Ladies and gentlemen, good day and welcome to the Max Healthcare's Q1 FY 2023 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 touchtone phone. Please note that this conference is being recorded. I now hand the conference over to Mr. Suraj Digawalekar from CDR India. Thank you, and over to you, sir. Thank you. Good morning, everyone, and thank you for joining us on Max Healthcare Q1 FY 2023 earnings conference call. We have with us today Mr. Abhay Soi, Chairman and Managing Director, and Mr. Yogesh Kumar Sareen, Senior Director and Chief Financial Officer of the company. We will begin the call with the opening remarks from the management, following which we will have the forum open for interactive question and answer session. Before we begin, I would like to point out that some statements 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 remarks. Thank you, and over to you. Good morning, everyone. It gives me immense pleasure to welcome you to Max Healthcare's Earnings Call for the first quarter of the ensuing financial year. Let me provide you with the key highlights of the quarter's performance before opening up the forum for question and answers. In continuance of our trend towards the end of the previous quarter one FY 2023 was largely a normalized quarter with average occupancies hovering around 74%, while less than 1% of beds were used for COVID patients. It was the highest ever revenue and EBITDA quarter and marks our movement in the direction already articulated earlier. We witnessed consistent performance throughout the quarter and almost all the operating and financial parameters touched a new high. Consequently, we registered highest revenue, ARPOB, EBITDA per bed, etc. This was driven by improvement in payer mix, surgical medical mix, annual price revision and normalization of patient footfalls as we continue to focus on the growth levers set out by us post-Omicron wave. I would like to remind you all in quarter one last year, we had separately reported a revenue of INR 136 crores and an EBITDA of INR 59 crores from COVID-19 vaccination. To that extent, the year-on-year growth numbers are being reported on a like-for-like basis, excluding this non-recurring item. The key highlights for the quarter one performance were the average occupancy for the quarter recovered to 74% from 68% in quarter four FY 2022, which was largely impacted due to Omicron COVID-19 wave in the first half of Q4 FY 2022. The bed share of institutional patients, relatively a lower ARPOB channel, has been brought down to 30% from 33% in Q4. This has added to growth in ARPOB as well as EBITDA per bed. This is in line with our guidance and objectives. The ARPOB for this quarter rose to INR 66,000, implying a growth of 28% year-on-year and 4% quarter-on-quarter. Network gross revenue stood at INR 1,473 crore, of which INR 2 crore is contributed by revenue from vaccinations. Gross revenue excluding COVID-19 vaccination grew by 18% year-on-year and 14% quarter-on-quarter. The digital channel share of revenue was the highest ever at 16% in Q1 FY 2023 as compared to 13% in Q1 FY 2022, with website traffic growing by 14% quarter-on-quarter to reach 33 lakh sessions. In absolute terms, the digital revenue stood at INR 232 crore in Q1 FY 2023, which is 40% of the digital revenue of INR 585 crore clocked in the last financial year. That's the whole year. Also, as international medical tourism revenue reached pre-COVID levels in this quarter, despite negligible revenue from Afghanistan, which was one of our key territories till FY 2020. We continue to expand our geographical presence and expect to have 20+ offices operating from various countries by the end of this financial year. This coupled with the new Heal in India initiative should augur well for medical tourism to Max Healthcare as well. We continue to do our best to provide care to underprivileged. During this quarter, we served 38,500 indigent patients in IPDs and OPDs free of charge. The notional value of this treatment was INR 49 crores. Network operating EBITDA excluding COVID-19 vaccination for Q1 FY 2023 was INR 370 crores compared to INR 301 crore in Q1 FY 2022, and INR 304 crores in the fourth quarter of FY 2022, reflecting a growth of more than 23% year-on-year and more than 22% quarter-on-quarter respectively. EBITDA margin was 26.6% as compared to 24.8% in the fourth quarter FY 2022. Leading to a PAT of INR 229 crores. EBITDA per bed, most importantly, for the quarter was INR 62 lakhs, showing an improvement of 10% quarter-on-quarter. Cash generated from operations after interest tax and replacement CapEx was INR 237 crores, versus INR 179 crores in the fourth quarter FY 2022. Further, net debt reduced to a low of INR 217 crores at the end of June 2022, from INR 441 crores at the end of the previous quarter. However, the present net debt includes a put option liability of INR 141 crores. The actual net debt after that is less than 100. Coming to the strategic business units, Max Lab, which is our non-captive pathology vertical, reported gross revenue of INR 26 crores. It added 990 channel partners during the first quarter of FY 2023, taking the overall active clients to 850+, spread across 32 cities. On a like-to-like basis, the revenue excluding COVID-19 related tests grew by 50% year-on-year and 24% quarter-on-quarter. We continue to invest in this business and have expanded the team to more than 700 people working across functions. MAX@Home, our home healthcare vertical, reported gross revenue of INR 32 crore, a growth of 10% over fourth quarter levels, fourth quarter last year, and representing a growth of 18% year-on-year. The 650+ strong team at MAX@Home also manages a network of 62 medical outposts across corporates, of which 13 medical rooms were added in the first quarter of FY 2023. Going forward, we continue to employ the following growth levers. One, international medical tourism growth from both existing and new geographies. Two, improvement in payer mix. Three, fast-tracking brownfield expansions. 