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Max Healthcare to Acquire Lucknow's Sahara Hospital in an INR 940 Cr Deal

Written by : Nikita Saha

December 11, 2023

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With this acquisition, Max Healthcare seeks to bring high-end medical programs such as oncology, and organ transplants thereby strengthening the existing programs such as orthopedics, cardiac sciences, neurosciences, and renal sciences, among others.

Leading private healthcare provider Max Healthcare Institute Ltd is betting to acquire Lucknow’s Sahara Hospital, a 550-bed healthcare facility for a total consideration of INR 940 Cr.

If it goes through, which is quite likely, the acquisition will mark Max Healthcare’s entry into Lucknow, one of the fastest-growing cities in Uttar Pradesh.

With this acquisition, Max Healthcare seeks to bring high-end medical programs such as oncology, and organ transplants thereby strengthening the existing programs including orthopedics, cardiac sciences, neurosciences, and renal sciences, among others.

Commenting on the acquisition, Abhay Soi, chairman and MD, Max Healthcare Institute Ltd, said, “We are excited about this acquisition, which is in line with our strategy to enter new Tier I / II cities which have developed a healthcare services ecosystem. Given our track record of successful post-merger integration, we expect to quickly improve the operating and financial performance on the strength of the medical excellence of our clinicians and continued patronage from our patients. Through our presence in Lucknow, we aim to bring quality healthcare to the people of Uttar Pradesh.’’

What Goes In The Offing

Max's wholly-owned subsidiary, Crosslay Remedies Ltd (CRL) executed a binding Share Purchase Agreement (SPA) for the acquisition of a 100% stake in Starlit Medical Centre (Starlit) for an enterprise value of INR 940 Cr.

While Starlit had entered into a Business Transfer Agreement (BTA) with Sahara India Medical Institute Ltd for purchase of the healthcare on a slump sale basis.

Sahara Hospital is a tertiary care facility, offering comprehensive healthcare services encompassing a wide range of super specialties, including gastroenterology, neurology, surgery, cardiology, pulmonology, and diagnostics. It also has a nursing college on the same premises, which offers GNM, BSc and MSc courses, with an annual enrollment of more than 100 students.

Further, Max Healthcare will bring its medical programmes, including oncology and organ transplants, besides strengthening existing programmes such as orthopedics, cardiac sciences, neurosciences, and renal sciences.

In fact, Max Healthcare is concentrated in North India, with a network of 17 healthcare facilities. Of them, eight hospitals and four medical centers are located in Delhi-NCR and the others are located in Mumbai, Mohali, Bathinda and Dehradun. The Max network also includes hospitals and medical centers owned and operated by them.

This strategic acquisition underscores Max’s commitment to extending quality healthcare services to emerging urban centers.

Heated Up Healthcare M&As

Deals in Indian hospitals space have heated up, with mergers and acquisitions (M&A) totalling $4 billion in 2022 and $2.2 billion in the first quarter of 2023.

Global consultancy firm PwC, projects 12%-14% annual growth for the country's private healthcare market, which has seen a post-pandemic boom.

Indian hospital chain operator Manipal Hospitals in September acquired an 84% stake in four hospitals owned by the Emami Group under the brand AMRI in its bid to expand its presence in eastern India.

While prominent cancer care provider, HCG, acquired hospitals in TIer-2 and TIer 3 Indian cities to enhance medical infrastructure and expand the capacity of existing centres across the country.

As the healthcare landscape evolves, Max Healthcare’s expansion into Lucknow signifies a proactive approach to meeting the growing demand for high quality medical services in dynamic markets.

In the July to September quarter of FY24, the consolidated net profit of the healthcare provider fell by 39.5% to INR 276.68 Cr as against INR 457.35 Cr in the same period last year.

Max’s revenue from operations in the September quarter witnessed a 19% increase to INR 1,363 Cr. In the September quarter, the healthcare provider’s average revenue per occupied bed (ARPOB) improved by 13% to INR 74,600 as against INR 66,000 in the same period last year.

According to analysts at brokerage firm Motilal Oswal, the addition of beds, improved realisation per patient, and the optimisation of the case mix/payor mix are expected to drive sustained profitability and consistent earnings growth for the company.

"Further, MAX continues to be on the lookout for any M&A opportunities, which can also aid better return ratios going forward," says the brokerage firm.

The share price of the company stands at 682.05, an increase of 0.42% as of 11:12 AM IST on 11 December 2023.


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