FM JANUARY 2019 - digital edition

hospital news
WORST OVER FOR
HOSPITAL SECTOR: ICRA
Regulatory pressure impacted Indian hospitals in 2017,
but worst likely over, says rating agency
The hospital industry in the country
has seen its muted performance,
which started in 2017, continuing
through the quarter ended September
owing to pressure from regulatory
actions by both the centre and the
states, said a report by the credit rating
agency ICRA.
However, the impact of these
factors has likely peaked and conditions
can only improve going forward in
the absence of additional regulatory
setbacks.
ICRA’s sample set of hospital
operators - Apollo Hospitals Enterprise
Limited, Fortis Healthcare Limited,
Narayana Hrudayalaya Limited,
Healthcare Global Enterprises Limited,
Max India Limited and Shalby Limited -
reported a seven percent year-on-year
drop in its earnings before interest, tax,
depreciation and amortisation (EBITDA)
to Rs 516-crore in Q2 FY2019 from Rs
556-crore in Q2 FY2018. Operating
margin declined from 15% to 13.3%,
while aggregate revenue grew by 5%
to Rs 3,889 crore. This is in line with
the subdued performance in FY2018,
a year that witnessed the first fall in
aggregate EBITDA of the sample set
in over six years. The year also saw
operating profitability hitting a multiyear
low, dropping to 11.4% in FY2018
from a peak profitability of 15.7%
during the six-year period.
DECLINING MARGINS
Leading hospitals reported a seven
percent year-on-year drop in their
earnings
₹556
crore
₹516
crore
GST impact
The hospital sector has been
witnessing a decline in performance
since the beginning of 2017 due to
Q2 FY2018
Q2 FY2019
58 / FUTURE MEDICINE / JANUARY 2019