Max Healthcare Institute Limited

Abhay Soi

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Nikhil Mathur

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Kunal Dhamesha

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Bino Pathiparampil

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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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Yogesh Sareen

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As we said that generally Quarter 1 is a weak quarter on occupancies.

— Yogesh Sareen

We are able to track numbers for one of your peer Fortis as well as in Shalimar Bagh they have reported decent numbers on a Q- o-Q basis, despite 1Q basically is generally weak.

— Abhay Soi

Would you say that this is reflective of many of your other markets as well where any concerns, I mean there is some bit of divided opinion whether the demand factor is likely to be weak or not in this particular year.

— Abhay Soi

Typically, you will also pay a doctor more for a surgical procedure compared to medical specialities, so there obviously would be a higher impact of that also on margins.

— Yogesh Sareen

Now whether it continues to be February/March or its March/April, is a little difficult to project at this point.

— Abhay Soi

Q

Just on the kind of growth what we have seen on ARPOBs and how sustainable that is let’s say for next 12 to 24 months? And secondly, while the ARPOB growth is there, the EBITDA per bed has been pretty stable maybe on a quarter-on-quarter basis. So, if you could share your comments on that?

Abhay Soi

We will continue to keep doing what we are doing – focusing on higher end specialities and better payor mix, etc., so your ARPOB growth should continue. And when it comes to EBITDA per bed being almost flat quarter-on-quarter, like I said Q4 is the most solid quarter in the year. It’s the strongest quarter and Q1 is the weakest quarter. I am very encouraged by the fact that in spite of this our Q1 results are flat with our Q4 because if you look at it historically, and I am taking away that one COVID year, Q1 is usually lower than Q4 because on April 1 you have increase in costs, particularly

Q

My first question is on your Shalimar Bagh, clarity on your comment that you decided not to optimize payor mix. So, does it mean like you have taken up more institutional patients there?

Abhay Soi

Yes, basically we do not disempanel over there and we don’t filter business because the extra capacity is, firstly, at a significantly lower cost due to operating leverage. So, even at the institutional rates, we still generate EBITDA, as we have already seen. But the first thing to do is that you bring in the occupancy and then start filtering down at a later stage. Okay, so institutional bed share at around 29.7% for first quarter. So, earlier you guided like by end of '24 or so, you will bring it down to 15% to 16%, does it still hold or you have some different thoughts now? Excluding Shali

Q

Just one question I have. Now you have reported pretty strong occupancy on the incremental beds in Shalimar Bagh. We are able to track numbers for one of your peer Fortis as well as in Shalimar Bagh they have reported decent numbers on a Q- o-Q basis, despite 1Q basically is generally weak. So, it kind of seems that in that particular micro market the demand is very strong. Would you say that this is reflective of many of your other markets as well where any concerns, I mean there is some bit of divided opinion whether the demand factor is likely to be weak or not in this particular year. Woul

Yogesh Sareen

Also, I think we have not seen any dwindling of demand in any of the hospitals. If that’s what you are looking at, then there is no impact on demand. While in June quarter, the occupancy is generally lower, but we have seen that occupancy coming back in this quarter. I don’t cater to this point at all. You have to look at the business year-on-year rather than quarter-on-quarter. Unless you have a fourth quarter, which is supposed to be a good quarter and is running below the third quarter or something like that, then I will be worried. No, I am looking at it on a year-on-year basis only, but I

Q

I just have one question, so I understood that there is an increase in employee cost, but if I look at Max consol. level, there is also increase in raw material as percentage of sales. So, is there any increase in the pharma medicines that you are seeing?

Abhay Soi

As far as the pharma cost is concerned, there is an increase because, like I mentioned, we are doing more higher-end work. Like I said earlier, we doubled your robotic procedures; when you do all of these the consumables are more expensive in that and is higher as a percentage of the procedure. But the overall EBITDA per procedure, overall value that we get out of the billing is higher. So, in terms of percentage it is lower, but you will see that the ARPOB is higher. Cost of goods goes up, but your absolute EBITDA per bed and EBITDA also moves up. So, that is what we have seen. Your second qu

Q

I think there is some confusion regarding the seasonality at least on my end. So, I think there is seasonality with specialty mix that plays out in different quarters and then there is what you cited as in terms of volume also kind of there is some seasonality and that impacts our revenue on a quarter-on-quarter, year-on-year basis. So, could you help us explain how this seasonality because as far as -- Quarter 2 is more like internal medicine patient because of infectious season in the country, right. So, how that impacts our revenue and EBITDA on a quarter, let’s say starting from Quarter 1

