Fortis Healthcare Limited — Q2 FY26 earnings call

Call held 12 Nov 2025

Management summary

Fortis Healthcare delivered a strong Q2 FY26, marked by robust revenue and EBITDA growth across both hospital and diagnostics segments. The company expanded its operational bed capacity and improved key hospital metrics like occupancy and ARPOB. While diagnostics volumes saw a slight dip due to specific business changes, margins remained strong. Strategic expansion initiatives are progressing, though the FMRI facility commissioning is slightly delayed.

Highlights

  • Consolidated top line grew 17.3% YoY to INR 2,331 crores.

  • Consolidated operating EBITDA increased 28% YoY to INR 556 crores, with margin expanding to 23.9% from 21.9% in Q2 FY25.

  • Hospital business revenue grew 19.3% to INR 1,974 crores, with operating EBITDA margin improving 150 bps to 22.9%.

  • Agilus Diagnostics revenue grew 7.3% YoY to INR 399.6 crores, and operating EBITDA margin expanded to 26.1% from 21.5% in Q2 FY25.

  • Hospital occupancy improved to 71% (from 69% in Q1 FY26), and ARPOB increased 5.8% to INR 2.51 crores per annum.

Concerns

  • Diagnostics segment experienced low volume growth (2% QoQ) due to discontinuation of Aam Aadmi Mohalla Clinics business and less significant vector-borne diseases.

  • Operationalization of the FMRI facility is delayed by approximately 3 months, now expected by March end 2026.

  • Management expressed caution regarding CGHS payment predictability despite the overall positive impact of revised rates.

Key financials

  1. Consolidated Revenue ₹2,331 Cr +17.3%YoY
  2. Consolidated Operating EBITDA ₹556 Cr +28%YoY
  3. Consolidated Operating EBITDA Margin 23.9%
  4. Consolidated PAT (before exceptional) ₹305 Cr +20.7%YoY
  5. Net Debt ₹2,219 Cr
  6. Net Debt to EBITDA 0.96×

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
₹556 Cr Total
  • Hospitals ₹452 Cr 81.3%
  • Diagnostics (Agilus) ₹104 Cr 18.7%

Capital allocation

high confidence
  • Debt Net ₹2,219 Cr · 1.0× EBITDA
    Our consolidated operating EBITDA increased 28% to INR556 crores, delivering a margin of 23.9% versus 21.9% in Q2 of financial year '25. The hospital business reported an operating EBITDA of INR452 crores, driving a 150 basis points improvement in margin from 21.4% in Q2 of financial year '25 to 22.9% in Q2 of financial year '26. Our consolidated profit after tax before exceptional items for the quarter increased 20.7% to INR305 crores. On the balance sheet front, the company's net debt stands at INR2,219 crores with a net debt-to-EBITDA of 0.96x as on September 30, 2025, as against 0.16x on September 30, 2024. The increase in debt was primarily due to funds raised to part-finance the acquisition of the 31.5% PE stake in Agilus, and the acquisition of Fortis brand and trademarks and acquisition of Shrimann Hospital in Jalandhar.
  • M&A 31.5% PE stake in Agilus Acquisition · Closed

    Part-finance acquisition

    The increase in debt was primarily due to funds raised to part-finance the acquisition of the 31.5% PE stake in Agilus
  • M&A Fortis brand and trademarks Acquisition · Closed

    Part-finance acquisition

    The increase in debt was primarily due to funds raised to part-finance the acquisition of the 31.5% PE stake in Agilus, and the acquisition of Fortis brand and trademarks
  • M&A Shrimann Super speciality Hospital in Jalandhar Acquisition · Closed

    Expanded Punjab cluster to 965 beds

    In July 2025, the company consummated the acquisition of Shrimann Super speciality Hospital in Jalandhar, Punjab, taking the total beds in Punjab cluster to 965.
  • M&A Gleneagles India Operation and management agreement · Signed

    Manage five hospitals and a clinic within their network

    We also entered into an operation and management services agreement with Gleneagles India to manage five hospitals and a clinic within their network.
  • M&A 200-bedded multi-specialty hospital in Greater Noida Lease agreement · Signed

    Convert O&M to lease, ramp up operations

    P&L charge of rental around INR 2.3 crores per month.

