Max Healthcare Institute Ltd (NSE: MAXHEALTH) Q3 2026 Earnings Call dated Feb. 06, 2026
Corporate Participants:
Unidentified Speaker
Suraj
Abhay Soi — Chairman & Managing Director
Analysts:
Unidentified Participant
Tamian TK Rai — Analyst
Shaleen — Analyst
Karma Vora — Analyst
Vivek Akarwal — Analyst
Panchi Desai — Analyst
Nitin Agarwal — Analyst
Presentation:
operator
Ladies and gentlemen, good day and welcome to Max Healthcare Institute Limited Earnings Conference Call. As a reminder, all participant lines will be in the listen only mode and there will be an opportunity for you to ask questions after the presentation concludes. Should you need assistance during the conference call, please signal an operator by pressing Star then zero on your touchstone phone. Please note that this conference is being recorded. I now hand the conference over to Mr. Suraj from CDR India. Thank you and over to you Mrs. Suraj.
Suraj
Thank you.
Suraj
Good morning everyone and thank you for joining us on Max Healthcare Q3 and 9M FY26 earnings conference call. We have with us Mr. Chairman and Managing Director Mr. Yogesh Kirin, Senior Director and Chief Financial Officer and Mr. Keshav Gupta, Senior Director, Growth M and A and Business Planning. We will begin the call with opening remarks from the management. Following this, we will have the forum open for an interactive Q and A session. Before we begin, I would like to point out that some statement made in today’s discussion may be forward looking in nature and a disclaimer to this effect has been included in the earnings presentation shared with you earlier.
I would now like to invite Abhay to make his opening thank you and over to you.
Abhay Soi — Chairman & Managing Director
Good morning everyone and thank you for joining us on max healthcare earnings call for the third quarter and nine months ended December 2025. We are pleased to share that the Network delivered its 21st consecutive quarter of year on year growth in quarter three despite excessive unanticipated seasonal softness due to lack of vector borne diseases and transitionary external factors. Revenue increased by 10% year on year while operating EBITDA grew by 4%. Overall occupancies remained strong and ramp up of the new brownfield beds progressed in line with our expectations.
During the quarter we commissioned 63 brownfield beds at Nanavati Max of which 45 beds are currently occupied. At Max Mohali 53 brownfield beds were commissioned in second quarter of which 46 beds are currently occupied. The remaining beds at both hospitals are expected to be commissioned during the fourth quarter of this current year. FY26. The incremental bed capacity at both these locations is already EBITDA and margin accretive. At Max Smart infrastructure for around 200 beds along with operation theaters and and OPDS is ready for commissioning and we are currently awaiting the occupancy certificate which is expected by the end of February.
We also took an important step to expand our geographic presence in Western India to develop a 450 bed hospital on a prime piece of land in Pune. This will be developed by 2030. In addition, driven by the exceptional ramp up in operations at Max Dwarka, the Board has approved the addition of another 260 beds at the existing site taking the hospital’s total capacity to 560 beds on a sequential basis. Revenue and EBITDA were impacted primarily due to a temporary shift towards institutional patients following the disruption in cashless services with standalone health insurers which was fully restored towards the end of the quarter.
Performance was also affected by the discontinuation of select high value patented chemotherapy drugs in light of the revised CGHS pricing guidelines and by the reduction in GST on drugs and consumables. Further, the results reflected pre commissioning expenses related to brownfield bed additions and other non recurring costs. Looking Ahead with cashless services now fully restored, upward revision in CGHS tariffs expected to fully kick in by April 2026 and margin accretive incremental capacity coming on stream, we believe the network is well positioned to continue delivering sustained growth now coming to the third quarter Performance Highlights Average occupancy for the Network stood at 74% compared to 75% in in third quarter last year and 77% in the trailing quarter despite an 8% year on year increase in operational bed capacity.
Occupied bed days were up by 7% year on year but dipped by 4% quarter on quarter due to seasonality. Average revenue per occupied bed RPOP for The quarter was 77,900 registering a 3% growth year on year and 1% sequentially. Network gross revenue stood at 2,608 crores compared to 2,381 crores in the third quarter last year and rupees 2,692 crores in the previous quarter. This reflects an increase of 10% year on year. Digital revenue from online marketing activities, web based appointments and digital lead management was 803 crores accounting for approximately 31% of overall revenue. Website traffic crossed 71 lakhs sessions during the quarter growing by 44% year on year.
International patient revenue was rupees 230 crores registering a growth of 14% year on year and accounting for 9% of the revenue from hospitals. Network operating EBITDA stood at 648 crores reflecting a growth of 4% year on year. Network operating EBITDA margin was 26.1% for the quarter compared to 27.3% in the third quarter, FY25 and 26.9 in the trailing quarter margin was largely impacted by payer mix change, pre commissioning expenses for brownfield beds and GST rate changes. Annualized EBITDA per bed for the Network stood at Rupees 71 Lakhs versus Rupees 73 Lakhs in both third quarter FY25 and the previous quarter.
Profit after tax for the network after exceptional items was Rupees 344 crores against Rupees 316 crores in the third quarter last year and 554 crores in the previous quarter. During the quarter there were exceptional items aggregating to rupees 55 crores relating to impact of the Code on Wages 2019 and provision for stamp duty on the merger of two of our subsidiaries. The network generated free Cash flows of rupees 281 crore during the quarter. During the quarter rupees 408 crore was deployed towards ongoing capacity expansion projects and facility upgrades and newer units. Net debt for the network stood at rupees 21.66crores compared to 2067 crores at the end of September 2025 while the net debt to EBITDA ratios compared to continue to be less than 1.
