP also remained flat. What explained this sizable jump in margins, 22% margin going to almost 28% in September quarter?
I think once Srikakulam Hospital, which we commissioned a new facility, the ramp-up there is happening quite well. The margin erosion that is happening in the new acquisition project, that has come to almost negligible. Both of these contributed to the margin expansion in Andhra.
When I—
We can see there was a drag last quarter, which now is EBITDA- positive in Q2, which is the hospital that we acquired last year. In Srikakulam, there has been an additional 150 bed capacity addition there.
Okay. So Vizag and Srikakulam. Okay. So for the cluster, AP cluster, what should be the sustainable margins? Somewhere in mid 20s? Will that be the fair assumption?
Yeah, I think anywhere between 25%-28% margin is what we're looking at.
Sorry, can you please repeat? I just missed that number. Twenty-five to?
Twenty-eight percent EBITDA margin in Andhra Pradesh is what we can sustain.
Okay. Okay. Thank you very much. I'll get back into Q.
Thank you. The next question is from the line of Abhishek Maheshwari from Skyridge Fund Managers. Please go ahead.
Yeah, hi. Thank you for the opportunity. Just one question regarding since you've commissioned new hospitals of late, the gap between your operational bed and actual bed capacity has increased quite substantially. Can you share some perspective on how you plan to close this gap and if there is any timeline to it?
No, we've added significant bed capacity over the last one year. We've added almost 3,000-4,000 beds. It will take a good time before we ramp up those beds. This is a capacity that we build for the next 4-5 years, right?
Just for understanding, when you open a new hospital, let's say a hypothetical 100-bed hospital, is it that only 20-30 beds are operational at the beginning? As they get occupied, you add another 20-30 beds. Can you just explain the process for that?
Yeah. If you take the example of Thane, you have the 300 beds that are fully ready. The capacity of the hospital is fully ready. But we only commission around 100-150 beds, census and nonsenses all together. As we reach 70-80% occupancy within this, we then add all we have to do to operationalize the other beds is add more manpower. Rest, everything is fully done up in the hospital. The CapEx required is fully incurred.
Okay. So that should close as and when occupancies improve?
Correct.
Okay. Thank you for that. All the best.
Thank you. The next question is from the line of Anshul Agrawal from Emkay Global. Please go ahead.
Hi, good morning. Thank you for the opportunity. The first question is on Thane. Why would the losses increase on a Q1, Q2 basis despite the spurt in revenues? Have you opened new beds here? Because you mentioned that there is no change in Maharashtra cluster beds.
No, no. Thane in Q1 was only commissioned for 45 days. It is not the full quarter.
Okay. In that sense, if I add up the losses and the revenue of the Thane cluster in Q2, would that give some sense about the fixed costs for this hospital?
Fixed cost is around INR 12 crore a month, INR 12-INR 12.5 crore a month.
Okay. We haven't increased the number of beds. This loss should sort of certainly move down in Q3.
Correct. Correct.
Got it. Any guidance for the Bangalore units in H2 on the EBITDA losses or the trajectory of EBITDA losses given the fact that it is a INR 25 crore loss? First of all, a clarification. Are there any costs of PES Hospitals included in the current quarter?
Yes, there is. Thirty percent of the loss that we are showing is from the PES hospital. There has been a delay in getting permission. We're hopeful that this month the permission should come and we should commission the hospital. So doctors have been onboarded. Some of the doctors have been onboarded. Staff has been onboarded. As a result, we are having these operational losses. Once we get the license this month, we should start commissioning the hospital from next month. As far as Mahadevapura is concerned, the hospital is now 2 months old. The performance of the hospital is quite good. It's better than what we had expected it to be. We had also completed the first liver transplant within the first 45 days.
We're pretty confident about the ramp-up at Mahadevapura and that it will break even within the 12 months of commissioning the hospital.
Any indicative numbers that you would want to suggest for H2 for these two units with regards to EBITDA losses?
I tend to predict that the ramp-up has been quite good at Mahadevapura. If we commission PES in December, we're hopeful that that also will ramp up quite well. I think the next two quarters are crucial for us to stabilize both these hospitals. Then we'll be able to give forward guidance of how things will stabilize.
Sure. Any update on insurance and panelments for the new hospitals? Would you like to share any color on this?
Yeah. I think the top five companies, we've started interacting with them and building a deeper relationship. We're hopeful that at least the top five companies by Q1, Q4, we should be able to complete all empanelments.
It will be for all new hospitals, right? Thane, Nashik, and Bangalore?
Correct. Nashik, Bangalore, and Thane, but for only the top five companies.
