On ARPOB - it's somewhere around INR 75,000 for FY '25. What kind of we should look at this parameter?
It's irrelevant what the overall ARPOB is. Today, if we acquire something for $100 and it gives us $25 of EBIT, it's a 25% ROCE. We do not worry about what it is producing is lower ARPOB or higher ARPOB. What we have to look at is what is happening to overall EBITDA and EBITDA per bed, what is happening to ROCE vis-a-vis what we are deploying. If I look at the ARPOB growth of existing facilities, it has gone up by 7.4%. So long as we can deploy money at a 20-25% ROCE. Our FY '25 ROCE is pretty high, it's 26% overall.
Can you give some qualitative colour on how to look at the overall EBITDA growth margins for the next couple of years?
Brownfields normally give you higher EBITDA margins, in percentage terms as well, because fixed cost is already incurred. Primarily, with the brownfields coming in, which is close to 1,000 beds, they should throw out significantly higher EBITDA margins. I am not going to give you any forward-looking statements, but theoretically, they should give you higher EBITDA margins compared to your existing business. 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.
In the last 6 months, the stock prices range bound over 1,200 level. So any comment on that, sir?
You have to tell me. We are happy to discuss operations, financials and balance sheet, but markets have their own territory.
For FY '25 ARPOB, payor-wise - institutional ARPOB, international patient ARPOB, and cash ARPOB?
We typically do not share payor-wise ARPOB separately, but we do mention the various parameters. Typically, the international ARPOB is 1.3x of the cash, in this quarter, institutional is around 40% lower than the cash. Institutional ARPOB has de-grown a bit, by around 3% to 4% in this quarter, compared to previous quarter. But that's temporary. On a full year basis: the cash is 100, the international will be anything between 1.3 to 1.5x, depending on which quarter you talk about. And the Institutional would be 52% of that 100% in some quarters or it will be 57% of that 100%. And Insurance will be 8-9% lower than the cash.
As and when this incremental Brownfield capacity stabilizes, where do you think these EBITDA margins or EBITDA per bed would settle?
We are not going to give you a forward-looking statement.
On ALOS - existing to existing is around 4.2 days. Are we taking any structural efforts to bring ALOS further down?
It is seasonal, and it is ongoing and it also depends on your clinical programs. ALOS by itself is not a bad thing. It depends on which programs you are running. Higher-end business, which is international business and higher-end surgical program, which is, let's say, transplant, will always have a higher ALOS, but will have a higher EBITDA per bed per day as well. That is what we should be focusing on rather than purely ALOS, unless you have a huge capacity constraint.
If we can give information on the profitability of the acquired units like Nagpur, Noida, Lucknow for the quarter?
Abhay Soi: As far as Lucknow hospital is concerned, we had 56% growth in revenue and 102% growth in EBITDA. Nagpur has reported a 23% growth in revenue, 86% growth in EBITDA. The Noida hospital, of which we completed the acquisition in Nov'24, reported a gross revenue of INR 228 crore and EBITDA of INR 48 crore at 21% margin. This is for full year FY '25. Yogesh Sareen: Given the fact that the 2 of these hospitals were acquired in Q4 last year, it is difficult now to segregate the last year numbers into 2 parts. We had INR 67 crore of EBITDA from New Units, which is 19.4% margin. Now if I take out Dwarka, which just broke even in Dec'24, our EBITDA margin is 24.9% in the New Units.
How much margin expansion still can happen in these units, except Dwarka?
Abhay Soi: Significant. This is only the first year of acquisition. In Lucknow, you had expansion of EBITDA by 102%, yet, there is no radiation oncology there. There is no bunker. And that bunker is going to come into play at the end of H1 this year. If you look at Nagpur, we are already now approaching very high-capacity utilization. We are already looking at the next phase of expansion, which is adding another 100 beds over there. As far as Max Noida is concerned, we bought a unit, which is operating at less than 50% occupancy. Yogesh Sareen: Lucknow margin is more than 30%, Nagpur margin is around 22%, and Jaypee will also be in similar range as Nagpur. For the New Units, overall EBITDA per bed is 43% of the rest of the network. Abhay Soi: But going forward, you are going to see that the EBITDA growth will outstrip revenue growth there.
