Good morning, everyone. I welcome you to the Aster DM Healthcare earnings conference call for the third quarter of FY26.

Today with us, we have the senior management of Aster DM Healthcare, namely: Ms. Alisha Moopen, Deputy Managing Director; Mr.

T.J. Wilson, Non-Executive Director; Mr.

Ramesh Kumar, Chief Operating Officer; Mr. Sunil Kumar, Chief Financial Officer; and Mr.

Hitesh Dhaddha, Chief Investor Relations and M&A Officer. We are also delighted to have Mr.

Varun Khanna, Group MD of Quality Care. Mr.

Khanna is here solely in the capacity of a representative of Quality Care to give insights into the business and future plans of Quality Care, the entity which is in process to get merged with Aster DM Healthcare. It is to be noted that merger is subject to further regulatory approvals.

All external attendees will be in listen-only mode for the duration of the entire call. We will start the call with the opening remarks by management, followed by an interactive Q&A session.

Certain forward-looking statements in this meeting involve risk and uncertainties. Aster DM assumes no responsibility for actions based on these statements and undertakes no obligation to update them for future events.

With this, I will now request Ms. Alisha Moopen to start with opening remarks.

Over to you, Ms. Alisha.

Thank you, Puneet. Good morning, everyone.

Thank you for joining us. As this is our first call in 2026, wishing everyone a happy new year.

As we move through the final phase of the regulatory process of the proposed merger with Quality Care, we believe it is increasingly becoming useful to discuss our performance through the lens of the combined platform we are in the process of building. At the same time, we remain fully mindful that the transaction is still subject to shareholder and NCLT approvals.

While the merger process is yet to be consummated, combined performance of the platform reflects how the two organizations are already operating at scale with complementary footprints, similar clinical philosophies, and consistent operating disciplines, and provides a clearer view of the earnings capacity and capital efficiency of the platform for the coming years. Over the coming few months, wherever relevant, we intend to continue providing this combined pro forma perspective to help investors better assess the underlying economics of this platform.

With that context and keeping the medium- to long-term lens in mind, I will begin by discussing the combined pro forma performance of Aster and Quality Care before moving to Aster's results. We are very encouraged by the operating performance of the combined entity this quarter, which demonstrates consistent and broad-based growth driven by continued focus on clinical excellence, an improving case mix, and efficient cost management.

On a combined pro forma basis, the platform delivered revenue growth of 15% year-on-year to ₹2,366 crores, supported by 9% growth in total patient volumes and 8% growth in inpatient ARPP. This was also accompanied by the ConGo mix increased by approximately 150 basis points to 54.4% in Q3 FY26.

Operating EBITDA grew faster than revenue, increasing 22% year-on-year to ₹503 crores, translating into an operating EBITDA margin of 21% and ROCE of 21%. This performance is not limited to a single quarter.

The combined pro forma performance of Aster and QCIL has demonstrated strong performance across the first three quarters of FY26, supported by steady patient volume growth in the 8% to 9% range and sequential improvement inpatient realizations with inpatient ARPP increasing in the range of 8% to 10% year-on-year each quarter over the same period. This reflects not just top-line growth, but continued investments in operating quality, driven by higher clinical complexity and improving case mix, and sustained cost discipline across the combined platform.

As a result, revenues and operating EBITDA have grown at healthy double-digit rates across all three quarters while operating margins have remained stable above 20%, despite ongoing capacity additions and business seasonality. Supporting this momentum, we continue to pursue measured capacity expansion aligned with long-term demand.

Over the past year, we have added 560 beds, taking combined capacity to 10,620-plus beds across 28 cities. Our pipeline includes over 4,000 additional beds, which will take the total capacity to 14,710 beds through a balanced mix of greenfield and brownfield expansion.

This disciplined and balanced approach allows us to scale capacity while preserving capital efficiency and returns. Both Aster and Quality Care have independently demonstrated strong execution across cost management and clinical productivity.

Initiatives such as procurement centralization, insourcing of key services, and strengthening of clinical talent have again supported operating efficiencies as well as margin delivery. This provides confidence in operating alignment and execution discipline ahead of integration as we continue to progress through the merger process.

Coming to the update on the merger, a notable development during the quarter was the continued and structured progress on the proposed merger with Quality Care India Limited. The transaction has advanced through the key regulatory and procedural steps to date.

Following the receipt of the CCI approval and no-objection letters from the NSE and BSE with no adverse observations, the company has filed the merger application with the NCLT on December 11, 2025. As directed by the NCLT, the shareholders' meeting is to consider and approve the merger scheme is expected to be convened between February 27, 2026, and March 13, 2026.

Subject to shareholder approval, the NCLT will thereafter review the application, and upon receipt of its sanction, the merger will become effective. Based on the current process timelines, the merger is expected to be completed in Q1 FY27.

Now having reviewed the trajectory of the combined platform, let's turn into Aster's performance for the quarter. During the quarter, Aster delivered steady and broad-based growth supported by improving case mix, disciplined execution, and continued momentum across its core clusters.

A key development during the period was the commissioning of the Kasaragod hospital, which marked an important expansion milestone and contributed to overall revenue growth. Aster's revenue from operations stood at ₹1,186 crores, representing a 13% year-on-year increase driven by 10% growth in total patient volumes and a 9% improvement in inpatient ARPP.

This improvement was supported by a richer specialty mix with the ConGo mix increasing meaningfully during the quarter alongside continued focus on operational efficiency. This performance reflects a continued shift towards complex, high-value care.

Oncology revenues grew by 27% year-on-year with contribution increasing to 11% in Q3 FY26, which is up from 10% same time last year. The medical value travel segment grew 41% year-on-year led by higher international patient footfall in Kerala, where MVT revenues grew 64% year-on-year.

In our ancillary businesses, the lab revenues increased by 17% year-on-year to ₹39 crores, reflecting continued scale-up. At the operating level, performance remained stable despite the addition of new capacity.

Operating EBITDA stood at ₹224 crores, up 11% year-on-year with a margin at 18.9%. Core hospitals and clinics delivered 12% growth in operating EBITDA with margin of 21.4%, reflecting steady execution across established assets.

While reported margins reflect the impact of recently commissioned capacity, the core operating performance of the mature network continued to demonstrate strong operating leverage. If you exclude the newly commissioned Kasaragod hospital, revenue and operating EBITDA grew by 12% and 17% year-on-year respectively with operating EBITDA margins expanding by 90 basis points to 20.2%.

This like-for-like comparison and performance reinforces the strength of the established hospital portfolio and the predictability of the maturity curve across the network. Core hospitals and clinics delivered 18% growth in operating EBITDA with margins improving to 22.8%.

Excluding Kasaragod, the normalized PAT grew 22% year-on-year, reflecting improved profitability. Normalized PAT excludes the impact of provisions related to the recently revised labor code.

Sunil will explain more about this later in the call. Within this overall performance, the Kerala cluster continues to anchor stability and profitability, reflecting the maturity and the depth of the network following its turnaround.

Inpatient volumes grew 11% year-on-year and 8% excluding Kasaragod, indicating healthy underlying demand. Revenues grew nearly 20% year-on-year while operating EBITDA margins remained strong at 25.4%, led by cost efficiencies as well as operational leverage.

Kerala remains a key earnings and cash generation anchor for the platform, absorbing growth investments elsewhere while maintaining high operating discipline. The Karnataka and Maharashtra cluster saw a relatively softer performance during the quarter, primarily due to a temporary volume moderation from seasonality, some scheme rationalization that was done, and a few clinician movements.

Proactive hiring and retention initiatives are underway to strengthen the clinical depth and execution capabilities. With these measures in place, the Karnataka and Maharashtra cluster is well positioned to deliver improved performance and accelerated growth in the coming quarters.

Overall, Aster continues to deliver consistent earnings quality and operating discipline, reinforcing its role as a key engine within the combined platform. Moving to capex and expansion, our growth strategy continues to balance near-term operating performance with long-term capacity creation with a clear focus on disciplined expansion and return-led deployment.

Over the past year, we added more than 320 beds, taking Aster's total capacity to 5,451 beds as of December 31, 2025. This includes the recent commissioning of new capacity including Kasaragod, which expanded our India network to now 20 hospitals.

Since commissioning, the Kasaragod hospital has demonstrated a steady and encouraging ramp-up with outpatient footfall averaging around 400 patients per day, rising inpatient admissions, and over 120 doctors onboarded, establishing a strong clinical and operational foundation right from the onset. Beyond Kasaragod, Aster plans to add over 2,300 beds over the coming years through a balanced mix of brownfield expansion and greenfield projects, taking our total capacity to over 7,800 beds.

