Max Healthcare Institute Ltd
NSE:MAXHEALTH
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Max Healthcare Institute Ltd
Earnings Call Analysis
Q2-2024 Analysis
Max Healthcare Institute Ltd
Max Healthcare has demonstrated notable resilience in its performance during the second quarter, marking the company's 12th consecutive quarter of year-on-year growth. The earnings call started with optimistic remarks, highlighting a sturdy year-on-year increase of 17% in network revenue and a commendable 20% in EBITDA for the first half of the fiscal year 2024.
Operational metrics remained robust with a 3% year-on-year and 5% quarter-on-quarter growth in occupied bed days, leading to an average occupancy of 77%. Inpatient discharges and operation theatre volumes also saw significant increases, further underpinning the company's operational strength.
Max Healthcare has exhibited a strong focus on execution and capital allocation, as evidenced by a pretax Return on Capital Employed (ROCE) of 38.3% in Q2. This is pivotal as the company gears up for its next growth phase, supported by planned capacity expansion and inorganic opportunities.
The company's financial health is demonstrated by growth in both revenue and profits. Network gross revenue burgeoned to INR 1,827 crores, a 17% year-on-year increment, while the operating margin escalated to 28.7%, up from 27.7% in the same quarter of the last year. In the first half of the financial year, network operating EBITDA grew by 20% to INR 933 crores, and EBITDA per bed rose by 15%, reflecting efficient utilization of assets.
Max Healthcare is progressing with its expansion projects, such as the 122 beds at Shalimar Bagh and the upcoming 300 beds at Dwarka. Moreover, other projects across various locations, including those comprising hundreds of additional beds, are moving forward without delay. This expansion is in sync with the company's growth trajectory and scaling operations.
The company's net fair cash position saw an impressive improvement to INR 1,303 crores, while continuing its commitment to the community by providing free medical services to approximately 39,000 outpatients and 1,300 inpatients from economically weaker sections.
The SBUs, Max at Home and Max Lab, continue to report strong growth with revenue increases of 23% and 8% quarter-on-quarter, respectively, highlighting the company’s success in diversifying its revenue streams.
Wrapping up the earnings call, Max Healthcare underscored the magnitude of investor interactions and highlighted forward-looking statements that envision the company's future developments, including the operationalization of international patient centers in Nepal and Bangladesh.
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Good day, and welcome to the Max Healthcare Institute Limited Earnings Conference Call. [Operator Instructions]. Please note that this conference is being recorded.
I now hand the conference over to Mr. Suraj Digawalekar from CDR India. Thank you, and over to you, sir.
Good morning, everyone, and thank you for joining us on Max Healthcare's Q2 and H1 FY '24 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. [indiscernible] Gupta, Senior Director of 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 introductive Q&A session. Before we start, I would like to point out that some statements made in today's call may be forward-looking in it and a disclaimer to this [indiscernible] has been included in the coming presentation shared with you earlier.
I would now like to invite Abhay to make opening remarks.
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 the fiscal year has set a commendable discipline 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 our operations as well as secular demand for quality health care services. .
Further, our granular focus on execution and capital allocation, as evident from our pretax ROCE of 38.3% in quarter 2, we are well poised for the next leg of growth that is set to come from planned capacity expansion as well as inorganic opportunities. On that note, we are happy to share that the developer of our upcoming hospital in [ Dwarka ] has applied for the occupancy certificate which is a significant milestone.
It's actually the final milestone, and we expect to commission the same in the fourth quarter of the current year. Moreover, our most recent brownfield expansion Max Shalimar Bagh has reported an overall average occupancy of 78% on a year-on-year revenue and EBITDA growth of 41% and 48%, respectively, in the second quarter. On the clinical front, we have signed memorandum of understanding with Intuitive Surgical, the U.S.-based pioneer of Robotics Medical System to establish Southeast Asia's first total program observation center located at our Max Bakes facility. The center is expected to have positive impact from both India and Southeast Asia vertical healthcare ecosystem by enabling health care professions to drive advancements in patient care using robotic-assisted surgery and elevate surgical healthcare standard in the region. Now moving on to the highlights of our second quarter performance. Occupied bed days grew by 3% year-on-year and 5% quarter-on-quarter, reflecting an average occupancy of 77% for the quarter. 93% of the year-on-year and 18% of the quarter-on-quarter increase in occupied bed pay was driven by its preferred cash channels -- preferred channels between cash, insurance and TPA and international.