100 additional beds will be operational in this year at Max Shalimar Bagh, while an additional 300 beds in Dwarka would be in early first half FY 2024. With large capacity addition in FY 2025, we are poised for growth in the foreseeable future. Finally, inorganic expansion in both hospitals and perhaps if we get some good opportunities in the diagnostic space as well. We have also made considerable progress on the digital front and are in the final stage of rolling out our proprietary app, which will not only help us engage with more patients and widen our patient reach, but also serve our customers better and provide improved experience. On this note, I would like to open up the forum for questions and answers. Thank you. Thank you very much. We will now begin the question and answer session. Anyone who wishes to ask a question may press star and one on the touchtone 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 is from the line of Damayanti Kerai from HSBC. Please go ahead. Hi. Good morning, Abhay. Abhay, my question is, how much price hike you have taken for the hospital services? If you can elaborate how price hike flow across different payer groups in terms of change. Essentially we have, you know, normally a price impact of about 2%-2.5% at best year-on-year at the end of the listing. Okay. What it impacts is essentially the international patients, you know, by that extent it will impact your, the cash paying patients. Insurance are typically two or three-year contracts, so, you know, every couple of years it sort of re-triggers. Then you come to the institutional business, which doesn't get impacted by it. Okay. Just 2%-2.5% kind of increments which you have taken for the current year, it's already visible for the cash and international patient and insurance, as you said, when contracts are renewed and the institutional business, it takes longer. What we're re-triggering right now is when the new contracts come, we'll be on the new. We've got plethora of contracts and all of them don't start at the same time. You know, year on. If they're two-year contracts, you can pretty much evenly sort of spread them over two years or three years. You'll have some impact of that. Whichever contracts are coming off, you know, are coming onstream or coming up for renewal, they will renew at new prices. Does it mean the patient who are paying cash, they have to bear the cost, like higher cost compared to someone who is covered by insurance on an immediate basis? That's right. Okay. In general, like what kind of impact we have seen on healthcare demand due to inflation? Say like price hikes have gone up, so any impact on the demand? I mean, you're seeing occupancy, right? From 68% you move up to 74% quarter-on-quarter. We'll say it's immune to price changes because it's essential services. I think it's a very marginal price change, isn't it? I mean, it's not a very large price change. No, in general, say like 2%-2.5% price hike for this year, but say like inflation goes up meaningfully across the industry, then should we assume any tapering on the demand part? Look, when inflation comes. Inflation in the industry doesn't impact the consumer, does it? The price hike as a result of the inflation impacts the consumer. Okay. That's right. Oh, okay. Now, if the price hike is 2%-2.5%, that is what is impacting the consumer. Now, if tomorrow inflation is significantly. Well, whatever the inflation has been, you've seen hasn't gotten absorbed, and you've seen the margins sort of expand in spite of the 2%-2.5% increase in price. You're better off in terms of margins. That's one. Secondly, and more importantly, if tomorrow there is a further, let's say there is a push-up because of inflation and you have to reprice it, then perhaps in October you look and relook at pricing and say, "Look, if I have to pass on the inflation, I have to improve the price or increase the price." Question. Your question will become relevant at that stage. Okay. This kind of price revision you do once in a year or it's? Once in a year, typically. You know, we always have the option of relooking at it in on October 1. Okay. I mean, you can even do it every quarter. You can do it midyear, anytime you want, but the fact is it's disruptive. I mean, if we have to look at it, we'll look at it at that stage. Okay. After six months, I mean, every two months, three months, you can't sort of keep changing and review your charges. Okay. On the international part, you mentioned it's started back to the pre-COVID level, and then you are stepping up your presence in the target market to get more footfalls. Which key market were you looking to? Sorry. That's not what I said. I said we are back to pre-COVID levels. Okay? Mm-hmm. In spite of one of our key markets, which is Afghanistan, okay, giving us negligible business. That was a key market because of travel restrictions from Afghanistan. When Afghanistan normalizes, that would improve it even further. We're already back to pre-COVID levels because we made efforts in other markets as well, right? Okay. Finally, like in terms of contribution from international business, how much that can go up in next two to three years? You know, the sky's the limit. I think the government is now really focused on this. You'll probably hear on Independence Day as a part of the Independence Day speech. At least what I'm reading in the press is the Heal in India is going to get a big push, which is, you know, India becoming a destination for healthcare tourism. That is what the government of India and the Prime Minister himself is perhaps going to include it in his speech. That should all augur very well. Sky is the limit. If you're asking me for precise listings, you know we don't give forward-looking guidances in terms of specific numbers like that. Look, I think you have a huge comparative advantage in India. With the right push and the right encouragement from the government, literally the sky's the limit as far as we're concerned. Okay. Thank you. I'll get back in the queue. Thank you. Thank you. you. The next question is from the line of Nikhil Mathur from HDFC Mutual Fund. Please go ahead. Yeah. Hi. Good morning. Thanks a lot. My question is on the new beds and the associated costs that will have to be incurred for new bed expansion that the company is undertaking. In FY 2022, the company had indirect overheads of INR 1,700-odd