Continuing our efforts to support the local communities, we provided free treatment to approximately 40,000 patients from economically weaker sections of the society worth rupees 61 crores as hospital tariff. Both our strategic business units continue to deliver steady growth in revenue and profitability. First MaxatHome reported a revenue of rupees 68 crores reflecting a robust 23% year on year growth. It offers 16 specialized service lines across 15 cities with over 56% repeat transactions. Maxlab reported a revenue of rupees 47 crores reflecting 13% year on year growth. It provides services in over 60 cities and serves more than 5 lakh patients during the quarter.
Now moving on to the status of our expansion projects coming on screen in the next two to three years Max Lucknow the current capacity of the hospital stands at 413 beds and we expect this to increase to around 500 beds by the end of this financial year. The radiation bunker and nuclear medicine services have now commenced at the hospital. 500 beds at Sector 56 Gurgaon the pace of work at site has picked up post grab related disruptions. We now expect to commission the first phase by end of H1FY27 100 beds at Daghpur we have received consent to establish and civil work has started.
We expect to complete this project within 24 months as communicated earlier 400 beds at Zirakpur Mohali. Project work continues to be on track and we are scheduled to commission the hospital in FY28 200 beds at max Vishali. We are awaiting environmental clearance and approval of building plans to commence the work on site. We expect to complete the project in 24 months. Post receipt of these approvals 397 beds are patwar Ganj. All approvals have been received and barricading work is complete. New design for Dewall has been firmed up and the project is now expected to be completed by FY 29th.
And finally, coming to the overview of the company’s performance. For the nine months ended December 2025, network gross revenue stood at 7874 crores reflecting a strong growth of 19% year on year. Overall network operating EBITDA grew by 16% year on year to 1956 crores translating to a margin of 26% and EBITDA per bed of rupees 71 lakhs. In the nine months we generated 960 crores of free cash flow from operations after interest tax, working capital changes and routine capex. Further rupees 1299 crores was deployed towards ongoing expansion projects and facility upgrades at newer units. Rupees 131 crores towards land purchase at Vishali and Rupees 146 crores was distributed as dividend.
With this we open the floor for any questions you may have.
operator
Thank you.
Questions and Answers:
operator
We will now begin the question and answer session. Anyone who wishes to ask a question may press STAR and one on the Touchstone telephone. If you wish to remove yourself from the question queue, you may press STAR and two participants are requested to use handsets while asking a question. Ladies and gentlemen, we will wait for a moment while the question queue assembles. The first question comes from the line of Tamian TK Rai hsvc. Please go ahead.
Tamian TK Rai
Hi. Thank you for the opportunity. My first question is on your oncology contribution. So during the quarter obviously we saw some softness which you attributed to discussion. Continuation of patented chemo drugs for institutional patient. So do you think you can go back to the prior level of contribution from oncology and what could drive it back?
Abhay Soi
Well, when you say contribution, this is high value drugs. So the pricing was high in terms of the revenue but the margins were not substantive. I mean compared to the rest of the business. So do you mean in terms of revenue or do you mean in terms of margin?
Tamian TK Rai
When we look at the contribution from oncology, I think which is part of the presentation. It’s around 24% or so compared to 26, 27% last year. So I was referring from that context.
Unidentified Speaker
This impacts CGHS patients only. I mean the institutional patients. So this is the high value drugs, okay. Which were low margin drugs which were being used for actually the institutional patients. What they’ve done is actually now you have to sell them below your purchase cost. So obviously everybody discontinued it and the contribution to the revenue mix may increase. But it’s a future traditional number just that it was increasing in the past as well for last four, five years as an outcome of what was happening in the society. Right. So directly with the number increases should follow the same vector trajectory.
Trajectory, let’s say.
Tamian TK Rai
Okay, so we see this as like one time adjustment and then going ahead.
Unidentified Speaker
So, so we continue to talk to cghs. Right. So there’s a lot of noise among the CGHS patients in, among the institutional patient. Right. For example, the CGHS has their own dispensary to supply these medicines. They said that they would like to supply this medicine to the patient. That means the, when the doctor, you know, the, this drug is required and the doctor accepts restriction, they pay the, you know, to the dispensary. When the medicine from the dispensary, CGHS dispensary. Right. Now similar theories has been applied to ECHS patients also. But ECHS doesn’t have any dispensary.
Right. So obviously there’s a lot of noise out there. I think. Let’s see what, how these things shape out. But we are in continuation, you know, continual discussion with the cghs. We obviously they are, they want to first apply it themselves. Secondly they’re saying otherwise we will give it to you at 70% of the MRP. Right. Our margins are less than 20% in these drugs. So there’s no question of our supplying these drugs because I can’t be cash out of these drugs while supplying these drugs. So I think that’s where the decision is on. We are asking CJ to give us some top up in terms of cost plus basis.
Right. So if my cost is let’s say 80, then I’m saying give me some margin 10%. No, I’ll be supply at 88 rupees rather than supply at 70 rupees. Right. Because I’m buying that 80.
Unidentified Speaker
So we believe it is an error on their part when you know, when they revise the cghs. This is something which, you know, doesn’t make sense because if you’re These are branded drugs and if your margins are, you know, let’s say less than 20%, way less than 20% then and you have to supply them at 30% discount to MRP, then you know, obviously nobody’s going to supply and you’re going to have a problem. So we’ve been talking to them but you know, because it’s the government and they, everybody sort of agrees but you know, I guess you have to go through the hoops.
Tamian TK Rai
Sure. And in oncology again, I guess we heard about some Doctors, team departure, etc. So has team fully back in strength and what kind of further pickup we can see in the oncology space, leaving aside the CGC issue which will I think be cleared in some quarters to come.
Unidentified Speaker
See, typically what happens is that in organizations like us, if there is a departure of a certain clinician of a particular this thing, there are almost immediate replacements from equivalent institutions. So in this particular case, while you may have heard of the noise of departure, there’s already been an addition and there were big advertisements in the papers, you may have seen it. So we had a very, very large team who’s just joined us from up here who’s sort of replaced that particular team who’s actually gone to the pair. So it’s been effectively been a swap effect.
