Max Healthcare Institute Limited

Abhay Soi

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Abhay Soi

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Abhay Soi

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Abhay Soi

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Abhay Soi

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Abhay Soi

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Abhay Soi

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Damayanti Kerai

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Abhay Soi

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Abhay Soi

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Q1 is weak because you have just had an increase in salaries and fixed costs on the 1st of April.

— Abhay Soi

There's a bit of a concern that we haven't acquired any project and added anything on to our already announced development pipeline.

— Ankur

Right now, it’s a little difficult to present a trajectory of where do we see growth happening and will it continue to be 100% growth, or will it taper down to 70% or 50%?

— Abhay Soi

Q

A very good morning to everyone. We are pleased to welcome you to Max Healthcare's earnings call for the second quarter and first half of fiscal year 2024. Let me start by stating that our performance in the first half of this fiscal year has set a commendable precedent for us to follow in the latter half. We recorded a year-on- year increase of 17% in network revenue and 20% in EBITDA in H1, while Q2 turned out to be the 12th consecutive quarter of year-on-year growth. Our Q2 performance this year largely mirrored our quarter-on-quarter performance last year, alluding to the steady state of o

Management

Q

My question is you continue to see progress in reducing bed share to institutional patients. So, a few quarters back, you had given an indication that we would like to bring it down to the industry level. But with Shalimar Bagh, I guess, you have taken on more institutional bed to ramp up occupancy, etc. So, do you still target to bring it down to, say, industry average and when it will likely happen?

Abhay Soi

There is no classified industry level, so to say. I think it highly sort of changes between metros and non-metros. You have more PSUs, headquarters, etc., out of Delhi NCR, so you have a larger share of institutional businesses coming through. Now, two-three things have happened. One is apples-to-apples from 29.7%, we have come down to about 25% in the current quarter. Second is that it's on increased capacity, including Shalimar Bagh. Thirdly, certain rates have moved up in CGHS and we're expecting certain other rates for institutional business to move up in the current quarter, because of wh

Q

Thank you for the opportunity, sir. First on the housekeeping question on the international patient bed share. What was that for the quarter?

Yogesh Sareen

Yes, that will be around 5%. 5% only? Yes, the ARPOB is higher, so that's how the revenue share goes up. It's 5.5% to be exact. 5.5%, okay. Okay, so then probably the pricing, etc., kind of more or less has remained the same. Okay, thanks for that. And secondly, when I look at our specialty mix, oncology therapy, if I see, has been growing at almost 2x the overall revenue growth, at least for the last two quarters. And even if I look at a longer-term trend, for the last nine quarters in a row, it has grown faster than our overall revenue growth. So what are we doing differently there? And is i

Q

Almost 90% of our expansion is brownfield. And normally, we see EBITDA breakeven in a quarter or two if not the first quarter itself. Our last brownfield experience was that we had EBITDA breakeven, and we were hitting 40% margins within 40 days.

Yogesh Sareen

On Greenfields, we do see breakeven within the first 12 months. That means 11th or 12th month should be the EBITDA breakeven month. Greenfields are only 10% of the total expansion. Bino Pathiparampil: Okay, understood. So, within a year for Greenfields and within a quarter for brownfields? Yes. Bino Pathiparampil: Great. Thank you.

Q

Hi, can you give us some numbers on what has been the increase in discharges, outpatient discharges of Q-o-Q and Y-o-Y?

Abhay Soi

7%. This is Y-o-Y? Yes. Q-o-Q doesn't matter because you have more medical patients in Q2. So, when you have more medical patients, your ALOS is lower, and your discharges tend to be higher. Look at everything on a year-on-year basis for better comparison. And secondly, on the seasonality part of it, typically, how should one think about seasonality in our business? Q2 obviously is bigger than Q1. And how should we think about the rest of the year with respect to Q2? See, Q4 is the best quarter in a year. Q2 is the second-best quarter. Q1 and Q3 are weak quarters. And that seasonality in the b

Q

Hi. I think my question is partly answered in one of the previous questions that was raised by one of the participants. Really, it was about the last two years. There's a bit of a concern that we haven't acquired any project and added anything on to our already announced development pipeline. And obviously, we've been running an underleveraged balance sheet for a while now. And then now, we've got all this cash accumulating. And you've talked about acquisitions, M&A, and all of that. But I mean, it's two years since we added anything. And, on the Greenfield side of things, are we looking at an

Abhay Soi

Yes, I think there's always a tug of war between the desire to expand and the fiscal discipline. And one has to maintain that. It's not as if we haven't been looking. And we are quite certain that shortly we should be able to deploy the cash. Do keep in mind that it's not a huge amount of cash. Because even to construct a 500-bed hospital, you require about INR 1,000 crores. To acquire a 500-bed hospital will cost you another maybe INR 1,000-1500 crores. So, one or two acquisitions and you're done. On one side, we are excited about the fact that we are accumulating cash. But we are also consci

Q

I think EBITDA per bed, now the first half has already happened, right? And second half is usually marginally better than the first half. At least for the rest of the year, some sort of trajectory has been already articulated. Tushar Manudhane: Beyond FY24, how do you think about it? In the sense, the case mix or the payor mix is also, we have already taken good price hike on account of institutional patients, the insurance penetration is...

