Fortis Healthcare posts 12.3% revenue growth, expands hospital and diagnostic margins

Fortis Healthcare Limited, one of India’s leading healthcare service providers, announced a 12.3% year-on-year revenue growth for Q2 FY25, reaching INR 1,988 crore, with an impressive 31.9% rise in operating EBITDA to INR 435 crore. The financial gains are attributed to strong performance across both the hospital and diagnostic segments, according to Fortis.

Hospital Business Drives Growth with Revenue Jump of 13.9%

The hospital segment led Fortis’ quarterly gains, posting a revenue increase of 13.9%, reaching INR 1,655 crore. The operating EBITDA for this segment surged 32.5% to INR 355 crore, marking an operating margin of 21.4%. The rise in revenue was driven by a 7.6% increase in the Average Revenue Per Occupied Bed (ARPOB) and improved occupancy rates, reaching 72% compared to 69% in Q2 FY24. Fortis reported robust growth in key specialties, including Oncology and Neurosciences, which contributed to a 13.6% revenue uptick.

The company’s enhanced focus on specialized procedures, such as Robotic Surgeries, also yielded positive results. Dr. Ashutosh Raghuvanshi, MD and CEO of Fortis, highlighted the importance of expanding specialized services and enhancing their technological capabilities. He noted that the 350-bed Manesar facility, acquired last fiscal year, was recently operationalized, adding further capacity to the company’s network.

Diagnostic Business Bounces Back, EBITDA Margin Expands to 21.5%

In the diagnostics segment, Fortis reported a revenue increase of 5.1%, reaching INR 334 crore. Operating EBITDA for diagnostics saw a notable improvement, jumping by 28.8% to INR 80 crore, with the operating margin expanding to 21.5% compared to 17.2% in the previous year. Agilus, Fortis’ diagnostic wing, saw a steady increase in its preventive healthcare portfolio, which grew by 20% in Q2 FY25 and accounted for 12% of total diagnostic revenue.

Fortis added 150 customer touchpoints in its diagnostics network, bringing the total to 4,085 touchpoints across India. The diagnostics business has been recovering from rebranding expenses and operational challenges, which are expected to ease toward the end of FY25.

Strengthened Balance Sheet and Plans for Expansion

Fortis’ financial position remains stable with a net debt of INR 281 crore as of September 30, 2024. The company’s net debt-to-EBITDA ratio improved to 0.16x from 0.29x in the previous year, reflecting a healthier balance sheet. Fortis also reported continued progress in its expansion plans, including an anticipated 700-bed addition by the end of the fiscal year.

The expansion strategy includes opening new facilities and extending capacity at existing hospitals. Notable expansions in Manesar, Shalimar Bagh, and Anandpur will add significant capacity to Fortis’ network, while major upgrades in diagnostics will drive further growth. The company’s ongoing investments in cutting-edge medical technology, such as the MR LINAC at Fortis Memorial, Gurugram, are aimed at enhancing patient care and treatment precision.

Expert Opinion: Steady Growth Backed by Strategic Expansion and Innovation

Analysts believe Fortis Healthcare’s strategic focus on expanding specialty care and diagnostic services aligns well with the increasing demand for healthcare services in India. Dr. Raghuvanshi pointed out that Fortis aims to actively explore growth opportunities across key geographic clusters while leveraging its strong balance sheet.