Artemis Medicare Services Ltd Q2 FY2026 Concall Summary

Key Takeaways

• Solid quarter, expansion bets placed: Consolidated revenue grew 13.8% YoY, driven by complex procedures and international patients, while EBITDA margin improved to 21.2%. The quarter also saw binding commitments for a major new hospital.
• ARPOB, not price, is the engine: ARPOB reached ₹81,248, powered by case-mix and complex procedures; pricing increases were a negligible 1.5-2%. Management targets 6-8% YoY ARPOB growth.
• A deliberate occupancy dip: Occupancy fell because 18-20% more beds were added YoY to stop turning away 20-30 patients daily to competitors. Management calls the dip transient and targets 70%+ occupancy.
• Raipur and South Delhi define the next chapter: A 650-bed South Delhi MoU is targeted to become binding by December-end, while the Raipur hospital commissions by March 2026 with a conservative first-year occupancy target of 40-50%.
• What to watch next quarter: Conversion of the South Delhi MoU into a binding contract, the capex and funding details that will follow, and whether Gurgaon occupancy ticks up toward the 70% trigger for the next 100-bed expansion.

Growth Drivers & Operating Performance

• Volume and complexity led the top line: The 13.8% YoY revenue growth was led by cardiac sciences, oncology, neurosciences, general surgery, liver transplant and gynecology, reflecting a deliberate push into higher-acuity procedures.
• ARPOB growth is a mix story: ARPOB of ₹81,248 was driven by an enhanced case-and-payer mix and a higher share of complex procedures. Pricing increases were kept to an insignificant 1.5-2% to preserve competitive edge.
• International patient surge: A 30% surge in international business came from an intentional thrust on servicing offshore offices better through more medical and surgical camps, outreach OPDs, and better connectivity via telemedicine, teleradiology and e-consult.
• Occupancy dip is a capacity story, not a demand story: Occupancy percentage fell because 18-20% more beds were added YoY; the absolute number of occupied beds increased. Some added beds are NICU/PICU bassinets that cannot take adults, further diluting the headline percentage.
• Non-census beds are revenue-generating: The 100 non-census beds at Gurgaon are daycare, dialysis and emergency room beds that are continuously used and generating revenue, not idle capacity.
• Smaller centers are near breakeven: 90-95% of business comes from the flagship Gurgaon facility; all other facilities are almost breaking even or showing profits and represent a small fraction of the overall business.

Chakravarty: "What was earlier happening, almost 20 to 30 patients were being refused every day, and they were going to our competitors. And once you refuse your patient, they never come back."

Margin Structure & Trajectory

• Economies of scale are the margin lever: EBITDA margins are a direct factor of scale: fixed costs stay fixed after a point, incremental costs are mainly manpower, and better negotiation on consumption gives an advantage of 2 to 3 times as hospitals grow.
• Government business is managed, not maximized: There was a marginal increase in government business margins due to recent CGHS rate revisions. Management prefers to keep the government mix between 15-18%, not 20%, though increased capacity sometimes forces a higher share.
• Gurgaon will carry the load during expansion: The flagship Gurgaon facility will push margins, profits and EBITDA to compensate for initial losses at Raipur, so the consolidated picture stays protected during the ramp-up phase.
• Mid-20s margin target is in sight: Management sees mid-20s EBITDA margins as a fairly doable target as corporate costs get divided across three hospitals once Raipur and Delhi come online.

Chakravarty: "mid-20s is a fairly doable target in terms of EBITDA margins."

Bed Expansion: Gurgaon & The 70% Trigger

• Gurgaon ambition is 850 to 1,000 beds: Management aims to reach this scale in the next one and a half years, driven by organic capacity addition and the FAR-enabled expansion.
• Platinum Green certification unlocks free capacity: The certification entitles Artemis to a 15% increase in FAR at no additional cost, enabling addition of 100-plus beds on the top floors of existing towers at a cost of around ₹70-75 lakhs per bed.
• The 70% occupancy trigger: Management will add the 100 FAR-enabled beds when current occupancy reaches approximately 70%. One quarter of sustained 70% occupancy will see those beds come in force.
• Sequencing matters: The project timeline is Raipur operational breakeven first, then Delhi operational, then the 100-bed Gurgaon expansion, then purchase of additional FAR for another 200 beds.

Chakravarty: "One quarter of 70% occupancy will see these beds coming in force. So, you track our occupancy, and you will know when the beds are coming."

Raipur: The Near-Term Greenfield

• First-mover in a tertiary vacuum: The Raipur hospital will be the first tertiary and quaternary healthcare facility in the city; no existing corporate hospital will be close in infrastructure, equipment or facility. Pricing will be competitive.
• Asset-light partnership structure: Local partners Dr. Agarwal and Dr. Gupta own the land and building; Artemis provides equipment and interiors under a 30-year contract where the P&L sits with Artemis. Partners receive monthly rent at market rate, and the two doctors run general surgery and gastroenterology with a 45-55% revenue share favoring Artemis.
• Conservative ramp-up baseline: For the first full year (April 2026 to March 2027), management has taken a conservative occupancy assumption of 40-50%, with a break-even target of one to one and a half years. Internal targets are shorter.
• Operating losses are quantified and contained: The operating loss before break-even is expected to be around ₹15-18 crores, described as small and marginal. Post break-even, Raipur will significantly add to top line, EBITDA and EPS.
• Market conditions are supportive: Insurance penetration is high and earnings are good in Raipur, providing a favorable demand backdrop for the ramp-up.

Chakravarty: "We are looking at 1 to 1.5 years to kind of breakeven, which is what we have kept as a target, but our internal targets are shorter than that."

South Delhi: The Transformational Bet

• A binding MoU with conditions to clear: Artemis has signed a binding MoU for a 650-bed hospital in South Delhi. Two conditions precedent must be converted for it to become a binding contract, targeted by end of December.
• No land cost changes the math: The company has taken 4 acres of land on a 35-year contract in the heart of South Delhi, so no land cost is required. Cost per bed will be significantly lower than current costs, and operational efficiencies will control capex.
• Timeline and phasing: The hospital will be built over 1.5 to 2 years, with spending phased over 2 to 2.5 years. The existing structure will be broken down and rebuilt as a state-of-the-art facility.
• Hub-and-spoke groundwork is already laid: Existing South Delhi Lite and Daffodils centers were started with the long-term purpose of having a hospital in South Delhi. They will continue as a hub-and-spoke model, with specialties like geriatric medicine being added. Currently, about three out of ten referrals from Delhi centers land up at the main center.
• Details are gated on the binding contract: Management declined to disclose capex structure, funding mix, margins or EBITDA for the South Delhi project, stating they will come back with details once the binding contract is signed by end of December.

Balance Sheet & Funding

• Peak debt is capped at ₹330-350 crores: Expansion across Raipur, South Delhi and the Gurgaon 100-bed addition will be funded through internal accrual and debt, with peak debt not exceeding ₹330-350 crores and ratios kept below 1.8x.
• Existing debt will be paid down first: Management plans to repay the existing loan and reduce the loan outstanding by ₹70-80 crores before new project debt builds up.
• Capital-raising options are open: Management is open to raising more money and is looking at options like a QIP, though no timeline or specifics were committed.
• Cardiac centers may be fully acquired: All cardiac centers are EBITDA positive and making profits. Artemis is in talks for possibly acquiring 100% of them, which would give more operational efficiency.

Chakravarty: "hospital business is a very capex-intensive business, and that's why the ROI becomes a bit of a question mark. So, if you have seen our strategy, we have actually thrown this whole concept on its head."

Guidance & Commitments

Key Metrics