With increase in occupied bed days and marginal drop in [indiscernible] loss, the inpatient discharges were up by 7% year-on-year. Even OT volumes exhibited a strong growth of 14% year-on-year and 4% quarter-on-quarter. Institutional venture [indiscernible] 27.3% compared to 27.9% last year and 29.7% in quarter 1 this year. However, after excluding Max Shalimar Bagh, the most recent expansion, the overall institutional net shares stood at 25.4% during the second quarter. Average revenue per occupied bed for the quarter stood at 74,600 growing by 13% year-on-year and remaining flat quarter-on-quarter due to seasonality. Year-on-year improvement was witnessed across all maturities with some quality being key driver.
Network gross revenue was INR 1,827 crores compared to INR 1,567 crores in the second quarter last year and INR 1,719 crores in the previous quarter. This reflects an increase of 17% year-on-year led by growth in ARPOB and occupied bed days quarter-on-quarter growth of 6% is mainly driven by increase in OBD-occupied vents. Revenue from international business again grew significantly by 25% year-on-year and 11% quarter-on-quarter, accounting for now around 9% of the total revenue from our hospitals. During the quarter, we have operationalized company-owned patient assistance centers in Nepal, while all formalities for the Bangladesh center have been completed.
We expect to operationalize this center shortly. This is in spite of the Afghanistan business, which was 12% of our total international business still down to 0. Direct costs were lower quarter-on-quarter due to increase in medical patients attributable to seasonal Vector-borne diseases. On the indirect cost side, while the overall percentage was lower, there was an increase in absolute costs, primarily due to marketing costs for international channels and seasonal increase in power consumption. Network operating EBITDA stood at INR 497 crores, just below the magic mark of INR 500 crores, reflecting growth of 21% year-on-year and 14% quarter-on-quarter.
Accordingly, the operating margin increased to 28.7% versus 27.7% in the Q2 last year and 26.8% in the previous quarter. Most importantly, annualized EBITDA per bed rose to INR 75 lakhs, yet again our highest ever, [ clocking ] a growth of 17% year-on-year and 7% quarter-on-quarter. Profit after tax was INR 338 crores versus INR 267 crores in Q2 last year and INR 291 crores in the previous quarter on a like-to-like basis. The year-on-year improvement of 26% was primarily attributable to flow through of improved EBITDA and lower finance costs. Free cash flow from operations was significantly higher this quarter at INR 436 crores, of which INR 90 crores deployed towards ongoing capacity expansion projects.
Net fair cash position improved to INR 1,303 crores at the end of September 2023 compared to net cash of INR 42 crores same time last year. Continuing efforts to support the local communities, we treated approximately 39,000 patients in OPD and 1,300 patients in IPD from economical [indiscernible] section free of charge. Both our strategic business units continued to trade strongly on the growth trajectory. Max at Home reported a top line of INR 42 crores reflecting a growth of 23% year-on-year and 8% quarter-on-quarter. We continue to receive good feedback for our services, and the same is reflected in the SBU revenue growth. Max Lab, the non-captive pathology vertical offers its services in 30 cities and now has an operational network of over 100 collection centers and active partners.
This SBU reported a gross revenue of INR 39 crores, reflecting a like-for-like growth of 32% year-on-year and 15% quarter-on-quarter. Now coming to the status on the upcoming expansion projects. As most of you know, 122 beds at Shalimar Bagh has been operationalized at the start of this financial year. And as mentioned earlier, the hospital reported an average occupancy of 78% for the quarter. For 300 beds at Dwarka, application for 4C, occupancy certificate has been submitted in October and majority of the interior works have been completed. And some of it is just being finished as we speak. We expect to commission the hospital in later half of Q4 compare to receipt of occupation certificate by the developer.
