Hi. This is Prithvi from Unifi Capital.

Let me begin with the domestic hospitals piece first. I think the EBITDA growth of 40 percentage despite not adding any beds in the last 7 to 8 years is quite remarkable.

In this context, my first question is with respect to the revenue growth. I think till last few quarters entire revenue growth for India hospitals came from ARPOB, but this time surprisingly even the footfalls went up.

Could you explain that and how should we look at it going forward? Will it be a combination of ARPOB plus footfalls or it will be predominantly ARPOB till you commission the new hospitals?

Hi, Prithvi. I'll take this up.

We've been off late doing a lot of high-end procedures and also the robotic work has gone up substantially. If you see the margin improvement over the last two to three quarters, they are basically on account of high volume of high-end procedures and also increased use of technology and robotics.

Also if you see the presence of our clinic across the network in mainly around Bangalore has actually strengthened the brand reputation of the hospital network, resulting in increased footfall. If you look at the data of clinics, the total footfalls of patients in clinic is approximately 30% of the total OPD footfalls in the hospital.

That is also the level of contribution clinics are doing. That is also complimented towards increasing of the footfall.

Overall general demand is also strong as far as healthcare is concerned. We have seen a good traction in terms of volumes coming across the network across all the regions, and it has been a good combination of volumes as well as realizations.

Going forward, we would strive towards continuing with such a combination in the quarters to come, but obviously we will not be able to boil down to any specific numbers. We would always work towards getting a combination of both volumes and realizations in the quarters to come.

Yeah.

Fantastic. Just on margins front, you made the point of the 24% EBITDA margin.

If we compare your ARPOB with other competitors, it is significantly lower. However, your margins are largely on par with the competitors.

I understand you have taken several initiatives on efficiency, etc., but do you think is there a further scope for hospital's margins to go up or it should stabilize at these levels?

Sandhya, you want to take that?

Yes, sure Venkatesh. If you look at how our margin journey, like you had acknowledged that we haven't added any beds, but we've been able to deliver incremental revenue and throughput, and that is what is giving us the expansion that we are seeing in margins, in addition to footfalls that we called out.

This will continue because we don't have any meaningful bed addition coming in for the next two to three years. Having said that, we have to make a choice on the leverage benefit.

We are an operator that works with an affordable care philosophy. We will continue to make that choice on how much do we pull back into cash flows and thereby fueling our expansion initiatives, how much we are going to continue to invest into our new growth verticals like integrated care, and how much we will pass back to the customers.

Those operational decisions we will make as we go through this journey. It is not possible to give a projection on that, but what we can definitely see is that we will see expansion in the core operating margin of the business given the leverage benefit that we will enjoy.

One final question on domestic business. If you look at the insurance piece, I think the losses shot up significantly during the quarter.

Just trying to understand what has changed so much in one quarter that the losses spiked up in a big way? Should we expect this losses to sustain for the next few quarters, or is it more of a one-off quarter?

What explains this domestic insurance losses?

Ravi, can you take this up, please?

Sure. Hi, Prithvi.

No, absolutely right. I think a few things you have to kind of keep in mind in this.

It is still a relatively small book, and so a few large claims sometimes can have a disproportionate impact when you look at loss ratios. At the same time, when you look at the growth, there are other benefits.

You'd have seen also that the expense ratio came down substantially, and so you've got to kind of a little bit balance both those things. In our case, the issue is contained to a few policies, and having said that, as part of our priorities, we're working on a number of initiatives to ensure that we manage our portfolio for long-term sustainability.

As I said before, right, it can be still volatile for a little while until it comes to a little bit of scale. We're not waiting for that.

We're working on a number of initiatives. Some of these I can share with you.

For example, we're implementing AI solutions across the board to review claims and minimize fraud, waste, and abuse in claims, especially outside our preferred network. We're inhousing more and more claims to ensure we bring not only a policy view, but also a health expertise view in these reviews, right?

That's one of the unique things that as Narayana Health Insurance, we can bring to the table that others may not have. We continue to sharpen our audits with our partners to ensure there's high quality in claims operations, for example, with TPAs.

In terms of future growth as well, portfolio-wise, we continue to focus on SME and retail business as growth drivers, and as those have got better margins than, say, larger GMC accounts. It's a combination of all of these things.

