Max Healthcare expects occupancy to fall but revenue from each patient likely to rise

Hospital chain Max Healthcare expects the second half of the fiscal to be marginally better than the first half in terms of revenue generated from each patient as the third and fourth quarters usually witnesses more surgeries, the firm’s Chairman and Managing Director Abhay Soi said on Wednesday.

“As far as occupancies are concerned, you are not going to have a 78 percent kind of occupancy when you come off the season in quarter three. But there will be higher ARPOBs (average revenue per occupied bed) compensating for it because there will be a better surgical mix of both surgical patients, which typically tend to pay you a higher ARPOB,” he told CNBC-TV18 in an interview.

Soi pointed out that typically the second quarter is the viral season when more patients tend to get themselves admitted to hospitals due to dengue. The healthcare company, therefore, benefitted from the high viral load leading to higher occupancies. “Both of these factors gave the firm some operating leverage, and therefore, it witnessed another quarter of all-time high revenue and EBITDA, he added.

Max Healthcare MD’s remarks come a day after the firm reported its financial results for the July to September period during which its profit after tax more than doubled to Rs 511 crore while the consolidated net profit jumped over three-fold to Rs 457.35 crore as against the year-ago period.

This includes a one-time gain on account of the reversal of deferred tax liability (net of capital gains tax) relating to intangible assets transferred to Max Healthcare Institute Limited pursuant to the voluntary liquidation of Saket City Hospital Limited and distribution of its business undertaking in August 2022, the firm said in an exchange filing.

The healthcare provider's net revenue stood at Rs 1,482 crore during the July-September period, up from Rs 1,353 crore. Its revenue from operations stood at Rs 1,137.12 crore during the July-September period,019.26 crore, a regulatory filing showed.

In the September ended quarter, Max Healthcare's bed occupancy was at 78 percent, of which a percentage of total occupied beds were used for COVID-19 patients. The ARPOB improved to Rs 66,000 compared to Rs 59,000 in the corresponding quarter of the last fiscal and Rs 66,000 in April to June quarter of FY23.

Soi attributed the sequentially flat ARPOB to medical management during the period and relatively lesser surgical management, which implies little stress on ARPOB for the quarter.

"The growth in the second quarter FY23 revenue and operating EBITDA were driven by higher occupancies, improved payor mix, and increased ARR in OPD," the company said.

Max Healthcare’s international patient revenue grew by 16 percent quarter-on-quarter and reflected 110 percent of the pre-COVID average. “This is whilst Afghanistan, which is one of our key markets that used to be 12 percent of our total business is really down to a trickle, right now is down to zero because the Indian Embassy is not really issuing many visas,” Soi said. According to him, once resumes, the firm will see a massive flow from there.

“Occupancies will move up marginally from a base rate, but you will definitely see a significant move up as far as our ARPOB is concerned,” he added.