329 beds at Nanavati, excavation and [indiscernible] work are complete. Steel fabrication up to the ground level and slab work have also been completed. Ground level structure is expected to be completed in the current quarter and the project continues to be on reduce. For 300 beds had sector 56 [indiscernible] in Phase I, the deal has been completed and the site excavation is almost done. The EPC contractor is already on board and design investment is under process. TDR approval for additional 0.5 FAR has been received, and the project is on June. For 190 beds at Mohali, the Dwell DeWAL is completed and excavation work is underway, all statutory approvals to start the construction has been received, and the project is largely on time well entirely on time. The EPC contractor has been mobilized and the design development is in progress. The 350 beds as Max Smart and Saket, which has seen some delays initially -- we have now initiated the process of transplanting the trees that permissions have taken some time to come, which are now. This has been on the critical path, but now the project is back constitute and work should start by December, current year. 300 beds at [indiscernible] at Shake environmental sales has been received and the submission of growing in the mutual cooperation of Delhi using process. for 250 beds at Piper growing have been submitted to the new group of portion of Delhi and the application environment shares has been submitted. So all the other projects are on schedule, there is no delay as such. And finally, coming to the overview of the company's performance in the first half of the financial year, network gross revenue stood at INR 3,546 crores, reflecting a growth of 17% year-over-year. Network operating EBITDA grew by 20% year-on-year to INR 933 crores increased ARPU improved case mix and augmentation of network bed capacity by 150 beds resulted in margin expansion to 27.8%. -- while EBITDA per bed grew by 15% to 72.8 lakh per day. In the first half, we generated INR 697 crores of free cash flow from operations after interest, tax, working capital changes and routine CapEx, of which INR 128 crores was deployed towards ongoing expansion projects. With this, we open the floor for Q&A.
[Operator Instructions] The first question is from the line of Damyanti Kerai from HSBC.
My question is you continue to see progress in reducing bad 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 a more institutional bed to ramp up occupancy, et cetera. So do you still target to bring it down to, say, industry average and when it will likely happen?
So I mean there is no industry level, so to say. I mean there's no classified industry level. I think it's highly sort of changes between metros and non-metros. You have more PSUs, headquarters, et cetera, out of like and CR you have a larger sort of ports of that. larger amount of businesses coming through. Now 2, 3 things have happened. One is apples-to-apples from 29.7%, which come down to about 25% in the current quarter. .
Second is that it's on increased capacity, including Shalimar bag, which has happened. Currently, certain rates have moved up in which -- because in the CGHS and we're expecting certain other rates for institutional business to move up in the current quarter because of which little bit you would have taken the foot of the accelerator. And finally, even within the institutional business, there's been a churn in the sort of specialties we are catering to and the ones we are not gating to. And all of it sort of comes down and plays out in our -- so what you're seeing is, although because of the overall capacity constraints that we have, your occupancy has moved up by only perhaps 3% year-on-year. but there's been a churn of about 3% to 4% year-on-year also within the patient in, within the payer mix. And all of that is tend to translate it into a higher percentage margin as well as EBITDA per bed. So to say, I mean, apples for apples, the same inventory going forward will be coming down as far as institutional business is concerned, to your point, rightly mentioned, as and when you have new capacity is coming, those capacities initially will have increased in estate business. So in percentage terms, it will move up, but in or remains stagnant just when those capacity is coming. But I think overall, it still translates to your better EBITDA margins. .
Okay. Okay. So you mentioned like...
Just to sort of complete that point. You may have seen because of Shalimar Bagh new capacity coming in, the institutional business sort of moves up. But if you actually see the EBITDA coming from those incremental base in spite of bank -- sorry, basis, this increase in institutional business is yet 40% margin. .
