Fortis Healthcare Limited — Q3 FY26 earnings call

Call held 16 Feb 2026

Management summary

Fortis Healthcare reported strong Q3 FY26 results with consolidated revenue growing 17.5% to INR2,265 crores and operating EBITDA increasing 34.8% to INR505 crores, driven by sustained growth in both hospital and diagnostics segments. Hospital EBITDA margins improved to 21.7%, while Agilus Diagnostics saw 8.3% revenue growth and significant margin expansion to 23.1%. However, PAT declined due to a one-off expense related to New Labour Codes, and some acquired/new facilities are experiencing initial occupancy drag, with Gleneagles units showing negative growth for the 9-month period.

Highlights

  • Consolidated revenues at INR2,265 crores, registering a growth of 17.5% YoY.

  • Consolidated operating EBITDA increased 34.8% to INR505 crores, with a margin of 22.3% (vs 19.4% in Q3 FY25).

  • Hospital business operating EBITDA margins improved from 20% in Q3 FY25 to 21.7% in Q3 FY26.

  • Agilus Diagnostics reported gross revenues of INR371 crores, reflecting an 8.3% YoY growth, with operating EBITDA at INR86 crores (margin 23.1% vs 14.4% in Q3 FY25).

  • Added approximately 750 operational beds during the year so far, including the Bengaluru acquisition and Adayu facility.

Concerns

  • Reported PAT stood at INR197 crores versus INR250 crores in Q3 FY25, primarily due to a one-off expense of INR55 crores for New Labour Codes.

  • Gleneagles revenue growth for 9 months was negative 4% due to clinician attrition and management changes.

  • New units like Greater Noida and Adayu are causing a slight drag on overall occupancy metrics.

Key financials

  1. Consolidated Revenue ₹2,265 Cr +17.5%YoY
  2. Consolidated Operating EBITDA ₹505 Cr +34.8%YoY
  3. Consolidated Operating EBITDA Margin 22.3%
  4. Consolidated PBT (pre-exceptional) ₹312 Cr +21.9%YoY
  5. Reported PAT ₹197 Cr -21.2%YoY
  6. Net Debt (as of Dec 31, 2025) ₹2,547 Cr
  7. Net Debt to EBITDA (as of Dec 31, 2025) 1.24×

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
₹506 Cr Total
  • Hospital Business ₹420 Cr 83.0%
  • Diagnostics Business (Agilus) ₹86 Cr 17.0%

Capital allocation

high confidence
  • Capex Capex disclosed
    • Expansion of People Tree Hospital to 300 beds (medical equipment and civil infrastructure)
    • Jaipur onco block installation
    • New projects like Mohali, Shalimar Bagh expansions
    So over the next 3 to 4 years, we should see this as a high-end 300-bedded super speciality hospital with all the modalities of treatment available. (Ashutosh Raghuvanshi, Page 6); So in the next year budget, we were planning to put something for Jaipur. (Vivek Goyal, Page 13); Of course, the new project which we are starting like Mohali, Shalimar Bagh, these 2 units which we have taken, those expansion we will be starting, there will be additional capex. (Vivek Goyal, Page 16)
  • Debt Net ₹2,547 Cr · 1.2× EBITDA
    On the balance sheet front, the company's net debt stands at INR2,547 crores with a net debt to EBITDA of 1.24x as on December 31, 2025. (Page 4)
  • M&A People Tree Hospital (TMI Healthcare Limited) Acquisition · Closed · Consideration ₹[object Object] (cash)

    Acquired 125-bedded hospital in Yeshwanthpur, Bengaluru, with underlying land and adjacent land parcel for future expansion to over 300 beds.

    Expected to be a high-end 300-bedded super speciality hospital over 3-4 years, costing INR800 crores for the 300-bed capacity.

    To that effect, in January 2026, we acquired the 125-bedded People Tree Hospital in Yeshwanthpur, Bengaluru for INR430 crores. This was done through a 100% acquisition of TMI Healthcare Limited Private Limited, along with the underlying land, building and an adjacent land parcel that enables future expansion to over 300 beds within the same location. (Page 4); And this acquisition will be costing us INR800 crores. So in the metro, in the heart of the city, with 300-bed capacity, I don't think so it is expensive acquisition. (Vivek Goyal, Page 15)
  • M&A Shrimann Hospital Jalandhar Acquisition · Integrated

    Contributed to increase in debt.

    The increase in debt was primarily due to the fund raised or to part finance the acquisition of PE stake in Agilus Diagnostics by the company, acquisition of Fortis brand and trademark and acquisition of Shrimann Hospital Jalandhar. (Page 4)
  • M&A PE stake in Agilus Diagnostics Acquisition · Integrated

    Contributed to increase in debt.

