Fortis Healthcare Limited — Q1 FY26 earnings call

Call held 7 Aug 2025

Management summary

Fortis Healthcare delivered a strong Q1 FY26 performance, marked by robust revenue and EBITDA growth across both hospital and diagnostics segments. Strategic acquisitions and O&M agreements expanded the company's operational footprint, while internal initiatives like improved case mix and digital adoption drove profitability. The quarter saw an increase in net debt due to funding these growth initiatives.

Highlights

  • Consolidated top line grew 16.6% YoY to ₹2,167 crores in Q1 FY26.

  • Consolidated operating EBITDA increased 43.2% YoY to ₹491 crores, with margin expanding to 22.6% from 18.4% in Q1 FY25.

  • Consolidated PAT before exceptional items increased 46.2% YoY to ₹254 crores.

  • Hospital business ARPOB increased 10.2%, driven by improved specialty mix (oncology up 28% YoY) and increased complex cases (75% YoY in robotic surgeries).

  • Hospital occupancy improved to 69% in Q1 FY26 from 67% in Q1 FY25, with occupied beds increasing 7.8% to 2,928.

  • Diagnostics business reported a strong EBITDA margin of 23% in Q1 FY26, up from 16.1% in Q1 FY25, with test volumes growing to 10.1 million.

  • Successfully acquired Shrimann Superspecialty Hospital adding 228 beds and entered an O&M agreement with Gleneagles India for 700 beds, expanding operational footprint to 33 facilities and over 5,700 beds.

Concerns

  • Net debt increased to ₹1,869 crores with a net debt-to-EBITDA ratio of 0.92x as of June 30, 2025, up from 0.22x on June 30, 2024, primarily due to funding acquisitions.

Key financials

  1. Consolidated Revenue ₹2,167 Cr +16.6%YoY
  2. Consolidated Operating EBITDA ₹491 Cr +43.2%YoY
  3. Consolidated EBITDA Margin 22.6%
  4. Consolidated PAT (pre-exceptional) ₹254 Cr +46.2%YoY
  5. Net Debt ₹1,869 Cr
  6. Net Debt to EBITDA 0.92×

What they filed

Q1 FY27: revenue up 17.4%, net profit up 2.2% against the same quarter last year.

₹ Cr · quarterly
Line itemQ2 FY25Q3 FY25Q4 FY25Q1 FY26Q2 FY26Q3 FY26Q4 FY26Q1 FY27
Revenue1,988 1,928 2,007 2,167 2,331 +17%2,265 +17%2,365 +18%2,545 +17%
EBITDA435 375 435 491 556 +28%506 +35%532 +22%537 +9%
Net profit193 254 188 267 329 +70%197 −22%271 +44%273 +2%
How to read this

₹ crore, as filed. The percentage beside a figure is the change against the same quarter a year earlier — never the quarter before, which would make every seasonal business look like it collapses and booms each year.

Segment breakdown

Share of Operating EBITDA
₹490.7 Cr Total
  • Hospital Business ₹406 Cr 82.7%
  • Diagnostics Business ₹84.7 Cr 17.3%

Capital allocation

high confidence
  • Capex Capex disclosed
    • Capacity addition (beds)
    • Robotic machines (Da Vinci) ₹12 Cr
    • Robotic machines (Ortho) ₹5 Cr
    We are on track to add capacity of approximately 900 beds in the current financial year, including those at our recently acquired hospital in Jalandhar. We expect to operationalize approximately 50% of these beds in the current financial year. Yes. So these robotic machines generally cost us around INR12 crores per machine. I'm talking da Vinci robot. And for ortho robot it costs us around INR5 crores.
  • Debt Net ₹1,869 Cr · 0.9× EBITDA
    On the balance sheet front, the company's net debt stands at INR1,869 crores with a net debt-to-EBITDA of 0.92x as on June 30, 2025, as against 0.22x on June 30, 2024. The increase in debt was primarily due to the fund raised to part finance the acquisition of 31.5% PE stake in Agilus Diagnostics by the company and acquisition of Fortis brand and trademarks.
  • M&A Shrimann Superspecialty Hospital Acquisition · Closed

    Strengthens presence in Punjab, adds 228 beds with potential for 225 more.

    Added 228 beds to network, potential to add 225 more beds by expanding existing building and utilizing adjacent land parcel.

    As part of our inorganic growth strategy, the company recently, through its wholly-owned subsidiary consummated the acquisition of Shrimann Superspecialty Hospital in Jalandhar, Punjab, which added 228 beds to its network. This transaction further strengthens our presence in Punjab from approximately 800 beds to over 1,000 beds. The acquisition also provides us with the opportunity to add another 225 bed by expanding the existing building and utilizing the adjacent land parcel taking the total to over 450 beds in the future.
  • M&A Gleneagles India Joint venture · Signed

    Significant expansion of operational footprint, enhanced scale, leverage synergies, and embrace efficiencies across more geographies.