    I'm pleased to inform that during the quarter, the company entered into a 15-year lease agreement for a 200-beded multi-specialty hospital in Greater Noida, a facility that we have previously been managing under an O&M agreement. ... So there is a P&L charge of rental, which will be below EBITDA actually. It will be around INR23.5 crores sorry, INR2.3 crores per month.
  • M&A 550-bedded greenfield super specialty hospital in Lucknow Operation and management agreement · Signed

    New greenfield project with Ekana Group

    The company also signed an O&M agreement for a 550-bedded greenfield super specialty hospital to be constructed in Lucknow by Ekana Group.

Guidance & targets

Margin

  • Diagnostics Full Year Operating EBITDA Margin Margin · FY26 · Medium confidence 23-24%
    As we have guided earlier also, it was -- the margins for -- if you see the half year, we are around 24%. So I think we'll be somewhere around the 23%, 24% for the whole year is what we are expecting.

    — Anand K

  • Hospital EBITDA Margin (25% target) Margin · next couple of years · Low confidence reaching there
    Yes, the pace at which our facility is ramping up, I think the target is not very far away. I will put that way. I will not like to give any definitive time line. But yes, next couple of years, it is definitely looking like we are reaching there.

    — Vivek Goyal

Profitability

  • Noida Hospital EBITDA Margin Profitability · 6 months or more · Medium confidence around 15%
    In our view, it will take maybe 6 months or more months' time when it starts generating around 15% EBITDA

    — Vivek Goyal

  • Hospital Margin Improvement Profitability · ongoing · Medium confidence higher than guided
    And we expect we will continue to do better on the margin expansion side as our units are becoming mature, there will be further improvement in the margin like Manesar has already become EBITDA positive. ... So I think there is a possibility we can see higher margin improvement than what we have guided at the beginning of the year. To quantify it will be a bit higher.

    — Vivek Goyal

Volume

  • Hospital ARPOB Growth Volume · second half · Medium confidence 5-6%
    Yes. So Shyam, we are expecting around 5%, 6% ARPOB growth even in the second half

    — Vivek Goyal

Revenue

  • Manesar Hospital Revenue Growth Revenue · ongoing · Medium confidence around 20%
    It is around INR40 crores per quarter, and we expect it to grow around 20%.

    — Vivek Goyal

  • International Business Growth Revenue · ongoing · Medium confidence double digits
    But in absolute terms, it will continue to grow in double digits..

    — Ashutosh Raghuvanshi

Occupancy

  • Hospital Occupancy Rate Occupancy · ongoing · Medium confidence above 70% but below 75%
    So I will say occupancy will remain in this range, above 70% but below 75% type of number.

    — Vivek Goyal

Debt

  • Net Debt Level Debt · 2 years' time · Low confidence zero
    I think this debt level will be come down in 2 years' time to zero level, which is not a desirable for me actually. We want to have more growth with this type of leverage.

    — Vivek Goyal

Capacity

  • Organic Bed Addition Capacity · next financial year (FY27) · Medium confidence closer to about 400-plus beds
    So next fiscal, as Dr. Raghuvanshi mentioned in the earlier question, major bed addition will be coming from the FMRI bed addition, where we'll be adding 225 beds. There will be another, say, 70 beds we may add at one of our facility in Kolkata. And then there will be ramp-up where we will be opening more bed in Manesar and maybe Bangalore where some bed capacity is there. So that will be the major capacity addition in the next financial year. ... Yes, it will be around 300, 400 range.

    — Vivek Goyal

Cost

  • Legal Expenses Cost · ongoing · Medium confidence down to 50% or lower

    Previously INR 30-40 crores annually → down to 50% or lower

    Like earlier, we were incurring around INR30 crores, INR40 crores annually. Now I expect it will come down to 50% of that amount, maybe lower.

    — Vivek Goyal

Receivables

  • Government Receivable Days Receivables · ongoing · High confidence around 180 days
    Yes. Generally, it is around 180 days, we are getting the money.

    — Vivek Goyal

What to watch in Q3 FY26

Noida Hospital EBITDA Margin

6 months or more
Current ~2-3% (new unit)
Target ~15% EBITDA

Why it matters

Tracking the ramp-up and profitability improvement of a key new facility.