We have said that 1,500 beds Brownfield expansion will happen in next year. Is it a Brownfield focus here? Or you think the M&A would still be there?
It's not one at the cost of the other. The brownfield expansion is already under construction. If you look at Mohali Hospital, it's operating 80-85% plus kind of occupancy levels. Then Max Saket again, is at a very high occupancy. Gurgaon Sector 56 - Gurgaon for us is the highest ARPOB, the highest EBITDA per bed market. We will continue to seek acquisition opportunities also. But like I said, we have to be able to touch base or clear 2 of our filters. One is the 20-25% ROCE within 4 to 5 years, and in markets where we have at least 1 or 2 of our peers.
On payor situation at new hospitals - your institutional bed share went up to 33% in 4Q. Is it because you are putting more of these patients to really like move up in the occupancy, cover up the fixed cost?
That's absolutely right. Typically, when you open a new hospital, Dwarka, for example, you kind of fill it up with all payor groups, because the first focus is to get the occupancy up and then you start churning it. If I look at Nagpur, for example, it was operating at 50-odd percent occupancy prior to acquisition, but we took up institutional business over there in order to ramp up the occupancy and the occupancy now is almost full up. From our standpoint, so long as contribution is positive from any payor group and there is idle capacity, it makes sense to do that.
At what occupancy you choose to optimize between institutional or TPA patient?
Abhay Soi: We can go up to, let's say, about 80% occupancy. Till we get to 80% occupancy effectively, we can take institutional patients. Suppose we have 60% occupancy other than institutional, then for the balance 20%, we will take institutional. Yogesh Sareen: As long as we are not refusing any cash or insurance patients, we would like to accommodate the institutional patients. Abhay Soi: Any growth in cash and insurance patient will be accommodated first.
On international patient revenue - have you seen any meaningful pickup in your international patient business?
It will be 9%, but please understand we have increased capacity by 30%. And the growth in that business this quarter has been 28%, which is a significant increase. I would not entirely put it down to Government of India, because that's a slow move. But the image of the country has improved. You have geopolitical unrest. We have had that issue with Bangladesh, Yemen, etc. We most recently had this with the Pakistan issue, where the airspace has been closed. If you were to draw a line, we have had more than 25% growth in this business for a long period of time, and 28% is an acceleration in spite of these setbacks.
IP growth at 3.5% was impacted due to lower footfall in Internal Medicine, Paediatrics. Is there something to read into this?
Yogesh Sareen: Typically, when you compare quarter-on-quarter, Q3 happens to have more Internal Medicine patients and Q4 happens to have less Internal Medicine patients. There's that impact of seasonality which comes in. A lot of dengue patients, etc. comes up through quarter. Sometimes it happens in October, sometimes it goes into Q4. Abhay Soi: Last year, October had significant amount of dengue patients, particularly in places like Mohali and Dehradun. None of our signs are showing any weakness. If I look at the number of OPDs overall, there's been a significant increase.
On Dwarka - I still see there is a loss in Dwarka in the quarter. It's still making EBITDA loss. Is that correct?
No, there is no loss. After breakeven, we have not made a loss. It's obviously lower profit. It's not as if in we broke even in December and then January, February or March, any of the months that we have lost money, we have not. Since then, till date, we have not lost money. Only occupancy has moved up. We already are at 235 beds. We had an occupancy of 73% on these beds in March. We had INR 30 crore of revenue coming from that single hospital in the month of March. We are expecting now any time to be opening the 68 additional beds.
The 1,400-odd beds that you were planning to add in FY '26, that remains on course?
