Max Healthcare Institute Limited

Abhay Soi

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Abhay Soi

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Yogesh Sareen

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Abhay Soi

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Damayanti Kerai

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Yogesh Sareen

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Abhay Soi

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Abhay Soi

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Yogesh Sareen

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Yogesh Sareen

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Obviously, the concern remains as last time you had highlighted at peak, you can go to 80%-82% and the bed additions like you're trying to reconfigure or internalize.

— Abhay Soi

I mean, if you go to Nanavati Hospital, if you go to Max Saket, if you go to Mohali, if you go to any of our hospitals that's where the challenge is.

— Abhay Soi

You have to keep in mind, if you look at sequentially, in a weak quarter, you're going to be accommodative, right?

— Abhay Soi

I mean a weak quarter in the sense that in a festive quarter where you have lower occupancy, okay, why would you want to have idle beds?

— Abhay Soi

I mean this is a seasonally weak quarter, not for us, but from an occupancy standpoint.

— Abhay Soi

I think what needs to be looked at, okay, is the fact that in spite of it being a seasonally weak quarter on an overall standpoint, right?

— Abhay Soi

You’ll typically see the first quarter and third quarter are weak quarters.

— Abhay Soi

Q

My first question was to be on Net debt to EBITDA, I think you have kind of cleared it. But just at a slightly higher level, I wanted to understand with so much of organic bed expansions planned over the next 4 - 5 years, is there a pressing need to do an M&A or whatever M&A that you are seeking is going to be very, I mean very valuation conscious and there has to be some clear rationale for you to be looking for an M&A because I believe the bed CAPEX plan itself will kind of take care of the medium to long-term growth of the company. I think we are not putting a cap on the long-term growth. I

Nikhil Mathur

One more question I had on the operations for this particular year. Now I think your investor presentation gives a clinical update on liver transplants, kidney transplants and bone marrow transplants done till date. But can you give some sense as to what is the number for these 3 categories of transplants looking like in FY '23 and what growth are we envisaging in the number of transplants that we'll be doing in the coming 2-3 years? I mean the clear question here is that these initiatives are ARPOB accretive. So, that could be an ARPOB driver for you in the coming 2-3 years. I mean it doesn't

Q

First, one clarification. Abhay, did you mention you would be able to add another 100 beds through internal reconfiguration, apart from the planned ongoing CAPEX?

Abhay Soi

Well, I said over 100 beds. So, it's a number which is higher than 100 beds, yes. Okay. That's clear. Let me make it clear. Through internal reconfigurations, okay, we will be adding this over the next few months. Next few months, okay. My second question is how do you see your operating cost inching up as your planned beds come online over the next 2-3 years, both on a variable as well as fixed cost part? I think the majority of the CAPEX that we're doing with the rollout we are doing it towards Brownfields, right? I mean 80%-85% of the total rollout is towards Brownfields. And Brownfields by

Q

Sir, can you dwell a little bit more on the international patients, how that particular mix of segment is moving? In one of the presentation, in one of the slides, you mentioned that the sales are already at like 10% higher than pre-COVID. Just wanted to know that on the footfalls, how the things are looking? Where the traction is coming? How do you see the year going forward? Because last time when we spoke, you had mentioned about Afghanistan not present, but you are trying to cope with that particular thing with some other geographies. Just maybe 2-3 minutes brief on that particular segment

Abhay Soi

We were not trying to cope up, we have coped up, right? So, in spite of Afghanistan which was 12% of our business being down to 0, we are at 110% of pre-COVID levels. So, what that basically implies is that not only have we coped up for lack of Afghanistan, but we’ve sort of overcompensated for it, right? That's one. Secondly, I mean, to have a discussion on present footfalls, you’ll have to have a point of reference from past footfalls. I mean the fact that this number has been moving up, I mean, we are getting massive traction on this, it's over 60% compared to last year, it's over 110% comp

Q

So, my first question relates to international patients. And I think it's around 8.5% contribution. But if you want to view it as a percentage of only Delhi Hospitals, so how much would that percentage be? And relating to the international patients, like what is the structure that we follow to attract these international patients, like do we pay some medical consultancy fees to any agencies? Or what sort of cost do we pay to attract these patients? And how is it versus the industry and Max? So this is my first question. And my second question relates to the margin structure of brownfield expan