Got it. Just one last question from my end. Would we be able to sort of quantify the CGHS price side benefit for our set of specialty mix?
Should be around 20% on the CGHS business.
Got it. Is there any way that we can attract more CGHS patients during the ramp-up phase for these new hospitals?
We've always done a good volume of work from CGHS across Andhra and Telangana. I think among all the hospitals here, we do the most volume of work as far as CGHS and related, whereas the concern. I do not think we put any special additional focus to drive more patients, but we'll continue to treat whatever comes by.
Got it. Many thanks. That's it from me.
Thank you. The next question is from the line of Alankar Garude from Kotak Institutional Equities. Please go ahead.
Hi, good morning, everyone. In the presentation, you have mentioned about achieving break even in the next two months at Thane as well as the Mahadevapura hospitals. In this, what is the bed count you are building in? Also, in terms of cost, you mentioned about INR 12 crore-INR 12.5 crore in Thane. Is this the cost which you're looking at when you talk about break even?
Yeah. As far as Thane is concerned, Alankar, we are going to break even in the next two months based on how things are going the last few months. As far as Bangalore is concerned, we're talking about 12 months from the time we commissioned the Mahadevapura. There's a typo error on the presentation, which we will update right after this meeting. As far as Thane is concerned, we're talking about INR 12.5 crore of fixed cost, plus you add consumable costs based on consumption. Typical break even we are seeing will be around INR 15 crore. If you look at the month of October, we have closed around INR 12.5-13 crore of revenue.
Understood. And this is on what bed count, Abhinay?
This will be around 130 beds operational.
130 operational beds. Okay. I mean, with more beds expected to be operational soon, do you expect the cost number to increase? Could that push out the break even timelines? Irrespective of that, we should be at break even in the next two months?
I think we should break even in the next 2 months. The margin may not be very strong because we'll keep operationalizing more and more beds. A large part of the doctor count is already factored in in the current cost structure today. As you add more manpower, yeah, there could be one or two quarters, one or two months that will slip and go by.
Got it. The second question is on this. We have seen a lot of news flow around the discussions with insurance companies and the hospital industry. Now, given for us particularly, we have opened a bunch of new hospitals and we are going to open a few more new hospitals. We need faster insurance empanelment. Let me see, in some delay in Nashik, you spoke about completing the empanelment with the top five by the end of this fiscal in Nashik, Thane, and Bangalore. Just directionally, if you can share your thoughts, can any delay in insurance empanelment be a risk for us, especially given that we are in an expansion phase at the moment?
Nashik now, just last week, we completed two out of the top five. The remaining three also we should complete soon. Things are now moving quicker. I think there's a lot of ambiguity on GIC for quite some time. I think that ambiguity is now settling down and things are moving. We're also trying to express our thoughts around how we can empanel things faster for newer hospitals. We're working with these insurance companies on that.
Okay. Any update on Thane? What's the current status?
On the empanelment status?
Yes.
Yeah. I think, again, the top five companies we should be able to complete by Q4.
Sorry. I meant the current status. What would be the status as on date?
On the top five, we have just one empaneled in Thane.
Got it. Got it. One final question. See, broadly, if I look at our network, Abhinay, out of the 24-25 facilities, we have a few hospitals which are loss-making. You spoke about breaking even in the currently operational ones by the first quarter. In terms of the overall margin profile going into FY 2027 and beyond that as well, would it be safe to say that we should expect a significant delta as far as profitability is concerned given many of these newer hospitals will start going towards the corporate EBITDA margin?
Correct. It will take time before we get there. Most of these hospitals got commissioned in the last 10 months. The first year typically goes in kind of reaching a break even point. It will take time for them to reach a double-digit margin. Definitely the delta is there, but it will take a good number of quarters before we are able to bring it to a corporate- level EBITDA margin.
Fair enough. That's it from my side. Thank you.
Thank you. Before we take the next question, a reminder to all, you may press star and one to ask a question. The next question is from the line of Deepthi Rajulapathi from Axis AMC. Please go ahead.
Hello. Thank you for the opportunity. I hope I'm audible. My question is regarding CGHS exposure that you have. You mentioned 20%. I believe that is AP and Telangana particularly. If we see overall mix, how much would it be? We should not include Aarogyasri, I believe, because it is a state scheme. What is the particular CGHS share of it?
We refer to 15%-20% will be the margin, sorry, will be the price hike impact. But as a percentage of revenue, it will be for these three clusters where Andhra, Telangana, and Nagpur. This is where we do most of the CGHS work currently. That number will be around 10% of the revenue.
Okay. In overall revenue?
Overall revenue, for these three clusters, it will be 10% of the business will come from CGHS and related companies, excluding Arogastry.