Okay. So that means, obviously, you are getting much better realization from these set of presents also. As you mentioned, wage hike in CJS could be 1 of the region, which might be contributing and then obviously, specialty mix. Just...
Not that. There is a reality because of the operational efficiencies that you have. You have huge operating leverage in the new beds. You don't have the fixed costs, et cetera. So what happens is even the lower mix, right? I mean the lower payer mix, okay, becomes more viable and more and more viable even on the new sort of bank operating cost is very low on the incremental .
Okay. It's primarily driven by efficiency that you mentioned like you have better absorbed overheads there that is presenting in these kind of numbers.
That's right.
Okay. And just a clarification, you mentioned there has been a bit of hike on the just patient also. So right now, like what is the difference between that price channel and then the normal cash and others like very broadly what is [indiscernible]
Typically, if you take the [indiscernible] with channels, they will be -- so the CTI channels in preferred channel is 85% higher than the [indiscernible] channel.
[indiscernible] 100%.
No, 85%.
85%.
So the preferred channel is 85% better.
[indiscernible] a PSU ARPU is 100 this will be INR [ 100 and 85. ]
Okay. My last question is your difference between gross revenues and net revenues, which you booked for pro forma financials, that's primarily driven by what you pay for EWS patients, right?
That's right. Largely that that number [indiscernible]
Yes. And I'm seeing that number has broadly remained somewhere like 5% of gross revenues. So should we assume similar numbers to trend even if we are commissioning new facilities ahead. And then according to government rules, we have to allocate some bed for the EWS.
Dwarka, may not have any EWS obligation. It does not have. The Dwarka does not have, Mumbai will have and others will have. I mean [indiscernible] have. Gurgaon, won't have. Other than Gurgaon, Dwarka and Mohali.
Yes. All other will have.
The other 2,200 additional beds, I think between these, you have 200 in Mohali, 300 in...
1,000 you will not have, balance 2,200 will have -- sorry 1,200 will have.
Approximately 1,200 beds will be utilized and then others don't have such requirements.
Yes. So let's say we have 2,200 beds further coming up -- sorry, 2,700 beds further coming out, of which 1,000 beds will not have any EWS obligation. With the balance 1,700, we'll have that 10%, so let's say about 170 beds out of 2,700 beds.
The next question is from the line of Kunal Dhamesha from Macquarie.
First, on the housekeeping question on the international patient bed share, what was that for the quarter?
Yes. So that will be around 5%.
5% only.
So you know the ARPU is higher. So that's how it the revision goes up.
[Audio Gap]
now we've got all this cash accumulated. And you've talked about acquisitions, M&A and all of that. But I mean it's 2 years since we added anything. And also on the greenfield tea side of things, are we looking at any greenfield projects that we want to add. And I know you keep saying like imminently that there should be some announcements, but it also takes about -- I think if you add a new project of Greenfield project about 3, 4 years before it's operationalized. So if you can throw some light on all of these things, please.
Yes. I think there's always a tug of war between the desire to expand in fiscal discipline, one has to maintain that. It's not as if we haven't been this thing. We [indiscernible] many falls before we find the price, and we are adding. And we are quite certain that shortly, we should be able to employ. Do keep in mind, it's not a huge amount of gas because even to construct the 500-bed hospital, you take about INR 1,000 crores, right? To acquire 1,000 bed -- a 500-bed hospital was to another maybe INR [ 1,015 ] crores to INR 1,500 crores. So 1 or 2 acquisitions may have done. So at one site, we are sort of excited about the fact that we are accumulating cash, but we are also conscious of the fact that this amount of cash and even a polluted to now will take you very far. I mean today, transactions are available at 15x, 16x, let's say, [indiscernible] EBITDA that means even at entry we'll be able to buy even if I was to go and spend INR 5,000 crores, right?
I mean we can invest, what is the math on that? About INR 200 crores EBITDA. That's about 10% of my total EBITDA. INR 300 crore EBITDA, that 15% EBITDA. So I can increase my EBITDA by 15% by deploying INR 5,000 crores. And that would pretty much use up all my cash and my leverage ability, right?
