Managing Director's Letter

Dear Shareholders,

The past year has been eventful for private healthcare providers. The overall attractiveness of the sector remains strong and with Ayushman Bharat Yojana on its way, the demand for healthcare services will get a significant boost especially in Tier 2 & Tier 3 markets. With a significant shortage in supply of quality healthcare services, the growth prospects of private players continue to be robust. This is also evident in strong interests displayed by domestic and foreign investors (both financial and strategic) in acquiring Indian healthcare assets.

On the flip side, the past year witnessed unprecedented levels of regulatory intervention both at the centre and the state level, which has put pressure on the economics of private healthcare providers.

The changing business paradigm will require private players to be agile in not only responding but also proactively adapting and innovating business models and formats to emerge as winners. For us at Max India, FY 2018 has been a year of reset caused by various regulatory interventions and other headwinds. We have launched initiatives to re-gain desired profitability signature over the next 18-24 months. Before I discuss in detail the strategic priorities of Max Healthcare and our other key businesses – Max Bupa Health Insurance and Antara Senior Living, allow me to share an overview of our financial performance during the past year.


Max Healthcare (MHC)

During the year, the Max Healthcare Network of Hospitals reported Gross Revenues of ₹ 2,787 crore, with a modest growth of 9% as compared to last year.

The consolidated operating margin (before interest and depreciation) at network hospitals fell to 8.5% in FY 2018 from 11.4% in FY 2017, resulting in EBIDTA of ₹ 222 crore. MHC Network reported a consolidated net loss of ₹ 50 crore.

It is important to note that till the third quarter of FY 2018, MHC’s performance was on expected lines, and in line with peers. However, dramatic changes in the external environment, especially following the Shalimar Bagh incident in November 2017, disrupted MHCs financial trajectory in the final quarter.

There were various other factors, regulatory and voluntary, that had a dampening impact on MHC’s financial performance during the year. Some of these changes are structural and some one-offs and recovery is underway. If we were to adjust for the impact of some of these one-off events, we would observe better growth especially in some of our tower specialties like Cardiology and Orthopaedics; Oncology at 24% growth continues to be fastest growing speciality within the MHC network. The Liver Transplant Programme, which we embarked on in later part of FY 2017, is also scaling up well with more than 200 surgeries completed during the year.

During the year, the Max Healthcare Network of Hospitals reported Gross Revenues of ₹ 787 crore, with a modest growth of 9% as compared to last year.

In response to some of the headwinds mentioned earlier, MHC delivered ₹ 73 crore of savings in FY 2018 across cost lines.

Despite all the challenges, MHC has preserved its core. This is reflected in lower employee attrition, and, superior scores on patient satisfaction (as measured by IMRB) and on clinical quality metrics. I am also delighted to share that MHC won Bronze at ASQ World Conference for Quality and Improvement 2018, the first healthcare organisation in the last 10 years to win one of the top 3 awards.

Max Bupa Health Insurance (Max Bupa)

Max Bupa reported a strong 27% growth in its topline with Gross Written Premium (GWP) of ₹ 755 crore in FY 2018. The growth in revenues was primarily driven by 23% growth in new sales and 29% growth in renewals. The growth in GWP was driven by both bancassurance as well as proprietary channels such as agency and digital.

The business also reported a Net Profit of ₹ 23 crore during the year, compared to a Net Loss of ₹ 4 crore in the previous year. With a provider network of more than 4,500 hospitals across 500 cities catering to a growing base of nearly 3 million customers, Max Bupa closed the year as the 5th largest business-to-consumer (B2C) player amongst private insurers.

Max Bupa also reported a Net Profit of ₹ 23 crore, during the year, compared to a Net Loss of ₹ 4 crore in the previous year.

FY 2018 was also a year of achieving new milestones in innovation. Max Bupa launched variety of innovations this year including a new product aimed at wellness – GoActive. This is a first of its kind, digitally-enabled customer-centric offering. It is the outcome of collaboration between the industry’s premier healthtech providers, including GOQii, a prominent brand in wearable fitness devices, Practo, India’s leading online aggregator app for healthcare, and 1mg, a leading online pharmacy; to create a digitally-enabled wellness ecosystem that seamlessly integrates all these services on a single platform. GoActive was also awarded the ‘Health Insurance Product of the Year 2018’ by Consumer Survey of Product Innovation. Max Bupa also won the ‘Best Innovative Medical Insurer’ award at the 4th Annual Businessworld Healthcare Summit Awards.

Additionally, Max Bupa also launched a couple of other new initiatives – Anytime Health Machines, or Health ATMs. These are geared towards driving better customer service and at the same time generate leads at lower costs.