As these measures start to deliver benefits and the book size grows, which is important, I feel confident that loss ratios will moderate to acceptable levels over a period of time. In the short term, we might still see some volatility in the book until it achieves a little bit of scale because some of this is law of large numbers.

I hope that answers your question.

I just have one follow-up on this insurance business again. How much of the claims are coming to your own hospital chain and how much of the claims are going to the third-party hospitals at this point of time?

Is that a reason what explains the higher losses?

Maybe I can take that and then others could chime in if you want. A couple of things on this, right?

I don't think we're prepared at this point in time to disclose some of those numbers. Having said that, as Venkatesh was talking about for the clinics business, for example, similarly the insurance business has a lot in terms of brand visibility for the group.

As these customers come in and as we get more and more engagement with these customers and introduce them to the entire gamut of services that Narayana Health provides, over time we feel confident that they will consider NH for all their advanced diagnostics and their hospitalization needs, and we will see a large portion of people coming to our hospital. Having said that, in our group policies at the moment, we do offer people choice, and we're working hard to win these customers to our hospitals by making sure they get great service in the hospital, making sure that the overall experience they have is good and engaging deeply with them to ensure that our hospital is at the top of their mind when they're considering their hospitalization needs.

That's kind of where we are. We do have a difference.

Broadly what I can tell you is that on the retail side, a lot of our customers come to our hospitals by choice, and on the group side, we are seeing those numbers improving, but we continue to work on that and to be top of mind for our customers to consider NH when they require hospitalization.

Sir. My question is, what is the current ROCE of our UK business?

Can you kindly repeat the question? It wasn't very clear for us.

What is the ROCE of our UK business currently?

I think it is too early to measure the ROCE of the UK business at the moment. It's very early days for us.

We have just acquired that business. We can start reporting this maybe four quarters from now.

Is there any target by 2030, any milestone that we will achieve that we can say UK acquisition as a good capital allocation? Is there any targets?

Anesh, you want to take that question?

Thank you. Japreet, we'd like to have the international question in the second half, but since you've asked, I think as we said during the acquisition time itself, we don't have any particular definite number to disclose as a ROCE target.

Having said that, we believe that the assets were acquired at a very, very reasonable price, and there is a substantial opportunity for us to improve their earnings compared to where they are now and when we acquired it, without any significant further capital deployments in that market with the existing capital base that already exists.

Hi. Hi, team.

This is Sajal from Antifragile Thinking and thanks for giving me this opportunity. My first question is, what evidence do we have today that owning both insurance and care delivery gives Narayana a structural underwriting advantage rather than simply transferring economics between insurer and the hospital?

Anesh, you want me to take that?

Sandhya.

Hi Sajal, thank you for your question. Just to clarify, sorry due to a prior travel commitment and some delays there, Viren is unable to attend this call, he sends his apologies.

To your question, I think just keeping the underwriting advantage aside for now, if you look at our actual experience in a very short time where we have the largest cluster of clinics is in Bangalore, and the footfalls, the outpatient footfall in those small clinics in aggregate represents a little over a third of what we see in our flagship hospital in Bangalore, including the HSR second hospital in Bangalore as well. Now when we look at the referral potential and what we're actually seeing being referred in, it is a phenomenal driver of activity, volume, and empowering a lot of the growth we're seeing in our footfall and conversions, especially around the high-end, complex procedures, robotic surgeries, etc., complex cardiac interventions, and so on.

To your second question about the underwriting model itself, now there is very little medical underwriting happening in the insurance industry as we speak. We have an ability to understand the consumption patterns through the people who are subscribers for our clinics.

We render the bulk of their primary care, the bulk of their pharmaceutical needs, the bulk of their diagnostic and follow-up care. This really gives us an ability to understand where people are spending, what are they spending on, and how can we best position ourselves to cater to that.

Now obviously this is a longer-term play. While we have started seeing very encouraging results with the clinics and the subscription plans, insurance, as Ravi mentioned, is early days, it's a small book.

These things will play out, but the early signs do point to us having something interesting to work on where we do have an inherent structural advantage to somebody just selling an open-ended policy to anyone who fulfills certain criteria.

No, that's helpful, Anesh. Just a quick follow-up on that one.

Some of the patients would have renewed their policy, right? Given their past behavior, we potentially understand them a little better in terms of what kind of system they have in terms of their own sort of mental and physical well-being, as well as their pattern of submitting a claim.

How does that reflect in the pricing for the renewal? That's one.

