Corporate hospitals to see 8-10% revenue growth in FY24: ICRA Ratings

The aggregate occupancy is likely to be at 63-65 per cent in FY24 as against the 65.1 per cent in FY23, the report said

Corporate hospitals are set to clock an 8-10 per cent revenue growth and strong margins in the current fiscal, ICRA Ratings said in a report on Thursday.

The rating agency maintained a stable outlook for the sector, saying the improving operating leverage, coupled with continued cost optimisation and digitisation measures, are expected to support a healthy operating margins of 22-23 per cent in 2023-24 (FY24).

The report is based on the agency's sample of nine listed hospital chains -- Apollo Hospitals, Aster DM Healthcare, Fortis Healthcare, Healthcare Global Enterprises, Krishna Institute of Medical Sciences, Max Healthcare, Narayana Hrudayalaya, Rainbow Children's Medicare and Shalby Hospital.

Higher revenue and margin expectations are led by rising incidence of non-communicable lifestyle diseases, growing per capita spend on healthcare, increasing number of health insurances being availed of, and an increase in medical tourism, it said.

The report said the aggregate occupancy is likely to be at 63-65 per cent in FY24 as against the 65.1 per cent in FY23.

The Average Revenue Per Occupied Bed (ARPOB) is expected to moderate to 5-7 per cent of the total revenue in FY24 as against 10 per cent in FY23.

Overall, the ratings agency estimated revenue to grow 8-10 per cent on the back of a 22-23 per cent operating margin expansion.

Mythri Macherla, assistant vice-president at ICRA Ratings, said these hospital chains have announced plans to add over 8,400 beds over the next four years due to a sustained improvement in demand.

This translates to over 26 per cent increase in capacity from the March 2023 levels.

The in-patient footfall saw steady sequential improvement during every quarter of FY23, except the October-December period when elective surgeries were deferred by patients due to the festive season, according to the report.

Most of these hospitals saw a jump in the return on capital employed from 6 per cent in FY21 to 18 per cent in FY22, before settling at 16 per cent in FY23, the report said, adding that the same is expected to be in the 13-15 per cent range going ahead.