Abhay Soi

No, it's not the price hike. In fact, the price hike impact is only INR 14 crore. There's a 28% increase in PSU ARPOB and that's due to the clinical mix, because we're moving into higher end procedures. We're distilling the procedures. Tushar Manudhane: Right. Okay. Price hike has been negligible, in fact. In fact, of the 28% increase in PSU ARPOB, only 5% is due the price hike in the PSU segment. So, like Yogesh rightly pointed out, out of the 28% increase in PSU ARPOB, only 5% increase is due to price hike. Tushar Manudhane: Right? No, I meant to ask that how much more can further be optimiz

Q

Hi. Thanks for the opportunity. So, I have one question and this is on the advancement of robotics that we have seen in the overall healthcare space. We have seen more and more specialties using robotics and even the non-complex ones are making use of robots. In general, where are we today in terms of surgeries which are getting done on robots and what is the scope here, where it can go to? Also, I am assuming this will be lucrative enough. What is it in terms of ARPOB and margins, how different they are compared to our traditional surgery work?

Abhay Soi

First and foremost, although robotics has been around for some time, over the last couple of years, there has been a sudden uptake of that and acceptability between both doctors and patients has been quite dramatic as far as robotics is concerned. To be honest, it surprised us also on the upside. As I mentioned earlier, our total number of robotic procedures have more than doubled in the last one year. And, it has been a pleasant surprise. For most specialties now, you get into this flywheel concept as their acceptance goes up. We are being pushed by many of our hospitals and many of the clini

Q

So on Dwarka. So as we are kind of getting closer to the commissioning of the facility, would have we like started hiring in terms of doctors or key specialties, nurses, paramedical staff, or would it be more closer to the commissioning?

Abhay Soi

We have started all of that. And at least all the head of the programs and functions are already in place and in the system. As we speak, they are working in some of our other facilities. So, as far as the soft power is concerned, the people are concerned, all of it is in line and as per schedule. There is no lull on that. And there's enough availability and excitement around this facility from a clinical standpoint. And would it be more like a staggered hiring in terms of specialties, or we would go with the full-fledged 300-bed operationalization on day one? No. We will do about 164 beds, li

Q

Yes, hi. Thanks for the opportunity. My first question was on the overall industry trend. Are you seeing still there is a gap between supply and demand growth? And do we see for the next, couple of years, there will be leverage to continuously grow price and ARPOB? How are you seeing that?

Abhay Soi

I'm not seeing it over the next couple of years, but I'm seeing it over the next few decades. I think this is a multi-decadal opportunity. There is a huge amount of under penetration. There's a massive gap between supply of quality healthcare and demand for quality healthcare, which is only increasing as we go by. So, that's the reason -- and India perhaps offers this opportunity which nowhere else, no other country, no other health system in the world does. I mean, at one side, you operate almost like a utility because it's inflation-free, it's an insulated business. But on the other hand, yo

Q

So, you mentioned about expecting to make some announcements on the expansion bed shortly. So, just wanted to check when it comes to different expansion models, like say between partner, built-to-suit, O&M, and acquisitions, do we have any specific preference?

Abhay Soi

No. I mean, acquisitions are, at the right price for the existing, but otherwise built- to-suit, in the sense being asset-light, is very good. We don't particularly like Greenfields. Understood. Okay. And on that point, on this CARE acquisition, you have been providing regular updates, including one yesterday night. Now, on one hand, the appeal is reserved for orders and on the other hand, Blackstone seems to have announced the acquisition, at least as per media articles. So, not sure what to make out of this. Can you please help elaborate on the current situation? The situation is what it is.

Q

Hi, my first question is that I don't know if it's already been asked or have you answered it, but the revision impact on the institutional business, can you tell us what is expected to be in the December quarter and March quarter?

Abhay Soi

I have no idea what it is expected to be because they haven't taken us into confidence on that. So far, the impact has been 5% of the ARPOB of the PSU business, but we have absolutely no clue how the government is thinking about it. So, no further institutional revision has been announced? No. We were expecting it this quarter and now hopefully we are expecting it next quarter, but we don't know when it will come through and how much will it be. Okay. The second question is actually, when I speak to other hospital companies who are not really in metros, they say that the institutional business

Q

Thank you, sir. So, on the CGHS and self-pay ARPOB, we have said the difference of around 85%. Can you also quantify what would be the difference for the international patients? So, let’s say CGHS is INR 100...

Yogesh Sareen

Well, international patients typically is 1.5x of the cash and insurance. So, could it be roughly around INR 250? Like, if CGHS is INR 100... If CGHS is INR 100, cash and insurance is INR 185. This is 50% more than INR 185. Okay, okay. Perfect.. And these are the numbers for H-1, I would say? Or, like, more or less, this remains... They're current numbers, running numbers. Current numbers. Okay, okay. And secondly, on CGHS, on institutional, you said that we are now taking higher complex procedures, etc. So, do we have that flexibility, you know, to choose on the specialty on CGHS or some of t

Q

Thank you all for coming on to Max Network’s Q2 FY24 results. We look forward to seeing you for our next results as well. Thank you very much. Goodbye.

Management