    The increase in debt was primarily due to the fund raised or to part finance the acquisition of PE stake in Agilus Diagnostics by the company, acquisition of Fortis brand and trademark and acquisition of Shrimann Hospital Jalandhar. (Page 4)
  • M&A Fortis brand and trademark Acquisition · Integrated

    Contributed to increase in debt.

    The increase in debt was primarily due to the fund raised or to part finance the acquisition of PE stake in Agilus Diagnostics by the company, acquisition of Fortis brand and trademark and acquisition of Shrimann Hospital Jalandhar. (Page 4)
  • Liquidity Liquidity disclosed Company is in a comfortable position and wants to create sufficient room in balance sheet for future expansion; potential equity infusion by IHH is expected to provide capital for debt reduction or growth.
    As I said, currently, we are in a very comfortable position. But from the management side, we have expressed that we want to create sufficient room in our balance sheet for future expansion. (Vivek Goyal, Page 13); So in all probability, there will be equity infusion by IHH, and that will be used for either debt reduction or for growth opportunity. (Vivek Goyal, Page 10)

Guidance & targets

Profitability

  • ARPOB Increase Profitability · Going forward (next 2 years) · Medium confidence 4% to 5%
    ARPOB increase, we are expecting around 4% to 5% ARPOB increase going forward also. This year, we are trending around this level. And I want to clarify that the ARPOB increase should not be confused with price increase.

    — Vivek Goyal

  • Margin Improvement Profitability · Next year · Low confidence Improvement
    We feel there is still scope for margin improvement, especially with the brownfield expansion that we have discussed in one of the questions on the next year.

    — Vivek Goyal

Revenue

  • Consolidated Growth Trajectory Revenue · Next 2 years · Medium confidence Similar to current FY26 (17.1% for 9M FY26)
    So I will say, you have seen that the company is in the growth trajectory, and it is also showing improvement in the margin. We feel there is still scope for margin improvement, especially with the brownfield expansion that we have discussed in one of the questions on the next year. Brownfield Expansion and that brownfield is coming in one of our premier facility, FMRI. So we expect the -- you will continue to see the growth trajectory what we are seeing in the current financial year at least for 2 years.

    — Vivek Goyal

Capacity

  • Brownfield Bed Addition Capacity · Next year (FY27) · High confidence 400+ beds
    And next year, we can target around 400-plus bed in the brownfield, which majorly contributed by FMRI because expansion is almost steady. We are planning to commission by April.

    — Vivek Goyal

  • Total Bed Addition Capacity · FY27 · High confidence 430 beds
    We mentioned about 430-odd beds, excluding any existing we will be able to complete it.

    — Vivek Goyal

  • FMRI Bed Operationalization (First Phase) Capacity · This year or next year (FY26/FY27) · Medium confidence 100 beds
    FMRI, we are planning to operationalize in two phases. FMRI is a 200-plus bed expansion. So we'll first open 100 beds. ... So FMRI is the only question mark that 100 beds may be operationalized this year or next year depending upon the ramp up. Other will be operationalized fully.

    — Vivek Goyal

  • Jaipur Onco Block Installation Capacity · 18-24 months (planning in next year budget) · Medium confidence Installation
    So these type of specialty takes some time. And generally, it is 18 to 24 months' time. So in the next year budget, we were planning to put something for Jaipur.

    — Vivek Goyal

What to watch in Q4 FY26

Gleneagles Turnaround Progress

Next financial year onward (FY27)
Current Negative 4% revenue growth for 9 months, 3% EBITDA margin (Q3 FY26, after O&M fees)
Target Positive growth and improved margins

Why it matters

Gleneagles is a significant O&M agreement, and its turnaround is crucial for overall profitability.

Nine months growth is actually negative for the unit we are looking at. It is almost 4% negative. ... I think we will start seeing the result probably from the next financial year onward.

Risks & concerns

  • PAT Decline due to One-off Expense

    medium

    Reported PAT declined to INR197 crores from INR250 crores in Q3 FY25, primarily due to a one-off expense of INR55 crores for New Labour Codes.

    Management acknowledged

  • Gleneagles Underperformance

    medium

    Gleneagles units showed negative 4% revenue growth for 9 months due to clinician attrition and management changes, requiring turnaround efforts.

    Management acknowledged

  • Occupancy Drag from New Units

    low

    New and small units like Greater Noida and Adayu are causing a slight drag on overall occupancy metrics, though their impact is minimal.