Abhay Soi

facilitators, your EBITDA per bed would be around 20% higher than the domestic patients. But having said that, our marketing is done through multiple channels. At the very least, there are walk-in patients, where there are no facilitators involved. Then you have patients and these people come through our digital platform, come through our office in overseas and so on and so forth. Then you have patients who come through international medical tourism companies. So, in those situations, we make a payment of facilitation fees to those international medical tourism companies. The third is we have

Q

Sir, if you could spell out, is there a certain seasonality in our business because if we try to have a look at the occupancy rate, quarter 4 seems to be much lower than the earlier quarters. So, if you could just help us understand the nature of the business?

Abhay Soi

Absolutely. So, there is a seasonality in the business. So, even if you go back to our last quarter's investor call or the presentation, when we had the higher occupancy, we said in Q2 that the occupancy is higher because of seasonality, right? In the rainy season, you have waterborne diseases, airborne diseases, etc. So, in Q2, typically, all hospitals have higher occupancies, right? I mean this is like I mentioned due to the seasonality and the flu season and so on and so forth. So, you'll have a lot of internal medicine patients, you have a lot of pediatric patients, etc. They come to the h

Q

So, I just wanted to understand how you look for breakeven time lines for the greenfield project? I understand for the brownfield, it's around 2 quarters, so for the greenfield project in Gurugram, how do you look at the breakeven time lines?

Abhay Soi

Yes. So, look, I think historically, greenfield used to be about a 2-year sort of breakeven. My belief is now it will be a 12 to 15 months sort of a breakeven in greenfield. And the brownfield where the current occupancies are in the range of 75%, that should see somewhere like 3 quarters, high occupancy, something like 2 quarters and greenfield 2 years? Is it the right way of looking, sir? No. we're not saying that. So, you take the example of Shalimar Bagh, now quarter 3, the occupancy was 85% in that hospital, right? So, at 85% occupancy, that means, obviously, you are not admitting all the

Q

Sir, Just trying to understand the business as to why we have a higher ARPOB because of a lot of foreign clients or because of the mix ratio. Just trying to get a feel of the business.

Abhay Soi

We have a higher clinical mix. Firstly, I think if you look at the 2 things, which drive ARPOB, one is the payor mix, other is clinical mix, right? As far as payor mix is concerned, 7%-7.5% of our beds are totally free for the poor compared to 1% or 2% for most of our competitors. If you look at 29% of our beds are catering to institutional business compared to maybe 20% and 13% for some of our competitors, right? So, the payor mix is clearly inferior, but our ARPOB is maybe 20%-25% better than the next best player in the industry. But more importantly, our EBITDA per bed is 55% better than th

Q

I had just one question. As we bring this capacity to brownfield and some of these efficiencies, what is your thought in terms of being able to sustain or maybe improve the current payor mix and as well as sustain the current occupancy levels?

Abhay Soi

Like I said, the majority of the expansion is coming in our brownfields, right? The reason we are doing it, we're not doing it in order to tap the market, we are doing it because we’ve got unsatiated demand at our doorstep. So, I mean, the payor mix that we've got waiting of 6 hours to 2 days in a ER for the sort of bed that you may want. If you want an ICU bed, even a single room is not available. I mean, if you go to Nanavati Hospital, if you go to Max Saket, if you go to Mohali, if you go to any of our hospitals that's where the challenge is. If you go to places like Gurugram and all, you d

Q

My question was more about the macro situation here in healthcare or hospital industry. I see in this budget, the Government has allocated some, I think, Rs. 6,000 crore to Rs. 7,000 crore for setting up AIIMS in different locations. Just I wanted to understand going forward because the Government thrust has been to improve infrastructure, mostly in public sector. So, do you see that the public sector is emerging strongly here and that could give the private sector a bit of competition in the next 3-4 years. So, how is your view on it?

Abhay Soi

I think anybody who's been to a public sector hospital should be able to answer that question. And even during COVID when health care was in focus and everybody was looking at it, you saw while there was no beds in private hospitals, there were idle capacities, okay, in Government hospitals across the board. And I think if this public sector supersedes, then probably in my memory, it will be the first time and first country where the public sector sort of outperformed the private sector. I don't think it's ever happened anywhere else. So, I really don't see that coming as a threat. I think pub

Q

Just trying to understand the margin outlook better for the next 4 to 6 quarters. I understand the bed additions of Shalimar Bagh, Dwarka and others you mentioned, they could have a little lower EBITDA per bed and the ARPOBs than the average. Would that understanding be correct? And would it have any impact on the margins?

