Release Date: November 07, 2024
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 a strong growth in revenue, with a 22% year-on-year increase and a 10% quarter-on-quarter increase, reaching INR 2,228 crores.
- The company successfully integrated recent acquisitions, Max Lucknow and Max Nagpur, which contributed significantly to the revenue and EBITDA growth.
- The newly operational Max Dwarka Hospital is expected to break even much earlier than anticipated, showcasing efficient management and strategic planning.
- The acquisition of Jaypee Hospital Noida is expected to strengthen the company's presence in the national capital region, with plans to quickly integrate and expand its capacity.
- Max Healthcare Institute Ltd (BOM:543220) continues to expand its capacity with several brownfield and greenfield projects on track, ensuring future growth potential.
Negative Points
- Max Dwarka Hospital reported an EBITDA loss of INR 18 crores, indicating initial operational challenges.
- The company's international patient revenue growth was impacted by political unrest in key markets like Bangladesh and Yemen.
- There are concerns about the potential impact of increased competition in the Noida region, where other hospitals are also expanding.
- The integration and upgrade of Jaypee Hospital Noida will require significant investment, estimated at INR 150-200 crores.
- The company's profitability margins have slightly decreased year-on-year, raising questions about sustaining high margins amidst expansion.
Q & A Highlights
Q: Can you provide insights into the potential margins for the Nagpur and Lucknow units, and whether Lucknow can match the profitability of other units like Saket?
A: We don't provide forward-looking statements, but both units are operating at lower ARPOBs compared to the rest of the network. As we enhance clinical programs and integrate new hires, we expect improvements. Lucknow's oncology program is underdeveloped, but with new equipment, ARPOB should increase. Our focus is on EBITDA per bed, and there's significant potential for improvement.
Q: Regarding the Saket complex expansion, is this considered a brownfield expansion, and how will it affect margins?
A: It functions like a brownfield expansion. While utilities and capital costs increase, operating costs do not significantly rise. The incremental cost for new beds is lower, leading to higher EBITDA per bed. We expect quick ramp-up of the new 400 beds, with additional capacity coming in 3.5 years.
Q: On the Jaypee Hospital acquisition, what improvements are needed, and are there any litigation concerns?
A: The hospital requires new equipment and clinical program enhancements. It has been in liquidation, affecting management and equipment quality. We plan to increase bed capacity quickly. There are no litigation concerns due to the NCLT acquisition process, which ensures a clean title.
Q: How do you plan to increase the international patient revenue, and what impact does the political situation in Bangladesh have?
A: Bangladesh accounts for less than 1-2% of our business, so the impact is minimal. We have set up offices in 22 geographies, driving a 20% CAGR in international business. We are exploring opportunities in the UK due to NHS wait times, but don't expect immediate large-scale changes.
Q: With the Dwarka unit expected to breakeven quickly, what factors contribute to this rapid success?
A: The location, infrastructure, and brand recognition in NCR are key factors. We have a strong team of doctors and are in the process of completing TPA and NABH certifications, which will enhance revenue. Typically, greenfield projects take 18 months to breakeven, but Dwarka is on track to achieve this sooner.
For the complete transcript of the earnings call, please refer to the full earnings call transcript.