crores, which was associated to 3,200 capacity beds. Roughly INR 54 lakhs or INR 53 lakhs cost per bed is the indirect overheads that I'm able to calculate on the whole of which FY 2022. With 100, 300 and 1,200 beds likely to be added next three years, we are looking at a bed build up of 1,570. So when I look at the cost build up for the new beds, should I multiply the 1,570 beds with the indirect overhead you have on the existing capacity bed, or it would be lower? If you can give some sense, what kind of cost build up should be associated with the new beds that are coming on stream? Largely they're brownfields. If you see out of the 3,000 beds, 80% of the new capacity is brownfields, right? In a brownfield, you already have your you know management costs as well as your senior clinician costs being incurred by the existing hospitals. I mean, I would look at it a little differently. Rather than looking at the cost and start dividing it, I'll say, okay, look, my EBITDA per bed is INR 62 lakhs today. Right? Now, this INR 62 lakhs, what is it going to be three years down the line? more, I mean, with the payer mix distillation, any inflation increase in price and so on and so forth. That is what is going to be attributable to the old capacity. The new capacity which comes up, okay, will have some operating leverage in it simply because, you know, like I said, you're not gonna have. A lot of the costs are already being incurred within the INR 62 lakhs per bed. That number for the additional bed should be higher, theoretically. You would take the EBITDA per bed and multiply it by the occupancy in those installed beds. That's how you would look at it. I don't see any major fixed costs coming on brownfields. Before these beds come on stream, whatever the EBITDA per bed the company kind of stabilizes at, let's say in next two or three quarters, while the new beds will come on stream, there should not be any major dilution on the EBITDA per bed. Would that be a fair assessment or- That's correct. Which we've guided to also in brownfields, typically your break even is the first quarter or whatever. We've seen that in Vaishali Hospital, we came up with 100-odd beds. I mean, these are required. These hospitals are operating at 80% occupancy. You put another 100 beds, that gets taken up pretty quickly. We don't see any abatement in EBITDA in absolute terms. Two near-term bed additions in Shalimar Bagh and Dwarka. In the last two investor presentations, the timeline has remained same. Can you highlight some milestones which would have been achieved in both these facilities, just to get some comfort that these bed additions are on track? Dwarka is at finishing stage, and as far as Shalimar Bagh is concerned, is late in finishing stage. I mean, if you're going to open up one capacity in the current year, and you said you already got. Look, current year means there's obviously, you know, you're looking at the next six to nine months. Okay. Then the new capacity in perhaps three to four months after that, you have to be pretty close to finishing. That's what on-the-ground reality is. Okay, cool. I'm not giving you visibility on something three years later. I mean, if you're saying something is coming up in six months or nine months, right? I mean, then obviously the structures of this thing, everything is ready. You're doing fit outs and stuff like that. Sure. Third question is on the international patients. Can you give me the number of beds which are occupied by international patients in this particular quarter? What this number of beds can look like next 12 months. First question. To answer the first question, I think about 6%, but you guys just sort of lean in on this. Secondly, like I said, I'm not giving any guidance on where it can be. Sky's the limit, like I said. That number can keep moving up. I mean. Yeah, it's 4.5%-5% of the beds were occupied by the international patients this quarter. 4.5%-5%. Okay. The revenue mix and the bed count mix is the same. I mean, my understanding might be wrong, but I thought that international patients come in at a much higher output, right? That's right. Therefore, your revenue because you see that the overall revenue share is 8% and the bed share is 4.5%-5%, right? That signifies that. Uh. Yeah. I'm looking at the wrong number. Sorry. Yeah. Yeah. Yeah, sure. Okay. This helps. Thanks a lot. Thank you. The next question is from the line of Praveen Sahay from Edelweiss Wealth Management. Please go ahead. Yeah. Thank you for the question, and many congratulations on a very good set of numbers. The first question is, just I'm repeating, you know, the earlier question that's related to the EBITDA per bed. As you said, that down the line three years with the, you know, new capacity coming into place, will you manage this EBITDA per bed from there or is there some, you know, deterioration we can see? Like I said, look, 80% of the capacity is coming in the form of brownfields, right? Mm-hmm. What is a brownfield? You have existing hospital which is operating, let's say at 80%-85% occupancy. You know, you are waiting in your ER for a couple of days for beds. Okay. The hospital's run out of space. Okay, where do you go from there? You put up another building adjacent or right next to it. Now. Yeah. Okay, you incur the CapEx of the building. Okay. Now, your CEO, your management, your clinicians, et cetera, already, the fixed indirect cost is already being incurred by the existing hospital. Let's say in the new building, I want to open with 100 beds, but I only have demand for 20 beds. I'll only open 20 beds over there. I'll put nurses, et cetera, for 20 beds. Mm-hmm. My building is ready. Okay. My fixed cost, this thing is already there. You know, it, so also the higher operating leverage. I don't see your EBITDA margins or your EBITDA per bed going down because of it. It should be accretive theoretically. as you are in the, you know, this year and the coming year, coming capacity in the Shalimar Bagh and the Dwarka, so with this, any change in the clinical mix also we can say, because No, this has got nothing to do with the clinical mix. Okay. Because they have a certain different clinical mix, and they are on the lower side