Ladies and gentlemen, please stay connected. The call will begin shortly. Thank you. Ladies and gentlemen, good day, and welcome to the Rainbow Hospitals Q3 FY 2026 earnings conference call hosted by IIFL Capital. 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 touchtone phone. Please note that this conference is now being recorded. I now hand the conference over to Mr. Rahul Jeewani from IIFL Capital. Thank you, and over to you, sir.
Yeah. Hi, good morning, everyone. This is Rahul from IIFL Capital. I welcome you all to the Q3 Earnings Conference Call of Rainbow Hospitals being hosted by IIFL. From Rainbow, we have with us today Dr. Ramesh Kancharla, Chairman and Managing Director, Mr. Abrara li Dalal, Group CEO, Mr. Vikas Maheshwari, Group CFO, and Mr. Saurabh Bhandari, Head of Investor Relations. Over to you, sir, for your opening comments.
Medicare Limited earnings call for Q3 FY26 and nine months ended December 31, 2025. I would like to start with a few key strategic and operational updates for the quarter. Our operational performance showed steady improvement across all the key performance indicators, including outpatients, footfalls, IP discharges, and deliveries. Growth has been quite satisfactory considering the festivities, year-end holidays, and ongoing seasonal impact. The new units performed well, with a steady improvement both in IP and OP volumes. The acquired hospitals at Warangal and Guwahati have operationally well integrated into Rainbow network. Both these hospitals are performing well and in line with our expectations. During the quarter, we commissioned a 100-bed hospital at Rajahmundry, strengthening our presence in coastal Andhra Pradesh. The performance of this hospital so far has been exceptional and is very close to breakeven in few months' time.
The 90-bed spoke hospital in Electronics City, Bengaluru, it just commenced the operations, reinforcing our footprint and advancing the urban spoke model in Bengaluru. With these additions, the company has largely completed the planned expansion for the current cycle and now transitioning from the phase of capacity addition to the execution. For Q3 FY26, the company reported revenue of INR 445.4 crores, growing at 12%, and the EBIT of INR 147 crores with a growth of 9% and a PAT of INR 73.9 crores, a growth of 7% compared to the Q3 of the last financial year. Occupancy for the quarter stood at 47.2%. Coming to projects, the 60-bed spoke hospital in Hennur in Bengaluru is in concluding stages, and we're awaiting for the final governmental approvals.
We expect to commence operations in few weeks' time. The construction has started at the regional hub hospital at Coimbatore of 130 beds. We are targeting to commence operations by end of 2027. Our upcoming Gurugram hospital's expansion in Sector 44 and Sector 56 NCR, the execution is at this phase, that right now we are at the basement stage slab, and we are hoping to complete the basement slabs in three months' time. The Greenfield Regional Hub Hospital in Pune of 150 beds has received project plan approvals from government, and excavation work has just started. On the clinical side, I would like to present our experience of first liver transplant in Bengaluru Hub Hospital. An 11-year-old child was referred with a chronic liver disease with jaundice and then losing weight.
Evaluation by our pediatric liver team concluded that the child had got an advanced liver disease, and the only hope for the child to survive on long time is a living related liver transplantation. So, we discussed with the parents and assessed both the parents for the living-related liver donation. The mother was most suitable for liver donation, so therefore, our transplant team has actually done a proper workup of both the donor and recipient and done the transplantation using the right lobe of the mother to the child, left lobe of the left mother to the child. The whole transplant procedure went very smoothly. The post-operative period was very uneventful, that the transplanted liver started working.
Both mothers were discharged at day 7, and our child was discharged on day 18, post-operatively, with the normal liver functions. Though this was the first liver transplant in this hospital, systems were so robust to support the seamless transplant procedure. We are grateful for the mother who not only gave birth to this child and also gave a second lease of life by donating a left lobe of liver. I'm pleased to say that now we perform the pediatric liver transplants surgery across all our hub hospitals in Hyderabad, Bangalore and Chennai. I'm. As a pediatric liver specialist, I'm so excited and very proud of our teams. We were able to commence three liver transplant programs in the last six years' time, and with a survival of 94%.
Clinically, we continue to see strong traction across pediatric specialties and the coronary care, with improving case mix and growing contribution from complex and high-end procedures. Our teams across the network remain focused on delivering high-quality outcomes, supported by full-time consultant-led model with a strong multidisciplinary collaboration. I'm pleased to welcome Mr. Abrara li Dalal as a Chief Executive Officer. I'm sure his leadership and experience will be a strong addition to the organization. As we look forward, I would like to reiterate that the major capacity addition in the last two years have almost concluded, and we are now focusing on operational excellence, patient experience, and strengthening our sales and marketing, and to improve our occupancy across the group level. I'm sure with our focused executive plan, we will be able to deliver a great outcomes and value for our stakeholders.
With that, I now hand over the mic to Mr. Abrara li Dalal to introduce himself before passing the mic to Mr. Vikas Maheshwari for the financial update.
Thank you, sir. So good morning, everyone. I come with over 25 years of experience across the healthcare, telecommunications, and FMCG industry. My career spans leadership roles in operations, strategy, and business development. My previous track record has largely been in managing turnaround, brownfield expansion, driving clinical excellence and brand repositioning, mostly in the healthcare industry. In my previous role, I led the growth journey of Sahyadri Hospitals for 6 years and successfully completed 2 transitions from Everstone Capital to OTPP in October 2022, and then from OTPP to Manipal recently in October 2025. I look forward to contributing to Rainbow at this important juncture, with a clear focus on improving occupancies, enhancing service levels, and building scalable, sustainable operations for a long time growth. Thank you so much, and over to you, Vikas.