Then as a system, we are continuously learning because, yes, it's a smaller book and early days for us. How is that learning getting reflected in our underwriting decision-making for the new patients that were never part of our network?

Sure. I'll pass it on to Ravi, but just a quick comment.

For a good number of our patients, given our role as both a provider and insurer, we actually are the only people who can underwrite them and price out a policy as well as a renewal to reflect their changing health status. Ravi, do you want to take Sajal's question?

Certainly. A few things, Sajal.

One thing just to keep in mind and kind of be very clear about, right, is that in India at the moment at least, we can't change somebody's renewal premium based on, let's say, deterioration in their health, right? That's one thing to keep in mind, and we of course don't do that.

Having said that, let's think about how this benefits us over a period of time, right? There are two parts to this.

One is while I may not be able to change prices at an individual level, what this gives me a very good sense of is what's happening at a portfolio level, at my overall retail portfolio, and at a group policy level, I have a good sense of what the claims are going to be next year. When you typically underwrite a group policy, right, you have some information and it's kind of imperfect that most companies would underwrite with.

In our case, we have a good idea of what claims have already happened and are unlikely to repeat next year, what claims haven't happened yet, but we know are going to happen next year, and price our renewal group at a group level accordingly and make changes at a price level as per the requirements at a portfolio level, right? That is a significant advantage that we have.

As our policies come to renewals, right, we've just started getting into the renewal cycle on our retail book and have got three policies so far that have renewed on the group side and more to come. We see that this is becoming something that is becoming more and more valuable to us.

The other part is the entire engagement that we do with customers. If you think about it in a slightly different way from a customer's perspective, right, what do we bring to the table for the customer?

Because we understand their health, unlike another insurance company, we can actually intervene earlier, and we can send somebody to the hospital and recommend that do the surgery now, it's better for the customer, it's hopefully less complicated, it's quicker recovery, and it is a lower cost for the insurance company as well. There's a number of things here that play that allow us to impact the life of the customer in a very positive way while also managing our overall book in a sustainable way, and that is the unique thing that we have as an insurance company that is promoted by a hospital, the only insurance company promoted by a hospital.

That's helpful. Thank you.

My second question is related to a classic tension. When the hospital benefits from doing more and insurer benefits from doing less, how does Narayana decide what is optimal for the system as a whole?

In the short run, there is a conflict. In the long run, if the hospital does too much, the insurance arm will not be sustainable.

If the hospital does too less, then that's also not good for the long-term outcomes of the patient. In a short run, yes, one quarter or two, but in a long-term, sustainable way, if you look at integrated care models all across the globe, it is a self-check mechanism where you render the right amount of care, not too much, not too less.

More importantly, in our market where there's abundant choice, if the insurance clients perceive that you're denying care or you're not rendering enough care, they would leave and go, which defeats the entire purpose.

I request Ravi to take up pertinent question from the chat box. Ravi, if you could just see that question, question number one, out of the all patients admitted in the Narayana Hospital this quarter.

Are you able to see that question? Sure.

I will just read that out for people's benefit and quickly answer that. We did cover this a little bit earlier as well.

Out of all the patients admitted in the hospital this quarter, what percentage originated through our insurance platform compared with traditional referral channels? The first part of the question.

Again, we're not prepared at this point to share the percentages, although we track it very, very diligently. Again, the insurance book is still a small book and it will take some time before we see really significant impact, but that is of course the direction that we all are working towards.

The second part of the question is, as the book matures, do you expect underwriting profitability to improve through premium increases, better risk selection, or lower operating expenses? I would say that, first of all, all three, and in order of priority, I think it's very important for us and consistent with our overall approach of the group to have the lowest possible operating expenses to give the maximum possible benefit back to the customer.

That will continue to be a focus, and you'd have seen a significant drop in our expense ratio from previous periods and something we'll be working on very, very closely. Better risk selection, just as a response to the earlier question we spoke a little bit about that.

The premium increases will be a factor of life based on how the book performs. Our approach is going to be to be responsible in our pricing and keep doing that and make sure that we are not overpriced or underpriced and trying to be as correctly priced as possible in order to have a sustainable business, which means value proposition for the customer as well as a sustainable pricing for ourselves.

On the second part, maybe I'll defer to Sandhya or Anesh on that, insurance sitting inside the listed company.

Sure. The question is, it sits inside the listed company and therefore suppresses consolidated return metrics.

