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Informist, Wednesday, Aug 7, 2024

 

By Alina Geogy

 

MUMBAI – Growth in Fortis Healthcare Ltd's core hospital business again helped it report an on-year rise in its key earnings metrics during the June quarter. The key segment's growth was aided by an increase in average revenue per occupied bed, higher occupancy, and revenue from its key medical specialities, the company said in a press release on Tuesday. 

 

The hospital chain operator's consolidated revenue for the June quarter rose over 12% on year and 4% on quarter to 18.59 bln rupees. The company's other income rose 60% on year to 130.1 mln rupees. The consolidated net profit for the quarter rose nearly 49% on year to 1.66 bln rupees, but declined 7.1% on a sequential basis.

 

HOSPITAL OPERATIONS

Revenue from the hospital business grew 14.4% on year to 15.49 bln rupees in the June quarter. The average revenue per occupied bed for Apr-Jun rose nearly 10% to 65,924 rupees per day. For Apr-Jun, average revenue per occupied bed was 241 mln rupees per annum. Meanwhile, occupancy rose to 67% from 64% a year ago.

 

The hospital segment, which drove Fortis Healthcare's financials in the previous quarter too, was supported by the combined revenue of the company's top six key medical specialities, namely oncology, gastroenterology, neurosciences, renal sciences, orthopaedics, and cardiac sciences, which grew nearly 16% on year in Apr-Jun, as per the press release. Their contribution remained steady at 63% to the overall hospital business revenue.

 

All the key healthcare facilities, excluding the Jaipur unit, continued to witness an on-year upward momentum in revenue, the company said. Among these facilities, Fortis Memorial Research Institute in Gurugram, Fortis Hospital in Mohali in Punjab, and Fortis Hospital in Bannerghatta Road in Bengaluru were the major contributors to hospital business revenue, as per the press release.

 

The mainstay of the company's performance continues to be the hospital business, which contributes around 84% to its consolidated earnings before interest, taxes, depreciation, and amortisation, Ravi Rajagopal, chairman of the company, said in the press release. "We are progressing well on our plans to add capacity of close to 700 beds in this fiscal year across our key facilities including Faridabad, Anandpur, Shalimar Bagh, and Noida and will also be shortly commissioning the 350-bed Manesar facility which we acquired in FY24 (2024-25)," Rajagopal said.

 

The number of key surgical procedures performed across some of the company's specialities, such as neurosciences, increased 23% on year, while robotic surgeries increased 59% on year. Revenue from medical travel for the quarter grew 11% on year to 1.27 bln rupees, contributing nearly 8% to overall hospital revenue.

 

Revenue from international patients grew 11% on year to 1.27 bln rupees in Apr-Jun. The segment's contribution to the overall hospital business revenue in the quarter fell slightly to 7.8% from 8.0% a year ago and 7.9% in Jan-Mar.

 

DIAGNOSTICS BUSINESS

Meanwhile, gross revenue from the company's diagnostics business rose only 0.2% on year to 3.44 bln rupees and was impacted largely due to the rebranding exercise that was undertaken in May last year, the company said. The diagnostics business performance was lower than the corresponding previous quarter, largely due to the impact of brand change, but witnessed signs of early improvement versus the trailing quarter, Rajagopal said in the release. "The new brand is being well accepted and gaining prominence; placing the business in a better position to further scale up its performance," he said.

 

While revenue in the diagnostics segment remained muted, the operating EBITDA margins were better than the March quarter, showing signs of a gradual recovery which is expected to continue through 2024-25, Ashutosh Raghuvanshi, managing director and chief executive officer of the company, said in the release. The operating EBITDA margin of the diagnostics business fell to 16.1% from 19.4% last year. However, it rose from 14.0% in the March quarter.

 

The performance of the company's diagnostic business is still adjusting to the impact of Agilus' rebranding exercise, which involved extensive rebranding efforts and associated marketing costs, Raghuvanshi said in a post-earnings conference call today. "That said, I'm confident in Agilus' potential to scale up both in terms of its revenue and margins based on its considerable network presence, a balanced B2C-B2B mix, and the increased focus on preventive care and specialised testing," he said. The company's diagnostics division had undergone a change in brand name to Agilus Diagnostics Ltd from SRL Ltd in 2023.

 

From a product standpoint, specialised testing contributed 34% to the diagnostics business revenue, routine tests contributed 54%, and the wellness portfolio contributed 12%, the management said in the conference call. During Apr-Jun, Agilus Diagnostics conducted around 9.92 mln tests, down from 9.95 mln tests last year, primarily due to lower COVID volumes. In Jan-Mar, it had conducted around 9.61 mln tests.  

 

On the National Stock Exchange, shares of Fortis Healthcare ended 2.1% lower at 486.25 rupees today.  End

 

Edited by Manisha Baxla

 

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