This pipeline is phased and aligned with demand visibility, ensuring growth remains disciplined and capital efficient. We also increased our stake in Aster Aadhar Hospital by 12%, taking our total ownership now to 99%, and we are in advanced stages of acquiring full ownership, further strengthening the operational control and integration within the platform.

During the quarter, Aster continued to receive strong external recognition across leadership, clinical excellence, and innovation, reinforcing the depth and quality of this platform that we're building. Dr.

Azad Moopen, our Founder Chairman, was honored with the Lifetime Achievement Award by Mount Judi Ventures and recognized as a visionary leader in healthcare at the ELETS Healthcare Innovation Summit. At the same summit, Aster DM Healthcare was awarded the Best Hospital Chain of the Year, with Aster RV recognized as the Best Multispecialty Hospital and Aster Whitefield receiving awards for excellence in cardiology, pulmonology, as well as urology.

Aster Hospital also received top rankings at The Week India Health Summit 2025, with Aster MIMS Calicut ranked as the number one multispecialty hospital, Aster Medcity Kochi ranked second among multispecialty hospitals, and Aster CMI Bangalore recognized as the second-best emerging multispecialty hospital. In addition, the group was recognized amongst India's top 500 value creators by Dun & Bradstreet, and Aster Digital Health India received the Innovation New Initiatives Award at the 24th Data Centre Summit & Awards.

To conclude, Aster has delivered a resilient and well-balanced performance during this quarter, supported by steady growth across the core hospitals, an improving case mix, disciplined cost management, and continued strengthening of clinical talent and leadership depth across the network. Our consistent approach to operating execution, steady progress on capacity expansion, and focused investments in people and systems have further reinforced the stability and scalability of our regional platforms.

As we move towards the final stages of the regulatory process for the proposed merger with Quality Care, our focus remains firmly on execution excellence, capital efficiency, and building a clinically strong and scalable organization while continuing to deliver consistent operating performance. By deepening leadership capabilities and attracting high-quality medical talent, we believe we are well positioned to deliver accessible, high-quality healthcare at scale and create sustainable long-term value for all our stakeholders.

I will now invite Mr. Varun Khanna to take you through the Quality Care performance.

Thank you.

Thank you, Alisha. Good morning and wish you all a very happy 2026.

This quarter demonstrates continued growth momentum and value creation from disciplined execution of initiatives launched earlier. During the quarter, we've strengthened our micro-market leadership through focused investments in clinical capabilities and infrastructure while maintaining rigor in our approach to bed capacity expansion.

Overall performance in Q3 was strong with revenue rising 17.3% YoY to ₹1,181 crores and post-Ind AS EBITDA increased 32% YoY to INR 279 crores. The post-Ind AS EBITDA margin expanded 265 basis points YoY to 23.7% in Q3 FY26.

The revenue growth during the quarter was driven by increase in IP and OP volume, 8% YoY for both; improvement in specialty mix with ConGo-T share increasing by 60 bps to 57.6%; and a very favorable shift in the payer mix as the share of cash and insurance business rose further by 100 basis points to 80.1%. Total ARPOB increased 12.2% year-on-year to INR 47k in this quarter from INR 42k in the same quarter previous year, driven by improvements in specialty mix, payer mix, and a 3.4% reduction in ALOS to 3.9 days.

EBITDA growth also reflects the early success of key synergy initiatives including procurement, new clinical talent hiring implemented in the first half of FY26, continued focus on clinical talent recruitment and management along with the strong ramp-up of the Nagercoil unit launched in October '24, which has already started contributing very profitably in this quarter. During the quarter, the mature units, which is approximately 60% of our revenue, delivered a 12.9% YoY revenue growth and 18.8% YoY EBITDA growth, achieving a margin of 32.8%, an expansion of 160 bps over last year.

Emerging units, which is about 7% of the revenue, continue to scale up well, recording a 15.6% quarter-on-trailing-quarter EBITDA growth and a margin of 13.3%, reflecting a 140 bps quarter-on-trailing-quarter expansion. EBITDA improved YoY, increasing from a loss of ₹1 crore last year to a profit of ₹10 crores this year for this category.

Focused units, which is 29% of the total revenue, delivered a robust 19.1% YoY growth and 68.1% YoY EBITDA growth, and achieved a margin of 17.8%, representing 520 bps YoY expansion, driven by sustained emphasis on operating excellence across the business. We continue to draw top-tier talent from across the healthcare ecosystem, and over the past few months, we've built out a strong leadership bringing a wealth of experience from across the industry.

Given our leaders' experience and expertise, we feel well placed as we enter our next phase of growth and excellence in care. We've continuously been advancing our doctor hiring models in a very structured way.

We've onboarded over 100 clinicians across the network during this year. While these initiatives were launched a few quarters ago, this quarter has shown significant progress with the monthly recurring revenue from the newly hired clinician cohorts reaching ₹24 crores this quarter.

Moreover, these new hires have been instrumental in driving a shift towards higher acuity care with our ConGo-T share increasing by 60 basis points to 57.6%. Our commitment to advancing clinical excellence has driven several notable milestones.

We performed the first matched unrelated donor, MUD, transplant at KIMS and carried out the first cadaveric transplant in Aurangabad, earning recognition as an authorized cadaveric transplant center. Additionally, our surgical oncology and urology teams at Nagercoil successfully executed a very rare and complex laparoscopic resection of a large retroperitoneal tumor in an 11-year-old boy, demonstrating our commitment to bringing the highest quality of care in tier 2 and tier 3 markets.

We also reduced our ALOS by 3.4% to 3.9 days YoY. To further enhance our clinical programs, we've committed to invest in advanced, future-ready technologies to enhance clinical outcomes and expand the access to specialized care.

Through our partnership with Elekta, we are deploying five linear accelerators across our network along with the network's first advanced central planning system in oncology. This strengthens clinical decision-making, standardizes care delivery, and enables technology-driven collaboration with expert clinicians.

In parallel, we are strategically scaling our robotic program. Through a newly established partnership with Intuitive Surgical, with the planned acquisition of five robotic systems, we are the first organization to implement robotic surgery at this scale across the tier 2 markets.

This initiative is our effort to democratize access to cutting-edge surgical care, ensuring patient benefit from the latest advancements in gastro, general surgery, and gynae. Expansion continues to be a key strategic priority.

We remain committed to strengthening our presence in existing markets and entering new ones through brownfield expansions, strategic M&A, and greenfield developments. Our enhanced near- to medium-term growth plan includes investment of around ₹2,000 crores to add over 1,700 beds in the next 3 to 4 years.

In line with our mission to improve accessibility to high-quality care, 1,300 of these 1,700 beds will be added in non-metro, tier 2 markets. Our efforts continue to get recognized in the industry.

Some key accolades we received during the quarter include the Visionary Healthcare Leadership Award at the AHPI annual conference; KIMSHEALTH Trivandrum received the Kerala Health and Medical Tourism Award from CII; AHPI conferred the Best Emerging Hospital to KIMS Hospital, Nagercoil. Thank you yet again, and I'll pass it to Ramesh.

Thank you. Thank you, Mr.

Varun, and good morning, everyone. I'll take a few minutes to walk you through the performance of each of our cluster I think this quarter and share an update on our operational priorities and team strengthening processes.

Let me begin with Kerala, which was a clear standout cluster this quarter and continues to anchor the company's performance. The cluster delivered a strong year-on-year performance Q3 FY26 with a revenue of ₹629 crores, growing 20% year-on-year.

Excluding Kasaragod, the revenue increased 19% year-on-year to ₹619 crores, highlighting the sustained strength of the core hospitals and the ability to grow on elevated base established earlier in the year. Performance during the quarter reflected a continued momentum post-recovery with our underlying demand remaining stable.

Revenue growth has also driven by a strong growth in MVT revenue, growing 64% year-on-year, led by a higher international patient footfalls from Maldives, Oman, and other Middle East markets. This is complemented by a sustained growth in oncology revenue and the initial ramp-up of the newly operationalized Kasaragod hospital.

Inpatient grew by 11% year-on-year while the ARPP IP increased 7%, supported by a improved case mix led by higher share of complex procedures, particularly in oncology. From a profitability standpoint of view, operating EBITDA increased 18% year-on-year, ₹144 crores.

Excluding Kasaragod, operating EBITDA grew 28% year-on-year to ₹157 crores with a margins expanding by 190 basis points to 25.4% margin expansion. It was purely driven by operating leverages across mature assets, continued the reduction of ALOS, and disciplined cost management across manpower and overheads, even as oncology-led growth resulted in a higher material intensity.