Has the board internally defined a maximum acceptable period or cumulative investment after which the strategy would be reassessed? It's a combination of both time and cumulative investment.

As Viren mentioned, we did set out broadly the terms in terms of the amount of investment we were willing to make into this. Things are on track, especially ahead of plan with the clinic, slightly behind with the insurance, but every few quarters or so we'll continue to reassess if the ecosystem benefits do materialize.

The early results are encouraging with the clinics. Insurance is too small to judge now.

We'll continue to watch and reassess every few quarters or so.

In your presentation, you mentioned there are three projects which have got postponed from FY28 to FY29, two to FY29, one to FY30. What are the reasons for this postponement if you can share?

Also,

southwest Bangalore, the 100 beds which are supposed to come during the current financial, which quarter do we expect them to operationalize?

I'll take this. See, among all the projects which we have listed out, most of the projects are within the acceptable timeline.

Even if there is a slight delay, they are within that 6-month window period of acceptable timeline. There are a couple of asset-light partner model projects which are running a bit slower, specifically because from the partner's side in terms of certain licensing issues or delayed licensing, which obviously we are in constant discussion with them and it should get sorted in the next month or so.

They should cut those delay by a considerable period of time. This is minor delay, but other than that, most of these projects are within the acceptable limits.

When it comes to the project in southwest Bangalore, as you said, we're at the end stage of this construction and we are hopeful to start it by the end of Q2. This is also fully in line with our plans and we hope to have this start by end of Q2.

Thank you.

Hi. Yeah.

My question was more to Ravi on this insurance side, right? Ravi was explaining in earlier participant's call where insurance business is having a bit--

Am I audible now?

Yeah. My question was mainly to Ravi with regarding to insurance having an impact on the overall profitability as of now playing.

Ravi was explaining that for now this will be going a little bit of maybe a couple of more quarters this impact will be. I just wanted to understand from Ravi that how long do you see that the scaling of insurance books will have impact on profitability?

By when we expect that that will start contributing on this?

Right. I'll attempt to answer that.

At this point, we don't make future forecast, but I think the important thing here is a couple of things, as I laid out in the earlier response. There are a number of things that we will continue to do to make sure that the portfolio itself is something that is managed sustainably.

That includes a number of things around underwriting and claims, as well as the type of business that we are writing. The nature of insurance business and the way that it is currently accounted is that you are able to book a fraction of your revenue in the period, but you have to book the entire expenses.

Growth does have impact on P&L. These are all things that we look at closely and monitor.

I think the important thing for us is to have a long-term sustainable portfolio, and over time to engage with our customers across primary care that we provide them as part of the insurance offering and as part of the value-added services, so that the entire integrated care approach comes in and we're able to see as a group the value of having hospital, clinic, insurance together, working with customers to help them get well, stay healthy. That's kind of how we're going to be approaching this.

We're obviously very focused on a sustainable business. At this point in time, I think it's given the size of the portfolio and the volatility, it's a little bit too soon to talk about when is it going to get to various levels, but it's something that we'll keep working on and keep updating you each quarter.

Got it, Ravi ji. Just to add on to the same, earlier we had a bit of more targeted segment was a retail.

Now, as you indicated that we have been also looking somewhere on the group and the other segment of the sector as well. Where do you see this shaping up in two to three years?

I'm not talking about from profitability point of view, just want to get a view from scalability perspective. Do you see Narayana Health Insurance becoming a prominent player in terms of the other competitors as well for the health insurance sector?

I don't know what you mean by prominent. If you think about the impact that we will have on the lives of our customers and be able to provide an entire integrated approach across everything that our customer requires from a healthcare perspective, then as Narayana Health, I think we'd be very, very, very prominent in the life of that customer, and that's what we're trying to build.

Okay? I think that's our focus.

In terms of channels and distribution, our focus, I would imagine would continue to be on those areas where we think we can make the most impact in the life of our customer, which for us at the moment appears to be retail coverage as well as SME. These are areas where there is a lot of people who are left uncovered, for whom having insurance will make a real difference in their life, will stop pushing them into below the poverty line, should there be a catastrophe or not be able to access care.

That's what we are focused on. In terms of prominence, I don't think we look at it as a market share thing.

It's about how can I provide a complete integrated service across clinics, hospitals, and insurance to our customers so that we can be super prominent in their life? If we make that impact and do that over a period to as many people as we can, and then I think we made a real difference.