Okay. Understood. Thank you.
Thank you. The next question is from the line of Rahul Jivani from IIFL Capital Services Limited. Please go ahead.
Yeah. In Nashik, there has been a significant delay in terms of ramp-up. It has been almost now 1.5 , 2 years since we commissioned that hospital, and we are still incurring losses there. Where do you think that ramp-up in Nashik has been, let's say, slower versus our expectations versus what we have been able to achieve in Thane or even the first Bangalore hospital?
Rahul, Nashik got commissioned in December, January last year, not 1.5 years. We got the OC in January. The doctor onboarding started from mid-January, February. We are 10 months now into commissioning the hospital. I think there is some confusion around that. Number two, as a market, if you look at Nashik, unlike what is happening in Thane and in Bangalore, 35%-40% of the hospital business in this cluster comes from CGHS and related parties. Now, for empanelment of CGHS and related parties, you need something called a 17-2B license, which typically takes time. Even historically in Andhra Pradesh and Telangana, it has taken us at least 9 months to 1 year to get that after the hospital gets commissioned. We should get that license, income tax certificate over the next—we are hopeful we should get that in the next few months.
If we get that, then we start applying for ECHS, ESI, CGHS, and all the related parties. Since that accounts for almost 35-40% of the business, that is a significant contributor. Now, what you are seeing, what you are seeing the revenue is all cash revenue. Even insurance accounts for 30%. Between these two payers, it is 70%, and 30% is only cash. Because 70% is credit, we're finding it difficult for all the doctors who are committed to come and join teams to join before this empanelment is done because they fear that their business could get impacted. Unlike in larger cities like Thane and in Bangalore, doctors are confident that even if insurance is not there, their patients are willing to pay cash and go for reimbursement later. The contribution from CGHS and such companies is very, very less.
Sure, Dr. Abhinay. If we get the CGHS license in Nashik, then obviously with the revised rates on the CGHS business, post that, Nashik should see a good ramp-up.
Good ramp-up. Post insurance and corporate empanelment. What you are seeing today is only 30%. Whatever revenue is coming is all the cash revenue, which typically accounts only for 30% of any hospital in Nashik, whether it is Medicover or Sahyadri. 70% is from insurance and CGHS-related businesses.
Sure, Dr. Abhinay. In terms of insurance empanelment for the Nashik market, how many have we empaneled as of now, and how many are you targeting, let's say, by the end of the year?
Two of the companies have been empaneled, two of the top five. At least before the end of the financial year, we're looking at getting three more, three of the remaining three.
Sure. Generally, in terms of the pushback which has been there between the hospital and the insurance companies and the fact that we have commissioned several hospitals across newer markets. Now, in terms of when you are negotiating with these insurance companies, do they squeeze you to lower pricing or provide them a better pricing in the core markets as well in return for coverage in the newer markets? Does that happen or that's not the case, that the negotiation happens on a market-by-market basis?
Fortunately, that has not happened so far, Rahul. It is not that they are trying to squeeze. It is just that we are trying to arrive at an optimal pricing because a lot of the hospitals in these markets are 10 years old. We are asking for better pricing given our infrastructure is new, given the kind of technology is quite new. That is why it has taken a little time between having these bilateral negotiations to get the right pricing for the hospital. It has no bearing on Andhra and Telangana or Nagpur.
Sure, Dr. Okay. Sure, Dr. Abhinay. Last question from my side. You said 15%-20% price increase benefit on the CGHS business in the three clusters, which is around 10% of the revenue for those clusters. When do we expect the margin benefit from the CGHS price increase to start flowing into our numbers? Would that help us to offset some of the margin pressures which we would see over the next two quarters because of losses from the new hospitals?
Yeah. I think Q4 is when we should see the full impact of CGHS. Yeah. Definitely.
And what?
Sorry.
Sorry. Please go ahead.
I am saying it will definitely offset some losses that we are seeing from the newer hospitals.
Have we quantified the margin benefit which we could see at an overall company level from the CGHS price increase benefit?
It will be around 60% of the incremental revenue, Rahul.
Dr. Abhinay, I was asking in terms of, let's say, these CGHS is around 10% of the revenue for those three clusters. Maybe at an overall company level, the contribution could be 5%-6%. Now, on 5% of the top line, if we assume a 20% kind of a price increase, that could potentially add around 100 basis points to your overall margin. Is that math broadly correct or the number which you might have worked internally is different than that?
We are expecting INR 15 million growth in revenue per month. 60% of that is around INR 9 million. Around INR 100 million-INR 120 million of EBITDA growth for the financial year, next financial year.