With the close to 3,000 capacity of beds, a stable leadership structure, and a clear expansion runway, the Kerala cluster remains well poised to sustain momentum, compound growth over the medium term, and deliver the best-in-class profitability. Turning to the K&M cluster, revenue grew by 7% year-on-year to ₹383 crores in Q3 FY26, supported by a strong 17% increase in inpatient ARPP, despite a 9% year-on-year decline in patient volume.

Volume softness was largely due to the discontinuation of the state scheme at Aster Aadhar and a few clinician movement due to the heightened competitive intensity in Bengaluru micro-markets. The operating EBITDA grew by 55% year-on-year with a margin of 21.9%, despite higher material cost building to oncology.

Furthermore, proactive hiring and retention initiatives are being implemented to strengthen the depth and the execution capabilities. With these measures in place, the K&M cluster is well positioned to drive improved performance and accelerate growth in the coming quarter.

Turning to A&T cluster, revenue grew by 13% year-on-year to ₹137 crores in Q3 FY26, driven by 4% increase in patient volume and 10% improvement in ARPP IP, reflecting a better case mix and a pricing discipline. From a profitability perspective, operating EBITDA increased 7% year-on-year with margins at 13.2%, despite increase in clinical manpower cost.

However, there has been a sequential margin improvement from 7.9% in Q1 FY26 to 13.2% in Q3 FY26. Overall, the quarter reflects a steady execution across clusters with Kerala continuing to anchor growth and profitability, and K&M and A&T making progress on revenue quality and operational discipline.

With focused intervention underway and a balanced growth strategy, the platform remains well positioned to sustain momentum and deliver consistent performance in the coming quarter. Thank you, and I will now hand it over to Sunil for a detailed review of the financial performance.

Thank you, Mr. Ramesh.

Good morning, everyone. For the quarter ended 31st December 2025, excluding our newly launched Kasaragod hospital, revenues increased to ₹1,176 crores, up by 12% in Q3 FY25.

Operating EBITDA has increased to ₹237 crores with a margin of 20.2% compared to ₹202 crores in Q3 FY25 with a growth of 17%. Normalized PAT, normalizing the recent changes in the labor code and post-NCI, for the Q3 FY26 is at ₹98 crores compared to ₹81 crores in Q3 FY25 with the growth of 22% YoY.

Similarly, for the nine months ended 31st December 2025, India revenues have increased to ₹3,451 crores, up by 10% from nine months FY25. Operating EBITDA has increased to ₹715 crores with a margin of 20.7% compared to ₹613 crores in nine months FY25 with a growth of 17%.

Normalized PAT post-NCI and also the labor code changes which recently happened for nine months FY26 is ₹298 crores compared to ₹251 crores in nine months FY25 and growth of 19% YoY. Our PAT for the quarter was impacted by one-time exceptional expenses related to implementation of new labor code amounting to ₹27.9 crores.

This includes a provision of ₹26.3 crores towards gratuity and ₹1.6 crores towards compensated absences. Moving to segmental performance, our hospital segment continued to deliver consistent and strong performance during the quarter.

Excluding Kasaragod, revenues grew by healthy 14% YoY while EBITDA grew by 18%, leading to an 80 bps improvement in margins. Importantly, performance was consistent across hospitals at different stages of maturity.

Our mature hospitals above seven years delivered 14% growth and 17% EBITDA growth, operating at robust ROCE of 36.2%. Hospitals in 3- to 7-year maturity bracket recorded 10% revenue growth and strong 28% growth in EBITDA with ROCE improving by 470 bps points to 25.7%.

Our new assets, which are less than 3-year-old, saw revenue growth of 19%. Turning to our diagnostic business, I'm pleased to share that Aster Labs has successfully delivered a turnaround since the start of FY25.

EBITDA margins have expanded from negative 7.6% in FY24 to positive 7.6% in FY25 to 12.2% in YTD FY26, driven by robust 35% year-on-year growth in external business, enhanced operating leverage, and improved material cost efficiencies. This turnaround has translated to healthy ROCE of 27%, a remarkable recovery from a negative levels a year ago.

On the wholesale pharmacy front, we took a strategic call last year to outsource the loss-making part of the segment. While this decision led to a reduction in reported revenues, it has materially improved profitability.

For the first nine months, EBITDA margins improved to 1.8% compared to negative margins in the same period last year. Importantly, this improvement is sustaining with the segment delivering EBITDA margins of 2.2% in the most recent quarter and moving to positive ROCE for the first time.

As of nine months FY26, our total capital expenditures stood at ₹406 crores with nearly 50% allocated towards expansion projects. We continue to maintain a robust liquidity position with cash and cash equivalents of ₹1,255 crores while our gross debt remains moderate at ₹631 crores.

Additionally, we've seen significant improvement in ROCE, which has increased by 260 bps from 19.5% last year same time to 22.1%. With this, we have laid a solid foundation for future growth.

As we move into the future, we are confident of building on this momentum with the same discipline and focus. On that note, I conclude my remarks and hand it over to Puneet to begin the Q&A session.

Thank you.

Thanks, Sunil. Dear participants, during the Q&A session, you will get a chance to ask a question by raising your hand through the raise hand icon in Zoom application at the bottom of your window.

We will call out your name after which your line will be unmuted, and you will be able to ask your question. I would also like to request to all the participants if you can introduce yourself with your name and company that you are associated with before asking the question.

If you are not associated with any company and you are an individual investor, you can highlight that as well. Moving on to the Q&A session now, the first question is from Mr.

Tausif. Mr.

Tausif, can you please unmute yourself and ask the question?

Thanks, Puneet. I'm audible?

Yes, you are audible.

Hi, this is Tausif from BNP Paribas. My first question is to Ramesh on the performance of Kerala flagship hospital, Aster Medcity.

We have seen a 20% more than 20% growth this quarter. Can you give us more color on this performance, and especially how much delta has been driven by the MVT volumes, and whether this growth in the MVT is sustainable or not, and the overall Kerala business?

Are we seeing the volume increase for the overall MVT, or is it just about Aster DM Healthcare?

Thank you, Tausif, for that question. I'm sure you rightly highlighted about the flagship of Aster.

It has really grown well. If you really look at the performance of some few months back, we always had the issue of sometimes the leadership issue and the MVT growth.

You have rightly pointed out all this has been taken care. We have a solid leadership there at the ground level.

We are able to add more clinicians to the systems. That is also brought in a lot of the top-line revenue, and certain programs like the robotic program have taken off very well.

In fact, there are months that around 80 to 90 surgeries of robotic program has been done. The overall performance consistently it has been doing around a ₹90 crores and above for the last 5, 6 months.

That's been the performance of the flagship. Since you touched upon the MVT, MVT it's grown by 64%.

That clearly shows that we are back on MVT, and especially from Maldives and Oman is what our patients are flowing in. I think this is definitely sustainable because there was a temporary setback for these patients not coming back, and I think we have started driving them back, and we have a proper engagement with the both Maldives and Omani patients as well.

That's where it stands. I'm sure flagship would definitely contribute, and other units of Kerala is also started doing exceedingly well, including MIMS Calicut.

The new unit added is also performing very well, Kasaragod. Entire Kerala cluster will sustain and you can see a significant growth, and with very good margins.

It has given 25. 25.5% margin operating margins as well.

That's helpful. My second question is on Karnataka cluster.

This quarter, we have seen occupancy dip to 55% from 60% earlier, while you have highlighted there is some movement of clinicians. Can you give us more color, means in which segment the clinicians have moved out, have we able to fill in the gaps, and when we can expect a normalized business?

Right. K&M cluster, as we look at, let me tell the good news is that the IP is grown by 17%.

That's really clearly says that we are in a strong footing in Karnataka. Especially when it comes to the ConGo-T mix and especially in that oncology and neurosciences have been contributing very well.

Of course, Whitefield facility continued to contribute 14% of the growth. It clearly says that we are in a strong footing.

Yes, coming to the other two unit Aster RV and the two micro-markets, one is south and one is the other Aster CMI north. Yes, here, as you rightly mentioned, now we have been performing with the ConGo-T again.

I'm talking on oncology is being doing very well across all the three units, and of course transplant as well in these two units. Even though there been a lot of competition in the market and there is some attrition of clinicians, we are able to replace all those clinicians.

Most of them are either intensivists, anesthetists, or even for that matter revenue-generating doctors as well. If I say, for example, in Aster CMI, if I would have had the pediatric team moving out, we have onboarded some of the best well-renowned pediatric team on board.