of ARPOB. That's why I'm asking this question, whether this. Sorry, I get that. I'm- Shalimar Bagh and Dwarka has some different. On the company level, it's a different clinical mix. Is there any impact you are expected to see in the next two years in your clinical mix on the overall company level? Where do you see from a company level it's a different clinical mix, Dwarka and Shalimar Bagh? It's similar, you are saying? No, I'm asking you, is there, I don't think the specific hospital clinical mix is something that we ever guided to. Now the next question is related to the payer mix and which you had guided earlier for a institutional business to go down to a 15%. What's the timeline for that, where you- When you want it? Over the next year and a half. I mean, do keep in mind this was 37%. Previous quarter it was brought down to 34%, 33%. Now it's down to sub-30. Mm-hmm. Hopefully. Yeah, but that's been the trajectory, right? Year, next year and a half, we should be down to 15 or below. Okay. Last question on the occupancy side. The current occupancy level, you are seeing this as a normal 75%-76% is a normal rate which you will run on? I mean, we, pre-COVID levels, we used to be 71%-72%. Okay. I mean, obviously disease burden goes up. We've also operated, as you've seen, at 81%, 80%, 81%, 82%. Mm-hmm. You know, sustainable basis, I've said in the past, we can go up to 77%, 76%, 77%, okay, across the network, at the network level. These are mid-range occupancies. Yeah, I mean, there could be a couple of percentage points sort of over a period of time, but that's about it. It's marginal. The real value will come from tilting the payer mix. Okay. Thank you for that. In the inorganic, are you also looking in the hospital business, any opportunity? Well, we are mostly looking only in the hospital business opportunities, to be honest. Not in diagnostic. Well, not actively at present. Okay. Thank you, sir. All the best. Thank you. Thank you. The next question is from the line of Sangeeta Purushottam from Cogito. Please go ahead. Hi, this is Andrew Purushottam, Sangeeta Purushottam's partner. Abhay Soi, just a little bit more light on your margin drivers. Specifically if you were to, you know, look at a two or three -year term horizon, how do you see your international tourism shaping up in terms of percentage of revenue from 7.3% or so? I believe your CGHS proportion to revenue is already low as compared to other hospitals. Would you be seeing this coming down to zero in the near future and seeing it substituted by higher-margin payers? What other elements of the mix can you know, add further color to, which would give us an idea as to how your margins would expand in a two or three -year horizon? First, I think your presumption is incorrect. Compared to our peer group, our institutional business, CGHS business, et cetera, is the highest. Okay. For more than twice of Apollo and maybe more than 50%-70% of Fortis. Right. Secondly, we are not giving any guidance on margins like we have. We've resisted from doing that in the past, okay? Like Himanshu also said, international business, I'm not going to give you. I can tell you what the opportunity set is, which is a great listing. I've been a big proponent of international medical tourism, and really, I think the big finish we are gonna get now is because the Government of India, okay, is putting its weight behind it. Okay? Right. You know, we are reading about Heal in India initiative, okay, again, which the Prime Minister may take up on his Independence Day speech, which is a big, big thing. When the Prime Minister picks it up, you know, the rest of the, you know, ministries and organizations will follow. I see a huge opportunity emanating from that. I've always been a proponent that we have a big comparative advantage. I think it's being recognized at present. A little difficult for me to answer what percentage of that business is, because like I said, you know, even if I have an internal assessment, it's something that we've resisted from giving forward-looking guidances on margins as well as this. What we have said is that the levers and you can perhaps make that out, okay, for our margin improvements going forward, besides medical tourism, is tilting the payer mix. That means reducing the institutional business, which we are from 30-odd% looking to bring down below 15% over the next year and a half. Right. This business, okay, you know, gives us, yields us 45%-50% lower revenues, okay? Once this business is replaced by, as we are seeing is happening also, okay, by our non-institutional business, it will generate 45%-50% more revenues, and 85% of that comes straight to our EBITDA. That can have a major impact on both our ARPOB as well as EBITDA per bed. This reduction in the share of institutional business, what impact would it have on occupancy rates? And will you be able to keep the same occupancy rates that you have right now? From what you said earlier in the call, you operate, let's say, on an average of maybe 77%-78% as kind of sustainable occupancy rates, right? How do you see the trade-off between that and- There is no trade-off. I think you're looking at the wrong equation. Okay. Okay. If today we lose this business, not because we have to, because we want to. Rather than keeping a bed idle, we'd rather do institutional business, right? Right. It's not as if you stop the institutional business, make the bed idle, okay, and then hope you're gonna get business. Right. Okay. Because if that was the case, then we would never start doing this business. The way to do it is, okay, that today we have non-institutional business, which are preferred channels, right? Which has a certain rate of growth. Now, I won't even go down to all the aspirational things or international business, et cetera, et cetera, that we're doing. Forget all of that. I think that business has been growing at a particular rate. Now, we already hit an overall ceiling almost as far as the occupancy is concerned. Like you rightly alluded, that you're already at 74%-75%. Right. Right? Where do you go from here? Maybe a couple of percentage points. Right. The preferred channel is growing, okay, requires more beds, 200-odd more