Fortis Healthcare (FORTIS) Q4 14/15 earnings summary

Executive summary

• FY15 consolidated revenue from continuing operations rose 14% to ₹3,966 crore; total consolidated revenue including discontinued operations was ₹4,140 crore, while net loss was ₹144 crore vs profit of ₹123 crore in FY14.

• India operations drove performance: revenue reached ₹3,928 crore, 99% of continuing revenue; the strategic focus shifted fully to India following international asset exits.

• The near-term priority was improving utilization and profitability through asset-light, calibrated expansion; management targeted PAT positivity in FY16 and dividend capacity the following year.

Financial highlights

• Continuing-operations revenue was ₹3,966 crore vs ₹3,492 crore; operating EBITDAC, before RHT costs, was ₹579 crore at a 14.0% margin vs 10.8% in FY14.

• Consolidated EBITDA, including other income and before exceptional items, was ₹225 crore; FY15 net loss was ₹144 crore vs profit of ₹123 crore in FY14, which included international divestment gains.

• India revenue grew 14% to ₹3,928 crore; operating EBITDAC before RHT costs was ₹607 crore at a 15.4% margin.

• Standalone revenue was ₹829 crore vs ₹599 crore; EBITDA fell to ₹69 crore from ₹149 crore, and net loss was ₹34 crore vs net profit of ₹24 crore.

• Adjusted for the Schedule II depreciation change, consolidated FY15 depreciation and loss would have been ₹22.07 crore lower; the change also reduced opening surplus by ₹12.91 crore, net of deferred tax.

Outlook and guidance

• Standalone projections: turnover of ₹780 crore, ₹858 crore and ₹944 crore for FY16-FY18; PBT losses forecast at ₹32 crore, ₹13 crore and ₹0.3 crore, respectively.

• Expansion was planned mainly through brownfield additions, with limited capital expenditure and substantial RHT funding; no near-term M&A was envisaged, with ~400 beds targeted annually for three years.

• Arcot Road, Chennai, a 200+ bed hospital, awaited approvals; the 70-bed Bengaluru women’s and children’s facility was expected to launch in Q2 FY16.

• Management expected improving occupancy, ARPOB, product mix and lower ALOS to support results as existing and newer facilities ramped up.