The replacement has also been happening in a fashion that we hire the best of the clinician on board. That's where I think we will be not only replacing, we'll also be adding new clinicians.

Way forward, and the good news is there are some clinicians who have already left us is also rejoining Aster. That clearly shows that our mantra, which we say, that we will treat you well.

Most of the clinicians happy rejoining as well. That's a very good news.

Way forward, our plans are to hire more clinicians, ensure that we have the right clinicians and well-renowned clinicians on board to contribute and have a steady growth happening for Bangalore.

Ramesh, just the last one on the ARPOB levels of Bengaluru cluster. Means have we reached the optimal level of case mix in Bengaluru, and what is the sustainable level of ARPOB levels one could see?

Whether one can assume 75,000, and from there whatever the industry growth of 6%

to 7%? There is a headroom for growth, as I rightly said, once we start progressing well with our ConGo-T, which will be our focus for Bangalore as well, the ARPOB would also, which should move to another from whatever 77,000 to furthermore it can add another 6% to 7% more is what I foresee in the coming days.

For mature hospital, Bengaluru, ₹75,000, ₹80,000 would be the current levels, right, to look out for?

Sorry, I didn't get you.

For the most of the mature hospitals in Bengaluru, the levels would be ₹75,000 to ₹80,000, right?

It should be ₹75,000 to ₹80,000.

Thanks. I'll get back in the queue.

Thanks, Tausif. The next question who is asking from Mr.

Amey. Can you please unmute yourself and ask the question, please?

Yeah. Am I audible?

Yes, Amey, you're audible.

Yeah. Thank you.

Thank you for giving me an opportunity and congrats to the management for good numbers. The first question I have on the QCIL front.

We have shown really good improvement this quarter on the margin front. Is it driven solely by the QCIL efforts on each of these assets, or is there also a impact of synergies which we have started seeing in QCIL?

Thank you so much.

Amey, first of all, thank you. Yes, the numbers look good.

Amey, I think the question, as I understand, we do have synergies, I told you previously as well. We do have synergies, but that's not the QCIL-Aster synergies.

Those synergies will only play out post the merger, post the regulatory approvals come in. Even in QCIL, we had synergies that played out between KIMS and CARE and Evercare.

Those synergies are playing out. We started working on them about a year back.

That's led to a significant upside. We've also had significant business improvement.

I touched upon it, but let me emphasize them again. Our payer mix is getting better.

We've actually moved to 80-plus percent payer mix now. Just to give you a sense, I think a few years back, this was 76%, 77%.

There's a very significant shift that is happening. Our ConGo-T continues to get significantly improved.

I alluded to the fact that we've been hiring a lot of clinicians, almost 100-odd clinicians have been hired in the last three quarters. The monthly impact of these new clinicians coming on board is about ₹24 crores, which is sizable.

We've been able to restrict any consultant leaving. The good part is that anything that we're hiring today is accretive.

I also gave you a sense by various categories, as that we've always emphasized the four different categories that we work on: mature, emerging, underperforming, and focus. Mature continues to grow very well, and we've seen about an 18%, 19% kind of an EBITDA growth rate on that.

The other categories are firing as well. Wherever we had some challenges, wherever EBITDA wasn't looking good, for instance, we had the focus units where EBITDA wasn't looking very good, and which is why they got categorized in focus units.

That was a reasonable number. 28%, 29% of the value of our business was coming from there.

There we've seen a 19% growth on the top line, and the bottom line has grown about 70%, which also translates into 550 bps of improvement on the EBITDA percentage. That is largely led by the value growth or the top-line growth and the initiatives that we've taken.

I hope that answers your question.

Sure. Basically, the synergies led by the combined procurement, pharmacies, etc., that is likely to play out only post merger is what you mean to say.

Absolutely. If you are, again, if you are alluding to synergies between QCIL and Aster, those synergies will only play out post merger.

There are no synergy impacts of the proposed merger in the QCIL results.

Sure. What could be the quantum for these synergies?

The reason I'm asking this because the next year, if you look at for the combined entity, we are adding on almost 900 beds, of which 700 beds are greenfield, where only QCIL is only adding 200 beds, which I suppose are brownfield. This number has cut down sizably from last quarter.

The next year seems to be a high greenfield year where there would be a losses to recoup. Will these synergies will be able to recoup these losses?

Let me take a part of it and pass on the part to Sunil to handle. We will see some bed growth which is coming in.

The bed growth that we're looking at essentially may not be margin dilutive because a large part of these beds are coming in Bhubaneswar, which is a facility for us that does very well. Bhubaneswar, we are maxed for capacity.

We can really take more patients. It's a highly profitable asset for us.

We are also adding to the acuity. We are adding oncology there.

I don't think these will be dilutive on margins is one part of it. Some of the beds that are getting added in Raipur will also not be margin dilutive.

We will be able to enhance again acuity there because one of our linear accelerators is coming there. That too doesn't seem to be a concern, if that's the question.

On the margin piece for the blended or the merged entity, I'm going to pass this question to Sunil.

Sunil. Thank you, Varun.

Amey, see, with respect to next year, what we are expecting is that because one of the things which has changed is the Sarjapur Road hospital, right? What has happened is that it took us some time to get the drawing approvals and all, and construction just started, basically the interiors and everything.

It should come mostly the fag end of FY27. That's why we moved it to beginning of FY28.

That means to say we'll have only two greenfield projects next year. Also if you've seen the merger date also, right, we are expecting sometime in quarter one.

For sure you can be very sure on the how when the operations will happen of these two greenfield. Because the out of the Hyderabad and the Trivandrum, Trivandrum is expected to operationalize first and sometime in the beginning of H2, right?

I'm hoping that before that the merger should happen. Second is related to the Hyderabad hospital, which is women and children care, and that should happen sometime in the second half of the H2 of next year.

Keeping that in mind the timeline, I don't think so it'll have a very considerable impact for the financial year. It'll be very similar to Kasaragod, right?

It started only in the second half, and you'll see it's not going to impact you on the full-year margins. Also it's very, very important, Amey, to note that both in Trivandrum and in Hyderabad, we have the QCIL assets already there, right?

We can get the network benefit, which is a very, very important thing. Trivandrum, we have called out previously also, it's very, very underpenetrated from a corporate, private quality beds per se.

KIMS has been the leader there, and we're expecting to get the network benefit in Trivandrum to have a very, very good launch, attract the good clinicians locally, and we're able to drive the ramp-up. That's what we've shown in Kasaragod.

In a city which is only 1.5 million, we are talking about ramping up to within 3 months 400 patients, OP patients per day, and 50 to 60 occupied beds in a day. Same thing in Hyderabad also.

Hyderabad is what the CARE has got good assets, and our asset, women and children, is very much strategically situated in a IT geography. We expect it to do really, really well.

I just want to add here that as you saw the combined number, more than 50% of the beds are actually coming brownfield in nature, right? Plus the synergy element that we've guided that we expect 10% to 15% of EBITDA coming in form of synergies over next 2 to 3 years.

Putting all of that in perspective, we don't want to guide you on every quarter. I think for us what's important is, do we reach to those 24%, 25% margin threshold in 2 to 3 years?

The answer is probably yes, that we intend to do that, and I think we see that moving forward. There'll be few quarters that you'll see because of new capacities coming in.

You'll see that excluding those projects, the momentum continues, but there will be some impact because of those new projects coming in, right? I think it's important to have clarity on that we are looking for a 24%, 25% margin with a sizable expansion in capacity, volumes, as well as top line as we move forward.

Sure, sure. Thank you so much.

That answers the questions. The last question, if I can squeeze in on Bangladesh, because there has been a lot of concerns from the investor side.

How this unit cluster is performing for QCIL over last nine months, since there have been a lot of social issues there. Any thoughts on the minority stake as well in that entity?

Thank you so much. I will join back the queue.

Thank you, Amey. Bangladesh has also done well, Amey, for us and is in line with our overall performance.

The top-line growth for Bangladesh for the year, and I think that is the question that you had. You didn't ask for a quarter, you actually asked for YTD, is at about 21-odd percent.

I've said this earlier, Bangladesh does get influenced by certain external factors, but the fact of the matter is that we happen to be the best place for patients in Bangladesh, and therefore we spring back our volumes very, very quickly. That's the strength of Bangladesh continues.

Sure.

Any thoughts on the minority interest? Are we going to buy back this minority interest, or how is it going to stay?

Thank you so much.

Amey, thanks for the question, but I think we don't want to give a very leading comment on this. We will keep you posted as and when we have a decision on this.

