MAXHEALTHNSEQ3 FY25February 6, 2025

Max Healthcare Institute Limited

9,205words
131turns
9analyst exchanges
2executives
Management on call
Abhay Soi
Chairman and Managing Director, Mr. Yogesh
Keshav Gupta
Senior
Key numbers — 40 extracted
30%
e's Q3 FY25 Earnings Call. We are considerably pleased by our performance this quarter with over 30% year- on-year growth across parameters such as revenue, EBITDA and occupied bed days, notably supp
Rs. 59 crore
6 months from the launch of our greenfield hospital in Dwarka. This hospital reported a revenue of Rs. 59 crores and an EBITDA loss of Rs. 5 crores in Q3. Max Lucknow demonstrated year-o
Rs. 5 crore
field hospital in Dwarka. This hospital reported a revenue of Rs. 59 crores and an EBITDA loss of Rs. 5 crores in Q3. Max Lucknow demonstrated year-on-year growth of 58% in revenue and
58%
oss of Rs. 5 crores in Q3. Max Lucknow demonstrated year-on-year growth of 58% in revenue and 94% in EBITDA, while Max Nagpur reported year-on-year growth of 22% in revenue and
94%
s in Q3. Max Lucknow demonstrated year-on-year growth of 58% in revenue and 94% in EBITDA, while Max Nagpur reported year-on-year growth of 22% in revenue and 50% in EBITDA in t
22%
-year growth of 58% in revenue and 94% in EBITDA, while Max Nagpur reported year-on-year growth of 22% in revenue and 50% in EBITDA in the third quarter. Additionally, Jaypee Healthcare Limited becam
50%
in revenue and 94% in EBITDA, while Max Nagpur reported year-on-year growth of 22% in revenue and 50% in EBITDA in the third quarter. Additionally, Jaypee Healthcare Limited became a wholly-owned sub
Rs. 112 crore
arter. Jaypee Noida is presently being integrated into our Network and reported a gross revenue of Rs. 112 crores with an operating EBITDA of Rs. 23 crores at a margin of 21% in the third quarter. We have now
Rs. 23 crore
rated into our Network and reported a gross revenue of Rs. 112 crores with an operating EBITDA of Rs. 23 crores at a margin of 21% in the third quarter. We have now been able to demonstrate remarkable operati
21%
eported a gross revenue of Rs. 112 crores with an operating EBITDA of Rs. 23 crores at a margin of 21% in the third quarter. We have now been able to demonstrate remarkable operating efficiencies acro
6 lakh
n Thane, to be set up by the partner as per our specifications on a built-up area of approximately 6 lakh square feet. The hospital is expected to be commissioned in 2028. This marks our third asset-ligh
75%
th consecutive quarter of year-on-year growth. 1) Our average occupancy for the Network stood at 75% versus 73% in Q3 last year and 79% in the trailing quarter, while the occupied bed days (OBDs) gre
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Guidance — 20 items
Abhay Soi
opening
“12) Now, coming to the status of our expansion projects: • 128 beds at Max Lucknow – 64 beds have been commissioned in January 2025, and the balance 64 beds will be added in February 2025.”
Abhay Soi
opening
“Project completion should take another 24 months thereafter.”
Abhay Soi
opening
“The project continues to be on schedule and we expect completion within the next 3 to 4 months.”
Abhay Soi
opening
“The project is on track and we expect its completion within Q1 FY '26.”
Abhay Soi
opening
“• 155 beds at Mohali – Interior work is in progress and we expect its completion again by Q1 FY '26.”
Abhay Soi
opening
“We expect completion of the first phase of 300 beds by the end of Q3 FY '26.”
Abhay Soi
opening
“Project is expected to be completed within 30 months.”
Abhay Soi
qa
“So, have that been taken place or do you expect in the next one year any price increase to happen on the insurance side?”
Yogesh Sareen
qa
“We can't give you hospital-wise numbers, but the very fact that we have 25%+ as percentage share of oncology in the overall setup, obviously there will be hospitals that will be in the range of 29-30% as well.”
Abhay Soi
qa
“Even Lucknow will be in single digits again?”
Risks & concerns — 7 flagged
It seems that quarter-on-quarter from Q2 to Q3 the revenue has remained largely flat despite being the weak quarter of Quarter 3.
— Amey Chalke
Amey, as you would know, Q3 is typically a weak quarter because you have festivals in this quarter, and if you see the history, you will find that typically the revenues come down by 2-3% and EBITDA also drops by 3-4% in this quarter.
— Yogesh Sareen
So, no, because I was expecting a drop this quarter considering it is a seasonally weak quarter.
— Amey Chalke
And sir, of the Nagpur facility, the Q-o-Q, there is a decline in the overall profitability.
— Sumit Gupta
What has led to that decline in the growth?
