Medi Assist Healthcare Services Limited (MEDIASSIST) Earnings Call Transcript

Ladies and gentlemen, good day, and welcome to the Medi Assist Healthcare Services Limited Q2 and H1 FY '26 Earnings Conference Call. [Operator Instructions]. Please note that this conference is being recorded. I now hand the conference over to Mr. Niraj Didwania, Senior Vice President, Strategy. Thank you, and over to you, sir.

Thank you. Good evening, and a very warm welcome to each one of you to Medi Assist Healthcare Services Limited Earnings Conference Call for quarter two and H1 ended 30th September FY '26. We have, the results of the company, the press release and the investor presentations have been uploaded to the exchanges and on our website and also distributed from mailing list. We apologize for the slight delay we had due to technical connection issue. Please note that any forward-looking statements are to be relied upon based on your own judgment and all financials and operating numbers discussed on the call are unaudited or management estimates, and hence, investors should refer only to the uploaded financial statements of the company. Without further ado, I would now like to hand over the call to Satish Gidugu, CEO and Whole-Time Director of Medi Assist Healthcare Services Limited.

Thank you, Niraj. Good afternoon, esteemed investors, analysts and all participants joining us from India and around the world. Thank you for taking the time to join us today as we review Medi Assist performance and strategic direction amidst the dynamic evolution of India's health insurance landscape. We are encouraged by the ongoing transformation in the health insurance segment, driven by technology and strategic partnerships that enhance efficiency, access and trust. This half year's milestones for us, including the completion of the acquisition of Paramount TPA, our collaboration with Star Health & Allied Insurance, expansion of our international benefit administration footprint and the investment from MIT demonstrates strong confidence in Medi Assist vision and capabilities. These achievements reinforce our dedication to building a sustainable tech-driven ecosystem that delivers lasting value for all stakeholders. I'm pleased to be joined by our CFO, Mr. Sandeep Daga; and Mr. Niraj Didwania, our Senior Vice President, Strategy, who also leads our Investor Relations function. I'd first like to share the key operational highlights for our company performance for H1 FY '26. And you'll also find some of these information on various slides in the investor presentation that's getting uploaded. Let me start with some operational highlights. The total Premium under Management (PUM) administered was INR 12,719 crores as on 30th of September 2025, a growth of 20.2% year-on-year. Of this, Group premium was INR 11,447 crores, a growth of 22.5% year-on-year and Retail premium was INR 1,272 crores, a growth of 2.6% year-on-year. Within this, Paramount contributed INR 488 crores in Group premiums and INR 104 crores in Retail premiums. Market share in terms of health insurance premium administered, which is Group and Retail of the total health premiums in India was 21.3% as on 30th of September 2025 as against 19.2% as on 30th of September 2024. The Group's segment market share moved up to 32.2% as against 28.4% as on 30th September 2024. And the Retail segment market share was relatively flat at 5.3% as against 5.6% as on 30th of September 2024. Now moving on to business highlights for Q2 and H1 FY '26. Share of Private and SAHI insurance in the total portfolio of premiums administered increased to 29.4% for H1 FY '26, a growth of 233 basis points year-on-year over a similar number for last year. A sustained leadership position in the Group segment, we continue to hold this well with premiums administered for private / SAHI insurers growing by 28.3% year-on-year as against the industry growth of 7.8% year-on-year within that segment. We achieved a retention rate of 93.4% for Group accounts across Corporates, excluding Paramount portfolio. And we continue to improve the work that we do with private and SAHI insurers in the Retail segment with the premiums administered for private and SAHI insurers growing by 47.7% year-on-year as against the industry growth of 8.6% year-on-year in the private and SAHI Retail segment. Our mix of private / SAHI insurers in the Retail segment of premium administered stands at 37.8% for the half year. We continue to improve our Provider Network proposition for the ecosystem with our network adopted exclusively by 19 insurers in H1 FY '26, up from 17 in the similar period last year. And our average claim size growth for Medi Assist continues to be substantially lower at 4.4% as against industry medical inflation of what is generally accepted to be at 10% to 12%. And we continue to leverage capabilities for delivering seamless global administration services through expanding partnerships. Mayfair We Care (MWC), UK, our international benefits business onboarded one new Indian insurer and one new UK insurer for the IPMI and the Group segments. Our strategic partnership agreement with Bhutan's Royal Insurance Corporation, enabling its policyholders to access Medi Assist cashless provider network across India is live. And of course, the integration of Paramount TPA operations are ongoing with focus on strengthening combined ‘go-to-market’ and overall ‘value proposition’ across Insurers and Corporate accounts and drive operational efficiencies and also while driving operational efficiencies at the same time. And moving on to some technology highlights for the period. We executed an industry-first strategic partnership with Star Health & Allied Insurance Company for deploying our MAtrix claims platform. Full-scale deployment achieved in less than six months from design to go live, demonstrating our capability to execute complex enterprise scale transformation. About 40% of the claims volume has already migrated to the platform, and the full migration is an ongoing activity. And we continue to keep our focus steady on technology-driven Fraud, Waste, and Abuse (FWA) activities. Our tech delivered savings of INR 230 crores in this period, marking a 50% increase year-on-year. And we continue to scale up our unique offerings across the Provider Network. “Raksha Primeâ€, our AI/ML-based instant record offering, enabled over 156,000 discharges in H1 FY '26 compared to 38,000-odd in similar period last year. And in fact, even against a total of 117,000 discharges in FY '25. And this number continues to grow day by day with both the patient satisfaction scores and the prediction accuracy substantially going up very frequently.  I now hand over the call to Sandeep Daga, our CFO, to walk you through some financial highlights. 

