Narayana Hrudayalaya Ltd.

The Cayman operations experienced sequential volatility in patient numbers and a decline in EBITDA by INR 20-25 crores, attributed to the new hospital's early stages. The newly launched Integrated Care business is ramping up significantly in revenue, exceeding initial plans, but is currently loss-making, reporting an EBITDA of -INR 9.3 crores in Q1 FY26. Management expects this segment to reach breakeven or slight profitability by the end of FY26 or Q1 FY27, acknowledging its inherently lower margin profile compared to the hospital business.

Narayana Hrudayalaya has announced INR 3,000 crores for new projects, with 80% (INR 2,400 crores) expected to be debt-funded over a 10-15 year repayment period. The company aims to maintain a maximum Net Debt to EBITDA leverage ratio of 2.5-3. For FY26, INR 420 crores is projected for greenfield projects, though only INR 5 crores was spent in Q1 due to rainy season delays, with management expecting to catch up^📎 in subsequent quarters. Additionally, INR 457 million is budgeted for Cayman maintenance capex, with INR 158 million already incurred.

The India business continues to maintain its growth trajectory, with domestic revenue growing by 12% this quarter. The Average Revenue Per Patient (ARPP) saw improvement due to a low single-digit price increase implemented on January 1st, an improved payor mix, and a significant reduction in lower-realization revenue from Bangladesh (down 50% YoY). The company is also focusing on high-end procedures, such as cardiac robotic surgeries, which contribute to ARPP growth.

The oncology division has shown strong growth, with management aiming for it to constitute 20-25% of total revenue within the next five years. Bangalore's Health City, a 25-year-old center of excellence, drives higher inpatient average revenue (INR 231K vs. ~INR 120K in other regions) due to its specialized case mix, including advanced onco-therapies and bone marrow transplants. Management is exploring opportunities to replicate such advanced treatments in other hospitals with existing capacity, acknowledging it as a 'fair point' to work on.

The IRDAI-regulated health insurance business (NHIL) has picked up well, adding new markets and products like Aditi Plus. The Arya scheme has enrolled about 6,000 lives. While the business is still in its early stages, management expects to reach operational breakeven soon, acknowledging it will take a couple of years to refine the model. The focus is on direct distribution to offer affordable plans with no waiting periods, supported by mandatory health checkups for underwriting.

The company is actively pursuing digitalization, with 85% of patient documents digitalized. Initiatives like the nurse application (NAMAH) and digital inpatient services (medication cards) are being stabilized, aiming to streamline processes and improve discharge times by October. These efforts, combined with investments in robotics and automation, are intended to enhance overall efficiencies, optimize manpower utilization, and contribute to sustained growth.