beds per year. Where do you get them from? I have to displace my institutional business. Right. You know, each hospital of ours has about 200 contracts with various public sector undertakings, so on and so forth. Mm-hmm. These are hospital level contracts, which are for a period of six to nine months. Then you have a notice period of one month, both sides if you want to discontinue. You keep switching off one after the other on a particular hospital wherever you have no beds for your preferred channels, effectively. Right. Case in point was our Gurgaon facility. We used to do 20% business from the institutions. Okay, now it's down to zero. Our EBITDA per bed over there is INR 90 lakh+. Right. Compared to INR 60 lakh for the rest of the listing because of that. I hope I've been able to sort of answer your question in some manner. Okay. It's not either/or. I mean, once we have the demand, we move away. You don't ever see a reduction in occupancy because we're moving from institutional. Okay. One last clarification. A lower ALS is good for you commercially? Sorry. Lower the average length of stay, the better it is commercially for you? That's right. Okay. Thank you. That's a key indicator for all hospitals. For any hospital, okay, you make money in the surgeries or the procedure. Most profitable thing are day care. Right. Okay. The longer a patient stays in a hospital, it's loss-making. Every day a patient stays in a hospital is actually loss-making. Right. Most people believe that hospitals are holding them back and making money, et cetera. It's the other way around. Hospitals want you out. Yeah. Because all the expenditure really becomes upfronted, right, on the first day itself. That's right. Your returns on day care, et cetera, the rooms, et cetera, is INR 4,000, INR 5,000 a room, with the nurses, with this, with that, et cetera, you can imagine. Right. Thank you. Thanks very much, Abhay. Mm-hmm. Thank you. Thank you. The next question is from the line of Devesh Pathak from Rytle. Please go ahead. Yeah, thanks for taking the question. This slide which says that CapEx for the quarter was INR 13 crore only, and there's another slide which says that total CapEx for the year is supposed to be some INR 600 crore+. Why was this quarter low? I think we haven't really made the payment to the contractors. There was already advances issued in last quarter. I think we'll be making some payments in this quarter now. It's only, you know, cash outflow stuff, right? It doesn't have anything to do with the work which is happening at the site. Right. Okay. Work at the Saket site and the Nanavati site, how are they progressing? Nanavati site, the piling work is on more or less, more than 70% of the piling has been done. The de-wall has been done. Demolition has been done. Construction is going to start once the digging is gonna start now. Most of all, almost all the approvals are in place. As far as Saket is concerned, I think, retaining wall has been done. Recently, you know, we have to transplant trees. There was an order that you can't transplant trees in Delhi. Now the order has come that you can transplant trees. We transplant those trees, so we are doing that, and I think work should start. I mean, work has already started. I think construction should start. Okay. You have to make a retaining wall, you have to make a D-wall, you have to do piling, you have to do foundations, et cetera. Yeah, more than that, I wanted that all the approvals that were, like, the tree issue and all those government approvals are in place, right? It's in our control. Yes. Okay. The second question was on the Max Lab. I'm just trying to understand that there's a gross revenue of INR 40, and then there is a net of INR 25. The balance is payment to the collection center as well as to the Max hospital lab? Or that only represents payment to the collection center and payment to the lab gets, you know, charged later in the cost line item? No. We recognize the revenue on a net basis in our financials. This is GMV, right? Don't compare the GMV. GMV is basically, for example, you know, what is the franchisee charging or the, you know, the center charging to the patient. And also, you know, we have some SLM, right? Where they charge it to the managed third-party hospital labs also. Obviously, you know, we represent 60% of the revenue and 40% then is the markup when the hospital is charging the patients. The 40% is not coming in the revenue line. We consider only for 25% in the revenue line. Yeah, that I understood. My question was that of the 40% and the 25%, the difference is 15%. This 15% includes both, right? The payment to the collection center, which is third party, and payment to our hospital labs? No. 15% is only payment to collection center. Payment 40% of the net revenue, which is payment to the lab. Yes. As an expense line item? Later. When you send the sample to the hospital lab, the hospital lab will charge you a cost, right? That's coming to your cost line. Right? If the patient is paying- If you pick up INR 100 worth of sample, you know, from the market, which is charged to the patient, you probably, you know, give a 25% discount to the franchisee, and 7% goes and charged to the patient. That's your revenue line. 100 is GMV. You send the sample to the hospital. The hospital charge you for testing the sample. That comes to your cost line. Is that clear? Right. Based on what we are showing, it seems if the customer is paying INR 100, we are getting only one-third. Right? 