Thank you, Mr. Abrarali . A very good morning to all of you, and thank you for attending this investors' conference. I'm pleased to brief you on the financial performance and the key developments of Rainbow Hospitals for the Q3 and the first 9 months of FY 2025-26. Our operating revenue for the quarter stood at INR 445 crores, reflecting a growth of 12% when compared to the corresponding quarter of the previous financial year. For the first 9 months, our revenues stood at INR 1,243 crores, reflecting a growth of 9% when compared to the same period of the previous financial year. Our EBITDA for the Q3 amounted to INR 147 crores, marking a 9% growth compared to the same period last year.
For the first nine months, our EBITDA stood at close to INR 400 crore, reflecting a growth of 6% when compared to the first nine months of the previous financial year. The EBITDA margin for the current quarter is at around 33%, while for the first nine months, our EBITDA margin is 32.1%. The profit after tax for the quarter is INR 74 crore, a growth of 7.2% in comparison to the corresponding quarter of the last financial year.
For the first nine months, our PAT stood at INR 2,303 crore, reflecting a growth of 8.3% when compared to the first nine months of the previous financial year. In terms of the operational performance, inpatient discharges, outpatient volume witnessed a growth of 9% and 18% respectively, when compared to the corresponding period of the last financial year. Deliveries grew by an impressive 16% when compared to the corresponding period of last year. Our payer mix continued to remain robust, and the balance with 51% of the revenue coming from the insurance, and the balance 49% coming from the cash patients. For the first nine months, the payer mix remains more or less the same, where the cash stands at 48% and 52% at insurance.
I'm pleased to inform that our company continued to maintain a robust balance sheet with a cash position of INR 579 crore as of December 31st, 2025. These funds will support our ongoing capital expenditure, merger, and acquisitions plans. With our current cash and anticipated internal accruals in the coming quarters, we are well positioned to complete all our planned capital expenditures using internal resources. During the quarter, company has invested INR 57 crore in capital expenditures toward expanding and enhancing our services at existing and upcoming hospitals. With these insights, I conclude my financial update. I now invite questions and suggestions from the participants. Thank you.
Thank you very much. We will now begin with 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 Dhananjay Bagrodia from Alchemy. Please go ahead.
Hi, sir. Congratulations on your new family. Just wanted to understand, what are we thinking regarding occupancy, because now we have enough capacity, how are we thinking on growing occupancy?
Question on occupancy: How do we build occupancy?
Yeah. Well, the current occupancy is about 47. So this year, we have seen the seasonal mutedness across the group, actually more so in the mature hospital groups, like in Hyderabad, Andhra and Bangalore. So that's what actually affected the occupancy levels. So what we have seen is that this performance, I mean, the occupancy has been lower in cardiac outpatient numbers are lower than we expected. So general patients... These are the three segments which in the last quarter also kind of expressed clearly that these are three segments which are being actually performed because of a seasonal mutedness. So rest of the kind of overall other system is actually very well positioned. Generally, the Q2 and Q3 are the seasonal quarters.
So this year, very unusually, we have not seen any kind of seasonal diseases, which impacts our footfall and IP admissions.
Sure, sir. I will just add that in terms of longer term, we are now below 50% utilization. What can we see or what can we think of doing to go back recently?
Dhananjay, your voice was not very clear, actually.
Okay. Hello?
Okay, can you please repeat again? Not clear.
I think right, right now, we're below 50% utilization.
Right.
What are we thinking long, longer term on how we could move that? Because once we get that, then our margins and numbers could be increasing significantly, and even our growth will be there. So anything we're trying to pinpoint back on how to improve, how to grow occupancy?
No, absolutely, you know, there's every plan in place for the next year to drive the occupancies and also, there is that's why I said, you know, we have actually strengthened our sales and marketing. We have got a senior leadership in this position, and also the Mr. Ali joining us. And also we are looking at kind of driving an aggressive sales and marketing, and also to see that the other avenues are actually the improving the occupancies. And, we're also evaluating that, you know, to see that whether any, some of the hospitals, whether the any CGHS would work, at the revised rates. So that is in the evaluation, but we have not taken a call yet.
I think these are all things which we'll definitely kind of, we'll- we are seriously looking forward to improve our occupancies to a kind of, north of 55%. That's where I think we deliver a great result.
North of 65%?
55%-60%.
Okay. And so would we look at also increasing now more capacity in the near term, or would we now just focus on occupancy, occupancy, occupancy?
Yeah, we have done a large capacity addition, almost 780 beds in the last 2 years.
Exactly.
This is a-
Yes.
Also, there's our pipeline is very strong, and the deliverables are going to come in next 18 months, 24 months time, next set of beds. So we have a 1.5 years of clear operational to execute our the recent addition of the beds.
Mm.
I think, anyway, this actually positions us very well to kind of to do the great execution, try to drive our occupancies and drive our operational outcomes.
Okay. And so the average length of stay for this 2.70, what are we targeting? Is this a fair number we should target going ahead, or how should one look at this?
Yeah. Hi, Dhananjay, this is Vikas. With respect to the ALOS, it has been brought in the range of 0.6 to 2.8.
Yeah.
The mean is somewhere 2.7 ±. I think that is the right trajectory for our business model.