That's very well. To achieve that, we will be strictly sticking to the Narayana integrated ecosystems, right?

We are only targeting on that area, we are not going to pursue this as a separate entity.

The question that you asked was over a period of time, right? Look, we're always going to be looking at opportunities and looking at what makes sense.

The lens is always going to be an overall integrated lens. That is the unique thing that we bring to this market.

That's what we're going to be focusing on, and all opportunities, all ideas, new things that we'll invent are all on the table to help us drive that goal.

Thank you, Ravi ji. All the best.

just on the UK ROCE, will it be better than what we achieved in India and Cayman business? The UK ROCE will be better than that?

Japreet, thank you for your question. We'd like to take the-- Sir,

We'd like to take the UK questions in the second half, but since you've asked, it's still early days, Japreet, to answer that question definitively. Like we said before, we do perceive a very good opportunity to increase margins for the capital we have in disproportion to the capital we've deployed.

It's a country that has a lot of favorable economics in terms of how the business is structured, and especially our advantage being a low-cost provider. To your specific question, it's too early to have a definitive number and a definitive timeline compared to where we are currently.

Second question is, there is a significant increase in our cash equivalents in the balance sheet. Where this cash has come from and where it is going to utilize?

Japreet, you're asking the cash balance that we are holding in the balance sheet, right? You're asking where we're going to deploy that cash, right?

Yes, yes. Okay.

This will get deployed into the projects that we've committed. Over the next 2 years, we've committed ₹3,000 crores.

A part of that will be our own contribution and a part of it will be borrowing in nature. We will deploy that cash towards projects.

Where this cash has come,

there is significant increase in the cash, from 25 to 26. Where this has come from?

The cash has entirely come from the performance of the operating business in India and Cayman.

Thank you.

I think we can take the questions on the chat, Neerav, and then move to UK. We can finish off all the India questions on the chat.

There's a question on, is your HSR hospital on track, and also any plans for expanding presence into North Bangalore? See, HSR is mostly on track.

In terms of the North Bangalore, we have already announced our projects for the first round of expansion. Whenever we come to the second round of expansion, this North Bangalore will be one of our priority areas, along with other parts of Bangalore where we are not present currently.

The second question is, India insurance, we have already covered for insurance.

India insurance we have covered.

There's a question on ALOS. ALOS during Quarter 1 was 4.3.

Where do you see it settling down?

Hi. I am Dr.

Rupert here. Our intention is to get it down somewhere between 3.9 and 4.

That's a journey because that's one of the areas of efficiencies we have been working on for the last couple of quarters, and we want to do that. Some of the complexities of the work which we do do have a different length of stay.

We're trying to balance out all these things to get to that kind of a number. Overall, the effort across all the hospitals is to reduce the ALOS, but we also have a sizeable number of medical patients who require a little bit of a length of stay.

It's a quite a balance, but we hope to get down to somewhere close to 4 as early as possible.

There's a question on the overall loss funding for insurance, clinic business put together. This we've already covered.

Yes, in 1:4.

The rest are mostly for international businesses. Can you provide some color on the trend in patient transaction volumes across your clinics this quarter?

Ravi, you want to answer that?

Certainly. In terms of the overall transactions that we have across clinics, this is something that continues to be positive.

Just give me a moment and I'll just pull up some of the numbers here for you. Right.

In terms of overall transactions in terms of OP consults, these have grown by about 30% year on year, and in the quarter we did about 66,000 consultations across our clinic network. That is something that has been pretty encouraging.

A very high percentage of our customers, again, we're not sharing the exact number, but a very high percentage, well over a significant number of the revenue of the clinics comes from these members. That's been very encouraging.

Our clinic business continues to grow. We are opening two more clinics this quarter and breaking ground on more later.

We are quite excited about the direction that the clinic business is going, both at a clinic level, as well as the support that is providing to the hospital, as well as our insurance business. The entire integrated story that we've been building for the last couple of years is starting to play out and we're pretty excited with the direction of that.

This is a question on the domestic market which Anesh can answer. How do you see competition because every other hospital is adding beds and why don't you expand your network in states like UP, Bihar where organized players like Max, Medanta, Fortis, they have no presence?

Sure,

thank you for the question, whoever asked it. We continue to evaluate all opportunities in India, especially states that are underpenetrated like you mentioned.