40% is going to the collection center and 25% or so is going to the lab. No. I think you're confused. What I'm saying is, INR 40 is getting charged to the patient, INR 25 is coming revenue in our books, right? We are collecting INR 25. Of that collection, we are getting. Sending the sample, testing the hospital lab. There's a transaction happening there. They pay part of that money to hospital for testing lab, right? For testing the sample. INR 25 is the, what we can collect. INR 40- INR 25 is what the money which is paid to the third-party hospital as well as third-party, you know, franchise. Understood. Okay. Thank you. Okay. Thank you. The next question is from the line of Harith Ahmed from Spark Capital. Please go ahead. Good morning. Thanks for the opportunity. My first question is on one of your closest peers who announced a foray into Gurgaon, which is Apollo Hospitals, and they've acquired a 650-bed hospital there. We also have a significant presence in the region, and then we've announced a 1,000-bed expansion as well. Firstly, any thoughts on the incremental competition intensity in this important micro market? And then secondly, if you could give an update on the status of the two projects that have been announced. I think first and foremost, you know, this particular target or what they acquired has been available in the market for six years, okay? You know, it's been available, and there's a reason that they were the only bidders right now, or the only people through a bilateral listing. We have passed on it numerous times in the past, and we've passed on it on and off again. I mean, that's the extent I'd like to sort of go through for not doing that. Yeah, I mean, I don't see any threat or real challenge coming from that. Okay. My second one is on Max Lab. Currently they're tracking, Significant listing in Delhi. I mean, you have to keep in mind today, Max Healthcare is equal to the size of perhaps Apollo Hospitals, Medanta, Fortis Healthcare, and maybe somebody else put together. Understood. Max Lab, currently the network revenues are tracking at a quarterly run rate of around INR 25 crore. Is there an aspirational revenue target that we set for this business, let's say over the next three years, from the current INR 100 crore annualized level? Do we plan to explore any other adjacencies such as pharmacy, retail or primary care clinics, to further leverage the brand? No, we're not looking at doing anything to leverage the brand which is unviable. Primary clinics, et cetera, are not the most viable listing. We've been in that, and we've rolled it back. I think we've seen it with some of the other competitors also. They've done that, either paused on it or whatever else it is. As far as Max Lab is concerned, you know, it's a business. We have aspirations. We've had a three-year, five-year plan and so on. Of course, tactically it will keep changing, and the outlook will keep changing depending on what others are doing and what market is, that is, right now market is disruptive in terms of discounts, et cetera. We don't participate in that because you know, our sort of client base is very different. Yes, we continue to build this business out, and we've seen, although on a small base, good growth both quarter-on-quarter, year-on-year. You know, 50% year-on-year growth and a 24% quarter-on-quarter growth in a non-COVID business in Max Lab is very, very healthy. Yeah, we will continue to invest and grow this business. It has multiple benefits for us. A, brand reach, B, you know, it sort of it's an important part of our offering to be able to do home pickups for our patients, et cetera, and to reach out to more and more people. Yes, I think we will continue to build this business in slightly challenging times right now because of more of what is happening in the marketplace. You know, these things are known to settle. You know, at some point in time the discounting and the, you know, there will be some shakedown in the industry and hopefully we will get back to building this business to what our previous aspirations were. As in before, we avoid or desist from giving any forward-looking statements, so I don't want to make a statement, "This is what I wish to see in three years." Okay. Got it. Last one, if I may. Coming to MAX@Home, I think that's a very interesting business. Okay, so again, something which is about INR 30-odd crore in this quarter, but it's been healthy 10% growth over last quarter and 18% growth year-on-year. You know, it's a business of the future, in my belief. You know, we've been doing it for many years. It's a profitable business, most importantly, perhaps the only profitable home care business in the country. You know, we've got more than 650 people doing this business. So yes, you know, we foresee great opportunities here as well. But again, I want to desist from giving you a two-year or three-year, you know. Yeah. Is there a standalone profitability for this business that you can share, like you shared for Max Lab? Yeah. Mid-teen sort of EBITDA margins. Okay. Understood. Thank you for taking my questions. Yeah. Thank you. The next question is from the line of Ashwin Agarwal from Akash Ganga Investments Private Limited. Please go ahead. Congratulations to the Max team. Abhay, in last three years, you have built a fantastic franchise. I think Max stacks well in all the operational parameters compared to the peer group. I had one question for you. One of the co-promoters, KKR, as we know, for their own internal reasons, is selling their stake. If there is a potential stake sale of the entire, would you be looking out for financial investors, or what is the strategy on that front? I think, you know, it's a private equity fund. Private equity funds are known to churn their portfolios and sell because they have a particular holding period in mind. Their holding period for this investment was seven years. They've only done three years, but it doesn't mean. Yet they've seen great returns, you know, because of the performance of the company. You know, they have sold down about 20%, in the last six to eight months. The flip side, it's a large amount of stock which is coming to the market, yet you do have to keep in mind that the trading in our stock is not very large. It's basically because whatever is being sold also has gone into a lot of the strong hands. These strong hands don't, you know, sort of trade in the stock. Your trading volumes are INR 2 lakh -INR 3 lakh shares or whatever. I'm not that sort of worried about further stock coming into the market in the future. As a private equity fund, it's a matter of time rather than it's not a question of if, it's a question of when. Yet, they've been very clear in stating, and we put it out in the news item as well as a part of a release to the stock exchanges, that they are not in any conversations with any strategic buyers or conglomerates, et cetera. What that