    Manage operations of ~700 beds across 5 hospitals and a clinic, entitled to a monthly service fee of 3% of net revenue.

    In July 2025, the company entered into an operation and maintenance services agreement with Gleneagles India. Under the agreement, Fortis will manage the operations of approximately 700 beds across 5 hospitals and a clinic within the Gleneagles India network. Fortis is entitled to receive a monthly service fee at the rate of 3% of the net revenue. This development marks a significant expansion of Fortis Healthcare's operational footprint and the expanded scale enhances our ability to deliver integrated high-quality health care services across more geographies.

Guidance & targets

Capacity

  • Total Bed Additions Capacity · current financial year · High confidence 900 beds
    We are on track to add capacity of approximately 900 beds in the current financial year, including those at our recently acquired hospital in Jalandhar. We expect to operationalize approximately 50% of these beds in the current financial year.

    — Ashutosh Raghuvanshi

  • Operationalized Bed Additions Capacity · current financial year · High confidence 50% of 900 beds

    — Ashutosh Raghuvanshi

  • Robotic Machines Addition Capacity · this year · High confidence 4
    So we have approximately 15 robotic machines across our network right now, and we are in the process of getting another 4 this year.

    — Ashutosh Raghuvanshi

Margin

  • Hospital Operating EBITDA Margin Improvement Margin · beginning of the year · High confidence 2%
    So we are sticking to our guidance, which we have provided in the beginning of the year, 2% margin improvement.

    — Vivek Goyal

  • Diagnostics EBITDA Margin Margin · whole year · High confidence 22-23%
    Yes. Our margins, as we have seen, it will be in the range of about 22% to 23% is what we are expecting for the whole year as well.

    — Anand K

Revenue

  • Diagnostics Revenue Growth Revenue · next few quarters · Medium confidence high single digit to about 10%
    So I think in the next few quarters, we'll be in the high single digit to about 10% kind of growth in the next few quarters.

    — Anand K

  • Diagnostics Revenue Growth Revenue · next 6 to 8 quarters · Medium confidence early double-digit numbers
    But as we move forward, in the next 6 to 8 quarters, we will be moving into the early double-digit numbers.

    — Anand K

ARPOB

  • ARPOB Growth ARPOB · normal course · Medium confidence 5-6%
    but we maintain our guidance that ARPOB growth should be in the -- in the normal course, it should be around 5%, 6%.

    — Vivek Goyal

What to watch in Q2 FY26

New Hospital Bed Operationalization

Next quarter / Current financial year
Current 228 beds added (Shrimann), 900 beds planned for FY26, 50% to be operationalized in current FY.
Target Progress on operationalizing ~450 beds (50% of 900)

Why it matters

Key driver for future hospital revenue and capacity utilization.

We are on track to add capacity of approximately 900 beds in the current financial year, including those at our recently acquired hospital in Jalandhar. We expect to operationalize approximately 50% of these beds in the current financial year.

Risks & concerns

  • Increased Net Debt due to Acquisitions

    medium

    Net debt increased to ₹1,869 crores (0.92x Net Debt/EBITDA) from ₹0.22x YoY due to funding the 31.5% PE stake in Agilus and Fortis brand acquisition.

    On the balance sheet front, the company's net debt stands at INR1,869 crores with a net debt-to-EBITDA of 0.92x as on June 30, 2025, as against 0.22x on June 30, 2024. The increase in debt was primarily due to the fund raised to part finance the acquisition of 31.5% PE stake in Agilus Diagnostics by the company and acquisition of Fortis brand and trademarks.

    Management acknowledged

  • Low Margins of Gleneagles India Facilities

    medium

    Analyst raised concern about the low margins of IHH's India business (Gleneagles) and potential impact on Fortis, despite management highlighting synergies and future options.

    Just expressing a concern here, Dr. Ashutosh. If you have given bad assets and we overpay for that, I'm just saying from a valuation perspective, is something that I hope from a Fortis perspective, those things are taken care. So it's just wanted to mention that upfront.

