Hospitals likely to witness 20-22 percent revenue growth in FY2022: ICRA

"Overall, ICRA expects at least 200 bps improvement in profitability in FY2022, though the margins are expected to moderate from the level seen in Q4 FY2021 due to normalisation of some of the cost cutting measures and higher proportion of Covid19 treatment. Further, the restrictions on treatment charges for Covid19 patients in certain states could keep the margins in check," ICRA Assistant Vice President & Sector Head, Mythri Macherla, said in a statement.;

Published On 2021-07-18 03:30 GMT | Update On 2021-07-18 03:30 GMT

New Delhi: Hospitals are likely to witness revenue growth of around 20-22 per cent in FY2022 along with strong profitability, ratings agency ICRA said in a report on Tuesday.

The first wave of Covid-19 had hit the hospitals hard, with almost all hospitals reporting losses in Q1 FY2021. Occupancies had plunged significantly, medical tourism came to a standstill, OPD visits were curtailed and electives were postponed.

Also Read: Combating Covid-19: Karnataka receives 40 ICU beds, medical equipment from various firms

But, with the easing of lockdown restrictions and decline in Covid cases, the occupancies recovered subsequently and almost reached pre-Covid levels by Q4 FY2021.

Occupancies are likely to improve to 61-63 per cent in FY2022, from 52.5 per cent in FY2021 due to higher hospitalisations on account of second wave of Covid-19 and year-on-year (y-o-y) increase in number of elective procedures owing to less restrictive lockdown as well as higher vaccination coverage, the agency report said.

Further, the current sluggish pace of capex is also expected to pick up, mainly via addition of beds in existing facilities in near term. Some of the larger players are actively scouting for inorganic opportunities.

On the back of strong accruals and limited incremental leverage, the debt protection metrics is likely to improve, the report said.

"Overall, ICRA expects at least 200 bps improvement in profitability in FY2022, though the margins are expected to moderate from the level seen in Q4 FY2021 due to normalisation of some of the cost-cutting measures and higher proportion of Covid-19 treatment. Further, the restrictions on treatment charges for Covid-19 patients in certain states could keep the margins in check," ICRA Assistant Vice President & Sector Head, Mythri Macherla, said in a statement.

For the report, ICRA sampled Apollo Hospitals, Fortis Healthcare, Narayana Hrudayalaya, Aster DM Healthcare, Max Healthcare Institute, Healthcare Global, and Shalby.

In Q4-FY2021, the revenues of the companies in the sample set grew by 21 per cent on YoY basis and about 6 per cent on quarter-on-quarter (QoQ) basis, while the operating margin expanded to 18.4 per cent vis-a-vis 17.7 per cent in Q3 FY2021 and 13.9 per cent in Q4 FY2020.

Long-term outlook for the industry continues to remain stable, given the increasing life expectancy, rising share of elderly people, rising incidence of non-communicable lifestyle diseases, higher healthcare awareness, growing per capita spend, increasing penetration of health insurance and robust medical tourism volumes, the report said.

Also Read: New updates in COVID-19 research: Emerging therapeutic role of Fexofenadine and Montelukast.

Article Source : IANS

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