That's right. We are expecting within 90 days, both Nanavati 268 beds and Mohali 155 beds. By second quarter, you will have Max Smart. By end of calendar year, you will have the Gurgaon Sec-56 facility, and in the midst, we are also adding some beds in Lucknow and other places. We'll be hitting around 1,500 beds, not 1,400 beds.
How many would you operationalize this year? How do you calibrate that?
Abhay Soi: There will be a ramp up. At Dwarka, we didn't commission all 300 beds, although they're ready. What we commissioned is as per occupancy. We started the hospital in July '24, and by March '25 we are already at 73% occupancy. When you see 75%-plus occupancy in any set of beds, that's the time we open the next lot. Keshav Gupta: And that was a greenfield. Majority of the beds that are coming up are brownfield. Abhay Soi: Gurgaon should have the same trajectory as Dwarka, whereas the brownfields would be much faster, right? In a greenfield, you take 6 months to break even. In a brownfield, you do it almost in a few months.
When you categorize into existing and new units, so new units would include all the acquired hospitals plus just the Greenfield ones?
All acquired units plus Dwarka. Going forward also, it is the greenfield plus the acquired.
How you should look at the situation as far as supply of doctors or medical tellers, nurses, etc.?
The brownfield capacity additions do not typically require increase in senior-level clinicians. The existing doctors increase their footprints within those hospitals. We do not see massive capacity expansion happening other than one more hospital other than ours in the current financial year in Delhi NCR. We have 14 facilities there. Even today, the cost of MBBS, i.e., the salary is about INR 45,000-50,000 per month. So, we do not foresee any shortage in senior clinicians.
Can we see the average revenue per occupied bed go into the territory of 80,000 plus in the coming quarters?
Abhay Soi: All the specialties, which have been growing, should take you there. We had a 7% growth in ARPOB for the existing hospitals. Yogesh Sareen: Yes, there is a gap between new units and existing units. We do not have radiation oncology in Dwarka and Lucknow; once we start that, it will add to the ARPOBs. Keshav Gupta: All the expansions coming up are in Mohali, Saket Complex (Smart), Gurgaon, Mumbai. These hospitals have a higher ARPOB in the current mix.
Existing units are operating at about 28.5% margin and EBITDA of INR 84 lakh per bed. There is an upside potential to this going ahead?
That's right. We have always guided to that. Brownfields have higher EBITDA per bed and have higher EBITDA margins, because the management costs and senior clinician costs are already incurred by the existing hospital. Any incremental beds that you have, even if you were to fill them with lower ARPOB businesses like institutional, they will still give you a higher EBITDA per bed as well as EBITDA margins.
On free cash flow - any upfronting of your long-term guidance of doubling your capacity over the next 4 years?
Abhay Soi: No. Any guidance that we give, is based on us already having acquired the asset, breaking ground or permissions, etc. We have guided that we are happy going up to 2.5x net debt to EBITDA. We have very little leverage on our balance sheet. We are going to be funding all of our expansion mostly through internal accruals. 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. Today, we are guiding you that by 2028, we may have 9,000 beds, but I am pretty sure one year down the line, that number would have moved up. Yogesh Sareen: Availability of cash is not a constraint for the capacity additions. Abhay Soi: It's not only cash. We have enough room in the balance sheet too.
Can you give me occupancy numbers in Q4 for the newer units individually, Nagpur, Lucknow, Noida?
Abhay Soi: Dwarka, I've told you is 73% in March. The older units were 79%. The Chitta and Jaypee Noida acquisition, which we completed in November '24, that's 46%. Yogesh Sareen: 46% on average basis. 52% in Jaypee Noida and 26% in Chitta. Lucknow is 65%, with the additional beds that we opened. Lucknow's operating capacity has gone up. In this quarter, again, it will go up to 413 beds. It was 343 beds in last quarter. Including the additional beds that we have added, the overall occupancy was 65%. Abhay Soi: It was 90% occupancy on the beds that we bought. Nagpur is 81%.
The interest cost has been going up quarter-on-quarter. Should we assume the current quarter as the run rate going forward?
