MAXHEALTH Q2 FY26 earnings call.

Guidance to track

• The CGHS revision (including ECHS and linked accounts) is partially implemented as of October 13th. The super-specialty category rates are pending portal updates expected by end of November 2025. Full benefit of approximately Rs 200 crore will flow through in FY27 with ~85-90% operating profit conversion.
• Management clarified that brownfield expansions at Nanavati and Max Smart will have near-immediate EBITDA contribution unlike greenfield projects. The operating leverage from recently added 30% capacity should drive margin expansion going forward.
• Existing units have historically delivered 6-7% ARPOB growth and this trajectory is expected to continue. The Q2 overall network ARPOB of 3% was suppressed by new hospital additions (which start at higher ARPOB but drag average as they scale).
• H1 capex was approximately Rs 900 crore. Management indicated H2 capex would be 'a bit higher' as expansion projects at Vaishali (500 beds), Greater Noida (400 beds), and other sites continue. Full-year capex guidance was not quantified.

Risks flagged

• The institutional segment (government PSUs, CGHS, ECHS) showed flat ARPOB in Q2. While overall revenue was maintained, the lack of realization growth in this ~26-27% revenue segment could pressure margins if volume growth slows. Management attributed this to Dara hospital's ramp-up phase but acknowledged this is a structural consideration.
• While the insurance impasse with three companies has been resolved (including agreement on future revisions), the company's 34-35% revenue exposure to TPA creates ongoing negotiation risk. The H2 renewal cycle includes other insurance companies. Any future impasses could again disrupt cashless facilities and shift patients to lower-margin self-pay channels.
• Multiple peers are adding significant capacity in Lucknow and Noida markets where Max has existing operations. While management dismissed near-term competitive concerns (capacity takes 4-5 years to construct), the long-term market share dynamics in these high-growth metros remain uncertain.
• When specifically asked about senior doctor departures from NCR hospitals, management provided only aggregate attrition data (<1% doctor attrition rate) without addressing whether any specific high-revenue specialists departed. The deflection with generic reassurance ('normal trend') suggests potential revenue risk if key specialists left for competitors, which was not transparently addressed.

Key quotes

• We are pleased to report that the network has maintained its strong growth momentum through the first half of FY26. For the second quarter, revenue grew by 21% year-on-year while operating EBITDA increased by 23%, thereby extending our track record to 20 consecutive quarters of consistent growth.
• The insurance may growth may have come down, but your cash growth may if you're not doing cashless, what happens? It's not necessary that you lose the patient, the patient also gets converted to cash paying. Because he goes later doesn't necessarily change the hospital because of which I think what you need to look at is the overall occupancy between cash and insurance and that's fungible.
• Oncology bunker is not operational over there right now. The idea was for us to fill up the hospital and then start to distill the pyramids. So I think we are at a stage where we have to start doing that now. You're going to see higher ARPOBs, you're going to see improvement expansion of margins through both patient mix, clinical mix including higher amount of share of oncology once the radiation starts over there.