Yogesh Sareen

Not in the brownfield hospitals, but Dwarka, yes. It will take time for Dwarka to start generating EBITDA. So, as I think, as Abhay mentioned, 12 to 15 months is when we see the breakeven in terms of EBITDA in Dwarka, that's the greenfield site. But other than that, it should be all better EBITDA per bed, etc., and better margin because these are all brownfields. And as I mentioned, Shalimar Bagh had 85% occupancy in quarter 3, right? So, in that hospital when I add 100 beds, you can understand how soon the uptake in the occupancy will be. And the 100-plus beds actually which we are eking out

Q

So, the first one was on the 100 beds that we are adding in our existing capacity, would that be more kind of the deluxe beds or the private rooms, et cetera? Or would it be a mix of everything?

Abhay Soi

No. So, it will be more critical care beds than more single rooms, etc., which is more of what we need. So, probably more ARPOB basically if those gets filled, right, because of a single room or deluxe room, critical care beds, et cetera. We make more out of doing a liver transplant in a general ward than we do from doing a delivery in the suite. But over a longer period of time, that's not in your hand, right? Like, over a longer period of time, the private rooms would obviously be better assuming that the mix over a long period across beds remains same. That's right. So, I would actually tak

Q

I just have few questions regarding international patients. So, I just want get a gist on the overall pricing. So, I presume that international ARPOB is more than Rs. 1 lakh. So, it is gross or net of discounts and every other thing that you pay to the overall medical tourism agents and all?

Yogesh Sareen

ARPOB is always Gross, right? It's based on the revenue that you book. There may be some expense linked to that revenue. So, we don't net that. That comes on the expense side. No matter how you look at it, EBITDA is 20% higher like what Yogesh said, per bed. And one more thing regarding, like sequentially, if I see that payor mix for international patient it is nearly like 9%, so consistently. So, going forward, do you see it at 9% or like moving it to 10%-11% also with like new geographies opening up? Our focus is always on the occupied bed days increasing, right? I mean if it remains 9% and

Q

Just one small question, can you help me with the tax rate for maybe how do we look at it going forward, may be FY '24?

Yogesh Sareen

I think for tax rate. I said this earlier also, the ETR should be in the range of 18% to 20%, right? So, this quarter was 18% plus, right? But I would say it will peak at 20%, on the Network basis. But you will note that this quarter, the CTR has come down, i.e the current tax rate has come down. It's by virtue of the fact that last quarter, we did some voluntary liquidation and there are some benefits of that liquidation in terms of depreciation on intangibles. So, I would say 2 things. One, the rate will be 18%-20%. Secondly, I would say watch out the CTR rate, that's better parameter becaus

Q

Yes. So, if you get an opportunity in future, would you also be willing to consider stand-alone hospitals, which are specialized in oncology, pure play oncology or say something like pure play child care?

Abhay Soi

We will evaluate everything; we have no issues evaluating anything. When the opportunity arises, we will evaluate. Sir, lastly on this digital app-based model, if you could just give some color on the potential of this model. And would there also be a cash burn? On the app, there is no cash burn. It's not an agnostic platform. It is a platform for our patients to interact with our doctors and our doctors to interact with the patients and for the hospital to provide services to the patients, right? Be it diagnostics at home or home care business or video consults and so on and so forth. I mean,

Q

Just clarifying our average length of stay at 4.2 days, is there higher or it probably could go down a little bit more. Just trying to understand it is high because of the critical care being a larger portion is it? And can it go down further?

Abhay Soi

And higher services. And eventually, we need to look at average revenue per occupied bed because your inventory in hand effectively is number of beds days that you have. So, it's higher ALOS but which leads to higher ARPOB growth for you, that's because you're doing more higher end. I mean, so look, if a place has more medical patients, your ALOS is lower but if you have more transplants patients it is longer. But transplant patients will pay you more. I mean the more BMT transplants, lung transplants, heart transplants you do, people tend to stay longer. And billing is more, ARPOB is more, th