Detailed Narrative
Q3 FY26 Financial Performance Overview
Consolidated revenues for Q3 FY26 reached INR2,265 crores, marking a 17.5% year-on-year growth. Operating EBITDA saw a substantial increase of 34.8% to INR505 crores, translating to a margin of 22.3%, up from 19.4% in the prior year. This robust performance was achieved despite seasonal impacts from festivals in key geographies, with both hospital and diagnostic segments contributing to the growth momentum. However, reported PAT declined to INR197 crores from INR250 crores in Q3 FY25, primarily due to a one-off📎 expense of INR55 crores related to New Labour Codes.
Hospital Business Growth and Efficiency
The hospital business reported revenues of INR1,938 crores, a 19.4% increase year-on-year, and its operating EBITDA margin improved to 21.7% from 20% in Q3 FY25. Occupied beds increased by 14% to 3,189, and ARPOB grew 4.5% to INR2.56 crores per annum, driven by a higher share of complex cases including a 52% year-on-year increase in robotic surgeries. Digital channels contributed approximately 30% to overall hospital revenues, growing 19% year-on-year.
Diagnostics Segment Performance (Agilus)
Agilus Diagnostics recorded gross revenues of INR371 crores, an 8.3% year-on-year growth, with operating EBITDA reaching INR86 crores and a margin of 23.1%, significantly up from 14.4% in Q3 FY25. Test volumes increased 3.6% to 9.9 million, maintaining a balanced B2C-B2B mix of 52-48. The segment expanded its network by over 175 customer touch points and enhanced its test portfolio with new offerings in neuro-oncology and autoimmune disorders, further strengthening its position in the healthcare sector.
Strategic Acquisitions and Capacity Expansion
Fortis acquired the 125-bedded People Tree Hospital in Yeshwanthpur, Bengaluru for INR430 crores in January 2026, with plans to expand it to a 300-bed super specialty facility over the next 3-4 years, entailing a total cost of INR800 crores for the 300-bed capacity. The company also launched Adayu, a 36-bedded specialized mental health care facility in Gurugram. Approximately 750 operational beds have been added year-to-date through acquisitions (Jalandhar, Bengaluru) and brownfield expansions (Manesar, Noida, Faridabad).
Capital Structure and Future Growth Funding
The company's net debt stood at INR2,547 crores as of December 31, 2025, with a net debt to EBITDA ratio of 1.24x. Management indicated comfort with current debt levels and room for further debt for growth. They also highlighted the potential for an equity infusion from IHH, expected to gain clarity within 3-6 months after the cooling period ends in May, which could be used for debt reduction or growth opportunities, reinforcing the company's strong financial position.
Gleneagles Integration and Turnaround
The O&M agreement for Gleneagles generated INR5 crores in fees this quarter, but the 9-month revenue growth for these units was negative 4%. Management attributed this underperformance to clinician attrition and leadership changes, stating that corrective actions have been taken and positive results are expected from the next financial year. The company is integrating Gleneagles into its common structure and strengthening regional leadership to address operational issues and improve efficiency.
ARPOB and Margin Outlook
Fortis expects ARPOB to increase by 4-5% annually going forward⏳, driven by case mix improvements and high-end work, rather than just price increases. Management also anticipates continued margin improvement, particularly from brownfield expansions like FMRI, which is a premier facility. The company aims to maintain its current growth trajectory for at least the next two years, supported by strategic initiatives and ongoing capacity additions.