Okay, fine. Fantastic. ARPOB growth at some stage, let's say now we have already reached. We're actually doing very well on ARPOB now. We're almost at INR 60,000. Would it be fair to assume that ARPOB has peaked out, or do we see in that also improving from?
The inflation-adjusted ARPOB growth may be there, but the right metric is to check our ARPP, basically.
Okay.
Because of the, you know, a lot of ARPOBs keeps changing.
Uh-huh.
So if you look at our IP ARPP, I think that is the most important parameters to check.
Okay, but, is that your disclosure?
We expect it to, yeah, 5%-7% CAGR growth. One or two quarters here and there, there may be some aberrations. But over a larger period, longer period, we have seen it is growing by 6%-7%.
Okay, fine. Sure. Thank you so much. Thank you so much, and best of luck. Thank you.
Thanks a lot.
Thank you. The next question is from the line of Prithvi Raj from Unifi Capital. Please go ahead.
Yeah. Thanks for taking my question. First on the new hospitals, is it possible to give more details about, you know, how Guwahati, Warangal, Rajahmundry are scaling up, what kind of patients are we getting, and how is the insurance empanelment? Also, a follow-up on that: Would you please give us the occupancy and margin details for each of these three hospitals during the quarter?
Thanks, Prithvi, it's a good question. As a, you know, company policy, we don't give the geography-wise details. Since you have asked for the details, what we saying that whatever the acquisitions we have done, at the time of acquisition, those companies, like Guwahati, was doing close to INR 8 crore revenue per month. I think it is doing slightly better than that per month right now. Warangal, when we have acquired, was doing close to INR 2 crore-INR 2.5 crore revenue per month, depending upon the month, 2.2 times. I think we have reached to that trajectory again. As far as... And we are improving as the empanelment and insurance empanelments are happening, it is improving now.
As far as the insurance empanelment is concerned, for both Guwahati and Warangal, happy to share that 70% of the insurance empanelment is done. Two or three large insurance companies, where the empanelment is pending, our team is in touch with them. Hopefully before February, March, we should see that, you know, those empanelments are also in place. So the company is completely focused on, as far as the business enablement, years are required in terms of the, empanel with the government departments or the insurance, we are on top of that.
Anything on the margins?
Margins are for the Guwahati is as per the company level. For the Warangal, it is on the improvement path. It is a bit of positive, but it is on the improvement path now.
You also made a point that Rajahmundry has broken even in the Q1 . Is it right?
Yeah, it's close to breaking even in the Q1 , yeah, I mean, in the last month. So things are good in Rajahmundry. I think they have good traction, both in outpatient footfalls, inpatients. Intensive care is doing very well, lots of transports. I think it's doing very well, because in the coastal Andhra, the Rainbow is very well-known, it's kind of household name. So we've got a great team and doing very well.
So even given the way these hospitals are scaling up, is it fair to assume that maybe in two years, these margins can be in line with company's margins?
Yeah, some of the years will be definitely. That's what we expect and hope for, but not everywhere could be the same one. I mean, it all depends on the competitive landscape and also their pricing points, both of them drives where they are. In the long term, I think we look at all the consolidated figures, what we always tell about 24%-25% margins. That's where Rainbow should actually aim at and keep that margins, while growing, while we are growing.
Okay. One last question from my side. I mean, let it be, ARPOB or ARPP. We saw a high growth this year. It might be also because of lower seasonal business. Let's assume we get back the seasonal business next year. Will the ARPOB or ARPP growth rate will be lower than inflation rate, just for next year, if the seasonal business comes back?
No, it when you have a seasonal business, proportionately to the IP business and also the large intensive care business, it will not impact much. When you have seasonal businesses, which are kind of simple illnesses, occupying the 1 bed days, 2 bed days, definitely it will lower. Because you got lots and lots of children getting admitted for 1 day or 2 days, where the billing is very small. So, I think what's important for us is that now we have a large part of business which are pretty standard, which is obstetrics, intensive care services, newborns, and pediatric specialties, pediatric surgical. So these are all very pretty standard, regular business, what we have.
The seasonal business, which is normally Q2 and Q3, which comes on top of it, and it gives a lot of occupancies and lots of outpatients and diagnostics, and it drives the top line significantly. Seasonal business drives top line significantly. That's why you always kind of look at it, you know. What's important is that, and a business which you are doing is, you know, with a solid good business, which you've got underlying business and on top of it, when you have seasonal business, and drives the both footfalls as well as occupancies, that gives you a handsome, the growth top line as well as the EBITDA.
The rest of the things is kind of not, because it is the season, the quarter- to- quarter may vary, but at a year level, we need to look at it to see that if you have the RTP of 5-6% growing is healthy.
Okay, got it. Just a bookkeeping question, because you had recent hires, you know, CG one, some senior level. Do we expect an increase in the employee expenses or it's already in the books?
In Prithvi, you know, as a senior leadership joins, and we have already completed our CapEx plans, et cetera. We are expecting a growth from the revenue also coming up, and corresponding EBITDA margins also improving from there. So, though obviously the new leadership, whatever is joining, there may be a cost, but as a percentage to the revenue which increased, we believe that, you know, in next two, three quarters, this will stabilize there.
I understand. That's all from my side. Thank you.
Thank you. The next question is from the line of Nancy Yadav from Allegro. Please go ahead.