So I think it's important to -- while the that capital intensive sector 1. And secondly, there are a massive amount of opportunities in such -- so if we want to sort of participate in that, okay, we need to accumulate the cash and spend it with the right amount of is discipline in the right but not that much.
Yes. And also, like as the way we've been growing, and it's almost, let's say, 20% sort of EBITDA growth, cash flow growth, over the last couple of years. And going forward, also, it seems we plan to continue on that trajectory over the next 4, 5 years. So then beyond that to continue growing at the 20% sort of rate, we also need to keep adding the bed capacity at that sort of way, right? So we need to have like this continuous development pipeline, which keeps -- evokes adding projects year-on-year, so that the growth continues following you guys are working on it, but just mentioning that you're looking at [ 30 ]. So -- but there has been no like actual project acquisition. So that was my only question, but...
But you're absolutely right. Just keep in mind, 2 aspects, right? The last 2 years, there's not been any capacity expansion. That's right? If you are seeing a 20-odd percent increase in EBITDA.
Even in the next 3 to 4 years, you're going to have 25,000 to 2,700 beds. The increasing your capacity, 65% of business through brownfield -- that is almost like during the capacity over the next 3 to 4 years.
Those are coming on [indiscernible] Shouldn't that be giving you expansion for the next 5 or 7 or 10 years itself, and increasing your -- given the fact that your bits for short, maybe brownfield, okay, a bunch of more cash flows for our business, which, again, all of it gets deployed and gives you further listing. Look, I mean, I think there are 3 streams of growth over here. One is your current bed capacity, which has been growing -- has been growing in terms of EBITDA, okay? Then all the expansions that have already been announced which have already been underway, which we said are largely online.
And the third is what you want to do with this cash. right? I mean it's exponential 3x strategy. It's not a strategy with a 15%, 20%. I mean, if I was not to sort of deploy this cash, it would all back to dividends.
Yes, you will be doubling the capacity over the next 2 years. No, sorry, 3 to 4 years. .
Yes I think that's it, I mean, from my side, I understand where you're coming from. It's -- and also, it's clear, like as the cash flow keeps accruing over the next 3, 4 years and they keep growing, you continue to add on your development pipeline and we'll continue this go for long term.
The next question is from the line of Tushar Manudhane from Motilal Local Financial Services. .
Just on the organic basis on EBITDA per bed, why we've already the optimized in terms of [indiscernible] level. So how do think the results for improving EBITDA for next 2 years -- 2 to 3 years?
I think EBITDA per bed the first half has already happened, right? As you know your second half is really marginally better than your first half and so and so forth. I think for at least for the rest of the year, some sort of trajectory has been already articulated.
So more from -- let's say, beyond FY '24 [indiscernible]
Sorry, more from?
Beyond FY '24, how to think it. In the sense the case mix -- or payer mix is also already taken good price hike in terms of institution issues [indiscernible]
No, no, it's not a price hike, impact is only INR 14 crores. Where's 28% increase in ARPOB and that's really due to the clinical side of the thing because you're moving to higher-end procedures. We are distilling procedures. .
[indiscernible] has been negligible, in fact.
Of the 28%, only 5% is the price hike impact in the PSC segment.
In the PS -- like. So like Yogesh rightly pointed out, our 28% increase in our comp in PS, only 5% as being due to price hike.
I meant to ask that how much more can further be optimized if not on price side but other viewers so as to drive the EBITDA or maybe mid-teens or low or growth over the next 2 to 3 years.
In a similar fashion. As your payer mix sort of start moving up on a particular trajectory, [indiscernible] your indirect cost is increasing by maybe 6-odd percent every year, [ 6% ] year-over-year.
[Technical Difficulty]
The next question is from the line of Bansi from JPMorgan.