Thank you, Satish, and a warm welcome to all the participants. Let me share with you the financial highlights for Q2 and half year ending FY '26. Starting with Q2, the total income for the period was INR 234.8 crores, which is a growth of 25.5% over the corresponding period of the previous year. Revenue from the contracts with customers, excluding other income, which we call it as Operating Revenue, was INR 232.5 crores, reflecting a growth of 28.6% over the corresponding period of previous year. The revenue from contracts with customers includes 12.6% from Government Business, 4.3% from our International Business Administration and 2.0% from the Technology SaaS Services.  EBITDA excluding other income during the period was INR 39.7 crores, which includes Paramount related consolidation and integration costs amounting to 150 basis points. The company has also incrementally invested into technology investments to the tune of 100 basis points. The INR 39.7 crores of EBITDA results into a growth of 3.3% year-on-year over the corresponding period last year and a margin profile of 17.1% on the Operating Revenue. Profit for the period was INR 8.1 crores, which reflects a decline of 6.5% versus the reported PAT versus last year and a margin profile of 3.4%.  However, adjusting for the Paramount acquisition financing, incremental Depreciation and Amortization and result in higher effective tax rate, the estimated PAT is in line with the historical performance. The financial highlights for half year ending September FY '26 is total income during the period was INR 432.8 crores, reflecting a growth of 20.2% over the corresponding period of previous year. Revenue from contracts with customers, excluding other income, was INR 433.1 crores, reflecting a growth of 21.4% Y-o-Y for the corresponding period of previous year. This revenue from context included 11.9% from our government business, 4.9% from the international business, and 2.2% from technology-led services.  EBITDA excluding other income was INR 81.7 crores, which reflects a growth of 10.9% year-on-year and a margin of 19.3% on operating revenue. Profit for the period was INR 30.7 crores, a decline of 23.3% on reported PAT versus last year and a margin of 7.1% on the total income. The key balance sheet and operating metrics as on 30th of September are as follows: Net cash balance in the books was minus INR 20.9 crores; the Net Worth was INR 591.2 crores and the Return on Net Worth was 10.4% on an annualized basis; Return on Capital Employed was 14.2%, again, on an annualized basis; revenue per average head count on non – government contracts was INR 14.9 lakhs annualized during the period.  I now hand over the session to Niraj. 

Thank you, Sandeep and Satish, for running through the performance of the company. We will now take questions and answers from the, questions from the participants on the call. 

