Fortis Healthcare Ltd, the largest healthcare service firm in India by revenues, sank deeper into losses in the first quarter due to forex losses related to sale of its Australian dental chain even as revenues rose over the year-ago period.
The company recorded a net loss of Rs 221 crore for the quarter ended June 30, 2013, against a loss of Rs 60 crore in the year-ago period. This was despite the consolidated revenues growing 8 per cent to Rs 1,517 crore.
The poor bottom-line performance was attributed to sale of Dental Corporation Holdings last quarter. The firm had struck a deal to sell its 64 per cent stake in Dental Corp to Bupa Australia Health Pty Ltd for $286 million (A$270 million) last December. It had acquired Dental Corp by investing around A$221 million in the second half of 2010. The sale of Dental Corp was completed in May 2013 and its financials were not incorporated for the month of June.
Consolidated revenue growth excluding Dental Corp was pegged at 18.3 per cent to Rs 1,188 crore. Its consolidated net loss factoring out Dental Corp was Rs 124 crore.
The firm also announced exit from its Vietnam venture, which is yet to be completed. Fortis Hoan My, Vietnam registered revenues of Rs 72 crore during the quarter, representing a growth of 20 per cent.
Fundraising and debt
Fortis raised $100 million in funding from IFC through a mix of preferential allotment and FCCBs besides participation in a larger institutional placement. It also separately raised $30 million more through FCCBs and is raising a further $13.5 million from StanChart PE. All these pooled in fresh resources to cut debt which was loaded when the firm acquired a string of overseas healthcare assets from its own promoter a couple of years ago.
Fortis cut its net debt to Rs 3,283 crore in the quarter, down by Rs 2,487 crore and representing a net debt to equity ratio of 0.7x versus 1.1x as of March 31, 2013.
India vs international business
The firm’s India business (hospitals and diagnostics) recorded revenues at Rs 814 crore, up 21.7 per cent compared with Q1 FY13. India hospital business revenues at Rs 654 crore were up 23 per cent from the year-ago period. The India diagnostics business (housed under SRL) recorded net revenues of Rs 160 crore against Rs 137 crore in the corresponding quarter last year, a growth of 17 per cent. The operating EBITDA margins in the diagnostics business rose to 16.5 per cent in the quarter from 13.9 per cent in Q1 of FY13.
The company’s international operation revenues (excluding Dental Corp) were at Rs 374 crore, up 11.5 per cent and contributed little less than a third of the consolidated revenues.
Vishal Bali, group CEO, Fortis Healthcare Ltd, said, “This has been a significant quarter for the company in strengthening the balance sheet. Our India business continues to show robust organic growth. Over the coming quarters, we will continue to strengthen the organisation organically.”
The company said it continues to evaluate its portfolio of businesses to ensure the right strategic fit and further strengthen its focus in geographies and verticals that present relatively better growth opportunities, especially markets such as India.
India business highlights
• In Q1 FY14, the top 10 hospitals contributed approximately 75 per cent to the hospital business revenue, compared with 70 per cent in the corresponding period last year.
• Most key verticals drew double-digit revenue growth including orthopaedics (23 per cent), neuro sciences (52 per cent), renal sciences (41 per cent), pulmonology (50 per cent), gynaecology (35 per cent), oncology 40 per cent) and gastroenterology (14 per cent). Revenue from cardiac sciences (which represents almost one third of India business revenue) grew 10 per cent over the corresponding quarter last year.
• SRL added a laboratory, 43 collection centres, 352 direct clients and 16 co-marketing clients during the quarter. The numbers of accessions performed by SRL during the quarter stood at 3.16 million, a growth of 11 per cent over the corresponding quarter last fiscal. The SRL network spans approximately 240 laboratories and over 1,300 collection centres.
International business highlights
• Quality Healthcare (QH), Hong Kong, recorded revenues of Rs 253 crore compared with Rs 230 crore in Q1 FY13, a growth of around 10 per cent.
• RadLink-Asia, Singapore, recorded revenues of Rs 34 crore, up 10 per cent over the corresponding quarter last year, led partly by the radio-pharmaceuticals business vertical.
• Fortis Colorectal Hospital, Singapore, the company’s super specialty hospital for colorectal diseases, recorded revenues of around Rs 9 crore during the quarter. The hospital was formally launched in late 2012.
(Edited by Joby Puthuparampil Johnson)