So.
Tamian TK Rai
Yeah, yeah.
Tamian TK Rai
Okay. Okay. My last question is on your resolution with the insurance partners. So have you like done renewing all the insurance contract for this cycle and, and you have nothing like spending on that part as you mentioned?
Unidentified Speaker
I don’t know.
Unidentified Speaker
Two things or three things. I mean, of course this was disruptive in some manner to us in this quarter. It didn’t happen in the previous quarter, but it was and you may have also read in the papers today that number of complaints of insurance companies actually moved up by 54% in this quarter. So you know, obviously there was a lot of noise because of this sort of disruption, but all of it has been restored. We have got an increment and there’s also a mechanism which has been put in place that there will be annual increments rather than sort of now having, you know, sunset periods.
Typically your insurance contracts expire and those negotiations take time. So now a process has been put in place where at least with these insurance companies is automatic renewal on pre agreed sort of increments.
Tamian TK Rai
So these annual increments, it’s already like pre agreed or how this mechanism will work out? That’s right, it’s in annual revision for all the contracts now instead of say two to three years cycle earlier.
Unidentified Speaker
Not all these are all the study companies.
Unidentified Speaker
One where we have the issues. Right. So we, you know, this is the whole issue started from the tariff revision. We were asking for price increase, they were asking for price increase reduction. That’s where this whole statement started. So eventually we got a price increase and also I got the price increase this time. We also started that out for, for the, for the, you know, next year. So there’s a mechanism in place now so hopefully they’ll live up to it. And so we shouldn’t have the same kind of, you know, statement coming up there. But this is only with the company that we had problem with.
Unidentified Speaker
Right?
Unidentified Speaker
Four companies basically.
Tamian TK Rai
So how many companies? Sorry.
Unidentified Speaker
Insurance companies.
Tamian TK Rai
Okay,
Unidentified Speaker
so now with those four there’s not only this thing but you know, like Yogesh has said, this was the issue at the end of a cycle. Now a mechanism is put in place that you have automatically load that so you don’t have, we shouldn’t have these issues coming into the next cycle or anything like that now.
Tamian TK Rai
Got it. Thank you, thank you.
operator
Thank you. Next question comes from the line of Shaleen with ups. Please go ahead.
Shaleen
Yeah, I’m Audible.
Unidentified Speaker
Hi Charlene.
Shaleen
Hi. Hi sir. So yeah, you know, continuing from some of the question asked by the previous participant, possible to get the, get the concept of increment like and like, or at least can we compare like what kind of increment will be getting compared to the past year?
Shaleen
Because.
Unidentified Speaker
Tough to really give it to on the, on the call like this. Right, so we got an increment. Right, that for sure it’s a moderate one. But then you know, I won’t give you a number.
Shaleen
Okay, okay. But, but is it in the ballpark of the kind of increment which we.
Unidentified Speaker
Yeah, it’s not adverse.
Unidentified Speaker
Yeah. And it’s in the same ballpark.
Unidentified Speaker
Yeah, yeah.
Shaleen
You know, one concern which we kind of, you know, there’s a debate this happened with these four companies. Can it happen with others as well? So do you think that first, do you think that can happen? Second, do you think that this kind of mechanism can smoothen out? Are you trying to do this?
Unidentified Speaker
I think, you know, they’re clearly their learnings when something like this happens. Right. I think it has also led to a lot of noise both ways and inconvenience to patients, not only our patient but also to insurance patients. And you would have read there’s a big article int today about the number of complaints which have sort of increased and hopefully everybody sort of, you know, kind of learnt from it, you know, by the end of the day. And I keep saying this, I said look, medical inflation is in very low single digits. If your rpop is only 8 or 9% typically historically has been growing that has included growth in oncology by 25 odd percent, growth in robotics by 40 odd percent, growth in international patients, etc.
I mean if you actually back it all off, what is the real growth in apples to apples medical costs? And then you apply it to 70% because 30% is an MRP in any case, which are drugs. Right.
Unidentified Speaker
So.
Unidentified Speaker
I don’t think there is much sort of play there. And you hear of anecdotally these issues, those issues and so on and so forth. But the fact of the matter is this is Apple to Apple, inflation has only been this much. Right?
Shaleen
Sure, sure, sure. Fair enough. Moving on. You know, I heard partly of your initial commentary. Maybe I missed something. I heard that you talked about a bit of contribution from Nanavati and new facilities from Nanavati and Saket is already accretive. So is it fair to, is it possible to understand that obviously when you started these things there will be some incremental cost which would have hit you in the quarter. Is it possible to quantify that kind of a cost?
Unidentified Speaker
I think what happens is that, see, and this is something we’ve guided to in the past where people are sort of had concerns or capacity expansion, etc. We’ve always said that essentially what you’re doing is you’re moving cash from your balance sheet and you’re creating an asset. Right. Because of the operating leverage, it is almost, I mean you don’t have suppression of margins. In fact it is break even is almost immediate and is accretive also very, very quickly. Okay. And this is what we’ve seen in the past and I think this is what we demonstrated by both of these.
You know, the cost, I mean whatever little cost. There is also, you know, for every incremental bed which gets commissioned now, okay. Your margins will only expand. And we had a 39 and 30% respectively, I think margins from both these units. Okay. Where we only started about 50 odd, 70 odd beds, right?
Shaleen
Yeah.
Unidentified Speaker
I mean as you are going to be adding beds in, all of those beds are coming through now as we speak and will be all through by before end of March. So you’re going to see a big, you should have a, you should continue on this accretive journey. Now the question is what is the sort of this thing now? You know, if we’ve had grab.
Unidentified Speaker
4.