Hi, sir. Congrats on a great set of numbers. I think some part of my question already got clarified in the earlier question. But, I just wanted to understand, you know, why there has been some decline in the volumes, and, our revenues are flat as compared to the previous quarter, but there's been some decline in OP and IP volumes. And, we started our Rajahmundry facility also this quarter. So how exactly, you know, should we look at, a decline in volume? Was it just, because of seasonality or there was something else that, impacted it?
Oh, it's purely seasonality. You know, what we have seen. What has happened is, when you look at, we had a high base last year. We had a pretty high season in the last year in terms of-
Yeah.
occupancies, in terms of outpatients and things. When it comes to seasonally muted, that whatever is the kind of the numbers in the outpatient footfalls or the seasonal business occupancy rates, occupancy, is gone off, especially in the mature units.
Mm.
So, where we are kind of Hyderabad and Bangalore and these areas, Vijayawada. So that, that actually shows the kind of overall flat curve on the-
Okay.
seasonal business side. So though this is exactly why, why you are seeing, kind of, the lower occupancies,
Okay.
in across the group, more so in the mature units.
Understood. Just another thing about hospitals. When we start a unit, like, you know, we started three units recently, how long does it take for them to, you know, start ramping up, for them to start contributing meaningfully to financials?
Okay. So, for example, the Rajahmundry we have started it. I think, for the next financial year, Rajahmundry will contribute positive EBITDA, without any doubt. So-
Mm.
Electronic City in Bangalore will take about 15 months time. That's what it is. And, we are likely to start in a few weeks time, the Hennur. That will not take more than a year's time to kind of a breakeven. So this is, more or less by next year, I think, you know, most of our last two years of units will be EBITDA positive. That's what we expect it to be. And, in Chennai, in Bangalore, except Electronic City, most of them will be contributing to positive EBITDA.
All right. That's all I had, sir. Thank you.
Thanks.
Thank you. The next question is from the line of Anshul Aggarwal from Emkay Global . Please go ahead.
Hi. Thank you for the opportunity. Hope I'm audible.
Yes, Anshul.
Great. Our first question was, while you have suggested the timelines of the breakeven for the Bangalore units, would it be possible to guide or quantify the losses that we could expect in the coming quarter or, or any period as such, till, till these units breakeven? Also, a follow-up on that is, Rajahmundry, I think in the last call, if we mentioned that we're expecting it to breakeven within 12-15 months, but, I think we are on track to breakeven within two quarters. So any particular, reason that you would want to call out, or any change that we have seen that has happened versus our, earlier expectations, which has led to this strong performance in that unit?
No, obviously, the Rajahmundry, our brand equity is very, very high in that Godavari district, that every household knows about Rainbow. So there, and we got a great teams. We're able to create great teams in Rajahmundry, and we are doing a lot of intensive care services over there, and also demand is fairly good. And, based on kind of what our capabilities and competency, that obviously now the traction is pretty good, much better than we expected in Rajahmundry. Because we have got a unit in Visakhapatnam, other unit in Vijayawada. Both, this is in between 200 kilometers on either side. This is a potential area and also strong agricultural, you know, delta area. So that's why it's actually done very well. There are lots of towns nearby Rajahmundry, so they are contributing significant numbers to the kind of Rajahmundry unit.
Got it. Would you be able to quantify the losses or guide towards what kind of losses can we build in for the Bangalore units in the upcoming quarters?
So, Anshul, for two units, which is Electronics City and the Hennur, which is getting opened in a few weeks' time from here?
... for the full year, for the FY 2026-2027, I think that the loss assumption, EBITDA loss assumption of INR 5-6 crore is a fair assumption.
Got you. Both units combined, right? Not per unit.
Per each. So INR 10 crore for both. I would say about 12 to-
Twelve.
INR 1,215 crore loss, you should budget it.
Got it. Second question. What I had was on the mature portfolio, while I understand the seasonality impact in the current quarter as well. We are hearing incremental news flow around competition, sort of, in the single specialty ramping up, and, you know, another multi-specialty hospital is sort of coming up with a new hospital in Hyderabad itself. While we obviously can't call out if season will re-return next year, but do you foresee mature hospitals to sort of lag, given the fact that, you know, increasing competition, funding for other hospitals is on the rise, especially in our core markets?
Oh, there's no doubt about it. The competition has been there for the last 10, 12 years' time in Hyderabad, you know, it's always been there. But it's increasing, there's no doubt about it, you know. So the multi-specialties who have lost their pediatric business and obstetric business, they are trying to kind of say that we also want to do a mother and child within the large multi-specialty hospital. And also standalone small hospital, and mom-and-pop stores. All these things, everyone is competing with the, you know, the outpatient footfalls, delivery segment, and those areas. See, when it comes to kind of the children who requires high-end care, who are sick, who definitely come to the Rainbow, and because number of local hospitals coming, definitely some outpatients.
What we need to figure out is see that, now, how do we actually capture the larger market? Obviously, city is also growing, and also the more younger, more and more younger families are coming into the city. We need to see and how we can actually capture larger footfalls into our network, which means we may have physical hospitals. We kind of we have been planned to do start some the clinics in the local geographies because the traffic conditions are getting worse. This is where the requests are coming. So obviously, we'll have our own plans to kind of see the competing at the different local, small mom-and-pop stores or small children's hospitals. How do we position ourselves? So this is an ongoing phenomena.
I'm sure, you know, this will keep us engaged and try to overcome all these challenges.
Got it. So, then would we be maintaining our sort of high teens top line growth aspiration/goal despite all these challenges in the mature hospital or core geographies?