    Analyst addressed

Q&A highlights

7 direct
Hospital Performance and Occupancy for specific facilities (FMRI, Mohali, BG Road, Mulund, Jaipur) Direct
Yes, so Jaipur is operating around 65% occupancy now, and it has revived. Last year, it was having some challenges. We have discussed in the earlier call. So it has come out from that and it is now on the path of recovery. It has already achieved around double-digit EBITDA margin also. So that is on Jaipur. As regard FMRI, it is doing quite well. FMRI EBITDA -- sorry, I'm talking EBITDA, the 20 beds we have added, and we're able to fill them quickly. And the occupancy level of FMRI is 80% level. BG Road, although the occupancy side, it is slightly struggling. It is at around 56%, 57%, but they're able to do some quality work. And as a result of that, the EBITDA margin are quite healthy.

Provides granular detail on the performance of key hospitals, indicating recovery in some and sustained strength in others, which contributes to overall hospital segment growth.

Asked by Amey Chalke

Gleneagles O&M Contract - Strategic Fit and Low Margins Partial
Yes. So it forms a new cluster for us. We definitely have no presence currently in the Fortis network in these markets. But we are going to double down on these markets and create further opportunities that we will explore. We do have a Gleneagles facility in Chennai, which does very high-end clinical work, has got fabulous clinical talent. So we are going to build on the existing base of good clinicians we have available in this network, and these hospitals have been there around for a long time. So we will build further on that. And with the combined strength of Fortis and Gleneagles, we will be able to support them to perform better and, at the same time, we will get a lot of synergies, both on the clinical front and supply chain and other areas as well.

Analyst questioned the rationale for the Gleneagles O&M deal given some facilities are outside Fortis's core cluster and IHH's India business historically had low margins. Management explained the strategic intent to build new clusters and leverage synergies, but did not directly address the low-margin concern beyond stating the current arrangement is a top-line fee.

Asked by Neha Manpuria

Gleneagles O&M Contract - Financial Impact on Fortis's EBITDA Margin Direct
Yes. So in that guidance, we have not considered this Gleneagles, of course. And whatever the earning will be because it will be part of the year, so that much it will be added up. Because as Dr. Raghuvanshi had mentioned in the -- for the earlier question, we will be accounting only that 3% of the net revenue and there will be some little bit cost... It'll not be 100 bps, Shyam, because if you see the revenue you might be having some numbers... Yes, so for the full year. And if you do percentage, it will be something around 0.2% to 0.3%.

Clarifies the financial impact of the Gleneagles O&M contract on Fortis's overall EBITDA margin, indicating a relatively small positive contribution of 0.2-0.3% for the full year.

Asked by Shyam Srinivasan

Diagnostics Gross vs. Net Revenue Growth Discrepancy Direct
So Shyam, if I can clarify this 9% versus earlier 7.4%. In the last year financial, there is certain one-off income, which was booked. So if we take impact of that out, then the revenue growth what Anand is now mentioning is 9.3%. So actually, operationally, the revenue has grown by 9.3%, if we've taken out the impact of that one-off expenses, which we -- income which we have booked in the last quarter.

Addresses an analyst's observation about a potential discrepancy in diagnostics revenue growth figures, clarifying that after adjusting for a one-off income, the operational growth was 9.3%.

Asked by Shyam Srinivasan

Diagnostics - Reintroduction of SRL Brand Direct
So Saion, if I can explain this a little further, the change which we had to do to -- from SRL to Agilus was a little abrupt. And at that time, the Board -- the courts directed us not to use SRL in any form, even to identify that this business was previously called SRL Limited. So we were constrained in communicating effectively to people that this is the legacy of this business, which continues as a new brand. So it was not kind of a very ideal kind of a brand change situation, and that impacted our business negatively. However, now we have acquired this brand, and now we have the ability to communicate effectively that SRL is now Agilus. So we expect that, that communication will also further help to strengthen our brand.

Explains the strategic move to re-leverage the SRL brand identity for Agilus Diagnostics, detailing the historical legal constraints and the expected positive impact on B2C business and brand strengthening.

Asked by Saion Mukherjee

Hospital Bed Additions and Revenue Potential for Next Year Direct
Yes. Mr. Goela, if I can answer this question, yes, out of 900 this 250 beds is for FMRI unit, which we will be completing by year-end only, December, January, sometime around that time. So no major revenue we are expecting from that. However, for Noida facility, 150; Faridabad, 50; and a little bit of capacity we are adding in other locations. Those will be operating at a decent occupancy level. And there is another, say, 200 beds, we are expecting to open for Manesar facility, which, as you know, is a new facility. So there will be ramp-up as per new facility... Yes, yes, 100%. Because all this expansion is coming at brownfield, so I think ramp-up will be quite fast.

Provides a detailed breakdown of the 900 planned bed additions, their timelines, and confirms that approximately 600 additional beds could generate significant revenue next year due to brownfield expansion and fast ramp-up.

