Healthcare Companies
Apollo Hospitals Enterprises and Fortis Healthcare are the two leading healthcare companies on the bourses. Both are large, similarly valued, doing well and expanding their respective footprints steadily. However, Fortis Healthcare appears to be the riskier of the two.
AHEL is primarily an Indiabased healthcare, with a total capacity of 8,717 beds across 54 hospitals as on March 31, 2011. It has plans to add 2,418 beds by FY14. The company’s in-patient admissions and average revenue per occupied bed has been steadily rising over the last four fiscals. Despite this, the company has efficiently managed to reduce the patient’s average length of stay in its hospitals. Its occupancy rates have also remained high above 70% over the past four fiscal years. AHEL also has a network of 1,200 pharmacies across 20 states in India. It has closed loss-making and low-growth stores to achieve positive Ebitda since the past three quarters. It also runs a health BPO and health insurance service. The company has recently raised Rs 330 crore through a QIP to fund its future expansion.
In contrast, Fortis Healthcare has managed to be the largest healthcare company in India through aggressive inorganic expansion. Because of this, it has relatively more leverage with a consolidated debt-equity ratio of 1.45 as on March 31, 2011. While revenues have grown strongly, the company has posted weak margins since the past two quarters. The company expects the margins to recover once its new hospitals start contributing to the bottomline. The company’s latest announcement of buying out its promoters’ stake in Fortis International - the global healthcare company with presence in the Asia-Pacific, has to be taken with a pinch of salt.
The combined entity will have a formidable network of 74 hospitals in nine countries besides India having over 12,000 beds with revenues of over $1 billion. While the valuations of the deal are yet to be arrived at, the company has not disclosed the profitability of Fortis International.
The impact of the acquisitions on the financials of Fortis Healthcare will only be seen once the combined entity announces its financial results. Investors should also note that the promoters have in an earlier media interview revealed their plans to eventually exit the healthcare business once it has acquired scale.
Source - Economic Times
Apollo Hospitals Enterprises and Fortis Healthcare are the two leading healthcare companies on the bourses. Both are large, similarly valued, doing well and expanding their respective footprints steadily. However, Fortis Healthcare appears to be the riskier of the two.
AHEL is primarily an Indiabased healthcare, with a total capacity of 8,717 beds across 54 hospitals as on March 31, 2011. It has plans to add 2,418 beds by FY14. The company’s in-patient admissions and average revenue per occupied bed has been steadily rising over the last four fiscals. Despite this, the company has efficiently managed to reduce the patient’s average length of stay in its hospitals. Its occupancy rates have also remained high above 70% over the past four fiscal years. AHEL also has a network of 1,200 pharmacies across 20 states in India. It has closed loss-making and low-growth stores to achieve positive Ebitda since the past three quarters. It also runs a health BPO and health insurance service. The company has recently raised Rs 330 crore through a QIP to fund its future expansion.
In contrast, Fortis Healthcare has managed to be the largest healthcare company in India through aggressive inorganic expansion. Because of this, it has relatively more leverage with a consolidated debt-equity ratio of 1.45 as on March 31, 2011. While revenues have grown strongly, the company has posted weak margins since the past two quarters. The company expects the margins to recover once its new hospitals start contributing to the bottomline. The company’s latest announcement of buying out its promoters’ stake in Fortis International - the global healthcare company with presence in the Asia-Pacific, has to be taken with a pinch of salt.
The combined entity will have a formidable network of 74 hospitals in nine countries besides India having over 12,000 beds with revenues of over $1 billion. While the valuations of the deal are yet to be arrived at, the company has not disclosed the profitability of Fortis International.
The impact of the acquisitions on the financials of Fortis Healthcare will only be seen once the combined entity announces its financial results. Investors should also note that the promoters have in an earlier media interview revealed their plans to eventually exit the healthcare business once it has acquired scale.
Source - Economic Times
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