I'm sure. No, challenges are there everywhere, sir. So when you have six, seven multi-specialty hospital groups in each city, they have challenges, but they're overcoming, the same way for us. I think it wasn't the challenge is not there for us at the pari passu level, you know. Equivalent, you know, equivalent player to Rainbow. At least they're all about seven, 10 years behind to us. So that's where it is. But what is the small leakages, wherever OPD footfalls, people aspiration to go to nearby, we need to solve those problems. I don't think that is what we try to work around, because we have, what? Close to 1,000 beds in Hyderabad, and we're going to continue to kind of expand ourselves to the OPDs, multiple ways, and also more units. This will be continuous, ongoing phenomena.
I don't think we're going to sit quietly and see that, you know, everyone goes, you know. That's, you have a, you have a brand equity, you have a kind of a reachability to the population, that will continue to, we continue to drive it, as a leader.
Got it. Very clear, sir. Just one last question. Are there any immediate plans to increase the operational beds at the Guwahati hospital? I see that we only have 85 operational beds, where the capacity is around 150 beds. Are there any immediate plans to increase the operational beds there?
I think that about next 3-4 months' time, those will probably come into the... for probably a kind of a new financial year, early part, will come into operation of those beds.
Great. Thank you. That's it from my side. All the very best.
Thank you. Thanks a lot.
Thank you. The next question is from the line of Rishi Dilip, from RDM Advisory. Please go ahead.
Yeah. Hi, sir, can you hear me?
Yes, Rishi.
Yeah. Hi, sir. A few questions. So, you know, a lot of questions have been asked on occupancy, and the rationale has been seasonality-led occupancy decline. I just wanted to understand, are we exploring any other business models or maybe smaller clinics to bring in patient flow from slightly further distances, so that even if seasonality doesn't work for us, yet our mature hospitals can rise up to 60% occupancy, just what initiatives we are taking there?
Yeah, the plans are on the way. I think we are looking at doing some small clinics, the formats. We are working on that. Probably about in six months' time, we are in the execution phase.
Okay, all right. That's great to hear. Secondly, I wanted to understand, the international patients, is the big rationale behind our Gurugram hospital investment that we are doing, we want to make it a global hub for international patients for pediatrics? Given how we've seen a lot of volatility in geopolitical relations, what hedging mechanisms or what mechanisms are we implementing so that even if there is a disruption, we still don't suffer extremely highly when we end up operationalizing that hospital?
Yeah, it's a good question. Definitely, we are already kind of in the process. So Gurugram strategic plan is actually, we will start working on it from probably the mid or last of, still about 1.5, 18 months, 24 months away to go down. So obviously, we need to, well, before we need to think about it strategically, how we're going to position the hospital, what kind of, you know, the doctor mix we're going to have it, and also the specialties, and also how the positioning of the hospital. And it's a huge exercise which we know how we could, we have plans, definitive plans to work around.
International is definitely as one of the bigger element when you're in Delhi, especially as a super specialty children's hospital, like other multi-specialty. We would like to get that kind of opportunity. Hopefully, you know, things may settle down also, but of course, we do need to reinvent which are the international markets which kind of—which are going to be convenient for you to kind of have the patients. Meanwhile, we also, our adult case are also working on the kind of a de-risking mechanisms, how to kind of work around and overcome the challenges, where the some of the... Like in Bangladesh, it's become really challenging now. So I think, it's a long way, long story. We need to work on that, and we are committed about the geographical, geopolitical volatility.
All right. I understand, sir. Maybe pick this up once we're closer to the operationalization of the Gurgaon hospital.
Yeah.
Third question I had was on the hospital operationalization delays that you've experienced over the past one year. Some because of construction timeline, some because of government delays and permissions. Just wanted to understand, is there, has there been some sort of root cause analysis being done on how to ensure that we hit our timelines on hospital operationalization and change in the process that needs to be done? Any technology change that can help us reduce the timeline for construction? Just to get your view on that.
Yeah, it's a great question, actually. We're working on that, actually, to see that now, how do we actually see, PMCs and how do you strengthen it, how do you see use the technology to see that, you know, the construction timelines are, executable timelines, or can they compress? Can they get compressed, or can we do it then within the timelines? A lot of times, what we have experienced is, it is because of, two aspects. One is, wherever you require permissions, governmental, so Bangalore hospitals, we clearly, it's kind of a delay from the government because there is a, there is a division of, the Bangalore metropolitan area, the 4 zones. So I think in the process, certainly, there 2-3 months delays have happened.
But having said that, in the last, you know, 6, 7 years' time, we've not seen the delays more than one or two quarters. I think the mostly one quarter or two quarters. The number been delayed indefinitely are 9 month- 9 to 12 months' time, a year long. So in Coimbatore, I think we had to go for recentering of the drawings. So that has taken up for 6 months extra, which been communicated because we have to put on many CapEx on those things. We have communicated to the, our, you know, in the con calls, but, you know, the, now things are going very well. Now from this is predictable. The delays happens in the two phases. One is in the sanction approvals, planning stage. Second thing is on the execution side.
If you have challenging teams or something, the difficulties or the, or the, your contractors and those things. Thirdly, the final permissions from the government. So these are the three phases. I think the middle one is in our hands. The first and last one is, I think we have to depend on the local government and their policies and how the. See, sometimes the elections comes, and the local, local body elections, they will take away 4, 5 months time. So you can't do anything about it because nobody works. So these are all the challenges changes from city to city and, state to state.