Unidentified Speaker
Delays and etc in this thing. And yes, of course, you know, we, I think, built close to 2.5 million square feet over the last three, three and a half years. Okay. And the fact of the matter is there has been a delay of three to four months, I think collectively, if you look at it. And nothing has actually moved out more than six months from a timeline standpoint. But, you know, at one point of time, yeah, I mean, this is what we had guided in terms of time, etc. On the other standpoint, you look at it, okay, three years, projects that take another four to five months, but, you know, it’s perhaps faster than what most developers deliver from that standpoint.
And we of course, continue to ask more of ourselves and, you know, there’s been a lot of learnings in this. The fact of the matter is that pre commissioning, okay, those costs have been sitting any of this thing, but it’s not as if they’re sitting and not contributing. If you bring doctors along, they perhaps don’t contribute as much, but they do contribute to the previous facility. So it’s little difficult to dissect the costs from that standpoint because, you know, there’s no management cost like already explained. Okay. Largely the clinician cost is the same.
Unidentified Speaker
Now.
Unidentified Speaker
You want to bring housekeeping people, you want to bring nurses, you could train them up, you know, the front end staff and so on and so forth. Okay. But they’re also training in the current facilities, you’re overstaffed in the current facility, and then you’re going to start to move them into the new one. So, I mean, it’s a little difficult to thread that cost out because it’s not like a typical green field.
Shaleen
Basically the reason to ask, you know, a lot of, lot of, lot of things have happened in the third quarter because. And that has kind of hurt our profitability. We understand that there’s going to be a step jump from the third quarter to fourth quarter in terms of profitability because, you know, a lot of things have been corrected and, you know, even new facilities have come. It’s just, you know, it will help us to understand what kind of a step jump. Because one.
Unidentified Speaker
Yeah, so I think, I think, you know, these are the smaller factors which have affected the profitability. If you ask me, the two big factors perhaps which have affected it would be, in my mind would be, first and foremost is the seasonality, right? Last year, right up till Diwali, we had a very, very strong vector bond season and large occupancies because of dengue and so on and so Forth which has happened historically as well this year, okay, they were extensive sort of, you know, there wasn’t really this rainy period continued in straight into winter and there was no really stagnation of water from that standpoint.
Normally what happens is your rainy season gets over, there’s a humid sort of this thing and then winter starts. So in this period is when you have, you know, the vector borne diseases. But this year the rains continued right into the foot of winter and then winter started. So there was no humid period for you know, that kind of. So we had very bad seasonality. So I mean you’ve seen results of other sort of companies as well, particularly north based companies. And you see this effect and the second was of course disruption. Now when the disruption happened of the SAI companies, we’ve replaced all of that with institutional because that’s the easier part to replace it with.
So you see institutional businesses move up, right. So your occupancy didn’t get impacted but your quality of revenues got impacted, therefore your profitability.
Shaleen
So I think any sense on this quarter like fourth quarter since we are like almost end of February.
Unidentified Speaker
I’m not giving you a guidance, I’ve never given a guidance on forward looking numbers but you know, we typically only give it in terms of the new capacities which can come in and what the current sort of run rate of that is like in the past. So you know I will continue on.
Shaleen
Sure. Okay, last question from my side if I can. And this is more on the industry level question. A lot of debate again on this sector is like too much capacities are coming, too many hospitals are coming and in certain micro market they can set up example. Right. And hospital is, you know, it’s not just the local market, it’s also the intercity market. I also come from north, right. So I know that. But what’s your take on it? Right. Do you think that a lot of hospitals coming in Gurukao can impact Saket or the customer sets are different.
Do you think there will be enough demand? You know, because there is enough industry travel happening. So.
Unidentified Speaker
Look, I think there are two or three things over here. I think if you look at it on a holistic level, okay, I think over the next four to five years there were 20 which are coming up across the country. Right. So I mean it doesn’t really move things over over five years it’s a capacity increment of let’s say a CAGR of about I think 5% per year. If I look at, okay, let’s look at specifically Gurgaon now If a couple of hospitals are coming out of Gurgaon, we happen to be actually one of them, right.
So I think I’m less likely to sort of take a hit at Saket or anywhere else because if any of my doctors want to to go down then they will choose my hospital. Right. This is sort of easier if that location advantage is valuable to. Somebody said that what this does okay in some manner is okay when new hospitals come in and you know what happens after these two hospitals of three hospitals which have come up? I mean there isn’t a visibility of another hospital coming up in the next five years. Because if that was coming up that some plans would have already getting passed and something would have been built which is not the situation right now.
When that happens, okay, there may be some temporary disruption of cost, right? So your cost, your clinician cost at that point of time may go up because a you’re attracting in that new place in your hospital. Let’s say when we put up Gurgaon, when we are going to be approaching doctors, bring them, you are paying them more than what they’re perhaps earning in the peers. If somebody is trying to take your doctors again, you know, they are going to offer something more. So temporarily for some time that cost goes up. But that’s also temporary factor, right? Eventually, okay.
If there’s any cost inflation, okay, it does get passed off to the customer. That’s what we’ve seen historically. I mean it’s not the first time that you’re seeing all of this capacity come up. I mean if you look at the numbers now, you know we are building another 400 beds are coming up in Saket which is the center of the city. Now it’s very different from Gurgaon. Gurgaon typically doesn’t affect Delhi, but Gurgaon will affect other hospitals in Gurgaon. I mean normally it would have affected my small hospital Gurgaon, but I’m coming up with a big hospital in Gurgaon, right? I mean if there were hospital coming up in Mumbai, they’ll affect the hospital.
But a brownfield will always be de risked. And direction. What you were asking earlier, like from our own, our plan is to our each site, right. So capacity that we created in Mohali, occupied Nanavati, occupied Gurgaon also converges. Entire Haryana, Rajasthan directly comes here. So there’s significantly, very, very large pool of demand. It’s a lot of Gurgaon. Hello. Hello.
operator
We have lost the line of the participants. We’ll take the next from the line of Karma Vora With Goldman Sachs. Please go ahead.