Yogesh Sareen: We do not expect any material change in the number. The interest cost went up since the October '24 quarter, because we borrowed money for the Jaypee acquisition of INR 1,000 crore, and then we had taken INR 600 crore loan for the Sahara acquisition in March '24. The net debt we have is INR 1,572 crore at the end of March '25. Unless we really do any major acquisitions, we do not think any major change is expected in the interest cost as such. Abhay Soi: If we do an acquisition, then yes there will be change.
Given that a peer of yours is coming up with the same number of beds in Gurgaon, do you think that is going to impact your numbers?
No. We are not seeing any impact of this. We have a very large network in Delhi NCR. We have got 14 facilities. Today, in terms of number of locations, we have twice the number of locations that our next three peers have put together. In terms of number of beds, we are equal to or more than the number of beds that all of them have put together in NCR. We have got 35,000 healthcare workers, of which 20,000 live in Delhi NCR. Out of our 6,500 senior clinicians, about 4,000 live in Delhi NCR. We are the largest home care business, and only profitable one in the country, almost entirely focused on Delhi NCR.
For the Noida asset, what is the total FSI potential and how much has been used currently?
It's 18 acres of land for Noida. And we can add another 1,000+ beds. The present facility is operating at 50% occupancy, so there is tremendous potential over there. I don't think we have a problem for the next decade at least.
On Gurgaon - international patients should increase once Gurgaon comes up? Any particular tough competitor for you in Gurgaon?
Every hospital of ours, in its micro market, is the best-performing hospital, with respect to perhaps every line item, including significantly higher occupancy. We operate at maybe 75% and the next close competitor is at 65%. Delhi NCR also, coincidentally, happens to be our backyard. It is destination for international business, but it is very similar to Delhi. We do not give it a significantly higher weightage. At the enterprise level, will it significantly increase medical tourism? Answer is 'No'. In any case, in the first year or so, we are going to be taking in all sorts of occupancies, not only international business, but institutional, etc. like we have done in Dwarka.
Capacity beds is around 5,100 and operational bed count is around 4,654 - 90% operationalization. Historically we used to do around 95%. Are we going to get to that 95%?
Abhay Soi: If I take the example of the last two acquisitions, we acquired Jaypee Noida Hospital. And along with it, there was a hospital each in Chitta and Bulandshahr. They have a 200-bed capacity and it's operating at 26%. Yogesh Sareen: Jaypee Noida, the hospital has the capacity to go up to 500 beds, we have opened only 377 beds. Knowing that the occupancy on the 377 beds is 52% only, we are not really fast tracking that. Similarly, Chitta Hospital is a 200-bed hospital, but only 100 beds have been opened. Dwarka Hospital, we opened only 235 beds. The capacity is around 303 beds. We'll open another 68 beds soon. We have 200 beds at Bathinda Hospital, where we have opened only 100 beds. At Bathinda, we have not seen the demand, so we do not plan to really open the other 100 beds. But rest all will be onboard, in another 8-9 months' time. Keshav Gupta: All the capacities are real. They are an outcome of the business plan.
On Nanavati - till what period on those 260 beds, which will be demolished will we be losing revenue?
Abhay Soi: No, we are not demolishing 260 beds, we are demolishing 160 beds. Also, of these 160 beds, a large amount of them are the ones which are not occupied. We are adding 268 right now. For a period of 2 years, these 160 will not be available and then we come back with another 270 beds or so. Keshav Gupta: Currently, we have 328-bed hospital. We are activating 268 beds approximately now as Phase-1. Most of these 160 beds are ward structures and lower occupancy beds. They are the old economy beds.
Had you booked some cost in Dwarka in the first quarter before commencing operations, which are contributing to the full year EBITDA loss of INR 29 crore?
Yes, we did. The opening of this hospital was delayed. We were earlier planning for its opening in quarter 1 of last year. We had hired manpower and that's the reason we could ramp it up faster. There was some loss in the quarter 1, it's around INR 6 crore, which was also reported.