Sure. Thank you so much.

Thanks, Amey. The next participant who is asking question is Miss Damayanti.

If you can unmute yourself and ask the question.

Yeah. Hi.

Thank you for the opportunity, and I hope I'm audible. My first question is on your Kasaragod unit, which just started.

How do you see the trajectory for scale-up of this unit, and when we should be expecting unit to turn cost neutral? That's my first point, and then I have some other questions on the new units.

I'll come back.

Damayanti.

I think I called out on the Kasaragod unit. It has done really, really well.

As I said, in the third month, because the ARPOBs are quite lower being a tier 3 city, right? ARPOB is only at ₹31,000.

With that, we are able to ramp up to 50, 55 beds only in the third month with more than 400 patients, right? Losses have drastically reduced to only around ₹2, ₹2.5 crores per month.

If the trend continues, the growth what we had in the first 3 months, I think within the next one quarter, I think we should be able to break even.

Okay. You're comfortable about covering up all the cost in short term, right?

Because we already added all the key clinicians. We've hired more than 100-plus clinicians with more than 40 to 50 RGDs.

Also look at the ConGo-T mix there. Already ConGo-T mix for a new hospital is more than 46%.

That's really good.

Okay. That's, I think, helpful.

My second question is on your Women and Child Hospital in Hyderabad, where I believe we had seen some shift in the timeline, and now you are indicating that to start in the second half. If you can just add the time when you are confident about launching the unit, and in preparation of entering that space, what kind of hiring or other preparations are currently underway?

Yeah. As you see that it's a women and child project broad specialty.

It is a multispecialty of women and child. Multispecialty means we are going to have all specialty of women, especially to start with oncology, not only maternity cases, gynae cases.

We are also looking at other super-specialization of women alone, and also all subspecialties of children as well. That's the concept of the hospital.

We wanted to add a bunker now in between. That's where the timeline got shifted a little bit.

Nevertheless, as per our projected timelines, we will be commissioning. Side-by-side, we are looking into the talent pool as well.

Since the concept is all there, we are also looking at which talent can be hired, and how to kickstart. All the plans are in place, and sure shot, we will be coming up at the given timeline.

Miss Damayanti, just to add to what Ramesh is saying, we've had other women and children in Kottakkal before as well as within Whitefield Hospital there is a women and children block. We have done this before.

The delay has been slightly because we wanted to change the configuration of how many beds are for women compared to how many for children, and also work with sort of the QCIL team on how do we kind of leverage this network that Quality Care has in Hyderabad. Exactly like you said, there's a lot of review happening in terms of onboarding of the right clinical talent for a specialized care for the women's hospital largely in Hyderabad.

The preparation is all on.

Sure. Thanks, Alisha.

Just want to understand of the total capacity which you're planning for this facility, how much will be for the pediatrician part and how much will be for women care?

More than the majority will be for women. I don't want to give exactly the number because we still have some flexibility, but sort of more than 60% will be for women's care.

Okay. My last question is on the talent movement in Karnataka cluster, which we already discussed, and you mentioned you are preparing some strategy to retain the best doctors in your team, etc.

If you can highlight a bit about how the competition is shaping up in terms of getting the best talent, as we see more competitors coming into this market, especially Bengaluru, and what are your key strategies to retain your core doctor team there?

Yeah. I think I have called out, but still I would like to repeat the same.

One, as rightly, we are looking at how to retain our existing clinicians, so that is, of course, many of them are quite happy and contented with Aster itself. They don't want to because as we go by our tagline, we will treat you well.

They're quite happy with the culture of Aster. Many of the senior clinicians are quite happy to be with us only.

I did mention about that few of them who had left, they would like to come back. That is also one good thing what we see.

Now further, we are looking at what is the best talent available in Bangalore. We look into the top 1, 2, 3, for example, what in the ConGo-T mix, we want this, who are the top 1, 2, 3 clinicians, and we would like to onboard them, engage them.

We are putting all the efforts, and shortly you'd hear some of the very big names would also be associated with us. That's the way forward plan.

We are trying to get the best of the clinicians on board.

Sure. Thank you, team.

I'll get back in the queue.

Thanks, Damayanti. I would like to put a reminder to all the attendees who would like to ask a question, please raise your hand and ask the question.

With this, now we have next participant, Mr. Kunal Randeria.

Kunal, can you please unmute yourself and ask the question?

Hi. Good morning, everyone.

My question is around your expansion plans, and just I would like a few clarifications. In Kasaragod, for example, you have 264-bed expansion, but those are bed capacity, right?

How many beds will be operational, because we have 80 census beds for now. When will the remaining come, and how much should be the total operational beds there?

Thanks, Kunal, for the question. See, we said that 264 beds is the total capacity beds.

Out of that, census beds is approximately 183 to 185 census beds, and balance around 80 beds is a non-census bed. That's a broad breakup on that.

When you talk about the operational, see, usually non-census beds gets operational very quickly, because there you're talking about emergency, day care, and few other pre-op, post-op beds, right? That's usually operational in the first year.

Mainly it takes time for the census beds to get operational. As you said, currently we are at 80 beds.

Now question is that how fast we can ramp up to a 180 beds. What we have always seen is that even when you looked at Kannur previously, because that was the first hospital is in that micro-market, we were able to ramp up very, very quickly.

If the current trend of quarter one does, and I think very quickly we should be able to ramp it up, the 180 beds.

Right. Fair enough.

For the remaining 750 beds that you're going to add in '27 in Hyderabad and Trivandrum, will the ratio be approximately the same?

See, usually 75% to 80%, around 75% is the census beds and 25% is the non-census beds. That's a mix you should keep in mind whenever you're doing your modeling.

Sure. Then, just for modeling purpose, how many beds would be the census beds coming on-stream in FY27?

See, usually always we start between 75 to 80 beds. That's the usual start, like what we did in Kasaragod also.

It all depends on ramp-up. Whenever on the operationalized beds, you hit between 60% to 65% occupancy, you start adding 30 beds, right?

Usually what we have seen is that wherever the micro-market is very strong, like a tier 2 city, right, we've seen the ramp-up to happen to a complete capacity between again, see, it's a 500-bed hospital, you're looking at 5 to 6 years. If it's a micro-market as strong as Bangalore, it may take another 2 to 3 years longer.

That's a broad guidance what I can give you.

That's very helpful. Thank you.

My second question is on Kerala. Now obviously, since the last one year, there has been, I think, a massive change in how this has panned out.

Earlier, the occupancy used to be very high, ARPOBs used to be depressed. I understand the discounting and all would have come off, but now we are seeing very sharp ARPOB growth.

What is it that's changed? Have you added a lot of specialties in your hospital that's driving your growth?

Because for an asset that's been mature, and this been a sea of change in one year itself. Just want to kind of understand how much of this is sustainable.

I'll ask Ramesh to come in after I add a bit on the technical part of it. Kunal, if you look at ARPOB, significant growth in Kerala, but the majority of that's coming because of ALOS, right?

ALOS is almost 7%. If you remove that, ARPP level, it's around 8% to 9%.

When you go to the ARPP IP, that's around 7% to 7.5%. I don't think so 7% to 7.5% is a very mature growth with a 2,500 beds or 2,800 beds what we have today.

Even that's what I think we know, previously also we've given that understanding that. Very important to know in Kerala is that in north of Kerala, 75% to 80% is a cash patients.

Still the insurance penetrations is quite less. As compared to central Kerala where we have the flagship hospital Kochi, still the cash patients is almost 60%.

Keeping that in mind, you can continue to expect the ARPP, better not to track the ARPOB, because there will always a movement because of the case mix, on the procedure mix, or the specialty mix changing, you'll always see ALOS going up and down. Better, that's a more misnomer.

Better to control on the ARPP. ARPP, I think in the future between 6% to 8% is a growth in a mid-term, I'm talking about around 3 to 4 years, is something you can expect in Kerala for sure.

The most important thing why it will also drive is that, I told you about the payer mix, in addition to that, you're also seeing the competition coming in, right? With competition coming in, a lot of these changes will happen and that will expect you to drive the ARPOB growth.

In addition to this, I think Mr. Ramesh called out, across Kerala itself, we've added more than 20, 25 clinicians in the ConGo-T plus broad specialties.

That's also expecting basically elevating our ARPP growth over a period of time.

Right. That's very helpful.

Thanks, Kunal. We would like to highlight that we'll be giving preferences to attendees who have not asked a question before.

In that line, the next question is from Mr. Vivek Sethia.

Vivek, can you please unmute yourself and ask the question?