— Sumit Gupta
So, just wanted to understand like is there a risk of that property post, you know, we getting it being taken away by the developer and being given to someone else for a higher rental?
— Rishi Mody
I know you mentioned Competition Commission, but do you see that as a risk when we are thinking about pricing with insurance?
— Abhay Soi
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Q&A — 9 exchanges
Q
Hello, thank you so much and congrats to the management on good set of numbers. So, the first question I have is on the revenue from the existing units. It seems that quarter-on-quarter from Q2 to Q3 the revenue has remained largely flat despite being the weak quarter of Quarter 3. Is it possible to give an explanation on the front where we have seen the improvement or performance improvement during this quarter for the existing units?
Yogesh Sareen
Amey, as you would know, Q3 is typically a weak quarter because you have festivals in this quarter, and if you see the history, you will find that typically the revenues come down by 2-3% and EBITDA also drops by 3-4% in this quarter. Despite the history, this time it is flat and in fact the overall EBITDA has improved over Q2. That way, the performance has been much better and it is mainly because of the fact that in the Diwali month, typically you will see the occupancy drop to around 65-70% range, but this time we had very healthy occupancy even during Diwali, and that is what has made all
Q
Sir, on the Lucknow performance specifically, I just want to understand how the market is panning out and what kind of trends to expect in the overall profitability going forward? We are not going to give any forward-looking guidance, but the market is panning out very well. Like we said, we are launching another 140 beds. The reason we are doing that is because the occupancy requires that. 64 beds have already been commissioned in the month of January. These are new beds and another 64 beds will be commissioned in February, that is in the current month. Thereafter, we are looking forward to a
Sumit Gupta
Okay. So, what are the competitive scenarios there on the additional intensity being panning out like it is going up. What is the trend of the intensity? It's the same as earlier, so there is an Apollo and there is a Medanta. The same hospitals are still there. And there are some other smaller nursing homes and hospitals. Okay. And sir, of the Nagpur facility, the Q-o-Q, there is a decline in the overall profitability. What has led to that decline in the growth? Quarter-on-quarter, like we said, is a seasonal business. You must look at it on year- on-year basis. Okay, understood. Thank you, si
Q
Hi, thank you for the opportunity. My first question is on your debt side, so Rs.1,600 crore net debt after payment to the Jaypee etc. So, now in view of multiple projects coming in like coming quarters or years, how should we look at the funding side? And then maybe you can just like give your upper limit for net debt to EBITDA, like what will be your upper tolerance level there?
Abhay Soi
So, our upper limit is 2.5x net debt-to-EBITDA, but we are far from that. The new ones that we have announced such as Mohali (Zirakpur) as well as Thane, they are both asset-light models. The developer incurs the cost and we are essentially leasing these spaces from them thereafter. Dwarka expansion again is on a similar line, which is an asset-light model. As you are aware that Dwarka itself is an asset-light model. Now other than that, we are looking at Rs. 500-600 crore over the next 3-4 months of CAPEX towards the brownfields and then thereafter. But yes, our overall cap is 2.5x net debt-t
Q
So, my first question was on the Mumbai project and the additional beds that you intend to add in Mohali. As both are built-to-suit projects, what would your investment outlay be for these two assets?
Abhay Soi
Essentially, it's going to be medical equipment, which will be let's say about Rs. 150- 200 crores. But that only happens at the end when it's constructed – the last 3-6 months or whatever. Yes, it's about Rs. 30 lakh per bed, but it's all back-ended. Medical equipment comes after the entire project is almost complete. And Mumbai you intend to operationalize in fiscal ‘28, is that right? End of ‘28, that is right. So, it takes about 3-3.5 years to build, including permissions. And Yogesh, for your business, would say 65% cash conversion be kind of a reasonable number to work with, assumption t
Q
Is this for the brownfields? Tushar Manudhane: Yes sir, the ones which are coming up in say Q1 FY '26, Mohali, Max Smart, Saket?
Abhay Soi
Marginal operational cost increase because these are all brownfields. We already are incurring all the major costs in the existing hospitals. Tushar Manudhane: So, secondly, with respect to this build-to-suit where the investment is lower, but accordingly, I mean, subsequently as and when let us say the steady-state occupancy of say 55-60% as and when that happens, what kind of margins, you know, we are sort of assuming this build-to-suit because there would be rent share or there could be some revenue share with the partner unlike, you know, own green field, brownfield expansion? So, you know
Q
No, it is not. It's the burden of disease, right? Effectively, we start adopting and align ourselves with what the market demand is. You move towards higher technology and perhaps more robotics and higher end programs. That is what drives the clinical mix. Andrey Purushottam: No, I am talking about the payor mix.