In our view, it will take maybe 6 months or more months' time when it starts generating around 15% EBITDA

Risks & concerns

  • Predictability of CGHS payments and circular changes

    medium

    Management expressed 'hesitancy' due to non-predictability of payments and sudden circular changes, despite an expected overall positive impact.

    Management acknowledged

  • Impact of extreme weather conditions on hospital operations

    low

    Flooding in Punjab caused disruption for about a week in Ludhiana, Mohali, and Amritsar facilities, but overall results were satisfactory.

    Analyst acknowledged

  • Diagnostics volume dip due to business mix changes

    low

    Volume growth was low due to discontinuation of high-volume, low-ticket Aam Aadmi Mohalla Clinics business and less significant vector-borne diseases.

    Management acknowledged

  • Delay in FMRI facility operationalization

    low

    The operationalization of the FMRI facility is delayed by approximately 3 months, now expected by March end 2026.

    Analyst acknowledged

Q&A highlights

6 direct
Impact of extreme weather on hospital operations Direct
So in Punjab, there was a lot of flooding, as you are aware. So that did cause some disruption in our Ludhiana as well as in Mohali and Amritsar facility. However, there was no immediate problem in the surrounding areas. So the hospital kept on functioning normally. However, the patient flow was impacted for a week or so. But overall, as you can see, the results are quite satisfactory.

Addressed potential operational disruptions from external factors and confirmed minimal overall impact on results.

Asked by Tausif

P&L impact of Greater Noida facility transitioning from O&M to lease Direct
So there is a P&L charge of rental, which will be below EBITDA actually. It will be around INR23.5 crores sorry, INR2.3 crores per month. So it will be like yearly charge will be around that number, INR2.3 crores per month, multiply by 12 will be the annual charge. As regard the profitability, this unit is doing around revenue of around INR10 crores per month now. And this has a 200-bedded capacity and which can further be extended to 250 bedded.

Provided specific financial details on the new lease agreement and the current revenue contribution of the facility.

Asked by Tausif

Future margin trajectory for Diagnostics business Direct
As we have guided earlier also, it was -- the margins for -- if you see the half year, we are around 24%. So I think we'll be somewhere around the 23%, 24% for the whole year is what we are expecting.

Clarified the expected full-year EBITDA margin for the diagnostics segment, indicating stability after recent improvements.

Asked by Tausif

Inclusion of Mumbai in Gleneagles O&M and potential acquisition of assets Partial
Yes. So it is -- Mumbai is not included in the current arrangement. However, we are looking forward to have that play in the future. ... Yes. So we are sort of integrating it into our operation. But we expect that in future, we would be evaluating and seeing how we can integrate this and merge this Fortis operation.

Provided insight into future strategic plans for Gleneagles assets, including potential expansion to Mumbai and eventual acquisition/integration.

Asked by Neha Manpuria

Timeline for Noida hospital to reach mid-teen profitability Direct
Yes. So, Noida, as I mentioned, there is a lot of potential in that. That's why we have gotten to this arrangement. In our view, it will take maybe 6 months or more months' time when it starts generating around 15% EBITDA and then it can be ramped up further in line with our other big units in the NCR.

Gave a specific timeline and target for a key hospital's profitability improvement, highlighting required investments.

Asked by Neha Manpuria

Impact of CGHS revised rates and competitive landscape Partial
Yes. So our contribution in CGHS is there, and there is a positive -- I will say not positive mix impact because of this rate change because on one side, there are many procedures which has been -- where the price has gone up. But at the same time, there is a lot of clarity required in the way the circular has come. So we are still evaluating that. However, looking like overall, there will be a positive impact.

Addressed the impact of a significant regulatory change, noting both positive aspects and areas requiring further clarity, indicating a cautious optimism.

Asked by Aman Goyal

Low volume growth in Diagnostics and reasons for increased ARPOB Direct
So this quarter, there has been a slight dip in the volume mainly because of we had the Aam Aadmi Mohalla Clinics business, which was there until June 30. So this is not there in this quarter. So that is why there is a dip in the volumes because, as you know, that business was very high on volumes. ... No, we have not taken any price hike during this year. So what has actually happened is, one is our increased focus on wellness portfolio, where there are a lot of packages. So because of the higher ticket size, you're seeing a higher average revenue per acquisition or average revenue per patient.