Okay. Sure. Sure. Sure, Dr. Abhinay. Thanks.
Thank you. The next question is from the line of Shivam Dave from MIV Investments. Please go ahead.
Yes. Hi. Thanks for taking my question. I just had one question for the Bengaluru hospitals that are coming up. There are a lot of competitors, Parana, Aster DM, and Apollo as well. What is the competitive dynamics of that city? For two regions where you're coming up, one is Mahadevapura and the other one is Electronic City. How is the competitive intensity in those geographies?
We have the management team of Bangalore also on the call. I'll just allow them to answer this one.
Yes.
Yeah. Hi. Yeah. Sreenath here. Yeah, any market for that matter, there's always competition. No doubt Bangalore has got all the big players. Having said that, if you are able to identify the right location, which we have already identified and starting these hospitals, and also the right talent in terms of the clinical talent and the management team, which we have at this stage all with us. Therefore, we feel we are very confident that we should be able to do well in this particular geography in spite of the competition.
Okay.
There are certain micro markets, right, which are still untapped. Some of these micro markets, also there are potential even for future expansion also in Bangalore. Not that every micro market is covered in Bangalore.
Okay. Got it. Two specific markets where you're coming up, you believe that your intensity is a bit lesser.
That's right.
Okay. Okay. Thank you.
Thank you. The next question is from the line of Dhananjai Bagrodia from Alchemy. Please go ahead.
Hi. Most of my questions are answered. Very strong for the numbers. Actually, my question is for Abhinav. Abhinav, predominantly right now, in all these new markets we're entering, we've done a good job in the past market. What is our right to win? Are we going to be positioning ourselves as most premium or cheaper than the competitors? How are we thinking about these new micro markets in terms of positioning?
I think our intent is to keep it as affordable as we can. In most markets, we've always tried to price ourselves lower than competition to keep it more accessible and affordable. We've been able to maintain the same positioning in both Thane and Bangalore. We'll continue to do the same.
Okay. In terms of, see, that could be versus the A-plus players. Let's say today, a government hospital or a smaller specialty hospital, how would we look to be positioning versus them? I'm just trying to wonder, today, when a customer thinks of us in these new areas, when there's no prior history, who is coming to us? What kind of customer is thinking of coming to us?
I think those are not the right comparisons. We should look at hospitals that are comparable in that micro market. Like in Bangalore, it will be a Manipal, a Narayana, an Aster, Jupiter.
Okay. Okay. We'll keep our pricing similar or relatively affordable compared to them?
Yes.
Okay. So we are not playing, we do not want to just keep going ARPOB, which in one end, we want to improve our specialty mix and along those lines, right?
Directly more focused on building volume. That is why we're building large-format hospitals. We believe that there is a lot of volume in each of these micro markets. If we keep the pricing more affordable, we can attract a larger audience.
Okay. Fair enough. Congratulations. You have done a fantastic job. Best of luck for future.
Thank you.
Thank you. The next question is from the line of Kunal Randeria from Axis Capital. Please go ahead.
Good morning, sir. Thanks for the opportunity. Firstly, on ONM, your Sangli and Guntur hospitals, I believe you are getting a revenue share, right? EBITDA loss or profit really would not matter to you from an accounting perspective, right?
Correct.
Got it. Got it.
Does not matter. It's just that we are trying to show that in Maharashtra, Sangli is doing quite well on the EBITDA side as well.
Sure. Fair enough. Fair enough. Second question, and I have a couple of questions around Kondapur unit. Now, your bed expansion will go up to 550 next year.
Incremental.
Already is yeah, I mean, totally only 550, I believe.
No, no. 550 will be incremental. So total will be around 770 beds.
Oh, all right. All right. Now, sir, you already run a 220-bed hospital. It's a fairly profitable hospital with 30%+ margin and revenue of INR 350 crore. I'm just wondering, now with your bed count going up, let's say, one and a half times extra, I mean, higher, how will the fixed topics move? Number one. Number two, this average of making INR 1.5-INR 1.6 crore a bed revenue, is that possible in future also? Thirdly, since Gachibowli Hospital is just a few kilometers away, will there be kind of cannibalization also?
No, I think Kundapur is seeing very strong demand. In fact, we are losing a lot of our patients because of bed capacity constraint. We're pretty confident that this new 750-800 bed hospital will ramp up very well, better than our expectation over the next 3-4 years since it's a large-format hospital. I don't think both Gachibowli and Kundapur have very different catchments. Though they are only 4 km apart, the catchments are very different for each of these hospitals. I don't see any cannibalization.
Right. The cost, sir, how would that be moving up?
