Fortis Healthcare (FORTIS) Q2 24/25 earnings summary

Executive summary

• Consolidated revenue for Q2 FY25 grew 12.3% year-over-year to INR 1,988 crore, with H1 FY25 revenue at INR 3,847 crore, driven by strong hospital and diagnostic business performance.

• Operating EBITDA for Q2 FY25 increased 31.9% to INR 435 crore (21.9% margin), and PAT before exceptional items rose 40.3% to INR 253 crore.

• Hospital business revenue rose 13.9% to INR 1,655 crore, with occupancy at 72% and ARPOB up 7.6%; diagnostic business revenue reached INR 372 crore with margin at 21.5%.

• Significant clinical milestones achieved, including advanced surgeries, new technology launches, and robust double-digit growth in oncology and neurosciences.

• Board approved unaudited results for Q2 and H1 FY25, with no material misstatements noted.

Financial highlights

• Hospital business operating EBITDA margin improved by 300 bps to 21.4%, with 11 facilities reporting EBITDA above 20%.

• Diagnostic business operating EBITDA margin improved to 21.5% from 17.2%.

• Adjusted operating margin (excluding one-offs) stood at 24% for Q2 FY25.

• Net debt to EBITDA reduced to 0.16x as of September 30, 2024; net debt at INR 281 crore.

• Q2 FY25 exceptional loss of INR 59.8 crore, mainly due to impairment in an associate company.

Outlook and guidance

• Brownfield expansions and new facilities (Manesar, Faridabad, Noida, FMRI) to drive future growth, with 210 beds to be added in H2 FY25.

• Diagnostic business expected to reach 25%-26% EBITDA margin by FY27-FY28 and double-digit revenue growth from FY26 onward.

• Hospital business maintains guidance of 200 bps margin expansion for the full year, factoring in new facility ramp-up.

• Management expects no material additional impact from ongoing regulatory investigations, with all known financial impacts already provided for.