Explained the drivers behind the diagnostics segment's volume and ARPOB trends, attributing it to a strategic shift in business mix rather than price hikes.

Asked by Abdulkader Puranwala

Reduction in legal expenses post open offer closure Direct
Like earlier, we were incurring around INR30 crores, INR40 crores annually. Now I expect it will come down to 50% of that amount, maybe lower. It all depends on the number of hearing we have to do and things like that. It all will be depending on that. But it has come down substantially.

Provided a quantifiable expectation for the reduction in legal costs, which directly impacts profitability.

Asked by Shyam Srinivasan

3 min read 6 chapters

Detailed narrative

Strong Q2 FY26 Financial Performance

Fortis Healthcare reported a consolidated top line of INR 2,331 crores in Q2 FY26, marking a 17.3% YoY growth. Operating EBITDA increased 28% YoY to INR 556 crores, achieving a margin of 23.9% compared to 21.9% in Q2 FY25. Consolidated PAT before exceptional items grew 20.7% to INR 305 crores. For H1 FY26, consolidated revenues stood at INR 4,498 crores, up 16.9% YoY, with operating EBITDA of INR 1,047 crores and a margin of 23.3%.

Hospital Segment Operational Excellence and Growth Drivers

The hospital business revenue grew 19.3% to INR 1,974 crores in Q2 FY26, contributing 85% to consolidated revenue. Operating EBITDA for hospitals was INR 452 crores, with a margin of 22.9%, a 150 basis points improvement YoY. Occupancy rates improved to 71% (from 69% in Q1 FY26), and ARPOB increased 5.8% to INR 2.51 crores per annum, driven by an improved specialty mix. The oncology segment showed significant growth of 29% YoY, increasing its revenue contribution to 16.2%, and medical travel revenue grew 26% to INR 169 crores.

Diagnostics Segment Performance and Strategic Focus

Agilus Diagnostics reported a gross revenue of INR 400 crores in Q2 FY26, a 7.3% YoY growth, and an operating EBITDA of INR 104 crores, with margins expanding to 26.1% from 21.5% in Q2 FY25. The segment conducted 10.6 million tests and added 7 new labs and over 200 customer touchpoints. The preventive portfolio contributed 13% to operating revenue, and the genomics portfolio grew 20% YoY. The dip in volume growth was attributed to discontinuing the Aam Aadmi Mohalla Clinics business and less significant vector-borne diseases, with a strategic focus on higher-ticket wellness packages.

Strategic Expansion and Capacity Additions

Fortis added 550 operational beds in H1 FY26 through various initiatives, including the acquisition of Shrimann Super speciality Hospital in Jalandhar, which increased total beds in the Punjab cluster to 965. The company also entered a 15-year lease agreement for a 200-bedded multi-specialty hospital in Greater Noida (previously O&M) and signed an O&M agreement for a 550-bedded greenfield super specialty hospital in Lucknow. The integration of Gleneagles units under an O&M agreement is progressing well, with future evaluation for potential acquisition.

Capital Structure and Debt Management

As of September 30, 2025, the company's net debt stood at INR 2,219 crores, resulting in a net debt-to-EBITDA ratio of 0.96x, an increase from 0.16x a year prior. This increase was primarily due to funds raised for the acquisition of a 31.5% PE stake in Agilus, the Fortis brand and trademarks, and Shrimann Hospital. Management expressed comfort with the current debt level, noting healthy cash flow generation, and indicated that the debt could potentially reduce to zero in two years if no further growth acquisitions are pursued.

Outlook on CGHS and Legal Expenses

Management anticipates a positive impact from the revised CGHS rates, although they are seeking further clarity on specific details, particularly regarding drug price impact and super specialty services, and acknowledge payment predictability as a concern. Legal expenses, which previously amounted to INR 30-40 crores annually, are expected to reduce by 50% or more following the closure of the open offer and resolution of most legal issues, though some proceedings related to ex-promoters continue.

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