Abhay Soi

Orthopedics happen less in winter, Cardiac Sciences happens more in winter. More insured patients come in for annual checkups, etc. in Q4 because it is lapsing and so on. For any hospital or hospital chain over the last 10 years, whether it’s a mature hospital or otherwise, when you speak to their management or you look at their history, Q4 is the strongest, while Q1 is the weakest as far as occupancy is concerned. As far as Q2 is concerned, occupancy is higher, like you rightly said, because of dengue and more internal medicine admissions, etc. So, you have the highest occupancy in Q2, but yo

Q

Just wanted to know earlier you used to give a schedule of new capacity coming online all the way up to FY'28, I haven’t seen it for the last couple of quarters. So, just wondering if all those timelines given earlier two, three quarter back still stay or is there any change in that?

Abhay Soi

We just gave you an update so there is no necessary change in that. And I think other than the update that has been given in last couple of quarters. It’s there in our investor presentation. It’s there in our investor presentation, on our website. But I think Abhay has given you the update. Firstly, everything else is on time except for Max Smart, where we are delayed because of the forest approvals and those approvals have also been received now, and we have to transplant the trees. That’s the only project where we find some delays. And we said it last time, that because of those delays we ar

Q

So, to the fact that we have added this 144 beds in Shalimar Bagh and we have also said that we have added some of the doctors, etc., so would it be fair to say that the addition of let’s say manpower would be largely in line with what our average is at network level would be.

Abhay Soi

Are you talking about for the incremental beds at Shalimar Bagh and others? Yes. No, it’s lower. Because you don’t have to add the same amount of manpower, and especially not the same cost of manpower. I have mentioned earlier that there is operating leverage in it. But that’s not all, we added 144 beds, 80 ICU beds, 10 OTs. All of this generates a lot more than what it was previously being used for, both in terms of revenue and EBITDA, but has higher manpower requirement. And then we have, over the last year, strengthened our projects team because of all the projects we are doing, the digital

Q

So, you gave a commentary on the projects that are underway, but I am just trying to get a better understanding of the commissioning timelines. So, Dwarka, which is 300 beds Q3 of this fiscal year, FY'23 -- end of Q3, right. In FY'25 as per the earlier Investor presentation bit there were four assets Smart is delayed so now there are three; Nanavati is 329, Mohali 190 and Gurgaon Sector 56, 300. So, of these three if you can individually call out their commissioning timelines, as per your current understanding based on the current project progress. What we given is the timelines for the comple

Abhay Soi

Sometimes it comes sooner also. More or less it’s the timeline. Yes. All projects are on time except for the Max Smart, which is part of the Saket Complex. We are delayed by six to seven months there because of the forest approval and that’s the only project where we feel there will be a slip in timeline. But we are fast tracking the Vikrant one which is also in Saket Complex. So, individually if you go, Nanavati 329 you expect in Q4 of '25? Yes, as scheduled. So, this will be finished in Q4 FY'25. That means March '25 is when we finish and we will be starting this in the first quarter of FY'2

Q

Couple of questions on the CAPEX numbers that you talked about. Firstly, the operating cash flows you mentioned is lower because there was higher routine CAPEX spends this quarter. Will you be able to quantify the same, the routine CAPEX that you spent this quarter and the budgeted spend for the year? Just trying to understand what is our ongoing regular maintenance CAPEX.

Yogesh Sareen

Yes, so typically we spend around Rs. 170-180 crore in a year. This quarter alone we have spent Rs. 70 crore. That means we advanced and fast tracked the spend to get the benefit of it during the course of the year. And on the project CAPEX, the Rs. 38 crore spend I am assuming it was lower because of the weather situation that we had in the Delhi region and then we should expect it to pick up. So, for the year is there a number that you can share? Yes, we shared earlier that it’s around Rs. 900 crore spend for this year. So, there will be a significant pick up as we go into the next year? Yes

Q

Just wanted to understand how was the operating cash flow and if you could also highlight on the debtor days. And secondly what would be the debtor days separately for the government mix?

Yogesh Sareen

DSO at the end of the quarter was 66 days. It has gone up compared to 55 days at the end of March. There is a buildup of accounts receivables (AR) in the PSU and insurance segments. But, we are seeing that in July this has started to unwind a bit. So, just continuing on this I didn’t follow the first part. There you said there were two parts to the increase, so the first part was due to… Yes, I said that the overall DSO went up by 11 days, from 55 days at the end of March to 66 days at the end of June. This is basically because of the build-up of AR, for the PSU segment (CGHS and ECHS) and als

Q

Just in your business planning about the new assets which you mentioned would be commissioned by end of FY25, what would be the peak occupancy which you are targeting in the new assets, is it possible to share some thoughts around that?

