Fortis Healthcare turns around, posts Rs 32 cr Q2 net

Firm has a Rs 28 cr loss in the year-ago quarter; cuts debt after divestment in several overseas operations

Following divestment in several overseas assets and fund raising exercises, Fortis Healthcare reported a consolidated net profit of Rs 32 crore during the July-September quarter, against a loss of Rs 28 crore in the year ago corresponding quarter, the company said in a statement.

During the quarter, Fortis completed its divestment of stake in its Vietnam-based business - Fortis Hoan My and in its primary care business in Hong Kong – Quality Healthcare. While the divestment in its Vietnam asset was completed in August for a value of $80 million, it sold Quality Healthcare to BUPA for a consideration of $355 million in October 2013.

“The proceeds from the divestitures and the fund raising activities are being primarily utilised to reduce debt and strengthen the balance sheet. These will also enable the company to fund its growth and expansion plans for the foreseeable future,’ the statement said.

The net debt of the company has lowered to Rs 2,963 crore as on September 30, from Rs 5,771 crore as on 31st March 2013, reflecting a reduction of approximately Rs 2,800 crore.

The company’s net debt to equity ratio stood at 0.6 excluding the proceeds from its sale of Quality Healthcare. This is down from 1.1 as on 31st March 2013. “With the proceeds from the divestiture of Quality Healthcare received in October 2013, the net debt is expected to further reduce from current levels towards a targeted net debt to equity ratio of  0.3” the company said.

However, because of sale of assets, the company’s consolidated revenues dropped to Rs 1,281 crore during the quarter from Rs 1,493 crore in the corresponding quarter last year.

Its revenue from India business grew 22 per cent on year to Rs 879 crore during the second quarter of the financial year 2013-14. During July-September, Fortis’ India hospital business grew 24 per cent year on year to clock revenue of Rs 708 crore, whereas revenues from its diagnostic business stood at Rs 171 crore, up 14 per cent from the corresponding quarter year ago.

“Our results for the quarter strongly reflect the focus of the company on the India business. The operating performance of the company continues to show margin improvement alongside the deleveraging of the balance sheet, which has been achieved simultaneously. We will pursue both greenfield and brownfield capacity expansion to continue our growth trajectory and market leadership in India,” Fortis Group CEO Vishal Bali said.