Having said that, our focus now with the current wave of capital deployment and expansion is in the clusters where we are already strong, already have an established presence, and we have a track record of delivering and establishing a brand. We have outlined over the next I think 3 years or so, three financial years or so how that capital deployment will look like.

Once we start Phase 2 following some progress on Phase 1, we will consider newer markets and newer geographies. We currently do not have a presence in the states mentioned.

There's a question which Sandhya will answer. Is the Q1 FY27 EBITDA margin decline temporarily due to integration cost or should we consider this the new normal for the consolidated business?

I'd like to take this in three parts actually. If you look at the India business per se, including combining the losses from the clinic business, even if you set that off, the net margin has expanded by 400 bps year on year.

There, I think there is no shrinking. In fact, it's a very strong performance.

Cayman hospital has come back to its earlier levels because of the ramp-up and is operating at optimal margins. There are three places where there is a cash burn.

One is Cayman insurance, India insurance. Cayman insurance we'll speak about when we come to the Cayman segment.

India insurance we've already spoken about. Both of these are in the improving trajectory, and we will definitely be able to recoup margins over a period of time.

Similarly for UK, UK has also caused a dilution in the margins, which again we will speak about when we come to the UK segment. Overall, we are positive that the margin trajectory will be in the upward direction from here, given that all the efforts that we are taking will start to bear fruit in the medium term for us.

Nishant, there's a question

somewhat related

to-- Nishant, given the time, we're making progress. Let's take questions on the other divisions, and where there's a gap we can take the chat questions as well.

Sure.

Yeah. Anesh, moving on to Cayman and UK.

If you look at the insurance business in Cayman, it's good to see that quarterly losses have come down on sequential basis. However, in the last call, you mentioned that 1/3 of the contracts will get repriced starting from July.

Can we assume that we are behind worse for Cayman insurance losses and it should start improving significantly as this repricing starts kicking in in July and Jan? Should we look at break-even anytime soon?

Thanks Prithvi. On the exercise of renewals in July, we're very happy to note that we had a 100% acceptance and renewal rate, which is quite unusual for a new insurer.

That means we're confident that people are happy with what we're offering, they're happy to accept the price increases to a more sustainable level, and we're confident we'll have a similar result in the January cycle as well. That cycle has gone on successfully and as it's not reflected in the quarter results you're seeing because that kicks in from July, but it will be in the Q2 cycle.

Having said that, to your question, yes, you will always have some abnormal swings in some quarters in insurance because you can have a few large claims here and there. If you look at a rolling two or three quarters basis, we would agree with you that our intention is fully to see that the worst is behind us in the previous quarter, barring some abnormal swing that could happen with a few large claims for some complex cases.

I think we agree with your conclusion.

Moving on to the Cayman hospitals, the growth this quarter in USD terms is a bit soft in that 5-6 percentage. See, the whole point of getting into insurance is that it will also add more footfalls to the hospitals.

Is there any specific reason for this low growth in Cayman hospitals this quarter, or it's more to do with a couple of surgeries getting delayed which explains this?

Seasonally it is a softer quarter. Having said that, if you look at the volume metrics, we are seeing a healthy double-digit increase in whether we see year-on-year discharges or outpatient footfall, etc.

A lot of it is because of the integrated care strategy playing out. Having said that, we do look forward to the growth being a little more in the hospital, and as you said, which should result from the insurance company growing.

The insurance company is not small anymore. It's looking at a $60 million annualized book of business, so that should be empowering at least a little better growth trajectory in the hospitals for few quarters to come.

Q1 is a seasonally slower quarter given the holidays, but we're happy with what we're seeing in the early months of July and August.

One final question on UK business. Surprising to see that losses going up considerably in this quarter on sequential basis, and even there has been a revenue decline.

What's happening there? One obviously this quarter, second, how is the entire traction?

Are you people able to take control of the business and the change in payer mix or the initiatives that you wanted to take? How is everything going on there?

Sure. To your first question, there will always be seasonal variation, but on a year-on-year basis, which we'll have to compare to the period prior to acquisition, there is about a 5% year-on-year revenue growth.

It would have been higher. However, as you would have read in the media, there was a widespread heat wave which is very severe all across the country.

Critical infrastructure, not only hospitals, but railway operators and other infrastructure was significantly impacted. For us, what that meant is the chillers and air conditioning units in the hospitals conking off quite often, and we lost several days of operating capacity, which, in a business with a baseline low margin can be quite catastrophic.

