This article first appeared on GuruFocus .
-
Revenue:Network gross revenue stood at INR2,982 crores, up 16% year-on-year and 12% quarter-on-quarter.
-
Operating EBITDA:Network operating EBITDA was INR704 crores, reflecting growth of 15% year-on-year and 3% quarter-on-quarter.
-
Operating EBITDA Margin:Network operating EBITDA margin was 24.8% for the quarter, compared to 24.9% in Q1 FY2026 and 26.8% in the trailing quarter.
-
Profit After Tax:Profit after tax for the network was INR357 crores, against INR345 crores in Q1 last year and INR387 crores in the previous quarter.
-
Free Cash Flow:The network generated free cash flows of INR397 crore during the quarter.
-
Average Revenue per Occupied Bed (ARPOB):ARPOB for the quarter stood at INR81,900, growing by 5% both year-on-year and quarter-on-quarter.
-
Occupancy:Average occupancy for the network continued to be more than 75%, despite a 13% increase in operational bed capacity year-on-year.
-
Occupied Bed Days:Occupied bed days were up by 10% year-on-year and 5% quarter-on-quarter.
-
International Patient Revenue:International patient revenue was INR247 crores, registering growth of 18% year-on-year and accounting for 9% of revenues from hospitals.
-
Digital Revenue:Digital revenue was INR941 crores, accounting for approximately 32% of overall revenue.
-
MAX@Home Revenue:MAX@Home reported revenue of INR78 crore, reflecting year-on-year growth of 32%.
-
Max Lab Revenue:Max Lab reported revenue of INR58 crore, reflecting year-on-year growth of 20%.
-
Net Debt:Net debt for the network stood at INR2,384 crore, compared to INR1,908 crore at the end of March 2026.
-
Capital Expenditure:INR337 crore was invested in ongoing capacity expansion projects during the quarter.
Release Date: August 14, 2026
For the complete transcript of the earnings call, please refer to the full earnings call transcript .
Positive Points
-
Revenue grew 16% YoY and operating EBITDA grew 15% YoY, with network gross revenue reaching INR2,982 crores.
-
Average occupancy remained above 75% despite a 13% increase in operational bed capacity, with occupied bed days up 10% YoY.
-
International patient revenue grew 18% YoY to INR247 crores, and digital revenue accounted for 32% of overall revenue.
-
The company is expanding capacity with multiple projects, including a new 202-bed tower at Vaishali and the commissioning of 400 beds at Max Smart, which is already seeing 80% occupancy on opened beds.
-
The acquisition of Kalinga Hospital (Bhubaneswar) is on track, with plans to enhance occupancy and ARPOB by 50-80% over the next 12 months, following a proven turnaround playbook.
-
The company is entering the medical education business, expecting ROCEs of over 25%, leveraging existing campuses and clinical infrastructure.
-
CGHS reimbursements are on track, with complex specialty rates flowing from June, and insurance renewals include an automatic 6% price revision.
-
Free cash flow generation was strong at INR397 crore, and net debt-to-EBITDA remains below 1x.
-
MAX@Home and Max Lab reported strong growth of 32% and 20% YoY, respectively.
-
The company is strengthening its research ecosystem with over 750 clinical trials and recent grants from prestigious institutions.
Negative Points
-
Operating EBITDA margin was relatively muted at 24.8%, down from 26.8% in the trailing quarter, due to new capacity commissioning and the Kalinga acquisition.
-
Oncology inpatient revenue share dropped to 22% from 26% due to discontinuation of select high-value chemotherapy drugs for institutional patients, impacting overall growth.
-
Net debt increased to INR2,384 crore from INR1,908 crore at the end of March 2026, partly due to acquisitions and put option liabilities.
-
Free cash flow conversion was lower at 56% (vs. typical 62-65%) due to a buildup in accounts receivable, with DSOs rising from 87 to 95 days.
-
The Kalinga Hospital acquisition has led to litigation with minority shareholders, who are seeking to force a buyout of their shares.
-
The company faces regulatory uncertainty from a parliamentary committee report on healthcare affordability, which could impact sector viability.
-
Institutional business remains loss-making and contributes only to fixed costs, with a concerted effort to reduce its share.
-
Direct costs increased by 16% vs. 15% revenue growth, partly due to higher clinician costs.
-
New brownfield capacities are still in ramp-up phase, with EBITDA contribution expected to improve only over the next few quarters.
-
The company's expansion plans are capital-intensive, with significant CapEx commitments (e.g., INR425 crore for Vaishali) that may pressure near-term cash flows.