Sure. Thanks for the opportunity.

I have a couple of questions with regards to QCIL. Firstly, just wanted to understand the breakdown of your expansion plan for QCIL, right, in terms of greenfield and brownfield expansion year-wise.

I see that you have provided for the merged entity. To provide same for QCIL and along with the capex earmarked on a year-on-year basis?

Vivek, we've given some color, but let me give you the immediate numbers. We're adding Bhubaneswar, Raipur, and Kottayam for FY27.

That'll be 155 and about 190 beds, which is coming in FY27. Now all of these are existing facilities.

There's a ramp-up of beds that is happening. All of these are census beds.

That is one piece I can tell you. We're looking at FY28 at about 780 beds.

Again, a large part of this is actually all of it is brownfield, right? It's addition happening to our existing properties.

Therefore, capacity expansion is how I'm going to put these beds as. FY29 and beyond is another 750-odd beds.

If that answers your question.

Just to add, in all the expansion that Varun mentioned in QCIL, almost 80%, 90% of the expansion is brownfield in nature that QCIL is having.

Sure, that helps. Secondly, just wanted to understand we've seen the ConGo mix for both Aster and QCIL sort of improving on a quarterly basis.

Going forward on a steady-state basis, where do you see the case mix for Aster as well as for the merged entity going?

Let me take the QCIL side of it. Is that okay if I answer for QCIL?

QCIL is currently sitting and is able to see 57.6-odd percent. I think the endeavor is to continue doing this.

I told you that our investments, a large part of our investments for QCIL is going into oncology. Oncology is still underdialed when it comes to QCIL.

The fact that we're investing into linear accelerators, the fact that we are adding onco blocks in five different facilities over the next 2 years, needless to say that this will enhance the contribution of ConGo-T as we go forward. I don't think 57.6% is going to be where it is from a mature numbers standpoint.

It's continue to grow. I don't know if I can't really put a number to where it'll end up, but my sense is that you'll be in mid-60s over a period of time.

I don't want to draw when, but the how is known to us. I don't think the when is a fair answer.

Is that okay? Maybe I can pass to Sunil for the Aster side of it.

Fair.

Yeah. Just to add to that, Aster side, somewhere mid-50s is what we are having ConGo-T mix.

I think it'll steadily start growing as rightly mentioned, even the new units have started doing exceedingly well in the ConGo-T like the Kasaragod one. We are also looking at a steady growth, and the focus as we rightly said especially in tier 1 city in Bangalore.

Of course, all the tier 2 and tier 3 cities also are focused. We are looking at a dedicated cancer care centers, rightly said onco can give us a real growth.

We are looking at having LINACs and make it as a complete comprehensive set. Oncology would be one major contribution, followed by cardiology.

We have started doing a lot of transplants for heart transplants as well. Even the new in the Calicut unit has opened account.

Aster Medcity we are focusing. Bangalore is doing exceedingly well in the transplants for heart transplants.

I think the way forward focus would be anyway, as rightly mentioned by Mr. Varun, we would look at 60-plus, somewhere around 60% to 65% is what we are looking at to achieve the numbers.

Vivek, one of the other things I have to tell you, and maybe I'm just adding to what Ramesh said, and this is less to do with our network, this is more to generalize our comment, as we get into tier 2, tier 3 hospitals, the need for complexity there is very high. Currently, or given the fact that this is how healthcare has developed in the country, people have moved various cities, but the need to travel can be limited if the capability is available, which is where getting more LINACs, which is where getting robotic systems into various cities, expansion of talent that I spoke about earlier, I think all of this is helping us grow our ConGo-T mix.

I spoke about the complexity that we are enhancing. I think adding transplants into tier 2, 3 cities today is becoming a norm.

All of that will continue to enhance the group's focus and performance on ConGo-T.

Thank you. That helps.

Just one last question with regards to the pharmacy business. It's a two-part question.

First, we just wanted to understand what is the size of the pharmacy business for QCIL and its margins? The second part is in the previous couple of calls, you had mentioned that we are making sort of a strategic exit from loss-making units in the pharmacy business.

I guess this was more pertaining to Aster. Just wanted you to shed some light as to how that's panning out for the merged entity as a whole?

Vivek, it's very important to know that QCIL doesn't have any pharmacy business. Whatever pharmacy, it's more of IP and OP pharmacy within the hospitals.

What we have is a two parts. One is a wholesale pharmacy.

We have wholesale pharmacy which gets consolidated. Then there is a retail pharmacy where we have 49% investment where the share of equity gets adjusted at the PAT level.

Right, that's a two different parts. Now the wholesale pharmacy level, what used to happen is that this is the asset which we bought in the local Bangalore market.

In addition to that, we added the second business unit to supply to a retail pharmacy, which didn't work out really well due to logistics of reverse logistics, and the fill rates, and a lot of other things. That is the reason I think year back we tried to move out of that and ensure that we come back to the one which we acquired.

That's where we were able to bring out of the negative margin a year back to a positive margin in the wholesale pharmacy. Going forward also, wholesale pharmacy, we don't expect to do major growth because you can't expect more than 3% to 3.5% margin considering it's a low-margin business.

We'll try to keep it that level. In terms of retail pharmacy where I said we only own 49% and balance is owned by a resident individuals, here we have around 203 pharmacies where we have lent our brand to drive the business, right?

That's where brand licensing arrangement has been done here. There I think it's 203 pharmacies, it's spread over Telangana, Karnataka, and Kerala.

That's doing well. That's expected to break even in another year or two.

Got it. That helps.

Thanks, everyone. I would like to request all the participants if you can raise your hand and ask the question.

In this, we have next Mr. Harith.

Mr. Harith, can you please unmute yourself and ask the question?

Hi. Good afternoon.

Thanks for the opportunity. A couple on QCIL EBITDA that you've disclosed, which is the operating EBITDA.

It's around ₹800 crores for nine months FY26 period. Is there a minority share out of this ₹800-odd crores that you can share?

A rough number is what I'm looking at because there are quite a few units of ours where there's a decent minority shareholding, like clinical institutions, the KIMS has part of it. Any approximate number that you can share?

Approximate minority for QCIL is roughly 20%. You can use that as a base, and we can probably send the exact number separately.

All right. That's helpful.

Between the operating EBITDA and the reported post-Ind AS EBITDA for QCIL, is there a major difference? Like we have in Aster a few ESOP items and the fair value movements, etc.

For QCIL as well, is there a similar adjustment between operating EBITDA and reported EBITDA?

There will be, but we will share that number with you. I think it's about ₹15 to ₹17 crores is what I remember offhand.

Okay. For the new units that we're expecting in FY27, '28, which are mainly Trivandrum, Hyderabad, and Sarjapur at Aster, I'm referring only to the greenfield units.

What's the kind of EBITDA losses in the first 12 months that we should be penciling in? All these are in different markets and we should be looking at different numbers, but any ballpark guidance will be helpful.

Harith, yeah, I think previously I called out, it's very difficult to give you the number because it's all in different micro-markets, right? Sarjapur anyway it's going to come in the beginning of FY28, but the next year we are only talking about in the second half.

The first one should be our Trivandrum and the second should be the Hyderabad Women & Children. The good thing is that in both the cases, I called out saying that it's not a new geography.

Hyderabad we already present, CARE is present. That should help us in driving the growth and attracting the key clinicians.

Same is the case in Trivandrum. Usually what we always seen on an average, right, again this is something very broadly for your modeling you're talking about, it could be anywhere on a monthly average, right, and again I'm talking about the first 6 months, could be between ₹2.5 to ₹4 crores per month.

Usually that's a broad burn which we expect.

All right. The last one, more of an observation.

When I look at the total operational beds at Aster level, excluding QCIL, the breakup between census and non-census, the 24% share of non-census beds seems to be a bit higher than what we typically see at your peers and even at QCIL, I think there is a lower number around 15%, 16% of beds being non-census. Is there a reason?

Is there something different about our model or network that's leading to this higher number of non-census beds? Because some of our units are smaller and

Thank you, Harith. See, in the industry, there is no confusion when you get to the census beds.

We all know that any bed which you try to occupy for the patient on the midnight basis, you take it as census bed. In case of non-census beds, there is no industry-wide agreed standard.

Everyone takes it very, very differently. In our case, it's higher because we count everything.

Also, see, for example, usually it includes your emergency beds where there is no admission happens overnight, or say day care beds, right? That's one bit of it.

Third one is also your pre-op, post-op beds. Or we also look at dialysis beds.

There are a lot of these things where some of the institutions may count in the non-census and some institutions like us. We have been very consistency over a period of time, last 10, 12 years, we've been including it and we've not changed any formula.