Yeah. It depends on how the new specialty is when we onboard them. I think the first year will be a little dynamic because we'll be onboarding a lot of new specialties that do not exist today, like oncology, transplant, and stuff. It will be a little dynamic, but we're hopeful that we'll be able to maintain at least a high 20% EBITDA margin.
All right. As far as the revenue is concerned, this is potentially a INR 1,000 crore hospital in future.
Correct.
Great. Great. Just one more, sir. Sorry, I'm CGHS again. In your payer mix chart, where do you capture CGHS?
It's incorporate. 13%.
Okay. Okay. Thank you very much.
Thank you. The next question is from the line of Vedant Nilekar from ICICI Securities. Please go ahead.
Hello. Am I audible?
Yeah. You're audible, Vedant.
Yes. Hi. Thank you for the opportunity. I just had one question on Telangana and Andhra Pradesh clusters. Could you please explain the bed additions and in what particular facilities are they being added, like quarter-on-quarter?
Right now, we have completed all the capacity additions. There are only two hospitals, which is Kundapur, which will get commissioned over the next six months, which will be an incremental 550 beds. We are adding, we are rehabilitating beds in the secondary bed unit, and we may add another 150-200 beds in the secondary bed unit. That 1,000 beds in secondary bed will probably can potentially become 1,200.
The 1,000 beds will now become 1,200, is it?
That will take another 3.5 years.
Okay. The addition from, so the difference from Q1 to Q2 in both Telangana and Andhra. In Andhra, we have added around 100 beds. In what facility have we added those?
In Srikakulam.
In Telangana, the difference, where have been these beds added?
In Bengaluru, 65 beds were added.
Okay. Thank you. That's it from my side.
Thank you. The next question is from the line of Avadhu Joshi from Trivantage Capital. Please go ahead.
Am I audible? Hello?
Yeah. Yeah. You're audible.
Okay. Abhinav, the question is on the payer mix on the new hospitals. I just want to understand. See, I do understand it's not in our control how we control it for the new hospitals. If we consider new hospitals in the tier two cities like Nashik and Bangalore and Thane, other two cities, how do we want to, how the payer mix grows over the period and how it has impacts over both the things like ARPOB and the specialty we want to grow into? What is our understanding in the beginning of the phase and how we see, how we want to see it evolve over?
Places like Nagpur and Nashik will have similar payer mix. Even if you look at our Nagpur hospital today, 25% will come from CGHS-related businesses. 30%-40% will come from insurance, and the remaining will be cash. Any tier two market will have similar profile like we see in Andhra Pradesh as well. Nashik is very similar. When we got in, we know that this is how the business profile will look. As far as Thane and Karnataka are concerned, we're more focused on a cash and insurance kind of market. It's more a cash and insurance kind of a market. Maybe around 5%-10% at best will be CGHS and CGHS-related companies.
Initially, when we have not empaneled at or we are in the process of empaneling at Bangalore and Thane, initially, the volumes would be lower from insurance and cash. The ARPOB will be lower as compared to what we expect going further over the period. Is that the correct understanding?
Yeah. ARPOB will expand as over a period of time, the case mix changes.
Understood. On the —
Deliberately, the pricing also has been kept on the lower side currently. As time progresses, the pricing will get corrected. It will improve there. Also, the case mix keeps changing.
Understood. Understood. Thank you. That's it, ma'am. That's it from my side. Thank you.
Thank you. The next question is from the line of Alankar Garude from Kotak Institutional Equities. Please go ahead.
Yeah. Just one quick follow-up. In terms of positioning, we have a slightly more affordable positioning in AP Telangana. You spoke about the difference in payer mix across the markets. Similarly, how would you contrast your positioning across the newer markets of Nashik, Thane, Bangalore, as well as Kerala with, say, Hyderabad?
We're focused on a similar positioning, Alankar. We're trying to be as affordable as we can in each of these markets. We're trying to look for similar positions that we have in Andhra Pradesh and Telangana.
Understood. That's it from my side. Thank you.
Thank you. Ladies and gentlemen, this was the last question for today. I now hand the conference over to the management for closing comments.
Thank you for all your insights and questions. Given a lot more knowledge to be in future. We were very, very confident that whatever we have been promised, and whenever we started these new hospitals, what we planned, we are moving in the same way, and there are no deviations. We are very, very confident. I am sure the ramp-up is also going up. The consultants are also very happy with what we have seen in Bangalore as well as Thane. More and more consultants are interested to join. We are very, very confident the things will move as we plan. Thank you very much for all your interactions.
Thank you very much, sir. On behalf of IIFL Capital Services Limited, that concludes this conference. Thank you for joining us, and you may now disconnect your lines.