basically leaves it is sale in the marketplace only. Okay. In future, whenever that term or their holding period may be next one, two, three years, would you, in consultation with them, look at placing this large stock among two, three long-term investors rather than it coming to the market? Even right now, the 20% which is sold has been gone to long-term investors only, no? Okay. Okay. I mean, if you actually see, I mean, right now, if you look at the stock, between KKR and we have 50% of the company. Correct. The balance 50%, which is about INR 1,800 crores of stock is out there in the market. Okay. Which is about INR 45, INR 40, INR 48 crore shares. Yet the trading in shares is about INR 2 lakh or INR 3 lakh a day. Okay. You're not disturbed with having 23% stake and the other co-promoter selling off whenever they need to. No, I don't have any concerns on that. You know, I think there are immense examples of companies where the promoters have shareholding in this range. I mean, be it a player like Cipla, be it players like UPL, be it players like, you know, a lot of the Tata Group companies and other companies as well. I think, yeah. I mean, I'm not concerned about shareholding and, you know, balance shareholding going out in the marketplace. Thank you and wish you all the best. Thank you. Thank you. The next question is from the line of Prakash Agarwal from Axis Capital. Please go ahead. Yes. Yeah. Hi, good morning. Just one question on, you know, the growth. So we had a fantastic, you know, ARPOB growth, occupancy itself has increased substantially, and business seems to be normalizing now. Now the question is, you know, the growth and the margin, EBITDA growth, both are mid-single digit. So you mentioned in your opening remarks what are the levers, but when do we see these levers playing out? Is it from next year onwards and this year would be still this mid-single digit? Or how do we see the business shaping out over the nine months period, given that, you know, there are a lot of initiatives which are at play? I think, you know, where it's gonna shape out and what the margin is going to be is something for you to work out. I can essentially tell you what the levers are. The main levers would be international, will be the payer mix. You know, there'll be other smaller sort of these things. Do keep in mind two things. Quarter one typically is not the strongest quarter because you have price increases, et cetera, in the first quarter. Okay. Yet we don't have a bad quarter in the first quarter this year. That's one. Second is the payer mix, like I said, from 33%, here in one quarter it came down to 30%. Over the next six quarters, you're expecting it to be below 15%. That means 15% of your beds will be able to generate about 45% or 50% more revenue, and 85% of that will go down to your EBITDA. This is on top of what your regular growth should be. If you do the math, you'll come to some sort of a, you know, but that's for you to analyze. I'm gonna desist from giving any forward-looking, and we haven't given in the past also guidance as far as the numbers are concerned. I understand. I'm not asking for, you know, the percentage or that. I'm saying when do you see this happening? I mean, this, because we are sitting on a decent base, given the strong execution we have done over the last two years. Just trying to understand when does this start playing out double-digit growth? Or, with the addition of new beds, then only we start seeing that or it can happen? Sorry, you're talking about double-digit growth? That's right, yes. Double-digit growth as far as? Top line and EBITDA is concerned. I have not guided you double-digit growth at top line or this thing. It's something that we are working on. That's one. Okay? You're already seeing some sort of growth, which is, I think, quarter-over-quarter at least has been double digits. You're already seeing the 33% come down to 30%. Your growth right now is embedded with some payer mixture as well. Okay. When we are guiding it down to 15%, then, you know, your only question can be, is it gonna get bunched up in the last quarter or on the sixth quarter, or is it going to happen sequentially? Or, you know, how is it going to sort of play out? You know, that's why, you know, we can't do it on a quarter-over-quarter, month-over-month basis, and I don't, I refuse to give that sort of guidance. Now, if you want to draw a linear line, you're welcome to between you know, where we are today from 30% beds going towards institutional payer mix to 15% in the sixth quarter. Okay. For us, the EBITDA growth is 17% on a like-for-like basis, and the EBITDA growth is 23% on like-for-like basis, right? If you take the vaccination out from the quarter one, which we knew is non-recurring, and we reported the numbers separately also in quarter one last year. If you take that out and suddenly you compare the numbers, it's a 17%+ growth, right? And the EBITDA is also growing by 23%+. I don't know when you say that, you know, double-digit growth, so I don't know what do you mean by that. No, I'm talking about reported basis. There was COVID and then non-COVID was down. Now non-COVID is fully up, whereas COVID is down. I'm just saying on a first call. We just taken the COVID vaccination out. Because we haven't taken the COVID out. What we've taken out is only the vaccination. We know that vaccination was a non-recurring thing. That is the reason why we reported numbers separately for the vaccinations. I'm not taking the COVID out, I'm taking only the vaccination out, right? Which is actually OPD business and it was, you know, not integrated hospital, right? No, I understand that. Thank you. Secondly, I just wanted to understand the Shalimar which is getting added by end of, you know, this calendar or by fiscal end. How do you see the ramp up? I mean, given that, you know, your turnarounds are pretty fast. What is the plan here? Similarly, if you can guide for Dwarka also. Like I mentioned, your ramp up should be very quick, right? I mean it will not have any. At least the Shalimar Bagh is brownfield, should be very quickly. As far as Dwarka is concerned, it's not brownfield. It'll be a little longer. You know, we expect breakeven