[Operator Instructions] Our first question is from the line of Navid Virani from Bastion Research. 

First of all, congratulations on the acquisition of Paramount. So, I have a couple of business understanding questions. First one, sir, is on unit economics. So, what I want to understand is how as Medi Assist do we earn? I mean I understand that all our income comes from insurers. But what I want to understand is, is it fixed per policy, or do we earn as a percentage of premium that we administer? So that's first. 

Sure. Thank you. This is Satish. We predominantly earn our revenues in the India TPA business, which is our largest subsidiary. In the regulated India TPA business, we earn our income only from the insurance companies. And most of this income is paid within the Group and Retail business as a percentage of the premium. And in the Government business, typically, it is a fixed number of rupees per family per year, and that number depends on the complexity of the Group and the various conditions and the deployments. And these are the two predominant sources of revenue within the TPA business.

The second question which I had was on the growth levers. So, if my understanding is correct.

Sorry to interrupt, Navid, but your line is not very clear at the moment.

Is it better now?

Please go ahead. Let's see.

Yes. So next one was I wanted to have some understanding of the growth levers for Medi Assist. So, in my understanding, we have four growth levers. First is if we onboard a new insurance company as a client, that's one. Second, we have more number of policies or higher premiums to administer. Third is acquisition and the fourth one, which is a newly added one, which is SaaS. Is this understanding correct, sir?

I mean it's reasonable but let me just calculate it so that we have, we are predominantly in our health benefits administration business. We today report our revenues from what we earn from our standard TPA business across Group Retail and government segments, and we earn revenues like I've explained as an answer to the previous question. Second, of course, we have revenues from our international arm. Third is a segment that we started reporting separately, which is the revenue from the technology services as a line of business. So, these are the three broad segments. And of course, each one will benefit from expansion of the funnel, us able to convert more and are able to improve our yields.

Our next question comes from the line of Madhukar Ladha from Nuvama Wealth Management.

So first, just on the balance sheet. See, your other intangible assets have gone up considerably. So, I'm guessing that's the result of Paramount's consolidation and customer relationships, et cetera, being capitalized. I wanted to know how much of the Depreciation and Amortization is sort of these customer relationship related. Second, also, if you look at trade receivables, that have gone up quite sharply at the end of September. So that was the other thing I wanted to understand why have trade receivables shot up? And third, I think you mentioned that EBITDA was, for Q2 was impacted by about 100 basis points of additional technology-related investment. So, if you could explain that and give us some sense of likely trajectory of these investments and have we made any sort of changes over there? On a year-over-year basis, when I look at your cash flow statement in the first half, I don't see any significant increase in CapEx. So, it's broadly remained at about INR 26 crores, INR 27 crores. So yes, I mean, so that's the other point. I mean, what is actually driving the depreciation increase? So yes, those would be some of my questions.

Thank you, Madhukar. This is Satish. I will answer some of the questions, and then I'll hand over to Sandeep for the rest. Maybe start with the trade receivables. We had a little bit of a timing issue between September and October in one or two large project collections that sort of moved the needle by the number of, I mean, significantly on the DSO. But those collections, like you've always seen sometimes the seasonal from quarter-to-quarter. We have since collected significant amounts of that, and then we are reasonably back to normal. So, it's more a timing difference on the trade receivables, one on account of the larger business and two, on account of delays in some very specific large project that caused this. But otherwise, we are sort of back to normal. And from a technology cost perspective, Madhukar, it's as much as it's investment, it is, you're aware that we have a technology SaaS business. There are lots of implementation work that is going on. There is a fair bit of an upfront thing of that cost that's happening right now. That should even out in the next quarter or so as the volumes and ramp up on the platform and the revenue numbers actually move up. This is more just, again, a ramp-up phase of the project. Nothing specifically that we are building out as a new platform or a new capability. It continues to be what we've done before. On the other intangible assets, specifically from the customer relationship side of Paramount, it's about INR 3.5 crores for the quarter. And that's what you're seeing from the intangible side on the balance sheet on account of Paramount. Now...

That's in the depreciation amount, right?

Yes.

