Release Date: January 31, 2025
For the complete transcript of the earnings call, please refer to the full earnings call transcript.
Positive Points
- Max Healthcare Institute Ltd (BOM:543220, Financial) reported over 30% year-on-year growth in revenue, EBITDA, and occupied bed days, driven by recent acquisitions.
- The company achieved EBITDA breakeven within six months for its greenfield hospital in Dwarka, showcasing operational efficiency.
- Max Lucknow and Max Nagpur demonstrated significant year-on-year growth in revenue and EBITDA, with Lucknow showing a 58% revenue increase and Nagpur a 50% EBITDA increase.
- The acquisition of Jaypee Healthcare Limited contributed to the network's growth, with Jaypee Noida reporting a gross revenue of INR112 crore and an operating EBITDA margin of 21%.
- The company is expanding its footprint in the Mumbai metropolitan region with a new 500-bed hospital in Thane, expected to be commissioned in 2028, as part of its asset-light growth strategy.
Negative Points
- The greenfield hospital in Dwarka reported an EBITDA loss of INR5 crore in Q3, indicating initial operational challenges.
- Despite overall growth, the average revenue per occupied bed remained relatively flat year-on-year and quarter-on-quarter.
- The company faced contraction in patient footfalls from Bangladesh and Yemen due to political unrest, impacting international patient revenue.
- An exceptional item of INR74 crore was recorded for charges related to the acquisition of Jaypee Healthcare Limited, affecting profit after tax.
- The net debt for the network increased to INR1,608 crore by the end of December 2024, following significant investments in acquisitions and expansions.
Q & A Highlights
Q: Can you explain the flat revenue from existing units despite Q3 being a weak quarter?
A: Yogesh Sareen, CFO, explained that Q3 is typically weak due to festivals, but this year, revenues remained flat and EBITDA improved due to healthy occupancies even during Diwali. Abhay Soi, Chairman, emphasized the importance of year-on-year comparisons due to seasonality.
Q: Are there any expected price increases for insurance schemes?
A: Abhay Soi stated that no price increase is expected on the insurance side, but they anticipate a long-overdue increase on the institutional side, which should occur within a month or two.
Q: How is the market and profitability outlook for Max Lucknow?
A: Yogesh Sareen noted that the market is performing well, with new beds being added due to high occupancy. The addition of a new bunker for radiation oncology is expected to boost revenue and profitability.
Q: What is your debt strategy given upcoming projects?
A: Abhay Soi mentioned that their upper limit for net debt to EBITDA is 2.5x, and they are currently at 0.65x. Most new projects are asset-light, minimizing capital expenditure, and they plan to maintain a conservative debt approach.
Q: Can you elaborate on the expected price increase for institutional channels?
A: Abhay Soi is hopeful for a price increase in CGHS rates, which would also affect other PSU business rates. Despite assurances from the government, they are still awaiting official announcements.
Q: What is the impact of the IRDAI guidelines on senior citizens' insurance policies?
A: Abhay Soi sees a potential benefit as more people may remain insured due to capped premium increases. There is no expected impact on hospital rates, as these are not age-specific.
Q: How do you manage the payer mix to optimize profitability?
A: Abhay Soi explained that they focus on increasing international business and engaging with up-country markets, which are growing rapidly. This strategy aims to enhance preferred channels and profitability.
Q: What are the financial implications of the Mumbai expansion?
A: Abhay Soi clarified that the net addition will be 168 beds after accounting for phased reductions. The expansion aims to rightsize beds, improving occupancy and margins.
Q: How do you view the potential for collective bargaining by insurance companies?
A: Abhay Soi does not see this as a risk, noting that medical inflation justifies current pricing trends. He emphasized that hospitals could also organize collectively if needed.
Q: What is the strategy for managing indirect costs with new bed additions?
A: Abhay Soi explained that indirect costs are not linear and will not increase proportionally with new beds. Most costs are already incurred, and additional beds will primarily contribute to EBITDA.
For the complete transcript of the earnings call, please refer to the full earnings call transcript.
