Max Healthcare Institute Ltd Q4 FY2025 Concall Summary

Key Takeaways

• Record ramp-up, record confidence: Dwarka reached EBITDA breakeven in just 6 months, a new company record, while management called the coming year "the strongest year in the last 5 years."
• Acquired units are the growth engine: Lucknow, Nagpur and Noida delivered outsized EBITDA growth (Lucknow +102% YoY), and management expects their margin improvement to accelerate in year two of ownership.
• ~1,500 beds coming online within the year: Three brownfield towers are commissioning within 90 days, and the Gurgaon greenfield is on track for year-end, adding significant near-term capacity.
• Margins are set to outstrip revenue growth: New-unit EBITDA per bed sits at just 43% of the mature network, so as acquired and brownfield beds ramp, the mix shift alone drives operating leverage.
• What to watch next quarter: Whether the three brownfield towers commission on schedule, the pace of occupancy build in those new beds, and any M&A announcements given ample balance sheet capacity.

Acquired Hospitals: The Ramp-Up Story

• Lucknow delivered standout growth: Revenue rose 56% and EBITDA doubled (+102%) in FY25, with margins now above 30%. A radiation oncology bunker is expected by end of H1 this year, which management sees as the next margin lever since oncology penetration still trails the rest of the network.
• Nagpur is nearing capacity: Revenue grew 23% and EBITDA 86% in FY25, with margins around 22%. Occupancy is approaching full utilization, and a 100-bed expansion is planned, which management expects will provide a "major fillip."
• Noida (Jaypee) is still in early innings: The 500-bed hospital generated INR 228 crore in gross revenue and INR 48 crore in EBITDA at a 21% margin since acquisition in October 2024, operating at less than 50% occupancy with only 377 of 500 beds opened. Management expects 50% more occupancy plus higher-end clinical programs to drive the next leg of improvement.
• Year two is when the step-change happens: Management noted that the first year of an acquisition shows less absolute value improvement because integration and program-building take time; the second year is when the uplift "kicks in."
• Institutional payor mix is a deliberate ramp tool: Institutional bed share rose to 33% in Q4. Management uses institutional patients to fill idle capacity in new hospitals (as it did in Nagpur, taking occupancy from ~50% to nearly full), then churns toward higher-paying segments once occupancy is established. The rule: as long as contribution is positive and beds are idle, institutional volume is accretive.

Soi: "The important question is to say that we have very respectable margins. For example, Lucknow margin is more than 30%, Nagpur margin is around 22%, and Jaypee will also be in similar range as Nagpur. The main thing is that we want EBITDA per bed to improve now, which means that we have to start medical programs that are higher-end."

Capacity Expansion: The Near-Term Catalyst

• Three brownfield towers are imminent: 268 beds at Nanavati (Phase I) and 155 beds at Mohali are expected within 90 days; 400 beds at Max Smart (Saket Complex) by Q2 FY26 at the latest. Brownfields ramp in months, not quarters, because the fixed-cost base is already in place.
• Gurgaon greenfield is the year-end wildcard: A 500-bed facility at Sector 56 is expected by end of calendar year. Management expects it to follow Dwarka's trajectory, with the greenfield loss it produces more than offset by brownfield contributions and momentum from other units.
• Dwarka proved the model works: The asset-light hospital hit EBITDA breakeven in 6 months, exited March 2025 at ~INR 30 crore per month revenue and 73% occupancy on 235 operational beds, with 68 beds still to open. Full-year FY25 revenue was INR 171 crore with an EBITDA loss of INR 29 crore, dragged by ~INR 6 crore in pre-opening costs from a delayed Q1 launch.
• Brownfield beds carry structurally higher margins: Because fixed costs are already sunk, close to 1,000 brownfield beds should throw out significantly higher EBITDA margins than the existing business, even if initially occupied with institutional patients.
• Capacity operationalization ratio dipped for a good reason: The ratio fell from a historical 95% to 90% because acquired hospitals have unopened beds (Jaypee Noida: 377 of 500; Dwarka: 235 of 303; Chitta: 100 of 200; Bathinda: 100 of 200). Management expects all beds except Bathinda and Chitta to be onboarded within 8-9 months.