Also it's important to note that we are also looking at now going forward because there are a lot of short stay procedures and the day care, specifically oncology. In case of oncology, more than 50% to 60% of the revenue comes from chemo, and it's a day care, right?

You don't see a patient staying overnight. We have been converting most of the time sometimes from census to non-census beds.

That's also one of the reasons why our ALOS is also going down drastically. You've seen from one year back, we've been reducing last four quarters or five quarters, we've going down by more than 5% to 6%.

It's more to do with the short stay procedures and more day care patients which we are using. Otherwise, there is nothing much to talk about that.

That's helpful, Sunil. I'll get back in the queue.

Thank you.

Thanks, Harith. We request you to please limit your question to two, but not more than three per participant at a time.

The next question is from Ms. Nancy.

Nancy, if you can unmute yourself and ask the question.

Sorry, am I audible? Congrats on a strong team.

I'm just trying to piece a few things together and trying to understand. We see that there's a margin dip from the previous quarter, and while I understand that Q3 is generally a slightly weaker quarter for entirety of healthcare, and some of the margin drag is also coming from the Kasaragod hospital that we've started, but still, there's about 200 bps despite the Kasaragod hospital adjustment that's lesser from the previous quarter.

I'm just trying to understand that is this totally accountable to seasonality or are there any other factors that are also playing out here?

Thank you, Nancy. See, there are two, three things you need to look into it.

Year-on-year, if you remove the Kasaragod, right, then you're talking about 20 going down to 20.2%. When you look at the revenue and all, you're talking about ₹21, ₹22 crores revenue dip from quarter on quarter.

Wherein EBITDA, it's impacting almost ₹26 crores, right? If that's the right number.

Yes. If you look at the dip, almost for 60% to 65% is impacting due to the revenue, right?

If ₹22 crores revenue comes down, naturally 60% of that impacts on this one. Second thing which is really happening is more of an investment which you're doing in the clinical talent, which Ramesh talked about, right?

I also spoke about saying that Kerala itself you look at, year-on-year quarter 2 to quarter 3, it's the same revenue, right? The ₹619 crores excluding Kasaragod, but still the margin you can see a slight dip.

It's because of investment what you're doing. It's very, very important that an organization like us, again Ramesh talked about the ConGo-T mix and growth, we are looking at because we can get a major leverage in how we ConGo-T mix we can improve.

Year-on-year, we already improved by more than 240 bps, and we expect to go beyond 60. We are very, very clear that we want to add more and more clinical talent, and that's exactly what's happening.

It's important to note that this is an investment. We need to think it as investment so that once the new doctors who have come on board start ramping up over 3 to 4 quarters, you will see the benefits in the volume, benefits in the margin, right?

That's one thing. That's the first important thing.

Second also, one thing which has happened between the quarter 2 to quarter 3 is that I also told in the last quarter in the similar earnings call that the year-on-year the medical specialties, basically the vector-borne diseases, is reduced by almost 70%. Because of which last quarter 2, we have seen a dip of almost 12% in the internal medicine, pulmo, and children specialty.

Same thing has happened in quarter 3 also. In this quarter 3, when you compare to the last quarter 3, we have seen a dip of almost 12% in internal medicine, pulmonology, and children cases.

That's also in another reason why it is impacted. At the same time, what's also happening is that irrespective of this, our oncology's growth is great.

For example, when you talk about oncology only in the quarter 3, both our cardiology has grown by more than 22% and oncology is grown by 27%. Both these specialties carry a high material cost, unlike other broad specialties.

That's one of the reason our material cost has gone up from year-on-year this one, and that is also impacting our margins. As I said, this is not a structural issue.

You have always seen quarter 2 to quarter 3, it always slows down. Again, with the investment what you made, you can expect a good ramp-up and steady ramp-up in our volumes going forward.

Understood, sir. That was super helpful.

Thank you.

Thank you, Nancy. The next question is from Mr.

Kashish. Kashish, can you please unmute yourself and ask the question?

Hi. Thank you for the opportunity.

Just two questions on the ancillary business. One is on the Aster Labs.

We have seen the margins improve sharply to 12%. At what scale do we see these margins stabilize, and what can we expect going forward?

Secondly, it's towards the wholesale pharma business.

Sorry, Kashish, we didn't get your second part of the question.

Actually,

you can just answer the first one. First one, on the labs.

Labs, I think even I've been called out in my speech how from a negative EBITDA, it has gone to positive EBITDA in FY25, and in FY26, on a YTD basis, we already gone to 12.2% margins. Here the most important thing for the margins to further drive up is important that our non-captive business, which is currently at 30% to 31% of our Aster Labs revenue, how to drive it more than 50%.

That's exactly the sales strategy which we are working it, and also you'll see very soon there will be dedicated labs app we'll be launching, not linked to our hospitals, but dedicated retail app we'll be launching. That's going to really help us in driving the non-captive business.

Once we're able to get a non-captive business up from 30% to more than 50%, that's when you will see our gross margin improvement in a very drastic way. If that happens, then you can look at more than 20% margins in Aster Labs.

Again, Aster Labs is always a high-margin business and we expect to do really well.

Understood. Thank you.

Second question was after outsourcing the wholesale pharma business, how much margin drag has been removed?

Sorry, how much margin?

Drag. Margin losses has been removed from See,

here what we're talking about is that on a monthly basis, around ₹1 to ₹2 crores every month, that's the number which we have removed. Because, right, Kashish, in the wholesale, it's a distribution business.

Actual margin what you get is 8%, but with so much of discounts being given to the retailers and other trade business, the gross margin further from 8% dips to around 5% to 6%. With other manpower and overheads put together, the max you can hit is around 3%, 3.5%, not more than that.

Also you need a scale to drive this margin. Currently, as I said, on the quarter 3, already we moved to 2.2%, and we're consistent to continue to keep it positive and try to drive beyond 3% there.

Again, Kashish, I had called very clearly, we are not looking at increasing this business in a very drastic manner. Because you can always drive this business, but you will not get the quality business.

We want to ensure that what business is that, it's a high-margin business what you're getting it, and we don't want to drive the top line at the cost of our margin. The main idea is to even though my revenue dips in a year-on-year, I want to keep it consistent and drive the margins up.

Understood, sir. Thank you.

Sir, just completing the loop, do we

Sorry, Kashish, we are not able to hear you properly. I would request you to please come in the queue.

Sure.

I would request everyone to limit your questions to two, considering the time. The next question is from Mr.

Siddharth. Siddharth, can you please unmute yourself and ask the question?

Hi. Thanks for the opportunity.

On the ALOS, one sees a significant difference between the ALOS at QCIL versus Aster. Aster is among the lowest in the industry.

Given what you mentioned on onco being largely day care, and that being a focus area for you, should we expect this to stay at this level or even drop further? That was question one.

Question two was in terms of AI initiatives or technology initiatives, given that a large part of the network is in tier 2 and tier 3 cities, right, are there any remote diagnostics or AI initiatives that you've been taking that could possibly keep availability of talent being a lower challenge in those centers?

Mr. Ramesh, you want to pick up the ALOS question?

As far as, as rightly mentioned, it is all about oncology day care, more of targeted therapies being done, day care has been improving day day by day. Chemo day care is more number of patients have been there in chemo day care.

That's one one impact. Second is we have also a lot many of key keyhole procedures and we have you're seeing a lot of, Da Vinci, sorry, soft tissue robo also for, various other procedures.

As sometime back I mentioned, in a place like Medcity, we have we do around 80, 85 to 90 Da Vinci, sorry, your robotic procedures, and and of course lap surgeries have gone up. There's a significant reduction in average length of stay.

If you ask me, will there be a further reduction? It's very, very difficult to say, but I'm sure this is the best what we are in.

This is that shift which has been happening to lot of procedural, different procedures which we have taken up. I'm sure this would ALOS will be the the best.

The length of stay is also to do with, your quality parameters like infection control practices, and thereby the length of stay is high. We have one of the best quality parameters closely monitoring by all the chief of medical services.

All these factors have contributed to to a reduced ALOS.

Right. Mr.

Khanna, if you could just give us a sense on whether from where you are at 3.9, given post the merger, learnings and synergies, do we expect there to be a reduction?

Siddharth, thanks for the question. Let me add to this, Siddharth.

I think the reason you see the differential is also the mix of specialties. What QCIL does in terms of enhanced revenues, enhanced revenue mix is a high mix on account of orthopedics, cardiothoracic, neurosciences.