Yes. Because I think the capitalization is more, a lot more, right? Because other intangible assets have almost grown about what, I mean, they're at INR 220 crores from about INR 92 crores in March. 

So, this is the full customer relationship value for the entire transaction. This is, of course, the difference is largely Paramount, and that is amortized over a longer-term period. We are just giving you a quarterly impact of that. 

Just the quarterly impact. Yes. Got it. Got it. 

And your last question on the cash flow on CapEx and depreciation, some of the depreciation is also because we have also, with Paramount acquired some, there are some fixed assets. There is also some amortization on right-of-use assets. So, the D&A has gone up apart from the intangibles is also because of the Paramount consolidation. They also come with some assets and some D&A going up on their assets. 

Yes, yes. Great. Okay. Just a follow-up. On the business side, see, I'm still going through the presentation because it came in very late. So maybe I'll come back in the queue later. But on the business side, what's happening with the implementation of the SaaS sort of model with Star. So, can you give us some update there? And if any guidance on likely sort of revenue on that project? 

So, Madhukar, part of the press release, and I think we've had good success. And as announced by Star themselves, about 40% of the volumes are on the platform. And of course, it's a time carefully collaborated platform. So maybe two to three quarters potentially is where we are looking at most of the sort of the volumes migrating. And I think we continue to report technology revenues even in the quarter. So even in the current quarter, despite the increased no revenues, we're still tracking to about 2% of, the quarter as 2% of the revenues as the technology no revenues. Maybe I think we will be in a better position to talk about the overall technology revenues in a quarter or two as we sort of complete the integration. 

And we don't include this sort of technology service premium related to this technology service in the Retail premium, right? Or this, we don't do that. I just want to double check on that actually. 

Absolutely, Madhukar. We do not include, we only include those premiums so which were explicitly hired as a PPA. 

We are a full-service thing. We are doing the full service. 

Yes. 

Our next question comes from the line of Gaurav Shah from Harshad Gandhi Securities. 

Sir, my question is more of a strategic in nature. With the recent exit of private equity, the so-called promoter holding is just like close to 5%, which is such a less holding. I want to understand what will drive the management to work with the same passion or vigor as before? I mean, since the scheme in the game is clearly less now. So I just wanted to have your views on this. Are you planning any ESOP sort of thing for the management to work with the same passion and all that? Just wanted your view on that. 

We have always been a professional Board-run company with a large independent Board where, and with the professional management. We've not been a family-run business ever, right? And I think that's what allowed us to attract the right kind of talent, of course, with the right kind of incentives and structures for the management. We have among the most stable management in the organization. That has worked through the years and through the listing and post the listing, right?  So first, there is really no connection between promoter holding and the management. And secondly, I think given the Board and given the governance structures, there is obviously a continuous and a constant review of the management team on the incentive structures. So that's something that gets reviewed and acted upon at the Board level. 

[Operator Instructions] Our next question comes from the line of Jayesh Gandhi from Harshad H. Gandhi Securities Private Limited. 

Sir, first of all, congratulations on the stand-alone numbers. They are really good. So, my question is regarding Paramount and Raksha. You have given the revenue breakup for Paramount. Can you just help me out with any EBITDA that you might have calculated on that? I think it is negative, but what [Technical Difficulty]. 

Actually, yes. So see, what happens is we don't individually carve out revenue or profitability of these businesses because we are running them as a combined business. Once we've acquired them, it's eventually both are TPA Medi Assist and Paramount. So what we have indicated is the dilution is a combination of sort of low profitability that we got with Paramount at the time of closing, plus also some integration efforts and other transaction costs that we are incurring in the first quarter since we acquired that. So we are not independent, we are not giving individual values. But yes, aggregate, that is the kind of dilution that Paramount acquisition has brought in, in the first quarter on consolidation, which includes, yes, you're right that it is very low profitability EBITDA that they bring in and plus there are other costs that are incurred either at Paramount level in our books, which are related to the Paramount acquisition.

And another question is now since we have already integrated Paramount also, do we see any immediate low-hanging fruit that we would like to pluck, in terms of cost rationalization?