Max Healthcare Institute Ltd Q3 FY22 Earnings Conference Call Insights

Key highlights from Max Healthcare Institute Ltd (MAXHEALTH) Q3 FY22 Earnings Concall

Management Update:

• MAXHELATH achieved the highest ever operating EBITDA of INR364 crores in 3Q22, excluding vaccinations. The company added that it’s the fifth consecutive quarter of highest EBITDA and operating margins.

Q&A Highlights:

• Praveen Sahay of Edelweiss asked about OP volume if it has reached pre-COVID levels and the realization. Yogesh Sareen CFO said that the OP numbers have come down compared to 2Q22 due to vaccination and being a lean season for OPD footfalls. OPD is contributing around 13-14% of revenue, which includes the OP pharmacy etc., which is 3-4%.

• Praveen Sahay of Edelweiss asked about the improved international performance and which geography contributed to performance. Yogesh Sareen CFO said the main contributions were from Iraq, Kenya, Ethiopia, and SAARC countries.

• Nikhil Mathur with HDFC MF asked about the reason why ALOS being stable at 4.3 days and not trending down. Yogesh Sareen CFO said that ALOS of 4.3 is the normal it has been in the pre-COVID times, and there hasn’t been any major change in the midst of the specialties. So this is the normal ALOS one should see going forward in a non-COVID quarter.

• Nikhil Mathur with HDFC MF enquired about ARPOB going from INR51,000 to INR61,000 and breakdown into price hike vs. payer mix. Yogesh Sareen CFO said in that 3Q22 there was hardly any. Otherwise, the company takes every year a revision in April by 2.5-3% and TPA price revisions also happens in 18-24 months. So there has been some price increase in March end, the benefit of which flowed into this year.

• Abhishek Sharma from Jefferies also asked about dis-empanelment and if that’s going to be the way forward to reduce the share of institutional business. Yogesh Sareen CFO replied that dis-empanelment is the route to reduce dependence on the institutional business. MAXHEALTH said it shall be taking the call every 3-6 months.

• Abhishek Sharma from Jefferies enquired about the Nanavati VRS scheme, how many people availed of the scheme and future plans. Yogesh Sareen CFO said 69 people applied for it, in which 62 were accepted. The average service of people taking VRS was 25 years. Overall payout was INR13 crores, including gratuity and other benefits. Therefore, Dec. onwards, MAXHEALH has a savings of about INR9 crores a year from these VRSs. MAXHEALTH is working on the productivity of people in Nanavati and once it’s done, the company might launch another scheme.

• Sonal Gupta from L&T Mutual Fund asked about the total capex expectation for the next five years. Yogesh Sareen CFO said that on a five year perspective, the company is going to add 2,840 beds from now to FY27 at a total spend of INR4,000 crores, including land spend of INR500 crores. Of the INR4,000 crores, INR343 crore is already spent in FY22. INR622 crore cash is lying on balance sheet, which translates to generating another INR3,000 crore from here to FY27.

• Sonal Gupta from L&T Mutual Fund also asked about the capex for FY22 and FY23. Yogesh Sareen CFO said that capex for FY22 is around INR600 crores, including land and for FY23, it’s INR686 crores.