Margin Trajectory: Why EBITDA Growth Will Outstrip Revenue

• The mix math is straightforward: New units currently generate EBITDA per bed at only 43% of the mature network. As acquired hospitals ramp occupancy and add higher-end clinical programs, and as brownfield beds come online with minimal incremental fixed cost, the blended margin naturally rises.
• Revenue growth is not slowing: Management was explicit that the "EBITDA growth outstripping revenue growth" thesis is about margin expansion in the new assets, not a deceleration in the core business. Mature-facility ARPOB grew 7.4% in FY25.
• ARPOB is the wrong metric for this phase: Management declined to give forward ARPOB guidance, arguing that overall blended ARPOB is "irrelevant" when lower-ARPOB acquisitions are highly ROCE-accretive. The right lens is EBITDA per bed and ROCE, not average realization.
• Greenfield losses are manageable in context: The one greenfield coming at year-end (Gurgaon) will produce some operating loss, but management expects it to be more than offset by brownfield EBITDA and the momentum of Lucknow, Jaypee and Dwarka.

Soi: "If I look at the ARPOB growth of existing facilities, it has gone up by 7.4%. But when we buy something worth lower ARPOB, that drags it down. But the fact is, should we not be acquiring something with lower ARPOB, even if it is very high on ROCE, even if we are getting it very cheap. Answer to that can never be 'do not acquire'. Answer to that always has to be 'yes, you must'. So long as we can deploy money at a 20-25% ROCE."

International Business & Volume Dynamics

• International patient revenue grew 28% YoY despite contracting footfalls from Bangladesh and Yemen due to ongoing political unrest. Management attributed the growth to an improved country image rather than specific government initiatives, and noted the geopolitical headwinds are real but being overcome.
• IP volume growth of 3.5% was seasonally soft: Lower footfall in Internal Medicine and Paediatrics dragged the number, which management attributed to normal Q3-to-Q4 seasonality (Q3 carries more Internal Medicine patients) and dengue patterns. Newer facilities also naturally have lower Pediatrics and Internal Medicine volumes. No underlying weakness was flagged.
• ALOS is a function of clinical mix, not a target: Higher-end business like international patients and transplants carries higher ALOS but also higher EBITDA per bed per day. With available capacity across the network, EBITDA per bed matters more than ALOS optimization.

Balance Sheet & Capital Allocation

• M&A appetite remains active, with two hard filters: Any acquisition must clear a 20-25% ROCE within 4 to 5 years, and must be in a market where at least 1 or 2 peers are already present. Management will continue to pursue opportunities that meet both conditions.
• Balance sheet is under-levered for the growth ahead: Management is comfortable going up to 2.5x net debt to EBITDA, noting it can borrow at 8-8.25% and deploy at 20-25% ROCE. Current leverage is very low, with expansion funded mostly through internal accruals, leaving "spare room to acquire."
• Nanavati redevelopment will create a 2-year headwind: 160 older, lower-occupancy ward beds will be demolished to make way for a new tower with ~270-280 beds. During the 2-year construction period, the hospital will operate with 400 beds.
• A subsidiary merger will save INR 200-225 crore: The NCLT application to merge Crosslay Remedies Limited into Jaypee Healthcare Limited is expected to reduce the acquisition outflow by that amount.

Soi: "We are cognizant of the fact that at 2.5x net debt to EBITDA, we can get money at 8-8.25% and we are able to deploy it at 20-25% ROCE."

Competitive Position & Market Structure

• Delhi NCR dominance is widening: Management stated that Max now has twice the number of locations as its next three peers combined in the NCR market.
• The bed pipeline extends well beyond this year: Beyond the ~1,500 beds commissioning in the next 12 months, projects are underway at Patparganj (397 beds, tendering in progress), Max Vikrant in Saket (550 beds, awaiting forest clearance, completion by 2028), Zirakpur/Mohali (400 beds, partner awaiting EC, ~30 months), and Vaishali (140 brownfield beds on newly acquired adjacent land, ~30 months). Dwarka's next phase adds another 200 beds.
• Management is already signaling the 9,000-bed target is stale: The official guidance is 9,000 beds by 2028, but management noted that "one year down the line, that number would have moved up," implying the pipeline of both organic and inorganic opportunities exceeds current public commitments.

Soi: "We are probably going to be entering, if I was to look at it, the strongest year in the last 5 years that we have had."

Guidance & Commitments

Key Metrics