Max Healthcare Institute (543220) Q1 24/25 earnings summary

Executive summary

• Operationalized a new 303-bed hospital in Dwarka, South Delhi, under an O&M contract, with significant pre-launch hiring and marketing costs of INR 6 crores in Q1 FY25.

• Announced a build-to-suit transaction for a 250+ bed hospital in Zirakpur, Mohali, Punjab, on a long-term lease, expected to be commissioned before FY 2028.

• Lucknow and Nagpur hospitals, acquired at end Q4 last year, ramped up well, contributing INR 99 crores to revenue and INR 18 crores to operating EBITDA in Q1, with 21% and 64% year-on-year growth, respectively.

• 15th consecutive quarter of year-on-year growth, with network gross revenue at INR 2,028 crores, up 18% year-on-year and 7% quarter-on-quarter.

• Appointment of Mr. Gautam Wadhwa as Director & Chief Business Officer effective August 5, 2024.

Financial highlights

• Network operating EBITDA was INR 499 crores, net of INR 6 crores one-time pre-launch costs at Dwarka, up 14% year-on-year but down 1% quarter-on-quarter.

• Profit after tax stood at INR 295 crores, compared to INR 291 crores in Q1 last year and INR 311 crores in the previous quarter.

• Average occupancy increased to 77% from 74% year-on-year and 75% sequentially; ARPOB improved to INR 80,100, up 7% year-on-year and 3% quarter-on-quarter.

• Free cash flow from operations was INR 258 crores, with INR 213 crores deployed towards capacity expansion and upgrades. Net cash position at INR 66 crores as of June 2024.

• Existing units pre-tax ROCE was 33%; overall ROCE 25%.

Outlook and guidance

• Substantial improvements expected during the year, especially as post-merger integration and infrastructure upgrades progress.

• Oncology and surgical mix expansion in new hospitals expected to drive ARPOB and profitability higher in coming quarters.

• New facilities (Nanavati, Smart, Mohali) expected to be operational within the next 6-12 months, with minimal pre-launch costs for brownfield expansions.

• Focus on expanding international patient reach, enhancing local visibility, and strengthening medical capabilities at new hospitals.

• Ongoing brownfield and greenfield expansions, targeting ~2X bed capacity in next 4-5 years.