Summary
Max Healthcare Institute Limited - Q3 FY 2026 Earnings Call Summary Friday, February 6, 2026, 11:00 AM IST
Event Participants
Executives 3 Abhay Soi (Chairman and Managing Director), Keshav Gupta (Senior Director – Growth, M&A and Business Planning), Yogesh Sareen (Senior Director and Chief Financial Officer)
Analysts 6 Bansi Desai (J.P. Morgan), Damayanti Kerai (HSBC Securities), Karan Vora (Goldman Sachs), Nitin Agarwal (DAM Capital), Shaleen Kumar (UBS Securities), Tushar Manudhane (Motilal Oswal)
Financials & KPIs
| Metric | Reported | Commentary |
|---|---|---|
| Gross Revenue | ₹2,608 crores | +10% YoY, -3% QoQ; impacted by seasonal softness and insurance disruptions. |
| Operating EBITDA | ₹648 crores | +4% YoY; margin compressed to 26.1% due to payor mix and pre-commissioning costs. |
| ARPOB | ₹77,900 | +3% YoY, +1% QoQ; growth driven by case mix despite drug pricing headwinds. |
| Occupancy | 74% | -100 bps YoY, -300 bps QoQ; lower due to lack of vector-borne diseases. |
| International Revenue | ₹230 crores | +14% YoY; contributed 9% of total hospital revenue. |
| Digital Revenue | ₹803 crores | 31% of overall revenue; website traffic grew 44% YoY to 71 lakh sessions. |
| Net Debt | ₹2,166 crores | Increased from ₹2,067 crores in Q2; Net Debt-to-EBITDA remains <1x. |
| Free Cash Flow | ₹281 crores | Generated after interest and tax; used to fund ₹408 crore in ongoing capex. |
Geographic & Segment Commentary
- Existing Network & Brownfield: Commissioned 63 beds at Nanavati Max and 53 beds at Max Mohali, achieving high occupancy (45 and 46 beds respectively) almost immediately. These beds are already EBITDA and margin accretive. Max Smart (200 beds) is ready for commissioning pending an occupancy certificate expected by Feb-end.
- Expansion Pipeline: Approved 260 additional beds for Max Dwarka (totaling 560) due to rapid ramp-up. New 450-bed project announced in Pune for 2030 completion. Major hubs like Sector-56 Gurgaon (500 beds) are on track for H1 FY27 phase one commissioning.
- Strategic Business Units (SBUs): Max@Home grew 23% YoY to ₹68 crores revenue, offering 16 service lines across 15 cities. Max Lab revenue grew 13% YoY to ₹47 crores, serving 5 lakh patients across 60+ cities.
Company-Specific & Strategic Commentary
- Payer Mix & Insurance: Cashless services with four Stand-alone Health Insurers (SAHIs) were restored late Q3 with price increments and a new annual automatic renewal mechanism. During the disruption, the network shifted toward institutional patients, which protected occupancy but diluted margins.
- Regulatory & Pricing Impact: Discontinued high-value patented chemotherapy drugs for institutional patients due to revised CGHS guidelines requiring sales below purchase cost. Management estimates a net sustained positive impact of ₹140 crores annually from CGHS/ECHS rate revisions after netting off drug discounts and GST changes.
- Clinician Talent: Addressed recent clinician departures in oncology by hiring a large replacement team from a peer institution, describing the movement as a “swap” with minimal long-term impact on service delivery.
Guidance & Outlook
| Metric | Guidance / Outlook | Commentary |
|---|---|---|
| Bed Capacity | ~6,000 beds by FY27; 8,000+ by FY28 | Driven by brownfield expansions in NCR and greenfields in Gurgaon/Mohali. |
| CGHS/ECHS Impact | Full impact by Q1 FY27 | Rate revisions for super-specialties kick in April 2026; net annual margin gain of ₹140 crores. |
| Max Smart Saket | Commissioning by March 2026 | Infrastructure ready; awaiting occupancy certificate expected by late February. |
| Net Debt | +₹500-600 crores in FY27 | Driven by capex intensity; management comfortable as Net Debt/EBITDA will remain <1x. |
Risks & Constraints
| Risk | Context |
|---|---|
| Seasonality | Q3 saw unanticipated softness due to a lack of vector-borne diseases (Dengue/Malaria) as rains continued into winter, preventing the usual humid breeding period. |
| Regulatory Pricing | CGHS/ECHS requires 30% discounts on MRP for drugs; where hospital margins are <30%, they face “cash out” situations or must discontinue supply. |
| Capacity Delays | GRAP-related construction bans in NCR caused 3-4 month delays; however, most projects remain within 6 months of original timelines. |
| Competition | Significant bed capacity (20,000+ beds) entering the market over 5 years, particularly in Gurgaon, may lead to temporary clinician cost inflation. |
Q&A Highlights
Insurance & Payer Dynamics
- Question: What was the nature of the insurance stalemate and the new mechanism? (Damayanti Kerai)
- Answer: Disruption occurred with four SAHI companies over tariff revisions; services are now fully restored with pre-agreed annual increment clauses to prevent future sunsets (Abhay Soi). Top 4-5 insurers represent ~25% of insurance business (Keshav Gupta).
Financial Impacts of Drug/Tax Changes
- Question: Can you bridge the ₹200 crore CGHS impact? (Vivek Agrawal)
- Answer: Gross benefit is ~₹280 crores, offset by ₹80 crores from oncology drug discounts/discontinuations. Factoring in ₹60 crores negative GST impact, the net sustained margin benefit is ~₹140 crores (Yogesh Sareen).
Expansion & Asset Performance
- Question: How is the Max Dwarka greenfield performing? (Nitin Agarwal)
- Answer: The hospital hit breakeven within 6 months with only ₹30 crores total loss. It currently operates at 75% occupancy with 20% EBITDA margins despite a 50% institutional patient mix (Abhay Soi).
Key Takeaway
Max Healthcare reported a resilient Q3 FY26 with 10% YoY revenue growth to ₹2,608 crores, despite a “double whammy” of seasonal softness in vector-borne diseases and temporary insurance disruptions. While EBITDA margins moderated to 26.1% due to a shift toward institutional patients and pre-commissioning costs, the network successfully integrated new brownfield beds at Nanavati and Mohali, which are already margin accretive. Strategically, the company is doubling down on its NCR core with a 260-bed expansion at the high-performing Dwarka unit and a new 450-bed entry into Pune. Management remains focused on ROCE over absolute ARPOB, targeting a scale-up to 8,000+ beds by FY28. With insurance contracts restored and the full benefit of CGHS rate revisions expected by Q1 FY27, the network is positioned for a margin rebound as capacity utilization matures across new towers.
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