Right. Right. All right. It's good that we're working at least on the things that we can control. Hopefully, through some technological construction equipment changes, we can ramp it up quicker. Finally, you mentioned you are exploring CGHS, sign up to ramp up occupancy, given the new rates. Just wanted to understand how much is the rate differential now versus our current rates for cash patients?
No, I think there's huge difference. That's why we are still in the bench work, and we'll have to take a call on that. Now, which hospital, where, where is the lots of beds availability, which geography? That's something that now we'll take about 2-3 months' time to make such decisions. Because we have not been in the business of doing a government schemes so far. So this is the first time we've ever we are looking at it. We want to be conscious about what we are how we are going to take it. It's going to be kind of beneficial in a big way without compressing our ops and overall our margins, then we will take it up. It will be patchy, but not at the whole organization level.
And sir, what would be the percentage difference in the pricing?
We'd be, we still have to kind of do the work on it.
Okay. All right. Okay. Thank you. That's it from my end.
Thank you. The next question is from the line of Bansi Desai from J.P. Morgan. Please go ahead.
Yeah, hi. Thanks for taking my question. Just a follow-up on occupancy, and sorry to harp on it. If the seasonality continues to remain subdued going into the next year, do we see ourselves going past 50% occupancy levels, just driven by the measures that we are undertaking?
Yeah, of course, Bansi, I think seasonality is one factor, and also that, the number of action items which we have in front of us to drive the occupancy. I'm sure we'll be able to deliver next year definitely about 55%. This is what we are looking at it. Now we have strengthened significantly. I mean, our sales and marketing and various other the initiatives to drive the occupancies. And also, there's significant investments are going to go into the digital initiatives. I mean, you know, these are all things that I'm sure are going to work. And now I know the last six months I've been dissecting our own business, where and how to do business without much depending on the seasons. This is what now the current example, what we are doing it.
We are hopeful that, and I will overcome this. Of course, you know, any medical hospital, the seasonality is in a sense, and also we cannot escape or avoid seasons and also illnesses in this country. So therefore, this is probably I see it as one of the odd years, and you know, next year is going to be different. It's not going to be the same.
Thanks for that, sir. You know, besides these, you know, marketing led efforts, if you could illustrate, you know, you know, the efforts that you are, you know, undertaking. I mean, are these lines of, you know, adding more doctors or, you know, again, you know, doing more complex work, you know? If you could illustrate, you know, what are these efforts?
Of course, you know, the moving forward is, one is strengthening our specialties and doing more and more, more, the advanced care and also the tertiary care and all complex things. Now, for example, we started a liver transplant program in 5 years ago in Hyderabad. It's going well. We do second largest number of liver transplants in the country, in, in our Hyderabad, Banjara Hills. And, we started in Chennai. It's going very well, the program, last one year. Now, the Bengaluru is commenced. Obviously, I mean, we look to push the program probably to do about 100 transplants next to 16-18 months' time. So that is how we would look at it. How do we kind of build our strength in the pediatric subspecialty and the neurosurgical, cardiac programs, all other things.
The next thing is to see that, you know, how, how to drive the intensive case on the more complex disease. That's another one. And, you know, of course, you know, we were pediatric surgical work, and pediatric subspecialty, like orthopedics and those things. We're focusing on every single, you know, pediatric subspecialty, how we can grow each one of them. And especially the hub hospitals, eventually, to become a kind of a, you know, not depend much on the seasons, to kind of go with the regular business, like, like a, like our hub hospital in Banjara Hills, how it plays up with the throughout the year. We would like to see more and more hub hospitals with, in a similar fashion.
All right. Noted. And sir, just a second bookkeeping one. If you could comment on how the IVF business has trended, and what is it contributing in terms of revenues in this quarter? And, you know, on an annualized basis, what is it in terms of run rate? And also, Butterfly Essentials, you know, our, you know, retail endeavors.
Yeah. Okay, Bansi, for the IVF business, it is at around 4% of the revenue, which we have reached to that stage. It is at around INR 17 crore or INR 18 crore of the business. 4% of the business, which we have reached, is a good scale-up of which we have done. As far as Butterfly is concerned, it is growing, and on the quarter basis, it is doing something like that, INR 4 crore of revenue, which is means is 1% of total overall revenue. So it's still growing phase. I think, the IVF has a more scale to grow up than Butterfly.
All right. Are you dissecting margins for IVF or not at this point in time?
No, we are looking at this margin on the broader level, at the gross level, Bansi, and it is on the company level margin. It's not something that will EBITDA dilutive segment.
I don't think IVF dilutes our EBITDA. It's definitely in line with company EBITDA, maybe better as we move forward.
All right. Thank you.
Thank you. The next question is from the line of Venkata Sivaram, an individual investor. Please go ahead.
Thank you for coming, Sirji. Is the company actually investing in improving digital user experiences? And do you expect any meaningful revenue contribution from it in coming quarters or in coming financial years?
Yeah, that's true. We have kind of finalized our digital strategy and marketing and digital strategy. And also, we are also looking forward to kind of do the significant CapEx in future to see that how we become like a digital front door hospital. So this is because we operate in a women and children's hospital, more of a digital native population. Of course, now in a digital way, something is going to be very significant. I mean, this is, I think there's a lot of upside is there for us, I personally believe, and we are working on that. Almost we firmed up the plan to go ahead with our digital landscape and digital marketing.
Yeah, I mean, apart from marketing, I would like to know if the user experience kind of thing, like some things have been done.