Karma Vora
Yeah, thank you for taking my question. The first question is with respect to. Hi, the first question is with respect to insurance. So just wanted to get a sense what would be the rough share of say top five insurers for us as a percentage of hospitals revenue. And you know, when we set up a new hospital two ways, one is a greenfield and the other one is when we do a new tower in the existing setup, how easy or difficult is the impanelement? So do we get the same rates as our other hospital in the same city or we have to negotiate from scratch? How does that work? So that’s my first question.
Unidentified Speaker
On a brownfield, you don’t need to negotiate because the same hospital license just sort of continues into the into the new. So in case of brownfield you don’t negotiate, there’s no rediscussion or re impanement. What is happening continues in case of a new hospital, that means a new hospital license. Right. If you don’t have the impanelement terms already agreed, then it you need to implement. That means you will make those applications for hospital, that’s for a new hospital.
Karma Vora
Okay, got it. And so even. Sorry, go ahead.
Unidentified Speaker
And basically most of the insurance companies we have agreed a category of the hospital. It’s cat one, cat two, TAD three, TATT four. Right. So one of whenever new hospital comes up the discussion is always which category will it fall in?
Unidentified Speaker
Right.
Unidentified Speaker
So for example, Dwarka now isn’t Cat 2, Satya is Cat 1. Right. So it’s basically that decision. Then the rates automatically apply. It’s not that we have to get into a negotiation for each hospital separately. Right. So we have a set of rates and obviously you know, we agree. Let’s say for cat one we know TAD one to TAD two differently so much. TAD two to TAD three is different so much. So that’s how the tariff that drives the insurance company. So typically it’s not that we have to get into a discussion for each hospital, but the decision is which tat will it fall in?
Unidentified Speaker
And the top four, five insurance companies would contribute about 24, 25% of the group revenue.
Karma Vora
Got it. Okay, got it. And just one clarification here. So when you say we have categories determined or you know, so how long does it take? So when say for example a Gurgaon, whenever it comes online in the next one or two quarters, what is the expectation of the full empanelment across insurers? Like does it take 3 months, 6 months, 12 months? Any rough Sense there.
Unidentified Speaker
So I would say within six months.
Karma Vora
Okay, got it, got it. And my second question is with respect to.
Unidentified Speaker
Yeah, because typically you require nabh, right?
Karma Vora
Okay.
Unidentified Speaker
Yeah, nabh. And to get nabh you typically require six months of data.
Karma Vora
Okay, okay.
Unidentified Speaker
Okay. Even your institutional patients, okay. Take about six months to onboard and you have different rates for nabh and non nabh. So I think the first gating item for a new hospital would be to get nabh. Also concurrently, various licenses in a green field you need such as, you know, transplant licenses, this, that, etc. Etc. So it’s not as if in a brown field all existing licenses continue. In a green field you need to apply for each one of those blood bank license, this license, that license. You know, it’s sort of you can’t just start doing liver transplant or kidney transplant or whatever else it is so your full range of services doesn’t start.
Karma Vora
Got it.
Karma Vora
So basically, broadly six to nine months is where you can get the NABH accreditation as well as the insurance empowerment. That’s the rough sense we should have.
Unidentified Speaker
That’s right. But you know, I mean, depends now hospital, Hospital. Now of course this was the same in Dwarka as well for us. But you’re aware we started Dwarka last July, right? In by now you’re already fully occupied on the 300 beds. Way before now you were fully occupied on the 300 beds and you’re already planning a brownfield on other 200. And we had a break even within six months over there. Yeah, sure, right. Although of course it was cash, patients, etc. So it’s about how you also sequence it. Right. So I think the very important art over is how do you preserve cash flow and how do you sequence your event? Now I can, I could have started all 300 beds or 250 beds over there and so on and so forth.
You have to forecast the number of beds, you have to plan accordingly and you have to stop accordingly. If you’re going to stop all the beds, all the this thing, etc. Then you’re going to lose money, be it with a brownfield or a greenfield or whatever. So I think, you know, that is somewhere you need to be a little.
Unidentified Speaker
More tactful about it.
Karma Vora
Got it, got it.
Unidentified Speaker
I mean our total loss For Dwarka in 3 in 6 months to till break even was what? 30 crores. 30 crores up to break even the road loss was 30 crores in a brand new market, in a greenfield, in a micro market where we don’t have Presence.
Karma Vora
Got it. And my second question is with respect to, I think Abhay, you mentioned on the, in the opening commentary that you know, we should be back with respect to growth from Q4 onwards. So just wanted to get a sense. So do we foresee a step like stepped or phased manner of recovery in growth that Q4 you might be partially back and Q1 you should be fully back or from Q4 it’s a complete clean quarter and there should be no one offs or no deterrence from Q4 itself.
Unidentified Speaker
I think the big deterrent on our growth has been capacity essentially. If I go beyond the seasonality of it and whatever one time disruption which are back to normal and so on. I mean everything that we’ve acquired over the last this thing or the new capacity that we set up have been ramping up very well. I mean not ramping. There’s been great growth over there. I think two years back the issue was where is growth going to come from? Because already, I mean the fact is you’re operating very high capacity and the growth was going to be coming in from essentially from your capacity addition.
Karma Vora
Got it.
Karma Vora
And
Unidentified Speaker
there has been that delay. Right. Of a quarter or two or whatever.
Karma Vora
Yeah, yeah, yeah.
Unidentified Speaker
So now that it’s online then you know, you should be back to trajectory.
Karma Vora
Yeah. And the last question is with respect to Gurgaon, sorry if I missed remarks like do we expect it to commission like in by Q4 end or Q1 and what would be the impact like maybe a quarter or two’s impact of losses from Gurgaon since it’s a, like a large green field. Any color there will be helpful.
Karma Vora
Thank you.