When you do complex work around neuro, orthopedics, and cardiothoracic, you will then tend to get a higher ALOS. Our ALOS currently is sub-4 and largely driven by the mix part of it.

We will continue to see improvement in this as well as we go robotic and oncology, because that will bring in a lower ALOS patient into the system, which is a high-yielding patient as well. We'll have a favorable impact to ARPOB on account of value and also ALOS reduction, which is inversely proportional to the ARPOB as well, if that answers your question.

I think the second part that you touched upon is more on the AI. Could you be more specific what kind of response are you seeking?

Okay. What I want to understand is given that both at QCIL and Aster you are essentially looking at a lot more of your capacity being in non-metro towns, where talent availability, I am assuming, will be a relatively higher challenge.

In that context, is there any technology initiatives that you're taking where certain operations can be done remotely or what you may in order to reduce your talent dependence? That's really the question.

Or any other initiatives in which technology helps sort of improve the ability to service patients in those towns better?

Fair question, Siddharth. There's a lot happening on tech and AI in our industry.

Let me first start with responding to your first part of the question in terms of dearth of talent. I don't think we are seeing dearth of talent, at least on the QCIL side, and having heard what Alisha and Sunil mentioned around Kasaragod, I don't think we're seeing dearth of talent.

These are tier 2, tier 3 cities, and I just heard Alisha talk about 120 clinicians in Kasaragod, and I just told you about the complexity work that we're doing in Aurangabad and Nagercoil. I don't see that dearth of talent, even for the complex work.

The second part that I alluded to, today you can do transplants in 100-odd cities in the country, it's not limited to the 5, 6 metros that we know of. That's one.

Two, AI essentially we are looking at. We are looking at a lot of AI, but not certainly emanating from a need because of dearth of talent.

Let me rule that out clearly. We are seeing, in fact, I spoke about EOP, which is the first centralized solution that our group is looking at on radiation, and that will be AI-enabled, that'll be tech-enabled.

The idea to do that is not really, again, talent deficiency in some of these markets, but how is it that you can scale up the decision-making, make it more peer, make it more robust, make it more consultative? I think some of those are playing out.

The third and the most important part that's playing out for some of these investments is efficiency. We are getting significant efficiency through some of the work that we are doing through AI.

For instance, getting centralized call centers, getting pre-recorded voice calls now with the consumer before they come into the hospital, so that the EMR is enabled with the input parameters, and the time between the OPD time can actually be reduced or the consultation time can be reduced. Some of that is being played out.

By the way, these initiatives also help the consumer, because the consumer is able to iterate a lot more to a chatbot, or a chat, or they can choose their medium of communication. All of that is certainly play out, and that will be to drive efficiency.

I hope that answers your question.

Yes, thanks. The last question was on the AP cluster in terms of inpatient volumes.

That's sort of been flat for the nine months if you could just throw some light on how one should think about that.

This question is, I'm assuming, is directed to Aster?

Aster, yes.

Okay. Yeah.

If you can elaborate a bit. You would like to know about AP, Telangana performance?

Is that correct?

AP, Telangana, if I just look at the inpatient volume, right, and maybe I will tell you the specific slide that maybe I may have then not looked at it correctly. I'm looking at slide 40 of your presentation where in Q3 you're continuing to see the inpatient volume even in AP, Telangana being flat, right?

400 inpatient visits extra. That's the one that I wanted some understanding on.

If one looks at it on a nine-month basis, which I'm seeing, right, there also it's sort of been slower growth. So

Yeah. We have, especially when it comes to AP part, we have Vijayawada, Guntur, and Ongole the three units what we have, whereas and Tirupati also we have.

Tirupati is doing exceedingly well if you really look at. That is one unit which is consistently performed very well and average around 130%, 140% of the budget achievement.

Whereas in Vijayawada, the Vijayawada is a major center for especially the case mix is cardiology, and some of the clinicians are there. We had attrition as far as Vijayawada and Guntur is concerned.

Now we have replaced these clinicians, thereby the volumes are picking up. Guntur also's volumes have started picking up.

You'll find a steady growth coming in the next few months. We have replaced all the clinicians wherever attrition was there.

Ongole also had the competition, where a few of the doctor clinicians have left to the competition, but all have been replaced, and Ongole is also bounced back in last 2 months achieving their budgets, and there has been a significant growth. It was a temporary setback, and I think we have taken action on that, and you can see a steady growth in coming days.

Thank you.

Thanks, Siddharth. In the interest of the time, would like to take the final question for the management.

Mr. Sri Narayan, can you please ask the question?

Hi. Thanks for the opportunity.

Hope I am audible. Can you hear me?

Hello.

Yes, we can hear you.

Okay. My first question was on the material cost.

If we see year-on-year adjusted for wholesale pharmacy sales, it's up 50 bps. Now how much of it can be attributed to higher material costs coming from oncology and cardiology?

Sri Narayan, thanks for the question. The 50% 50 bps what you're seeing, I would say 60% of that should be attributed to oncology and another 20% due to neuro, because we've been good amount of DBS cases also.

Our DBS cases actually have doubled year-on-year. Balance another 20% you should attribute to the robotic procedures also.

We've been doing almost now 300 robotic procedures every month. It's 100% growth YoY.

Out of that, more than 60% of the robotic procedures are the soft tissue and balance 40% is ortho. I think we've been treated more like a quaternary care, and we've been a referral center in all our key hospitals like CMI, Medcity, and Calicut, where you get a lot of high-end referral patients.

That's where we do TAVR, DBS, robotic procedures, and specifically oncology. Oncology, 60% of it is med onco, wherein the material cost usually it's around 45%.

In that, 40% to 50% is my immunotherapy and target therapy. There is no margin for the materials.

Usually for every patient, the average yield goes between ₹4 lakhs to ₹7 lakhs. Out of that, as I said, 70% is your material cost there.

The question what we are now looking is that, again, as I said, already whatever you looked at last 3 years, we've been able to drive the material cost from 25.5% to below 21, last year closing at 20.9%, and that has changed little bit in the current year because of the case mix. What we is also seeing is that, as Mr.

Ramesh called out, we've been adding more clinicians in the other ConGo mix also. That's going to help us to drive the overall ConGo mix and also ensure that there is a good growth equivalent to what we've seen in onco.

As I said, in ConGo we've grown by more than 240 bps YoY, but out of that when you look at all the ConGo specialty breakup, the highest has been the oncology at 27% only in quarter 3. That is the highest, and second highest would be our cardio, and third highest would be neuro, right?

I expect once we're able to, I would say, neutralize more or less the growth, and I think we will be able to get it down below 21 going forward.

Okay. Then as a target mix of revenue, where do we see oncology in medium term, 2, 3 years?

How would that impact our material cost overall?

That's another good question, Sri Narayan. I think we've been calling out saying that we've been doing very heavy investment in oncology, and oncology has been the fastest to grow in all our specialties.

2 years back, we used to be around 8%, 9%. Now we've moved to 11% contribution on revenue.

The way it's going, I don't know, another 4 to 5 years, we expect it to be in high teens, right? That's a growth engine which we are looking at.

The same time, that's also been part of our ConGo growth, right? Because on a blended, we would be around 53%, 54%, and with that, as Varun called out, we are looking at more than 60% plus, and oncology will be the major driver growth.

I think material cost, we should not get too much worry on the material cost, because oncology also gives you a good EBITDA per bed growth. That is something which we need to always watch out for.

Thanks, Sri

Narayan. If I may ask one last question.

Please.

Yeah. On slide 48 of the presentation, there are a few synergies that we have highlighted.

Which of these is most sensitive to delivering the EBITDA upside potential of 10% to 15%? Which is your top priority after the merger, which say you want to get this done in 6 to 12 months, first thing which you want to do?

Which if it is not done has the highest impact on your EBITDA margin expansion?

If I want to jump in, Sri Narayan, the quick answer will be the material, right? Today I have ₹1,000 crores purchases as an Aster, and QCIL has got another ₹1,000 crores.

Imagine bringing the two things together and negotiating a ₹2,000 crores procurement, and also getting the best of the both worlds on the formulary mix. I think that's a no-brainer.

That's going to be the first target, and I think we should be able to do really well on that.

Okay. Thank you so much.

That answers my question. All the best.

Thank you, everyone. Thanks to the management.

There is no more question to the management now. This concludes the earnings call for this quarter of Aster DM Healthcare.

I thank the management and all the attendees for joining us today. If you have any other further questions or queries, please do get in touch with us.

Thank you, everyone.

Thank you.

Thank you, everyone.

Thank you. Thank you.

Bye.