Abhay Soi

Peak capacity would be similar to our Network levels, could go up to about 80%. In line with whatever are your matured assets currently 77% to 80% is fair to assume? That’s right.

Q

So, just on the timelines that you provided for the commissioning of those biggest beds, so from that what I can understand is that from here on 300 beds of Dwarka is expected to get commissioned in start of the Quarter 4 of this year and then we have something coming in the quarter one was FY26.

Abhay Soi

Yes, last quarter FY’25, first quarter FY’26. But then I am just focusing on the commissioning or revenue generation -- It’s a little early to project exactly in which month it will happen. I mean when we said end of FY’25, we meant February/March. Now whether it continues to be February/March or its March/April, is a little difficult to project at this point. But assume it comes on stream next year for calculation purposes. So, the thing which I want to understand so during this particular period, so I understand we have a 300 bed to ramp it up, what are other levers in that particular year w

Q

Firstly, Abhay when are we planning to commission the 100 Brownfield beds at Vaishali?

Abhay Soi

Vaishali was commissioned two years ago. Brownfield, we had signed an agreement right for 100 beds? We have signed an agreement to sell (agreement to buy for us), so there are some conditions precedent (CPs) for that. Basically there are some ongoing litigations at the High Court and district courts, and we have to settle those litigations first before we can take the handover of that piece of land. Right now it’s early stage. I mean right now firstly we have to procure the land. That’s why I was wondering which Vaishali you are talking about. One, the agreement to purchase the land has to be

Q

Can you share the revenue and EBITDA growth for exclusively March, Shalimar in Q1FY24 on a year-on-year basis?

Yogesh Sareen

So, we already said that the revenue has grown by 37% YoY in Shalimar Bagh and 43% EBITDA growth. So, what is the contribution in topline from Shalimar --? So, I don’t have the ready number. And my second question is what is the gross debt as on June 2023? There is no net debt, there is net cash. On a gross basis, it will be Rs. 641 crore, which includes the CC limits. But we have got cash against it of Rs. 1,681 crore. Yes so there is a net surplus of Rs. 957 crore.

Q

I saw the presentation and I saw the performance in the Oncology segment and even some of the peer hospitals have reported some really good numbers in the Oncology segment. So, I was just wondering what’s happening, is there some kind of change in the health insurance policies that are allowing more coverage of Oncology or can you elaborate little on what’s happening there?

Abhay Soi

Nothing in particular. The incidence of cancer is increasing, awareness is increasing, more people are acquiring health insurance and are able to afford to come to private sector hospitals, which obviously for more high-end diseases are preferred compared to perhaps smaller nursing homes. So, we have seen a drive towards that. Also, we have seen that in Oncology, there is more usage of ORC drugs, which improves the revenue / ARPOB because these ORC drugs are generally expensive. And how does Oncology growth impact our in-patient, out-patient revenue, because how is really radiation and chemoth

Q

I just have one question so Abhay you mentioned you added 44 beds though internal restructuring, etc., during the 1stst Quarter. How many more such beds can come say in 24?

Abhay Soi

We expect another 20 to 30 beds. For this fiscal right, 20 to 30 beds? So, plan is to add another 40 beds. Some of them are getting added in July and some will happen in October. 20 to 30 beds? 20 to 40 beds. And it will be an ongoing exercise right in coming years also you can choose to add such bed? No, we can’t. We are now pressing and at the final stages of capacity, we require that capacity so somehow you will find it. There is always some elasticity at the end. We move the laboratories out, we move the offices out, we move the kitchen out, etc. So, that’s what we are doing to add these b

Q

I just wanted a small confirmation, so the CGHS increase in rate is related to the radiology test that has not come in, in the Q1 any impact right. And what kind of impact that can have on our part?

Abhay Soi

No, some of it came in June and some of it came in May, but all of the impact so far has been about 0.6-0.7% on ARPOB. For CGHS business, 60% of what we bill is material costs, which includes drugs, consumables, etc., and balance40% are the items which are tariff items. 26% out of the 40% has been touched by the price revisions so far and on that 26%, we have around 50% price increase. In a nutshell, overall 5% price increase in the total billing for the PSU patients. And so that’s the story today. The absolute amount for us would be around, if I take the Q4 volumes and the price increase whic

Q

Just one follow up, historically in the run up the general elections has Max seen any increase on the receivables front given the higher institutional mix?

Abhay Soi

Not really. Yogesh Sareen No. There was an increase in the receivables by end of June, but in July we have seen some of it unwinding. So, we don’t see any impact of that. Yes but even in the prior years be it 2014, 2019 no impact per se? No.