Unidentified Speaker
I think we will be this thing H1. I think towards the end of H1 is when you should be able to sort of commission that the first phase over there. And I mean I’m not going to give you a guidance on, on the losses but I mean you have a history in front of you. So you’ve seen what the this thing has been, the recent history and so on and so forth. Because, and I’ll tell you why I’m not doing that. Right. I mean because it is a function, it is a function of, you know, the, the clinicians you’re able to get and you know what sort of this thing you’re able to start.
I’m happy to make a bigger loss over a shorter period of time and to have a deeper trough. What that essentially means that I’ve been able to get the clinicians also day one in a green field.
Karma Vora
Got it. Thanks that’s helpful.
operator
Thank you. Next question comes from the line of Vivek Akarwal with City group. Please go ahead.
Vivek Akarwal
Yeah, thanks for the opportunity. So one question on CGHS ECHS rate revision. So you earlier talked about approximately 200 crore kind of a positive impact on revenues but that is including the impact of discontinuation of some patented drugs etc.
Vivek Akarwal
Right.
Vivek Akarwal
So is it possible for you to split it? Like what is the absolute impact of rate revision and how much of that is likely to be netted off from the discontinuation of patented drugs etc. Thank you.
Unidentified Speaker
We already said that net net is 200 crores right? So obviously there is a this netted of the on crow effect because on crow is part of that MoU when the price got revised. So I would say It’ll be probably 280 minus 80 type. Right. But I. I must also mention to you that you know this whole of price increase hasn’t happened in quarter four. Quarter three ECHS has revised their prices only in December. Some of the peers you are asking for, you know new budget to increase the prices with the CGHS level. And also you know the super specialty rates within that territory will be available from the 1st of April.
Right. So to my mind the full impact of this will start to come from quarter one of next year. But I think a large part will start to flow from quarter four.
Vivek Akarwal
Understood.
Unidentified Speaker
It also also I must mention that. I also must mention that there is a negative impact of GST both on the revenue side and the margin side. Right. So I think if I net that out then you know you have to net out another 60 crore out of that 200 number. So it’d be a 140 number on a sustained positive impact basis in the margin.
Vivek Akarwal
Understood. So actually is it right way to. Right to understand. Right. Like the discontinuation impact of the discontinuation of patented drugs etc. Or the negative impact as well as including the GST etc. So that is largely in this particular quarter. Basically the GST plus discontinuation of credited trucks is this in the quarter and that the positive impact, let’s say around 280 crore only on the rates revision that is likely to come from.
Unidentified Speaker
The 200 crores is sustained impact, you know of the CJ prices. So the on top act will continue because under their MoU they are saying you will have to give discounts on the chemotherapy drugs by 30%. Right. So we only discounted some of the drugs where the margin was less than 30% where the margin was more than 30% we still continue to supply but still at a lower, lower revenue. Right. So there’s an impact. There are two main impact on the cghs, you know, price increase on the of the oncology drugs. One is that we discontinued some drugs, some we are giving 30% discount.
So both impact will be you know as I said 80 crores. So 280 minus 80. So this 80 sustained effect. Right. So that means net is 200 and then you have to reduce out of that the GST impact. So 140 is the net impact if you ask me on the. So it’s not one time I’m saying sustain impact. That means you will have both going forward.
Vivek Akarwal
Understood, thanks, this is helpful. And just one more question again on insurance, right. It looks like that it has been targeted towards Max. While we don’t see in this kind of impact and for the other of some of your other peers etc in Delhi ncr. So any specific reason for this? Basically why it has been targeted toward Max. And separately what kind of the safeguard that you have that other insurance companies let’s say does not do it again in future?
Unidentified Speaker
I think hopefully everybody’s learned from it but I don’t think you know the disruption is only for max. I think the disruption would also be for other insurance companies and there’s a reason that other insurance companies do not join in. I think it just sort of made some more media and this time and you know it’s been disruptive to patients. Right. And patients are also customers of the insurance companies and therefore you’ve seen higher amount of complaints and all the issues and everybody else stepping in.
Vivek Akarwal
Understood. And last question on institutional patient share. Right. So it has gone up quite a bit, 30 to 36% like and it’s part of this disruption. So any color how to look at this number? Let’s say one year down the line or two year down the line?
Unidentified Speaker
Well you know I think the important thing is that once you’re coming up with capacity. Okay. The more capacity you come up with you will have institutional. Exactly. To what extent is another matter. But the fact of the matter is you still EBITDA per bed is higher on even with the lower rates.
Unidentified Speaker
Right.
Unidentified Speaker
For these capacity additions that you’d pay. That is what you’re. What you’re kind of demonstrating right now.
Vivek Akarwal
Understood sir. Thanks. That’s from my side.
operator
Thank you. Next question comes from the line of Panchi Desai with JP Morgan. Please go ahead.
Panchi Desai
Yeah, thanks for taking my Question. So my first question is on the growth of our existing hospital beds. So traditionally if we see, you know, barring any seasonality impact, we still managed to see you know, good low teens kind of growth for our existing beds despite the fact that they’ve been operating at like 75% plus occupancy levels. Partially it could be because of, you know, higher encore share or you know, robotics etc, which you mentioned. But as we go forward, do you think, you know, theoretically this has to normalize at some point in time and you know, for us, therefore, you know, what could be the levers, you know, which can keep the growth momentum high over the next two, three years?
Unidentified Speaker
Look, I think seasonality, if you look at the past 10 years has been a reality and it has. The big difference is last year you had big seasonality and this year you had actually no seasonality. So it’s a little bit of a double whammy if you look at the numbers. Last year I think you had some 30, 35% growth as a group year on year basis in quarter three. So it was a very high sort of this thing. A lot of it was also due to a little higher part on the seasonality and whereas this time it’s lower.
Now having said that, the big jump in the current year was going to be coming through capacity addition and clearly there has been a quarter to two delay as far as that is concerned. So that is something we should have contributed to increase in revenue. And I think as and when you sort of start getting that on stream, you’re going to have that.