So I have one question, and this is on the advancement of robotics that we've seen in the overall health care space. So we've seen more and more specialties using robotics and even in noncomplex ones are making use of robots. So in general, where are we today in terms of surgeries, which are getting done on robots and what's the scope here, where it can go to? And also, this be, I'm assuming this will be lucrative enough. So what is it in terms of ARPOB and margins, how different they are compared to our traditional surgery work?
So I think first and foremost, I think although robotics have been around for some time, over the last couple of years, there has been a sudden uptick of that and acceptability between doctors and patients, both has been quite dramatic as far as robotics is concerned. I mean, to be honest, it surprised us also on the upside. I mean, like I mentioned earlier, our total number of robotic procedures more than doubled in the last 1 year. and been a pleasant surprise. More specialties now you get into this flywheel concept as acceptance sort of testing we are being pushed by many of hospitals and many of the clinicians now to set up robots because when prices become more and more viable. What happens is, of course, it's at a higher cost compared to laparoscopic or even for that matter, a general surgery for the same thing. But -- and so it leads to higher ARPOB. But the contribution levels from robotics are lower. And EBITDA in terms of margins are lower in percentage terms, although in value terms are higher -- and this is something that Banca previously mentioned with respect to both higher-end payer mix and political mix that you get lower percentage margins, but higher value in terms of absolute EBITDA coming from this. Yogesh, what is that...
It also helps us in terms of production loss, right? So EBITDA per pet is obviously better. But in terms of margin, that may be probably lower than the overall effect.
But a little difficult to right now sort of present the trajectory, where do we see the growth happening and 1 to be 100% growth or will it proceed down to 70% or 50%, but [indiscernible] increase from here.
Got it. But the adoption has increased. And in general, it also improves your throughput, right, within a particular [indiscernible]
That's right. That's right. And I mean, overall, it's a -- it's got all the out positives with it. And as public acceptability started increases, as technology advanced, there are entry barriers in this the smaller sort of places can't adopt it increasingly and awareness increases, then you see this move towards larger hospitals and more litigated car systems. It's also better [indiscernible] for patients.
[Operator Instructions] The next question is a follow-up question from the line of Kunal Dhamesha from Macquarie. .
One 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 for key specialty say paramedical staff -- or would it be more closer to the commission? .
So we started all of that. And I think we've at least all the head of the programs and functions that already in place, and they've been in the system as we speak, they are working in some of our other facilities. And yes, so we -- I mean as far as the soft power is concerned, people are concerned, et cetera, all that is in line and schedule. So there's no lull on that. And there's enough availability and excitement around the facility. .
And would it be more like a staggered hiring in terms of specialties or we would go with the full place 300 bed operationalization on day 1...
No, no, it will be about 150-odd beds.
164 beds we are doing to be precise. So you pointed out, 164 day 1. And as you require sort of open up more...
Okay. And 1 follow-up on the robotic surgery while you have alluded that it's good from the ARPU perspective and the absolute EBITDA perspective. But in a longer term, if, let's say, when the other hospitals also kind of start affording it, bend does not that -- does that bring them to the equal level in terms of surgical outcomes, et cetera, and then the importance of brand or surgeons scale kind of get reduced. Do you see that happening?
Not particularly. I think the market is growing. I mean, there's only those many players which cannot talk robotics can is also -- people have to be trained on it. You have to have availability of the talent to be able to do this. So all of that will take time. But I think more and more before that your market would -- and when we've seen this, right? I mean why robotics as far as any technology is concerned, the larger players are adopted for the smaller players have updated thereafter. The market continues to stand. But I've never seen a larger player sort of market share go down because the smaller players have adopted the technologies thereafter. I think you kind of reset the market in all the smaller players also have had an increasing awareness for the product. .
Sure. And for us, is it more like a CapEx model or is it more pay-per-use model?
Actually, we started to all this paper use we be quite unsure. But we've actually bought back or bought more than 50% of the robots rest because it's going to surprise us in any case. So at this point in time, we have hybrid simply because we started off by paper use, but now we were in to buy a report more than 50% of the reports that we have.