Oh, yeah. We are refreshing our, right from, our website to the patient app and the doctors, this one, and also making ourselves to be completely EMR based. So these are taking its own time, but I think our both focus is going more towards the, and thus the, the patient app and also the online consultations and also the, the payment gateways. I think these are all going to get sorted very soon.
Okay. Yeah, thank you. That's all. Thank you.
Thank you. A reminder to all participants, you may press star and one to ask a question. The next question is from the line of Rahul Jeewani from IIFL Capital. Please go ahead.
Yeah. Yeah. Hi, sir. So, sir, can you also talk about in terms of the ramp up, which we would have seen in the international business? Because I think for the past couple of quarters on the international business also, we had seen some sort of an impact because of what's happening geopolitically. So where is the international business trending now, and what kind of a trajectory do you expect over the next, let's say, two years?
Yeah, yeah. I think we just slowly come back to the 2%. I think, although we budgeted about 4%, but I think because of geopolitical situations, I think the dominant, we used to get a lot of patients from Bangladesh and Sudan, and Kenya. So these are the two of them who are affected significantly. That's why it's, Somalia is another one. Somalia had a ban also from Hyderabad, so that's again, significantly impacted. So we come up to 2% from the revenue now. I think that's not, that's still not very meaningful to me.
I think we are trying to kind of revisit our international plan, which is to include more new countries, explore new markets to see that we can get back into the kind of 4-5% of the revenue.
Sure, sir. Sir, with respect to the acquired assets, what was the contribution, let's say, in first quarter?
Contribution in terms of what, Jivani?
In terms of top line.
The Guwahati will be close to INR 26 crore-INR 27 crore. For the Warangal, should be at around INR 7 crore.
Okay, so INR 34 crore kind of a contribution for the quarter?
Yes.
Sure, sir. So, if we adjust that, obviously the organic growth has been mid-single digit only, and we are talking about recovery going into 2027, 2028. But, yeah, what comfort do you have now that we would see that recovery playing out in 2027 and 2028?
Well, two points. See, in the last 12 months, the company has significantly invested into senior leadership in terms of sales and marketing, which we have announced also, like Mr. Srinath has joined. Now, Mr. Abrara li Dalal has joined as a CEO to drive. We have revamped our units, heads and the cluster head, wherever it was required. We taken the corrective measures for that. We have, as sir has briefed you earlier, is that in the call that we are significantly increasing our presence into the digital initiatives, brand repositioning, et cetera. So a lot of things are happening. At the same time, if you look at our, the seasonal impact has started at around quarter four of the last year, right? And this low base also should help to get on to that.
Sure, sir. Now, with just on seasonality, obviously what happens for us is one year we see a very strong season, followed by a weak season next year. Now, let's say if one had to evaluate the business over a medium to a long-term perspective, would you say that maybe the, the growth potential for our business is mid-teens kind of a number over the next five-year period, versus our earlier guidance of 18%-20% CAGR?
I think we have to take a CAGR of a 4-year CAGR. But if you take a 4-year CAGR, we should clock around 18%. That's what my personal view is. Whatever the experience of running this hospital group, except in this year, which may be when we may touch to kind of double digit. But when the 17, 18% growth has always been there for us in the past. So that's what we would aim and what we would like to reach to. That's our, that's our safe zone, where we feel.
Okay, sir. So you are still sticking to that, let's say, an 18% kind of a revenue CAGR over a medium-term period?
Absolutely.
Okay. Sure, sir. Thank you. I will join back with you.
Thank you. The next question is from the line of Prithvi Raj , from Unifi Capital. Please go ahead.
Yeah. Sir, just, one follow-up question. If you look at our margins, the margins are quite high. It's also because the kind of treatment that we provide at your- at the hospitals. But just, you know, given that the competition is increasing, are we seeing any signs of, you know, the pricing coming in, and, you know, is there a risk for margins to come down?
I think the margins are with the model which we operate, we are kind of a very fixed kind of a model, right? When you do very well in terms of, suppose, for example, you do occupancy 55%, or north of 55%, and this, our margins are achievable. So it is a more... It's a Our hospital is a more medical hospital. So therefore depends on multiple shoulders rather than one, two one, two shoulders. So this is why you will be able to fix costs are high. When you perform very well, you drive kind of excellent outcomes. So when you kind of drive very poorly, that's vice versa, it comes down significantly.
So the threshold is very important for us because when even at 50% occupancy for year long, still we're able to manage the margins because of underlying core business is strong. That's what we have to see it.
Okay. Thank you, sir.
Thank you. The next question is from the line of Alankar Garude from Kotak. Please go ahead.
Hi, good morning, everyone. Sir, you touched upon Telangana and Bangalore briefly. Similarly, can you touch upon your performance across some of the other clusters as well?
Yeah. So the Chennai, I was talking to you about Chennai in the previous calls, about, Chennai is actually improving pretty well and overall in a good trajectory. And the all the three hospitals, I think, of Guindy and Anna Nagar are doing very well. Sholinganallur is also kind of started showing a good ramp up. So I think we are positioning Chennai very well for the next year. The next cluster is Andhra Pradesh. Andhra Pradesh will be very promising for us, because we strengthened the doctor team and leadership doctors team in Visakhapatnam. That will give us a very positive outcomes. We are also planning to see that now we can do a cardiac program in Visakhapatnam. And also we operate currently 100 beds. We plan to operationalize another 50 beds in Visakhapatnam.