We unfortunately have some of those heat wave impacted days even in Q2. Hopefully towards the mid and end of Q2, the season changes and we think that the worst is behind us.

This is definitely something that hit us pretty bad, but hopefully it'll be a one-off. We do have experience through Cayman and India of operating hospitals in much hotter climates with higher humidity.

We'll look to incorporate and strengthen our systems, especially around the HVAC and chillers, to be able to be more resilient to these swings. It'll take some time.

To the second part of your question around how the business is generally going, I think we're fairly positive with what we're seeing. The team is doing a great job, the integration is progressing well.

We have finished almost all of the separations from the erstwhile parent. We only bought a division.

That was a very big, time-consuming transition exercise, which is complete. We now have all hands on deck towards our transformation plan and our implementation of our software, our synergies.

We continue to be positive with what we're seeing. It's going to take a little time because the certification regulatory timelines around our software products is a little longer than we expected.

With the opportunity that we now have scoped out compared to what we theoretically imagined pre-acquisition, the two are very close, and we continue to be positive on the mid- to long-term direction of that business.

Sir. Best of luck from my side.

am I audible?

hi team. My question on the international business side.

Did the international business witness any sequential margin pressure in Q1 Fiscal '27 compared to the Q4 Fiscal '26, and if yes, what were the key drivers?

Hello Jyotheesh, thanks for your question. Let's take Cayman separately because I think that's the relevant one for your question.

Q1 compared to Q4 is the weakest quarter compared to the strongest quarter seasonally. Yes, there was a revenue decline sequentially, but a revenue growth year-on-year if you look at it.

For the hospital business where the bulk of the margin, the profitability comes from, a revenue decline will have some softening of the margins. Insurance, which is still a growing business, sequentially we had a meaningful reduction in the losses quarter on quarter.

Year on year will not be comparable in insurance because the size of the book almost 3x year on year, but quarter on quarter there was a reduction from approximately $5.2 million for the quarter in insurance losses to about $3.7 million now. We have Rajat, and then we can take some from the chat.

Hi. You did mention that technology, certification, etc., you've initiated at UK, but apart from that, any other specific steps that you could share that you are looking at or you might have undertaken?

Anything towards change in payer mix or maybe rationalizing HR costs or anything of that kind?

Absolutely. Let's do it in two buckets, Rajat: the cost and revenue.

On the cost side, pretty much what we started in NH in India about, I would say, 15 years ago, standardizing the variation in implants, consumables, drugs; consolidating purchasing power to a few global vendors and getting those benefits. That process is playing out well.

Standardizing output and bill of materials for each procedure, engaging with consultants to understand if they're aligned with a productivity-focused model rather than more of a time-spent model, which can be at cross-purposes. At the same time, when we look at the cost side on the non-clinical aspects, the entire non-clinical, that is the admin overhead, is a large chunk where automation does translate into meaningful reductions in effort and cost.

We've already started a lot of that. The thing with our software platform is it's modules.

It's not one day the old system switches off and the next day the new system switches on. Every quarter or so one will pass certification, we will deploy, there will be a quarter or two of settling in, and then the benefits kick in.

With each and every administrative process, whether it is submitting an invoice, processing payroll, closing a purchase order, with every administrative process, we have identified concrete steps to reduce the number of touch points and the number of steps and costs it takes to fulfill that process. It does take time, and this is in line with our diligence and our thesis pre-acquisition.

On the revenue side, our biggest goal was changing the payer mix from a predominantly NHS-oriented payer mix to something more balanced, which had private sources of revenue, which are self-pay and PMI, which is essentially private insurance. We have made progress there.

The business's private contribution, while still low, very low compared to peers, compared to the business itself is at an historical all-time high. It's never had this proportion of private revenue sources, but still early days.

It's only been, I would say, two solid quarters of us owning the business. We continue to invest in those relationships, and it's very aligned with what the private insurers are looking for.

They are desperate to look for providers that are focused on controlling costs, whereas that's not necessarily been an option for them. They've usually had quite a fraught relationship with the other providers, whereas we are coming out and saying that our goal is to control costs and lower costs.

This is very aligned with the private insurers and they are actively and definitely being very encouraging to our plans and helping us build out the private book of business. I hope that was helpful, Rajat, yeah.

That's very helpful. Just one small thing.

Earlier you used to give out a breakup of numbers with UK, without UK, which is not there now. Can we expect that to see going forward?