Okay. And return on capital is higher on...
Of course, that's why we are [indiscernible] -- the next
The next question is from the line of Lisa Sari from [indiscernible] Capital.
The first question was on the overall industry trend. Are you seeing still there is a gap between supply and demand growth and what we see for the next couple of years, there will be leverage to continuously grow price and pom. How are you seeing that?
I don't know seeing it over the next couple of years. I've seen it over the next few decades. I think this is a multi-decadal opportunity. There is huge amount of under penetration. There's a massive, massive, massive gap between supply of quality health care and demand for quality health care, which is only increasing as we go by. So that's the reason -- and India perhaps offers this opportunity, which nowhere else or the country or the health system holds I mean you have at 1 site, you operate almost like a utility because you have the sort of -- its inflation-free insulated business. But at the other end, you also have this massive growth opportunity because of the I mean just the sheer lack of penetration or availability of quality facilities.
Got it. And on the international patient side, you said around 5%, 5.5% of your beds. Is there scope for that to significantly go up to, say, 10% or higher? And how are you seeing the international traffic on the hospital side?
It's grown 25%. Traffic has grown by 25% in revenue terms at least over last year. Okay. Even I suspect even in terms of total number of betas that means in terms of volume of patients has grown by 25% over the same quarter last year and 11% over the last quarter itself.
And then do keep in mind, this is 12% of our total business, which was [indiscernible] down to 0. I mean if you assume that coming back to normalcy, I mean, this would have been an increase of 30-odd percent over last year or more impact. So I mean, where does this train stop, I think we haven't even scratched the people type. This should continue in my mind, at a significantly higher pace than the rest of the hospital growth.
Got it. Got it. And the 2,600 bed expansion that we have, can to some idea in terms of how much can come in the next 6 months and how much in '25?
But 300 beds should come in by end of FY '24, current fiscal year. FY '25 towards the end, you will have another 350 beds [indiscernible] coming. Then Mohali, another 200 beds. Again same time next year. And Gurgaon, same time next year. So we have about 1,000 beds coming in the next [indiscernible]
So 300 by the end of this year and another 800 to 900 by the end of next year.
Yes, it's on the presentation on the website, you can see. I mean it's quarter-by-quarter expense and data commissioning.
Okay. And just one last data point. You said the institutional obviously will improve significantly. So now where does the gap between institutional, noninstitutional, [indiscernible] What would be the gap?
85%. Somebody had asked the question earlier, 85%. For institution is 100, for noninstitution 185%.
The next question is from the line of Alankar Garude from Kotak Institutional Equities. .
Sir, you mentioned about expecting to make some announcements on the expansion base shortly. So just wanted to check when it comes to different expansion models, like, say, between partnered, build-to-suit, O&M and acquisitions. Do we have any specific preference?
No. I mean, acquisitions are at the right price of the existing, but otherwise build to suit in the sense the asset life is very good. We don't like greenfield.
Understood. Okay. And on that point, on the care acquisition, you have been providing regular updates, including 1 yesterday night. Now on 1 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? .
I mean the situation is what it is. We've made up [indiscernible] high court, so the high court will decide. I can't give you any opinion on that. I mean, for the judge side.
True SP1 Okay. And wane final question. Now when it comes to some of the allied services, we are into diagnostic than at home. But we have seen some of the other hospital chains doing far more as far as some of these allied health care services is concerned. -- getting into pharmacies than insurance diagnostics in maybe a bigger way. So maybe in future, not immediately, but in future, are we open to being more aggressive on some of these allied services?
I am open to anything if everything in the health care business, okay, which others have succeeded in. Philosophically, we don't like to do pioneering things. When they succeed, we will study, we will learn from their mistakes and we will gain confidence from what they got right and then we will do it better like we do. Okay. anybody does it, I'm very open to doing those things. But let some do it successfully first. I mean there are more than enough examples in front of you where people have jumped into situations and got it wrong. That's not a game play. That's what would be good at, to be honest.