Asked by Amit Goela

Drivers of Hospital Performance Improvement Direct
Yes. I think there have been multiple factors which have led to this consistently good performance. One of the factors is that the investment, which was made in clinical manpower as well as in the infrastructure in last 3, 4 years, that has started yielding results. That is one of the major drivers. And that also has resulted in the case mix change. So we, across our network today, have more than 14 robots. And these -- all these robots have doing very large -- the growth has been 75% from last year to this year. So that kind of high-end work is growing. The second is that oncology, which we started investing about 6 years back, is yielding results and is growing at almost 27%, 28% CAGR.

Summarizes the key strategic initiatives and investments (clinical manpower, infrastructure, advanced technology like robotics, focus on oncology) that have driven the consistent improvement in hospital performance and ARPOB.

Asked by Nitin Agarwal

Manesar Facility Ramp-up and Breakeven Direct
Yes. So ramp-up is quite good, and it is better than our expectations, Saion. And it is picking up quite well. In terms of revenues, it has started generating revenue of INR11 crores-plus per month, okay? And the EBITDA side, it is still on the negative side because there a lot of hiring and clinical talent we are adding. And that -- the actual benefit of that may be coming in the forthcoming quarters. So, I am expecting if we're able to achieve the revenue of INR2 crores more per month, which we are expecting in the next couple of months, this unit should be breakeven on EBITDA level.

Provides an update on the Manesar facility's ramp-up, current revenue generation, and a clear target for achieving EBITDA breakeven with an additional ₹2 crores in monthly revenue.

Asked by Saion Mukherjee

2 min read 7 chapters

Detailed narrative

Q1 FY26 Consolidated Financial Performance

Fortis Healthcare reported a strong consolidated top line of ₹2,167 crores in Q1 FY26, marking a 16.6% year-on-year growth. Operating EBITDA surged by 43.2% to ₹491 crores, leading to a significant margin expansion to 22.6% from 18.4% in Q1 FY25. Profit After Tax (before exceptional items) also saw a robust increase of 46.2% to ₹254 crores, reflecting healthy operational leverage.

Hospital Business Highlights

The hospital segment, contributing 85% of consolidated revenue, grew 18.6% year-on-year to ₹1,838 crores. Operating EBITDA for hospitals stood at ₹406 crores, with a margin of 22.1% compared to 18.5% in Q1 FY25. ARPOB increased by 10.2% to ₹2.65 crores per annum, driven by a 28% growth in oncology and a 75% increase in robotic surgeries. Occupancy improved to 69% from 67% year-on-year, with occupied beds reaching 2,928.

Diagnostics Business Performance (Agilus)

The diagnostics business recorded a net revenue of ₹329 crores, a 6.3% year-on-year growth. Gross revenue was ₹369 crores, up 7.4% year-on-year. Operating EBITDA margin significantly improved to 23% in Q1 FY26 from 16.1% in Q1 FY25, with tests conducted increasing to 10.1 million. The preventive portfolio grew 8.4% and contributed 12% to revenues, while the genomics portfolio grew 17%.

Strategic Expansion and Partnerships

Fortis expanded its network through the acquisition of Shrimann Superspecialty Hospital in Jalandhar, adding 228 beds and the potential for 225 more. Additionally, the company entered an Operation and Maintenance (O&M) services agreement with Gleneagles India in July 2025, managing approximately 700 beds across 5 hospitals and a clinic. This agreement entitles Fortis to a monthly service fee of 3% of the net revenue, expanding its operational footprint to 33 facilities and over 5,700 beds across 11 states.

Capacity and Infrastructure Development

The company is on track to add approximately 900 beds in the current financial year, with 50% expected to be operationalized within the year. This includes 250 beds for FMRI, 150 for Noida, 50 for Faridabad, and 200 for Manesar. Fortis also augmented its medical infrastructure by installing second Da Vinci robots at Mohali and BG Road, bringing the total to 15 robotic machines across the network, with plans to add 4 more this year.

Digital Initiatives and Talent Augmentation

Digital initiatives remain a core strategy, with inpatient modules of EMR successfully implemented at Fortis FEHI. Revenue from digital channels (website, mobile app, campaigns) grew 16.8% year-on-year, contributing 29.5% to overall hospital revenues. The company also strengthened its medical talent by onboarding specialists in oncology, cardiac sciences, obstetrics, gynaecology, and renal sciences.

Capital Structure and Debt Profile

As of June 30, 2025, the company's net debt stood at ₹1,869 crores, resulting in a net debt-to-EBITDA ratio of 0.92x. This represents an increase from 0.22x on June 30, 2024, primarily due to funds raised to finance the acquisition of a 31.5% PE stake in Agilus Diagnostics and the acquisition of the Fortis brand and trademarks.

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