Max Healthcare expands growth strategy, eyes strategic acquisitions: Abhay Soi, Chairman
Max Healthcare Institutes – one of the largest private healthcare providers in the country – continues to be on the hunt for acquisitions as a part of its organic growth strategy. The company, however, will be looking for acquisitions in “proven territories”, that is, where at least one or two of its peers have a presence or operation, Abhay Soi, Chairman and Managing Director, Max Healthcare told businessline.
According to him, it does not matter whether the acquiring venture is profitable or not. But there would be a return on capital employed (ROCE) of 20-25 per cent within a time frame of 4-5 years.
“Profitable, non-profitable…. we seek a 20 to 25 per cent ROCE within 4-5 years. And basis which we value how much we are willing to pay at this point of time,” he said.
“Our only other criteria, that (at) least one or two of our peers should have proven viability in those geographies. We are comfortable going to places where we have already seen other people make viable decisions,” Soi added.
Acquisitions already EBITDA positive
According to him, as far as acquisitions are concerned, previous ones – in Nagpur (Alexis acquired at enterprise value of ₹412 crore) and Lucknow (Sahara Hospital acquired on a slump sale basis of ₹940 crore) – some 9 months ago, more than doubled their EBIDTA.
The Jaypee Hospital acquisition made last year is already EBITDA positive.
Asked about target acquisitions, Soi said: “We always have a strong pipeline. We keep evaluating. So, you know I am not ruling anything out.”
Most of the acquisitions have so far been funded through “internal accruals”.
Free cash flow from operations stood at ₹303 crore in the December quarter; while net debt stood at ₹1,608 crore. .
The debt was taken primarily for the acquisition of Jaypee Hospital, Noida and Bulandshahr.
“This is the only net debt that we have on our books and we were quite comfortable going up to 2 and a half times debt to EBIDTA (for acquisition purposes).”
Gross revenue stood at ₹2,381 Cr for Q3FY25, up 34 per cent y-o-y; while PAT before Exceptional items stood at ₹390 cr.
Jaypee Hospital acquisition
“It’s already generating profits (Jaypee Healthcare in Nodia, now rebranded as Max Super Speciality). Last year they had a ₹70 crore EBIDTA. The question is we have to ramp it up a bit; and we’re ramping it up,” Soi said.
In September, it entered into ‘strategic collaboration’ for the acquisition for an enterprise value of ₹1,660 crore.
Acquisition was for a cash consideration including refinance of debts of Jaypee Healthcare. This was completed in November.
This acquisition will give Max Healthcare access to Jaypee’s flagship asset, the 500-bed facility at Noida. This apart, acquisition will also include the 200-bed Jaypee Hospital Bulandshahr.
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