The next question is from the line of Amit Kawani as an individual Investor.
My first question is that I don't know if it's already been asked or and have you answered it, but the revision impact on the institutional business, can you tell us what it is expected to be in the December quarter and March quarter? .
I have no idea what is expected to be because they haven't take us into confidence on that. So far, the impact has been 5% of ARPOB of the PSU business. But we have absolutely no clue how the government is thinking about.
No further, any wage -- sorry, institutional division has been announced?
No. We were told we were expecting it this quarter. And now hopefully, we are expecting in next quarter, but we don't know when it will come through and how much will it.
Okay. 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 does not have lower margins than the overall business? So just trying to understand the kind of the difference between them and us, is it just because that we are in metros, that our -- we -- our noninstitutional business is higher paying. Is that the conclusion to reach? .
No, no. Look, -- the institutional business, let's say, have an ARPU which is 40,000 odd, right? If the rest of your business for whatever reason, ARPU of 40,000 or lower, okay? Then it doesn't impact you do it. is the highest in the industry. Now why is that a lot of players have 40,000 -- now it could be a function of 2 or 3 things. One is that their clinical programs, okay, they're not doing high intent programs like transplant, high-end oncology, et cetera, et cetera, et cetera. We have more medical basis. Okay?
The payer mix, okay, it is not very listing. They don't have international patients. I mean they're going to have cash paying patients and suasion to that extent and whatever else it is. substitution institutional isn't there. So obviously, for them, there is no benefit in moving out. .
So -- but the question actually is that suppose if someone has a hospital, let's say, in Ranchi, which is like a Tier 2 city. So will the CGHS compensation to them, be the same as another hospital in [indiscernible]
[indiscernible] In the NCR price and non-NCR price, but I would say not [indiscernible] great difference.
Negligible difference. .
Basically the same do it. The Ranchi will do it. [indiscernible] many divisions, right? .
The next question is follow-up line from Kunal Dhamesha from Macquarie. .
So on the CSS and [indiscernible], we have said the difference of around 85%. Can you also quantify what would be the difference for the international patient. So let's say, CGHS...
Contribution typically be 1.5x of the cash and insurance. So that means domestic vision versus -- so domestic to [indiscernible]
So could it be roughly around 250 if we CGHS is 100...
CGHS -- will do the math.
If CGHS is 100, that is 185, this is 50% more than 185%.
[indiscernible] And this is -- these are the numbers for H1, I would say, or like more or less this remains...
There are current numbers
Correct. current numbers. Okay. Okay. And secondly, on CGHS, you said that on institutional, you said that we are now taking higher complex procedures, et cetera. So do we have this flexibility to choose on the specialty on CBS or some of the institutional business? .
Well, we inherently do because some of the hospitals are now disengaged and hospitals, which are engaged are doing half those versus sometime facilities. This is churn which happens. .
Okay. So basically some word of mouth -- something more people...
Total word of mouth. My [indiscernible] now only to cardiac and [indiscernible] have stepped out of CCH on all of the disties, et cetera. That's the mean [indiscernible] start moving towards that.
Okay. Okay. So we have the flexibility of saying no to other specialty.
It's not a question of flexibility. It's a matter of contract.
[indiscernible] told them that we don't treat patients, right?
No, no. We've entered -- our contract is amended to this thing. It's not a flexibility that we have. We have no flexibility for all of the new do [indiscernible] all of [indiscernible] it don't start terrific for whatever at you have.
Okay. So our contract is only for a few specialties where we have a strong base and more complex.
[Operator Instructions] Ladies and gentlemen, there are no further questions from the participants. I would now like to hand the conference back to the management for their closing remarks. Thank you, and over to you.
So thank you all for coming on to MAX Networks Q2 fiscal year 2024 results. We will look forward to seeing you our next results to that. Thank you very much. Bye. .
Thank you very much. Ladies and gentlemen, on behalf of Max Healthcare Institute Limited, that concludes this conference. Thank you all for joining us, and you may now disconnect your lines.