Q & A Highlights
Q: What are the company's plans for turning around the Kalinga Hospital (Bhubaneswar) acquisition, and what is the headroom for improvement in profitability and ARPOB? A: Abhay Soi, Chairman and Managing Director, stated that with current occupancy at 50% and ARPOB at INR35,000, there is significant room for a 50% to 80% enhancement in both metrics. The strategy involves renovating infrastructure, upgrading technology, and enhancing clinical programs over the next 12 months, following the same playbook used successfully for previous acquisitions in Lucknow and Noida.
Q: Can you provide an update on the ramp-up of the newly commissioned beds at Max Smart and Nanavati, and when should we expect to see the EBITDA improvement from these new capacities? A: Abhay Soi explained that the newly opened beds at both Max Smart and Nanavati are already operating at approximately 80% occupancy. He outlined the standard ramp-up trajectory: first, occupancy ramps up, then revenue, and finally EBITDA. He expects the revenue and EBITDA ramp-up to accelerate by the second or third quarter of operation, with the new capacities contributing significantly to the bottom line.
Q: What is the company's strategy and capital commitment for entering the medical education business, given the recent National Medical Commission (NMC) guideline changes? A: Yogesh Sareen, CFO, noted that the draft NMC notification now allows for-profit companies to open medical colleges. The company plans to invest around INR300 crores for a 150-bed teaching medical college, likely starting at its Lucknow campus. Abhay Soi added that this is a natural backward integration for the company, given its existing hospital infrastructure, faculty, and training ecosystem. He projected ROCEs of more than 25-30% for this business.
Q: What is the status of the CGHS (Central Government Health Scheme) revenue, and are we on track to realize the expected INR140 crore benefit for the year? A: Abhay Soi confirmed that the company is on track. The flow of funds has been consistent, and the complex specialty rates, which were a pending component, have also started to flow from June onwards. The run-rate from June is in line with the expected INR140 crore annualized benefit.
Q: Why is the oncology segment's revenue growth under pressure, and when is it expected to return to normal levels? A: Yogesh Sareen explained that the pressure is due to the discontinuation of select high-value chemotherapy drugs for institutional patients, a decision taken in mid-Q3 of the previous fiscal year. Since Max Healthcare had the largest oncology franchise and the highest share of CGHS business, the impact was more pronounced. He expects the oncology growth to start normalizing from Q3 FY2027 and be fully normalized by Q4 FY2027.
Q: Can you explain the bridge between the 15% EBITDA growth and the lower operating free cash flow growth, and what caused the increase in net debt? A: Yogesh Sareen attributed the gap to a build-up in accounts receivable (DSOs increased from 87 to 95 days), which absorbed around INR250 crores of cash flow. This was primarily due to lumpiness in collections from CGHS and other PSU payers, though collections have started to improve with the new CGHS portal. The increase in net debt was due to the acquisition of Kalinga Hospital, the put option liability for the Pune project, and ongoing capital expenditure.
Q: What is the company's view on the recent parliamentary standing committee report on the healthcare sector, and does it impact the viability of expansion plans? A: Abhay Soi stated that while the report focuses on affordability, the need for new hospital beds and viability must also be considered. He does not believe the report will lead to a reassessment of expansion plans, as he expects any policy to be rational. He emphasized that Max Healthcare is an efficient provider and would be an outlier in terms of efficiency, potentially benefiting from any industry consolidation.
Q: What is the status of the ongoing insurance empanelment and renegotiations, and what pricing revisions are expected? A: Yogesh Sareen confirmed that negotiations are ongoing with insurers, with renewals due in September-October. Abhay Soi added that the previous stalemate was resolved with an agreed 6% automatic price revision, which will be implemented. Additionally, industry bodies like CII have engaged with IRDAI to recommend automatic price revisions linked to hospital inflation.
Q: Given the recent capacity additions, should we expect a material increase in operating expenses going forward, and has net debt peaked? A: Abhay Soi indicated that the significant increase in indirect costs was due to new capacities at Mohali, Nanavati, Max Smart, and Bhubaneswar. He expects no significant increase in OpEx until the Gurgaon facility comes up, allowing for higher EBITDA flow-through. Regarding net debt, he stated it could marginally increase due to ongoing CapEx, but the company is comfortable with a net debt-to-EBITDA ratio of up to 2.5 times, particularly if it enables value-accretive acquisitions.
Q: How are the previous acquisitions (Lucknow, Noida, Nagpur) performing, and what is the status of the Shaheed Path and Thane projects? A: Abhay Soi stated that all three acquisitions have been successful, with high ramp-ups in occupancy, revenue, and profitability, and are now moving towards capacity expansion. For the greenfield projects, Keshav Gupta noted that Thane has received stage 1 approval for the master plan, and Shaheed Path drawings are being discussed with authorities. Approvals are expected within 6 months, with project delivery taking an additional 30-36 months.
For the complete transcript of the earnings call, please refer to the full earnings call transcript .
