India’s second-largest hospital chain reported a profit after tax of Rs 111 crore in the second quarter ended September 30, led by a strong uptick in operational profitability for both the hospitals and the diagnostics businesses.
Fortis reported a net loss of Rs 166.6 crore in the same period last year.
The net profit was aided by a one-off gain due to the sale of Fortis’ entire shareholding in C-Care, Mauritius (formerly known as Medical and Surgical Centre Limited) for Rs 38.8 crore.
Reduction in the cost of borrowings and the elimination of hospital service fee due to the acquisition of RHT assets also boosted the profit.
Revenues grew 6.3 percent to Rs 1,212.2 crore in Q2FY20, compared to last year’s Rs 1,139 crore.
Hospitals business revenues grew 8.1 percent year-on-year (YoY) to Rs 972.3 crore, while the diagnostic business sales grew 3 percent to Rs 276.6 crore.
Hospital business contributes 80 percent to overall revenues.
The finance cost in the second quarter dropped 41.9 percent YoY to Rs 49.2 crore, as a result of lower debt and reduced borrowing costs.
Net debt to equity ratio stood at 0.13 times. Net debt stood at Rs 1,194 crores in the quarter.
The EBITDA margin stood at 15.7 percent in Q2FY20, against 6.6 percent in Q2FY19.
All key operating metrics of the hospital business improved. The occupancy and average revenue per occupied bed (ARPOB) for the quarter stood at 72 percent and Rs 1.54 crores in Q2FY20 versus 69 percent and Rs 1.49 crores in Q2 FY19, respectively.
Fortis has been charting a turnaround story, with Malaysia’s IHH Healthcare winning the bids to acquire the healthcare provider by infusing Rs 4,000 crore by way of preferential allotment in July 2018. IHH also completed the acquisition of assets under RHT in January 2019, saving Fortis the entire clinical establishment fee being paid to RHT. Fortis hospital assets are housed under RHT, which is listed in Singapore.
However, the proposed open offer to acquire up to 26 percent of expanded capital of Fortis was stayed by Supreme Court, in a case related to Daiichi Sankyo versus Singh brothers over Rs 3,500-crore arbitration.
“We continue to witness an upward trend in our business operations and will remain focused on optimally leveraging our portfolio of assets,” said Dr Ashutosh Raghuvanshi, MD and CEO of Fortis.
“While challenges remain, our strategic actions and initiatives lay emphasis on consolidation and growth. With a stronger Balance Sheet and improving operational performance, we are actively pursuing our investment and capex plans so as to enable and provide our clinicians and administrators with a relatively stronger ecosystem for driving future performance,” Raghuvanshi added.
Raghuvanshi said the company has been trying to foster a culture of cost-consciousness across the organization without compromising on our quality and care.
“All these should gradually also reflect in the performance of the Company over the medium and long term and I do believe that Q2 FY 20 results are reflective of this intent and direction,” he added.-Money Control