Panchi Desai
Yes, actually I was just, you know, trying to say that if I actually look at this quarter and if I map it over a two year CAGR, this number still suggests a 20% CAGR over two years, you know, so you know, if I remove that seasonality impact and despite the fact that we have not added as many beds. So what I was trying to understand is that it does mean that our existing beds are still growing well in that low teens rate. And we’ve seen that the peers that most mature beds beyond a point once you’ve reached your optimal occupancy levels will probably come down to high single digit kind of growth rates, etc.
So I was just trying to understand that from our side, if seasonality were to remain favorable, then do we continue to see the kind of growth that we’ve seen?
Unidentified Speaker
I think, you know, look, two aspects to it. Okay. One is, one is I’m not looking at peaks and troughs as far as seasonality. Is concerned. I’m just looking at, okay, on a static basis, if you were to put a line, straight line through it, what the mean is, right? So I’m not looking at extensive seasonality or it happening or not happening. So that’s one. I think secondly, in terms of existing beds are concerned, we’ve always sort of guided that there are levers, right? I mean, some of the levers get obfuscated because we are opening new beds.
But the fact of the matter is there is higher institutional business, okay, which kind of gets or will be getting, you know, distilled through it. But you know, it gets obfuscated by the fact that you open new beds so that, you know, again, so there are levers even in the current capacity. It’s not as if they aren’t. I mean, it depends how you look at it, how you bifurcate this. I don’t know if I’m relating to what you’re saying.
Unidentified Speaker
I think also as management, our job is to make sure that even the existing hospitals grow, right? So they can grow one on the R pop side, you the casemates, etc. And the other is also adding more beds in these hospitals, right? So that’s what we’re doing. We’re trying to do borrowed expansion where in the same campus and you add more beds, then the existing hospital also grows, right? So there’s no existing bed buses. Then it’s a one hospital that we’re trying to grow, right? For example, you know, wherever we have higher occupancies, we try to, you know, that boundary bed there, you know, existing hospital.
Now Dwarka is a distance hospital, right? So we adding 260 back there. So that will make the distance hospital grow.
Unidentified Speaker
But it doesn’t mean that in Dwarka, okay. While they putting the additional beds over there, okay. Your current mix, okay. Is more sort of attuned to because you almost got 50% institutional patients over there. And in the first year you want to ramp up capacity, you want to take all sorts of business. And as you go along, okay, you’re going to see that distilling.
Panchi Desai
And my second question is more clarificatory nature. You know, we mentioned that the GST rate has also had a bearing on our margin. So just wanted to understand. This would have not impacted our absolute ebitda, right? It would have just impacted our margins because, you know, your realizations go down.
Unidentified Speaker
No, back to.
Unidentified Speaker
It does. Because when you build to the patients this mrp, you know, you have, you don’t pay the GST on the margin because these goods are used for delivery of medical services. Right. So there is an impact on that.
Unidentified Speaker
So that’s how you guess led to 200 crores net of this thing and then minus another 60 crores for this thing you commit about 100 crores as a result of this entire CGHS revision as well as gst.
Panchi Desai
Okay. Because I would assume that gst, you know, realization or EBITDA would have been net of that tax amount. Right.
Unidentified Speaker
Probably will have to that online separately. I’ll make you, made you, you know, see why this impact margins.
Panchi Desai
Okay. Okay, got it. Thank you.
operator
Thank you. Next question comes from the line of Financial Services Ltd. C square.
Unidentified Participant
Thanks for the opportunity sir. First clarification, the top four, five insurance companies forms for 25% of the insurance business, right?
Unidentified Speaker
Yes, yes.
Unidentified Participant
Secondly, secondly we’ve been doing roughly 400 crore, 420 crore plus minus sort of a capex per quarter. But FY26 I guess the target is up to 1900. So are we on track to do that kind of capex?
Unidentified Speaker
Yeah.
Unidentified Participant
So effective.
Unidentified Speaker
You know what typically, typically happens, a lot of the capex is back ended. You don’t necessarily relate work done to capex. I don’t think it works in a, in tandem necessarily.
Unidentified Speaker
Also when you will do a cash flow projection you will always, always do a conservative projection. Right? That’s how we plan for it. You don’t want the, the project to suffer because of you know, financial clothes, etc. So this is always, we will always find that we’ll be spending less than what we’re projecting because of the fact that we project a sensitivity number.
Unidentified Participant
Okay. Even if I take roughly 400, 450 crore per quarter sort of a capex subsequently for FY27 also it will be higher capex.
Unidentified Participant
Right?
Unidentified Participant
I’m not referring to bed addition, I’m not even connecting that to bed addition. I’m just referring to the amount that would be spent for the new hospitals.
Unidentified Participant
Effectively
Unidentified Speaker
you have the number already in the slide. We will revisit the number at the end of March in any case and then probably will float the new numbers. But as of now, but they are.
Unidentified Speaker
Fairly conservative numbers so I mean you would certainly not be doing more than that.
Unidentified Participant
And given the current sort of cash flow which Is like roughly 300 crore plus finals cash flow from operations I’m referring to. So does it mean that we’ll still have some more debt coming on balance sheet?
Unidentified Speaker
No, in terms of the incremental beds that we debt in on stream now they Will start to diverse, diverse, you know, operating margins. And we mentioned that all these beds are EBITDA as less margin accretive. So you obviously expect, you know, better cash flow from these operations now that the new beds that that operationalized so.
Unidentified Participant
Which means effectively 2100 crore net debt. Is that the number right in FY27 as well? Does that, I mean is that the safe assumption?
Unidentified Speaker
No, I think the last name was also this question was all I’ll do up by around 500, 600 rupees in terms of net debt. But it will be still, you know, less than 1 unless we do any M. Etc.