within the year. You know, it's on a large base of 3,500 beds that you're looking at another 300 beds coming up, so it should not disturb your numbers too much. Okay. Lastly, if I look at Devki Devi, particularly, you know, sales have been stuck, but margin has improved significantly. Anything happening there you want to call out? Not particularly. Yogesh? Prakash Agarwal, don't understand what you're saying. What's your question? You're seeing margin improvement, Devki Devi. I didn't quite get that. Prakash, don't read too much into it. There'll be some payments which we people made, you know, which is on a, Devki Devi has to donate some money in Saket to one of the trusts. That payments comes when they come. Are you talking about the margin improving? Can you repeat your question, Prakash? Yeah. If I see the, you know, the slide that you have provided, there Yeah. Which of the slide? RECO slide, you say? No? Hello? The slide you're talking about, right? Yeah. The slide where you have that revenue and EBITDA breakup. Yeah. Yes, but one thing, don't read too much into the individual hospital slide. I'm saying those movements happen from quarter on quarter. You know, because sometimes they have to make some donations separate, which they made when they made. I would say yes, there is improvement overall in all the hospitals if you compare the quarter four. You know that EBITDA has gone from 0.4% to 3.8%. Obviously you will see that in the underlying hospitals also. You know, so that's a welcome step. The point I'm making is that don't read too much into it. I think the gross number is what is more important than the individual, especially at EHS level, right? Because here the agreement that revised and as the agreement got revised, then maybe they'll have more charges to their P&L and then that will come to the MHL side, right? That revisions will happen in the course of this year. I'm saying this may be a temporary phenomena before the agreement revision takes place. Okay, perfect. Lastly, on the, you know, further growth initiatives. Next 5, 6 years we'll stick with a stated plan of bed additions. But you also talked about REIT kind of structure, asset light, you know, development, tie-up with developers, or ready-to-move-in hospital kind of setups. Is there anything on, you know, we're still looking at it or our hands are pretty tied up with the existing expansion plan? Dwarka is just that, isn't it? Dwarka is a tie-up with the developer. That is known. I was asking is there anything or anything else that is in the group? Yeah. There's plenty on the listing. I think, yeah, there's quite a few conversations around that. Okay. It is a big focus area for us. Yeah. Okay. Perfect. Great. Great. Thanks. No other questions. Thank you. Thank you. Thank you. The next question is from the line of Yash Shah from Investor Cadiz. Please go ahead. Hi, sir. I've just got one question. Given that our international patients footfall is back to pre-COVID levels and Afghanistan is now completely back, which country have you exactly seen sudden inflow? What I wanted to understand is it sustainable in your opinion? Sorry, I can't. Sorry to interrupt, Mr. Shah, but your voice is not clear. There is a lot of glitch. Okay. Is this audible? Like is this fine? Better now. Is it better? Yes. Okay. What my question was is, given that our revenue or our footfalls from international patients, it is back to pre-COVID levels, right? Afghanistan is now completely back, as compared to FY 2020, right? I just wanted to understand which country have you seen sudden inflow, like in footfalls? Do you think it is sustainable or will you be able to sustain from the other footfalls from the same countries? Yes. It is sustainable. You know, it is, we've been making efforts for entry into new markets and increasing also our patient flow from our existing markets, which is sort of got augmented and absorbed the lack of business from Afghanistan. I am going to again desist from giving you specific names of new markets because, you know, I don't want to do it in a public forum. We do see stickiness about this business. In fact, more stickiness with this business because this is a result of a lot of direct-to-fly offices that we are setting up overseas. Got it, sir. Just one small clarification. When we say our international footfalls is back to pre-COVID levels, do you mean the revenue, right? Yes. 11% which was- We mean the absolute terms, yes. Absolute terms. That's right. Okay. Got it. Thank you so much, sir. Thank you. Thank you. The next question is from the line of Amit Dhawan, an individual investor. Please go ahead. Hi. Thank you for taking my call. It's always a pleasure hearing you, Abhay. Can you discuss what levers are there any low-hanging fruits still there in ARPOB? I mean, if we look at ARPOB as something where we can guide for certain QoQ growth or we may think that we don't see seasonality in the ARPOB. How or are there any low-hanging fruits to take this higher? I wonder if you just know your thoughts there or, you know. First and foremost, primarily the low-hanging fruit is going to be the payer mix non-institutional, which we've been speaking about on this call, and second is international business. As far as seasonality is concerned, you know, there is, you know, a slight seasonality. Typically our fourth quarter is the best. Our first quarter and our third quarter are typically not the strongest quarters, etc. Yeah, so that's where we are. Thank you. Thank you. Thank you so much. Thank you. Participants who wishes to ask question may press star and one. As there are no further questions, I would now like to hand the conference over to the management for closing comments. Thank you so much for being on the call. The results are robust, as you can see, but don't come as a surprise for us in some manner. You've been a part of the calls in the past. You've seen us guide towards, you know, normalization and these sort of results. We are quite certain that this path should continue going forward as well. Thank you. Thank you very much. Yeah. On behalf of Max Healthcare, that concludes this conference. Thank you for joining us, and you may now disconnect your lines.