    Management acknowledged

  • CGHS/ECHS Clarity

    low

    While CGHS shows positive results, the new ECHS circular has some doubts, and the super specialty hospital category for CGHS is yet to be finalized, with clarity expected by next year.

    Management acknowledged

Q&A highlights

7 direct
People Tree Acquisition (Bangalore) Ramp-up & Margins Direct
So it needs to be brought to Fortis standards. It would require some investment in that regard. The investment in the first phase is not very huge. But at the same time, we are also going to expand and start the expansion work for creating further beds so that the capacity can be taken to 300 beds, and that would entail some capex, both in medical equipment as well as civil infrastructure. So over the next 3 to 4 years, we should see this as a high-end 300-bedded super speciality hospital with all the modalities of treatment available.

Clarifies the strategic intent, investment, and timeline for a recent significant acquisition, indicating future growth and margin potential.

Asked by Neha Manpuria

Gleneagles O&M Agreement Performance Direct
So we are in the integration phase for O&M. As you know, this has been started this quarter only. So we have earned INR5 crores as O&M fee in the current quarter. And the revenue for this quarter, excluding Bombay, is INR172 crores and EBITDA is almost 3% after absorbing 3% fees to us. So that means this will be around 6%. And that was in the mutual stage. ... Nine months growth is actually negative for the unit we are looking at. It is almost 4% negative. And there are a lot of disturbance. There is clinician attrition. Management team has also been changed.

Provides specific financial details on a new O&M agreement and highlights challenges in the acquired Gleneagles units, indicating a turnaround effort.

Asked by Tausif Shaikh

Bangalore Acquisition Commercialization Timeline Direct
So it will be like a sort of brownfield expansion like we do in our facility, which typically take 24 to 30 months' time. And Bangalore is a slightly difficult location, that's why I'm saying 30 months' time because approval generally takes more time. But we will start the work immediately on that.

Gives a concrete timeline for future capacity expansion, which is a key growth driver for hospitals.

Asked by Tausif Shaikh

Fortis Differentiation in Competitive Landscape Direct
So I think one of the major differentiation is in terms of the kind of infrastructure we're able to provide and there's a legacy of the institution, and there is an environment, which is very conducive for clinicians to be able to practice effectively. And that's what probably makes us attractive and we have a lot of involvement of physicians in clinical governance and broad policymaking as well. So that makes them feel included, and that's what makes it attractive for them to be a part of us.

Addresses a strategic question about competitive advantage in a rapidly evolving healthcare market.

Asked by Sanjay Shah

Institutional Patient Pricing (CGHS/ECHS) Partial
So we have started seeing the positive result from the CGHS particularly. ECHS, the circular is new, and there is still some doubts which need to be cleared, and team is working with the authorities to get it cleared. But until now, the number is quite positive.

Indicates a positive but still evolving impact from government healthcare schemes, which can influence revenue mix and profitability.

Asked by Vivek Agrawal

Debt and Inorganic Growth Capacity Direct
First of all, the debt EBITDA number is not that alarming. We have still room to take some more debt for our growth aspiration. Having said that, you might be aware that open offer is now settled. And IHH in the public forum has expressed their willingness to increase their stake in the company. So in all probability, there will be equity infusion by IHH, and that will be used for either debt reduction or for growth opportunity.

Addresses a critical capital allocation question, indicating comfort with current debt and potential for future equity infusion to support growth.

Asked by Vivek Agrawal

IHH Equity Infusion Timeline Direct
I think that cooling period end by May. And this is their Board level discussion, then our Board level discussion on the equity need. As I said, currently, we are in a very comfortable position. But from the management side, we have expressed that we want to create sufficient room in our balance sheet for future expansion. We feel we are in an idle position looking at current market dynamic to reap maximum benefit from this current market, so we will like to take that advantage. I think in 3 to 6 months' time, we will be having more clarity about the exact timing.

Provides a specific timeframe for a potential significant capital event (equity infusion) that could impact the company's balance sheet and growth strategy.

Asked by Shaleen

Growth Slowdown Risk & M&A Strategy Direct
Yes, that is one thing which we are now targeting very aggressively. And we have done a couple of acquisitions in the last quarter. We have a couple of others which are in pipeline. We can't disclose the details as of today. But yes, you are right, so there will be -- the growth will be coming from 3 buckets. One is the brownfield expansion. Apart from what we have disclosed earlier, we have identified certain more, which will be coming in the next year investor presentation. Then we will also be having this acquisition thing. And then there is some greenfield project also we are looking at.

Directly addresses concerns about future growth trajectory and confirms an aggressive M&A pipeline to sustain growth.

Asked by Nikhil Mathur

3 min read 7 chapters

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.

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