Max Healthcare Institute Ltd Q2 FY2026 Concall Summary

Key Takeaways

• 20 quarters of momentum, 21% revenue growth: Network revenue grew 21% YoY, operating EBITDA rose 23% YoY, and Existing Units delivered 14% like-for-like revenue growth driven by an 11% increase in occupied bed days.
• Brownfield capacity is the next margin lever: Two large brownfield towers (268 beds at Nanavati, 400 beds at Max Smart) are commissioning now, and management expects these to be immediately EBITDA-positive with margins eventually exceeding existing hospital beds.
• Insurance impasse resolved with no lasting damage: Cashless was suspended by four insurers during the quarter, but patients converted to self-pay, overall occupied bed days grew QoQ, and all four have now reinstated cashless with next revisions already agreed.
• CGHS rate revision unlocks a ~INR 200 crore tailwind: Revised rates took partial effect October 13, with the super-specialty category expected by end-November; full benefit flows through FY27.
• What to watch next quarter: The pace at which Nanavati and Max Smart brownfield beds fill and begin contributing to margins, the institutional cash flow catch-up flagged as lumpy, and whether Dwarka’s payor mix distillation starts lifting its ARPOB.

Brownfield Expansion & Margin Trajectory

• Two towers, immediate commissioning: The 268-bed Nanavati-Max tower is set to commission this week, and the 400-bed Max Smart tower within the next 30 days; both are brownfield projects where fixed costs are largely absorbed by the existing hospital.
• Brownfield economics are structurally different: Unlike greenfields, brownfield EBITDA breakeven is almost immediate and these beds are expected to deliver margins higher than existing hospital beds once fully up, so the next ~30% capacity addition should not be a drag needing subsidy from prior expansion.
• Dwarka is now distilling its payor mix: With occupancy already at ~80%, the focus has shifted to improving ARPOB through patient mix and clinical mix, including a higher share of oncology; management expects Dwarka margins to reach corporate average by next year.
• Mohali beds ramping: 90 of 160 beds are now operational, with the remainder expected to open in Q3 as demand materializes.

Soi: "It would be not only will you have expansion or, you know, benefits coming out of what you expanded over capacity addition over the last 15-17 months, that is about 30% capacity, but majority of the capacity coming up now, another 30%, is brownfield. And that brownfield capacity should, soon after commissioning, get into higher EBITDA margin business to start with."

Revenue Drivers & Payor Mix

• Existing Units drove growth: Like-for-like revenue growth of 14% came from an 11% increase in occupied bed days and a 3% increase in ARPOB; the blended ARPOB of 3% was pulled down by new hospitals whose share increased YoY, while Existing Units saw ~7% ARPOB growth.
• Walk-in ARPOB grew 8-10%: On a like-to-like basis, insurance plus self-pay ARPOB grew strongly; institutional ARPOB was flattish because CGHS rates were revised only in October, so growth from that segment will come in future quarters.
• Insurance suspension had no net occupancy impact: When four insurers suspended cashless, patients shifted to self-pay and claimed reimbursement later; insurance bed share fell, self-pay rose, but overall occupied bed days grew quarter-on-quarter.
• International revenue grew 25% YoY: Reached INR 231 crore, entirely volume-driven with no ARPOB increase; management declined to disclose geographic breakdown, calling it privileged information.
• Digital channel now ~30% of revenue: Digital revenue reached INR 803 crore, with website traffic crossing 79 lakh sessions, growing 53% YoY and 15% QoQ.

Soi: "Yes, we saw a spike in our cash patients."

Insurance & Regulatory Developments

• Impasse resolved with forward visibility: The three insurers that suspended cashless have not only reinstated it but also agreed the next rate revision as part of the settlement; management does not expect a repeat.
• Other negotiations underway: GIPSA and other companies are up for renewal, with negotiations ongoing; management characterized expected rate hikes as within the historical band but declined to give specifics.
• CGHS revision partially live: Revised prices took effect October 13, covering ~10% of CGHS revenue; the new super-specialty hospital category is expected to be implemented once the portal is updated, likely within 15-20 days, with full INR 200 crore-plus benefit flowing in FY27.
• ECHS and linked accounts to follow: New rates are also expected on ECHS and other accounts normally aligned with CGHS, though they must go through their own paperwork.

Sareen: "First of all, whatever issues we had in terms of these three insurance companies, that we have already sorted out. And not only sorted out for now, but we are also sorted out for future. In the sense that when we concluded this arrangement, we also agreed the next revision with them."

New & Emerging Units

• Noida gaining traction: Every month since January has been higher than the previous month; clinical program licenses including transplant have come through, and insurance empanelment is complete, with the unit expected to continue ramping toward network-level performance.
• Lucknow delivered 17-18% QoQ revenue growth: EBITDA grew more than 30%, maintaining 30%-plus margins; capacity is expected to increase from 413 to 550 beds by fiscal year-end, and an onco radiation program including PET-CT launches in the next two weeks.
• Dwarka oncology block to unlock bed capacity: Once the radiation oncology block is operational, onco day-care beds can be vacated and moved, restoring hospital capacity to 300 beds; planning is underway for another 200 brownfield beds on the same site.
• Greenfield ARPOB follows a known pattern: A greenfield starts with high ARPOB and low occupancy (self-pay only, no insurance contracts for ~6 months), then ARPOB declines as institutional business begins and payor mix changes, before eventually recovering as mix is distilled.

Soi: "You start off immediately with high ARPOB, low occupancy since it is only self-pay business. You do not even have any insurance contracts in the first six months."

Profitability, Cash Flow & Balance Sheet

• PAT growth lagged EBITDA growth: PAT of INR 406 crore (excluding a one-time INR 149 crore tax benefit from mergers) grew 16% YoY, trailing revenue and EBITDA growth because finance costs and depreciation rose from new hospitals added in Q3 last year and borrowings taken to fund the ~INR 2,000 crore Jaypee acquisition; management expects PAT growth to converge as new hospital EBITDA comes in line.
• Cash flow was lumpy, not structural: Free cash flow was INR 291 crore, with weak operating cash flow driven by a buildup in institutional receivables; PSU payments are historically lumpy as budgets run out and get replenished, and management expects large cash flows next quarter with full-year days outstanding unchanged.
• Net debt rose on capex and dividends: Net debt increased to INR 2,067 crore from INR 1,755 crore at end-June 2025, with INR 456 crore deployed toward capacity expansion and facility upgrades.
• Existing Units margin improved: EBITDA margin for Existing Units reached 27.5%, up 90 bps YoY and 200 bps sequentially.

Pipeline & Capacity Build-Out

• Land bank supports long growth runway: Noida Sector 128 has 18 contiguous acres; Lucknow has 27 acres capable of supporting another 2,000-2,500 beds plus an additional land parcel; a separate Greater Noida site is also held.
• Project timelines span the medium term: Patparganj is expected by FY28; Max Vikrant (Saket) within 40 months of Max Smart commissioning; Zirakpur/Mohali by end of calendar 2027; Thane in 42 months; Pitampura in 36 months post building plan approvals; Nagpur within 24 months of receiving Consent-to-Establish.
• Doctor attrition is negligible: Attrition runs between 1% and 1.5% across a base of ~6,000 doctors; departures are normal and new teams come in almost immediately, with no expected impact on operations.

Soi: "We have got close to 6,000 doctors, right?"

Guidance & Commitments

Key Metrics