Sandhya, I think that is derived, but Sandhya, you want to take that?

Because we have given the UK numbers separately, without UK will be, you just have to remove them from the numbers we've reported.

Because

otherwise it was getting very complex. If you have any questions, you can always reach out to our team and we'll be very happy to clarify.

No, I did reach out last time as well. I just wanted to know if I reach out to you, would you be able to give me the breakup of the numbers like you used to present earlier?

Yes, with and without UK we can share.

I'll reach out then. Thank you so much.

Nishant, you want to screen and run through what we've answered or how do you want to go?

There are a couple of questions on India as well. There's a question on, any plans to reduce debt or will it be maintained at these levels?

See, the debt-equity ratio and the debt-EBITDA ratios are not very high even now. Our net debt-EBITDA is still less than 1.

Debt numbers will go up as the project construction picks up pace, which will be for the next 2-3 years, but by FY30, we would expect these numbers to come down to even lower levels than what it is currently. There's a question on, would you be thinking of entering into other European markets like in European markets or USA, Canada in the next 2-3 years?

Anesh, would you want to answer? No,

we have our hands full with what we've started, yeah.

Okay. One question on the UK, which you've already covered for EBITDA, but there's a related question, who are the closest comparative hospitals in the UK business?

In order of size, that would be Spire, that's the only publicly listed one. The other one is Circle, which is owned by Pure Health, then there is Ramsay, Nuffield, which is a not-for-profit, and then us.

HCA of course, which is very London-based, the economics are completely different, but the others would be suitable comparators.

There's a question on India in the consol financials, there's a jump in professional fees paid to doctors from INR 244 crores in Q4 '26 to INR 327 crores in Q1 FY27 without increase in volumes. What is the reason for this increase?

Is there some one-time element to it? Sandhya, if you'd like to answer.

Yeah. Actually in Q4, we had a reclass in the Cayman professional fees where the fees to doctors was accounted in the professional fees line instead of the employee cost line.

That got reclassed, which means the professional fees for that quarter ended up being negative. When we booked the Q1 in that item, so that's why you are having that difference.

The actual cost has not gone up at all. It is actually flat between the quarters.

It is because of the reclass entry that we passed from one line to another that you are seeing that difference.

Thanks, Sandhya. Anesh, it's a follow-up question to your answer last.

Can you elaborate what you mean by longer regulatory approval timelines for the own software products?

Sure. To deploy software in the UK medical software, it frequently gets classified, depending on how you use it, as software as a medical device, which has a certification timeline.

We knew that there were certain regulatory and data privacy processes to go through pre-acquisition, but we did not have the details about how our software would be classified. Having said that, I think it adds about 4 to 6 months in terms of timeline to what we initially anticipated.

It's a one-time effort, and the advantage it gives us is there are very few products at our scale that have all the classifications to be used as software as a medical device in the UK.

Thanks, Anesh. There's a question on the UK business showing high dependence on the NHS contracts.

I think mostly we have already covered, yeah.

Yeah. No, go ahead, Nishant, sorry.

No,

I'm saying we have already covered on the margins and how the future will look like, but maybe you can mention about this dependency on the NHS. Yes,

the business we acquired was 95% NHS. That's definitely not good and not where we want it to be.

The closest peer in terms of geographical distribution has about 70% NHS approximately, so that's closer to where we want to be. It obviously will take time to get there.

We did anticipate this to take 4 to 5 years to move. Early results are promising.

We have had some encouraging signs, but it's a journey because the doctor engagement model, insurance relationships, even the location and structure of these hospitals, which you cannot change in the short term, everything has to be redone. It is a worthwhile pursuit because it does come at a meaningfully higher per unit realization, and that is part of our acquisition thesis.

One more question. They're asking if we can give a split of the private versus NHS in value or volume terms.

In value terms, like we said, when the business was acquired, it was approximately 95:5. We are better off there, but not enough to comment on.

What we can do is once we have a few more quarters under the belt, we'll think about the appropriate way to convey progress on diversifying payer mix.

There's a question on the share if you could if you can share the losses in India clinics business in for Q1 FY27. It's there in the IR deck.

That number we have also given the margins with and without clinics. That number is approximately ₹15 crores for this this first quarter of FY27 for the clinics business alone.

Neerav, do you see any more investors asking questions?

If you can just wrap up this session, Neerav, for us.