Max Healthcare is preparing to add around 1,500 more beds by expanding existing facilities and building a new hospital in Gurugram, chairman and managing director Abhay Soi has said, as the company draws up an aggressive expansion strategy to drive higher-margin growth.
The healthcare provider plans to commission three brownfield towers — at its Max Smart hospital in New Delhi, Nanavati Max in Mumbai, and Max Mohali hospitals — over the next three months, followed by a new facility in Gurugram by the end of the year.
"The brownfields coming in, which is close to 1,000 beds, they should throw out significantly higher EBITDA margins compared to your existing business," Soi said in a telephone interview to Moneycontrol on August 13, adding the expansion is central to the company's strategy to enhance profitability.
The financial logic is compelling. Brownfield expansions, which add capacity to existing hospitals, ramp up much faster than new projects.
This speed is driven by pent-up demand at facilities already operating at high capacity. For instance, the Mohali hospital runs at "80-85 percent plus kind of occupancy levels", and the new beds there "should get taken up very quickly", he said.
The 160-bed tower in Mohali is ready and trial runs started in July.
This growth is also capital-efficient, leveraging the existing infrastructure and clinical teams to maximise efficiency. "The brownfield capacity additions do not typically require an increase in senior-level clinicians," Soi said, adding existing doctors are the ones "who are seeking these beds to start with".
The expansion aligns with Max Healthcare's broader plan to almost double the bed capacity over the next four to five years.
The hospital chain has a 5,200-bed capacity across 22 hospitals, of which 76 percent are in metro and tier-1 cities.
For Q1, Max Healthcare has reported a gross revenue of Rs 2,574 crore, up 27 percent from the year-ago period.
Operating EBITDA rose 23 percent to Rs 613 crore, while profit after tax (PAT) grew 17 percent to Rs 345 crore. Bed occupancy stood at 76 percent, with occupied bed days increasing by 26 percent from the year-ago quarter, the company said on August 13.
EBITDA per bed was Rs 68.5 lakh and excluding new units, it improved to Rs 74.6 lakh. The company generated Rs 389 crore in free cash flow from operations during the quarter. The EBITDA margin dropped sequentially from 27.2 percent to 24.9 percent.
Soi attributed the drop to new hospitals, which weighed down the margins, as they take time to ramp up.
Fuelling growth
Demand for the new capacity is underpinned by strong performance in high-value segments. A key driver is oncology, which Soi identified as "clearly growing faster" than other segments. It is the largest specialty, contributing 25.7 percent to the company's gross inpatient revenue.
Max is making significant investments in this area, with new radiation oncology bunkers set to open in Lucknow and New Delhi's Dwarka in the coming months.
"You are going to see a bigger flip in oncology going forward," Soi said, attributing the growth to both rising incidence and Max's expanding capacity, capturing more patients.
The company has seen a 32 percent YoY surge in revenue from international patients, a high-margin cohort which accounts for nearly 9 percent of the total revenue, surpassing pre-pandemic levels.
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