Unidentified Participant
Got it. And just lastly Smart, there has been like almost five, six months delay so and still like the regulatory approval is to come through. So February 26th, is that sort of now largely certain or that might get pushed further.
Unidentified Speaker
So as far as Marks Max Mart is concerned, the original time given was FY28. This project has taken us about 24 to 25 months in its entirety. We expect approvals by end of Feb. Is just got ready now and we’ve just applied for approval. So there’s been no delay in approvals. I want to put that also in place. So it’s not as if the project has been lying ready and sort of approvals is what is delaying. Okay. I think the project has been delivered now and approvals have been sort of this thing. We’re expecting it by end of February.
In fact, whatever attendant approvals are, they’ve been coming through very, very quickly and very smoothly.
Unidentified Participant
Got it. Thanks. Thanks for that explanation.
Unidentified Speaker
Actually in this one we’ve been sort of, like I said, ahead of schedule. This one and 04 we have seem to be ahead of schedule.
operator
Thank you. The last question comes from the line of Nitin Agarwal with DAM Capital. Please go ahead.
Nitin Agarwal
Thanks for taking my question. You’ve talked a couple of times about the Dwarka hospital and the fact that we’ve seen encouraging progress on it to go in for expansion. If you can give us some more color on what’s been the financial progress for the hospital in terms of where it’s reached right now which prompted you to go for expansion at this early stage.
Unidentified Speaker
We are already operating in close to 80% capacity, 75% capacity. Although almost half of the business continues to be institutional. Like I said, you know, early the, you know, the life cycle of a sort of hospital, you first ramp up occupancy. Okay. And you ramp up occupancy with all sorts of business. Then you start distilling it so we already doing 20 plus percent. 20, 22% margins over there. 20% margins at Dwarka. Okay. While 50% of the business is institutional, when we put up capacity now going forward, it will take us at least two years to put up that capacity.
That means in the better part of two years, I will not have beds, you know, easy to survive from. 75% will probably go to 85%. So I will be this, I will be distilling it my beds. That means we already see month on month there’s more and more cash and insurance patients coming through and the institutional patients are reducing and therefore you see the margins move up. Right. So that’s the encouraging part.
Nitin Agarwal
And secondly on the JP Hospital, if you can give us any update on the progress on that.
Unidentified Speaker
So JP Hospital is doing well now. I think the occupancy has improved, you know, over the period in the hospital. So are you looking for some specific numbers for that?
Nitin Agarwal
I’m just curious in terms of where from where you acquired to where it’s come to, what’s the distance we’ve covered in terms of performance improvement in that business?
Unidentified Speaker
So I think if I take Y on Y, it will be more than 30% growth. Right. We took this in last same quarter last year. So the revenues are up by 30, 35% range. EBITDA is also upper toddler. Obviously I’m not giving you the specific numbers in terms of revenue setup, but I think that’s the state it is. So. And when I say 30% increase in revenue, that obviously means that the revenue has come down first because when we acquired the hospital, we stopped all the referrals, etc. The revenue tanked a bit and then, you know, we brought it back.
So the 30% growth y same quarter is basically after that dip which happened in the first quarter after acquisition. And then we build it up. So the real growth would be actually around 40%.
Nitin Agarwal
And in terms of profitability, is it now closer to your network profitability? How far is it from there?
Unidentified Speaker
No, it is not. It’s less. So I think the first endeavor was to stabilize the operations. We had a lot of complaints in that hospital. Right. So we were working on that. I think margin is, is probably 3, 4% lower than the overall margin that we have in the net worth.
Nitin Agarwal
And secondly, when we look at our business for the next couple of years, the EBITDA per bed for us has been a pretty dramatic journey which we’ve had over the years. Around 75 to 7 and a half to 8 million is where we are at, I mean does the network EBITDA stabilize around that or you do see opportunities for us to significantly improve incremented from these levels. And how should we think about EBITDA per bet when you take a two, three year view from here?
Unidentified Speaker
No. So we don’t go towards the direction for chasing a bit upper bed also as a, as a base. Right. So our trajectory is to deploy capital efficiently, to yield, to have yields on the capital that may be have a lower EBITDA per bed. So you have to focus on ROC over there. Right? I mean we’re not focusing on making EBITDA per bed or RPOB accretive or whatever. We are focusing on roc.
Nitin Agarwal
And if I take the last one, you know, over the next two years from where do we see our operational beds sort of hitting out? We are about 4,600 operational beds right now. Where do we end up in the next two years?
Unidentified Speaker
I think we are higher than 4800. I think now you are adding another, what close to thousand beds now and another 1500 including Gurgaon. So that’s six and a half thousand. And by 28 you should be adding what, 8800. Yeah, roughly. I think it’s on the. You just added up, it’s in the presentation.
Nitin Agarwal
About 18 and a half thousand there should be, you know.
Unidentified Speaker
By 28, 27, 26, 29. Presentation may. I think it’s on the.
Nitin Agarwal
Okay, sure. Thank you. Thank you so much.
Unidentified Speaker
Location wise, Location wise, is there no location wise, how many bits, how many are brownly agree
Nitin Agarwal
with respect to the.
Nitin Agarwal
Delays and all that you foresee by the time you finish F28, you still brought more or less in the same ballpark that we had in the presentation is what I meant.
Unidentified Speaker
That’s right. So I mean we’ve given it out in the presentation. Updated numbers this current quarter. This will be updated for any delays.
Nitin Agarwal
Okay, perfect. Okay, thank you so much.
operator
Thank you.
operator
Ladies and gentlemen, we have reached the end of question and answer session. I would now like to hand the conference over to the management for closing comments.
Unidentified Speaker
Thank you everyone for joining us today. We appreciate all your time and look forward to interacting with you again next quarter. Thank you very much.
operator
Thank you.
operator
On behalf of Max Healthcare Institute limited that concludes this conference. Thank you for joining us. You may now disconnect your lines.