One of the leading healthcare service providers of the country, Fortis Healthcare Ltd, showed signs of revival in the fourth quarter of the 2018-19 with improving Ebitda. The buyback of the RHT assets has improved the operating Ebitda.
Gurgaon headquartered Fortis Healthcare reported a net profit (Profit after tax and minority interests) after accounting for exceptional items of Rs 135.6 crore for the fourth quarter of 2018-19 fiscal as against a loss of Rs 932 crore in the same period previous year.
The exceptional items for the quarter primarily include allowance for doubtful advance and security deposit given to body corporate along with impairments taken in capital work in progress (Rs 47.4 crore), impairment of investment and allowance for doubtful loans to subsidiary company (Rs 55 lakh), impairment of goodwill of Shalimar Bagh property, exceptional gain on recovery of salary and other reimbursements paid in the previous year (Rs 7.35 crore) as well as allowance of doubtful amount recoverable on salary and other reimbursement of expenses (Rs 20 crore).
The exceptional items for the quarter stood at Rs 66.31 crore while for the full year period it was Rs 67.95 crore. The full year period had additional expenses on composite scheme of arrangement and amalgamation. This was pertaining to an earlier board decision (around August 2016) to demerge the diagnostic business SRL into another majority owned subsidiary Fortis Malar Hospitals. In June 2018 Fortis Malar and SRL decided to withdraw from the scheme.
The consolidated revenues for fourth quarter grew 9 per cent to Rs 1184 crore. Consolidated operating Ebitda grew by 123 per cent to Rs 167 crore in the quarter.
The company said in its statement that adjusted for the one-time off Ebitda from RHT Trust Manager Pte Ltd, the consolidated operating Ebitda growth was at 88 per cent.
RHT Trust Manager Pvt Ltd is the trustee manager of the RHT Health Trust and is 100 per cent owned by one of the step-down subsidiaries of Fortis Healthcare Ltd.
The one-off EBITDA from RHTTM relates to the one- time payment received by the Trustee Manager as a result of the completion of the RHT Transaction in January 2019.
The hospital business operating Ebitda grew 120 per cent to Rs 92 crore versus Rs 42 crore in Q4FY18. The diagnostics business operating Ebitda grew 48 per cent to Rs 49 crore as against Rs 33 crore in the corresponding period previous quarter.
For the full year 2018-19, Fortis has posted a loss of 299 crore (after accounting for exceptional items), which has improved from Rs 1009 crore in 2017-18. Income from operations dipped by 2 per cent year on year in 2018-19 to Rs 4469.36 crore. Consolidated operating EBITDA margins were at 7. 3 per cent versus 8.5 per cent in FY2018.
Commenting on the results, Ashutosh Raghuvanshi, MD and CEO, Fortis Healthcare stated, “Our operations are improving steadily, and we are on the path to recovery as the worst is behind us. Our priority this year is to further strengthen our liquidity position, enabling us to invest for future growth to achieve shareholder returns. Despite the challenging last couple of years, we’ve bounced back.”
Fortis noted that it is working on balance sheet strengthening through portfolio optimization and non-core asset monetization. Bringing back the RHT (hospital assets) on its balance sheet as well IHH’s infusion of Rs 4000 crore during the year have strengthened the company’s balance sheet.
It further noted that the healthcare major continues to focus on strengthening cash flows and liquidity position through lower cost of borrowings (reducing finance costs by 400-500 bps) and it is working on strengthening working capital management, focusing on receivables and inventory. Rating agencies like ICRA and CARE have improved the company’s credit ratings.
Ravi Rajagopal, Chairman, Board of Directors, Fortis Healthcare stated, “IHH’s preferential allotment in Fortis has re-capitalized the Company’s Balance Sheet allowing it to refocus on its business operations and deliver what we do best i.e. patient care. We have successfully stabilized our operations over last 6 months and continue to witness an ongoing improvement in both the hospitals and the diagnostics business.”
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