Abhay Soi
Sorry, as far as the payor mix is concerned, we have seen there is an increase of 28% in international business. So, this is because we have engaged deeper with various geographies that we get patients from as far as the domestic patients are concerned. Upcountry is 40% of our NCR business. All of that is growing at a faster pace and so we want to have deeper engagements with upcountry. And other activities that we do to engage with the communities that should enhance the preferred channels for us. Andrey Purushottam: Okay, thank you.
Q
Yes, thanks for giving me the opportunity and congrats for a good set of numbers. It was asked previously also, but just want to understand, you know, that on a consolidated basis, for example, our EBITDA margin is somewhere around, like, 20- 25 percent, but you told to assume for mature hospitals, it would be around 29-30%. I just wanted to understand for the asset-light model, while I understand completely that ROCE would be very much attractive, I just wanted to understand what would be a similar, what would be the EBITDA number for the mature business for asset- light models. It could be a
Abhay Soi
This is post Ind AS, so the rental line comes below EBITDA. But for pre Ind AS basis, what would be the EBITDA margin? It should depend on what the maturity of the hospital is, but I think it should be lesser by 5-6%. That's it from my end. Thanks, and all the best.
Q
Yes, thanks for taking my question. Abhay, just one clarification on the Mumbai expansion. I think once the new tower is commissioned, we are planning to phase out some of the older ones and rebuild that. So, would the net addition still be the 268 beds that we have talked about or should I also adjust the beds that will be going off for some time till we get it back? How should that phasing happen?
Abhay Soi
No, so it is going to be a net reduction there. When we start Phase 2, which should be almost immediately, you will have a reduction of 160 beds. Yes, we are currently adding 268 beds. After that is commissioned, we have to tear down 160 beds. Then next we will be adding 271 beds. That's a phase of about 1.5- 2 years period. So, net reduction eventually will be 111 beds in Phase 2. So, for the time being, you should take 268 beds. There is no reduction there. We have to take a call on reduction. Once we do the Phase 2, then the reduction will happen. So, the Phase 2 is not happening immediatel
Q
Hi, thank you for the opportunity. The first one on the Dwarka. While we have done a very good job of breaking even, based on our reported number, if I look at the indirect cost in the Dwarka Hospital for the 140 beds, it seems to be roughly around Rs.150-Rs.160 crore a year, assuming that our direct costs are similar in line with the network average. So, my question is given that we are going to add almost around 1,400-1,500 beds next year, how should we think about the indirect cost related to that? I know there are some brownfields etc as well, but again these brownfields are separate tower
Abhay Soi
No, I think the way you need to think about is that indirect cost is not linear. Right? It would come primarily in the first year? It's already there. Whatever indirect cost you have been incurring up till breakeven, we have incurred the indirect cost. It is that indirect cost on 140 beds that we have broken even on. Thereafter, every bed that you add, your indirect cost is not going to be linear. It's only the direct cost which is going to be linear. Now indirect cost will be just some nurses and some resident doctors etc., which is a marginal cost. What is going to happen is that every bed t
Speaking time
Abhay Soi
49
Yogesh Sareen
20
Moderator
10
Damayanti Kerai
9
Keshav Gupta
8
Rishi Mody
7
Kunal Dhamesha
7
Amey Chalke
5
Neha Manpuria
5
Prashant Nair
4
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Opening remarks
Suraj Digawalekar
Thank you, Ryan. Good morning, everyone, and thank you for joining us on Max Healthcare Q3 and 9M FY '25 Earnings Conference Call. We have with us Mr. Abhay Soi – Chairman and Managing Director, Mr. Yogesh Sareen – Senior Director and Chief Financial Officer and Mr. Keshav Gupta – Senior Director, Growth, M&A and Business Planning. We will begin the call with opening remarks from the management, following which we will have the forum open for an interactive Q&A session. Before we begin, I would like to point out that some statements made in today's call may be looking forward in nature and a disclaimer to this effect has been included in the earnings presentation shared with you earlier. I would now like to invite Abhay to make his opening remarks. Thank you, and over to you Abhay.
Abhay Soi
A very good morning to everyone and warm welcome to Max Healthcare's Q3 FY25 Earnings Call. We are considerably pleased by our performance this quarter with over 30% year- on-year growth across parameters such as revenue, EBITDA and occupied bed days, notably supplemented by the growth momentum of our recent acquisitions. We are happy to share that we achieved EBITDA breakeven in December 2024, within a record period of 6 months from the launch of our greenfield hospital in Dwarka. This hospital reported a revenue of Rs. 59 crores and an EBITDA loss of Rs. 5 crores in Q3. Max Lucknow demonstrated year-on-year growth of 58% in revenue and 94% in EBITDA, while Max Nagpur reported year-on-year growth of 22% in revenue and 50% in EBITDA in the third quarter. Additionally, Jaypee Healthcare Limited became a wholly-owned subsidiary of the Company during the quarter. Jaypee Noida is presently being integrated into our Network and reported a gross revenue of Rs. 112 crores with an operating EB
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