Vijayawada is always does very well because Rajahmundry's joined the team, kind of, it's you know, by third month, it's coming closer to the breakeven. So Andhra cluster will definitely be like another Hyderabad for us in future. So going to Delhi, that Delhi performance has been okay, but I wouldn't say that's a great, great performance. The smaller hospital, Rosewalk, turned around and doing very well. And Malviya Nagar, because of our structure and also managing these beds and the challenges of the high cost and all those things, wouldn't allow us to have kind of more than 8-10%, that's been always a challenge. Otherwise, of course, hospital overall is doing done well in terms of obstetrics, obviously, it does very well in South Delhi.
I think we do the, we do, we do the maximum number of deliveries in South Delhi. Obstetrics is very good, and the pediatric specialties, it's not a clinic, it's not the kind of hospital where you have a lot of space to build advanced care specialties, build up, and those things. But it's kind of a mid-sized hospital, that's where we are struggling, and also with the high cost and paying a lot of money to the, to the society. So these are the challenges always been. I think as a hospital, we have a good name, and we continue to kind of, kind of, build our credibility in that area. That's most important for us at the moment, because of upcoming Gurgaon hospitals in, in, in a, in a few years' time.
Guwahati has been a great addition, I think a great addition. So we are actually recruiting the specialty doctors, and hopefully that, you know, in the next year, the midyear, so that we want to do kind of launch cardiac program in Guwahati. So that's a great acquisition. That again will join the, like, Hyderabad and other cluster will join the company EBITDA. That's what our expectation.
Just to follow up on Guwahati, given your experience so far, I know it's early days, but just given your experience so far, do you get the same confidence about adding more spokes in the region? And if yes, by when would you be deciding on your growth plans in the region?
I think our partner is pushing us to do things, but we want to take our own time to see how... I mean, there each state has got his own. Manipur has got his own challenges, Nagaland has got its own challenges. We wanted to study and understand more about potential versus challenges. I think we'll take up one year time to think about it.
Got it, sir. Sir, the second question is, would it be fair to say that we will be playing bit of a catch-up to some of the leading multi-specialty hospital companies, digital initiatives, et cetera?
Of course, we have to. I think there's a significant ramp up what we have to do. I personally believe that, you know, the way we are and the way we are need to reach to is a long gap, which we are actually been working on it. This is work in progress now. I think in a year, two years down the line, I think there's a lot of buildup is going to happen, the ratio and the technologies side, as well as kind of a marketing side.
Maybe a crude way of asking the question. I mean, on a scale of, say, 1 to 100, if the leading multispecialty players are at 100 when it comes to these marketing activities, digital initiatives, et cetera, where would we be at this point of time?
I think we would be somewhere around 30, 40. I won't rate myself more than that. See, we always this is why it is such an important thing for me. Rainbow is always grown as a kind of a very organic, very doctor-driven, very community inclusive, this ones. And Rainbow is kind of an organization not built on sales and marketing and digital, because the way the way the things are moving, word of mouth is going getting shifted to online ratings, right? Mm-hmm. And also cities are becoming very, very fragmented and because very, very cosmopolitan. And also people, rather than asking for opinion about neighborhood, they go to the digital platforms. So that is the world we are in. I think we need to be in the forefront.
If you ask me that now, where, where we should be, we probably should be, higher, somewhere higher than multispecialty, than lower than multispecialty, as we move forward, our penetration.
Understood, sir. One final question. So there's been a lot of discussion on seasonality, and we've seen that impact on us, for a few quarters now and maybe two quarters two years back as well. From your understanding, how do you see some of these global pediatric hospitals dealing with seasonality? Are they doing something different, which we can try and do, or this is just par for the course?
Okay. So there are two kinds of hospitals we have in global level, like, like hospitals which are, which are super, super specialized, like a Children's Hospital of Philadelphia and those ones which are, mid-sized hospitals, which are, like Cincinnati and those hospitals. I did have a call recently with the Cincinnati. I think, one of the things what they say, they do. See, what a season does in pediatrics is, season actually, not only I'm not talking about coughs and colds getting admitted. And when there is a viral infection or when there is unusual, you know, bugs in the system, not only the well children coming into the hospital because of sickness.
Mm-hmm.
These are the ones which actually tilts the balance of the children with the chronic diseases. Children with the cardiac problems, children with the neurological problems, children with various other problems, they are the people actually get affected a lot more in the seasons. So that is what the volume which comes and gets deposited into intensive care services. So a lot of times we think about the seasonal illnesses causing them, because children who have got underlying problems and, they, they, there's a trigger, and they show up when they need a care. Sometimes they need a, you know, larger care. So that's what season plays out. It's the same phenomena, whether it is, in, in, in India or outside.
In India, we are a lot more of secondary and tertiary pediatrics compared to kind of, the some of the super specialty children's hospital, like in America. But mid-sized hospitals, be exactly the same, like us in America also.
That's helpful, sir. Thank you, and all the best.
Yeah. Thanks, sir.
Thank you. Ladies and gentlemen, that was the last question for today. I now hand the conference over to the management for closing comments.
Thank you all the participants for joining today's conference call. Very insightful questions and few of the solutions by the participants, and thanks for that. Your continued support is instrumental to our strategy journey. If there are any questions later on after this call, please do write to us or connect with us at investorrelations@rainbowhospitals.in. Thank you. Thank you, everybody.
Thank you. Thank you.
Thank you. On behalf of IIFL Capital, that concludes this conference. Thank you for joining us, and you may now disconnect your lines. Thank you.