Gurugram-headquartered hospital chain Fortis Healthcare is looking to add more than 800 beds this year through brownfield expansion and inorganic route. It signed a definitive agreement to acquire Medeor Hospital in Manesar with VPS Group for Rs 225 crore on Thursday.
Fortis Healthcare now has around 4,000 operational beds across its network.
Medeor Hospital has a potential bed capacity of 350 beds, and can be operationalised in a phased manner in approximately nine months, Fortis said.
"The transaction entails the purchase of land, buildings, and movable assets of Medeor Hospital in Manesar, Gurugram, owned by Medeor Hospitals Limited and is expected to close by end of July 2023, subject to the completion of certain conditions precedent as stipulated in the definitive agreements. The transaction will be funded through a mix of debt and internal accruals," Fortis Healthcare said.
It added that this acquisition fit well with its strategic approach of expanding its presence in the focus geographic cluster including the Delhi-National Capital Region.
Dr Ashutosh Raghuvanshi, MD & CEO of Fortis Healthcare, said, "We have been evaluating various acquisition opportunities to expand our presence in our existing markets and to enable us to leverage the benefits of scale and synergies. We believe this is a good strategic fit as we already have a significant presence in Gurugram with our flagship facility, Fortis Memorial Research Institute (FMRI)."
Fortis Healthcare sees strong growth in hospital revenues in Q2FY23
Time has passed when offer price of Rs 170 for a share was good: IHH's Loh
Sebi asks IHH Healthcare to get Delhi HC nod for Fortis open offer
How did IHH Healthcare manage to nurse Fortis hospitals back to health
Hospital stocks gain in tepid mkt; Krishna Institute, Fortis rise up to 11%
Sebi bars ex-Care Ratings MD & CEO Rajesh Mokashi for two years
HCLTech reports 11% jump in Q4 net profit, pegs guidance at 6-8%
Tiger Global-backed Koo lays off 30% of its workforce in a year
ICICI Prudential Life's net profit rises 27% in Q4; VNB jumps 36%
NCDEX isabgol futures clocks 102 tonnes volume on first day of trade
He added that this acquisition will make Fortis the second largest healthcare services provider in Gurugram with over 850 beds, including its ongoing brownfield bed additions in FMRI.
Besides, Fortis Healthcare has plans to add over 800 beds during 2023-24, sources said. These would be mostly through brownfield expansions at its Noida, Gurugram and Faridabad hospitals.
For the third quarter of 2022-23 fiscal year Fortis Healthcare occupancy stood at 66 percent, and its average revenue per occupied bed was Rs 2.02 crore. It gets roughly 59 percent from surgical revenues.
Oncology, Gastroenterology, Neurosciences, Renal Sciences, Orthopaedics and Cardiac Sciences contributed 60.9% to overall hospital revenues.
After Malaysian major IHH Healthcare won a bidding war to acquire a 31.1 percent stake in Fortis Healthcare in July 2018, the beleaguered hospital chain has come a long way. It has not only pared debts, improved its net worth, become profitable, but has also focused on expansion through its internal funds.
Fortis has continued to invest in brownfield expansion from its internal accruals. It noted in its FY22 annual report that brownfield expansion should see the company add close to 250-300 beds each year for the next two to three years, taking the operational bed capacity to 5000 beds. Its bed-expansion has been largely stagnant.
In an interaction with Business Standard last November, Ravi Rajagopal, chairman of Fortis Healthcare had said "From a Fortis point of view the frustration is that we are not able to participate in M&A activities…our footprint and our presence could have been a lot bigger, had we been not constrained by capital. We are expanding organically – at seven of our hospitals we are expanding."