Antara Senior Living (Antara)

Our senior living business Antara had an eventful year with its first community in Dehradun, Uttarakhand, commencing operations in April 2017. With 92 units already booked, Antara reported collections of ₹ 253 as of March 2018. The community operations are running smoothly with very positive feedback from residents who have already moved in.


Max Healthcare (MHC)

As I mentioned earlier, we have embarked on a journey at MHC to mitigate risks and address emerging challenges brought about by the evolving external environment. The four pillars of value creation for MHC are:

  • Optimising existing network: We have undertaken targeted efforts to improve speciality and channel mix, drive higher occupancy through continuous engagement of communities in the vicinity, expansion of upcountry and international presence and sustain cost rationalisation initiatives

  • Growth of hospital network: Our expansion is prioritised in facilities that have a proven track record of delivering superior profitability. Our initial plan to double bed capacity to 5,000+ beds is intact and as we do that we will optimise capex, and adjust business model in the context of changing business environment

  • Alternate models: Last year, I had discussed at length our growth bets in new alternative business models including Max@Home, our homecare initiative, our pathology vertical, Max Labs and Oncology Day Care which opened its first unit in Delhi in FY 2017. All these new businesses have delivered strong growth over the previous year. While we expand these businesses (e.g., launching 2 new Onco Day Care centres in Gurgaon and Noida), we will also launch new verticals in FY 2019, such as Tele Radiology and Physiotherapy. We are making good progress on growing these new businesses into a sizeable scale

  • Key enablers: For us, metrics such as patient safety, people, technology, service experience and compliance are key to staying relevant in the longer term and be differentiated from others. We will continue to duly invest in these going forward

Over the coming months, we will continue to closely monitor progress on the performance improvement agenda. We are confident to resurrect EBITDA margin to the level of early to mid teens over the next three years.

Max Bupa Health Insurance (MBHI)

Max Bupa, having successfully delivered on the ‘Getting fit for growth’ agenda, will be changing gears in FY 2019 and beyond to accelerate growth through well calibrated bets:

  • Distribution footprint: While Max Bupa will continue to drive profitable scaling up of existing bancassurance alliances, it will continue its attempt to forge new partnerships. We have signed new partnerships with HDFC Bank and Karur Vysya Bank. At the same time, MBHI will invest in expanding agency footprint to Tier 2 & 3 cities adopting a variable cost model.

  • Compelling Product Basket: After the successful launch of ‘GoActive’, Max Bupa is working on new products both to strengthen proposition at the top of pyramid as well as to drive penetration across segments.

  • Cost optimisation: Max Bupa will continue to drive structural cost savings across the organisation and, has identified a series of Health Risk Management (HRM) initiatives to control claims related costs.

  • Digitisation across value chain: A dedicated team will drive the digital transformation agenda. Immediate focus will be on creating an ecosystem to improve customer engagement and seller productivity and drive efficiencies in operations and claims management.

We are very excited about the growth potential and opportunities for Max Bupa and are on track to pursue Max Bupa’s vision of becoming India’s most admired health insurer.

Antara Senior Living

While the Dehradun community, which was a greenfield project, serves as an excellent showcase for Antara’s world-class service levels and top-notch execution capabilities, we have decided to pursue growth through Operating & Maintenance (O&M), an asset-light model. As part of this model, the real estate developer will own, develop, construct and complete the project, and Antara, as the O&M manager will advise and assist in design development and will drive sales and marketing under its brand for a management fee as well as run the operations of the community, once completed.

The first project under the new model is proposed to be launched in Noida in FY 2019 and, discussions are underway on a few more opportunities.


Over the past few years, the Group has invested significantly in growth areas. These growth bets were represented in capital outlays for large hospital acquisitions in Max Healthcare, and growth capital in Max Bupa and Antara Senior Living.

However, a fast-changing external environment with persistent regulatory changes and interventions necessitated re-calibration of business plans and changes in the business model. The key is to remain agile in pre-empting, responding and adjusting to these changes. While there may be some short-term pressures on profitability, with our strong fundamentals and competitive position, stable leadership team, robust governance and, deep-rooted business ethics I am confident that our businesses will deliver strong profitable growth in 3-5 years.

I would like to thank each and every one of you for your continued support to your Company’s vision and proposition. I also wish to thank all our employees across the Group, our business partners, investors as well as the Government and its various agencies with whom we engage actively on a near daily basis, for their continued support in helping our Company move on to the next stage of its exciting journey.

With Best Wishes,

Mohit Talwar

Managing Director, Max India Limited