India Ratings and Research has maintained a stable outlook for the corporate healthcare sector for 2017-18 aided by strong growth in health insurance coverage. “India Ratings and Research (Ind-Ra) has maintained a stable outlook for the corporate healthcare sector for FY18, based on expectations of continued stable revenue growth,” the agency said in a statement.
The sector is expected to register stable revenue growth of about 15 per cent for FY18, driven by the completion of new facilities and aided by strong growth in health insurance coverage, it added.
“The growth in health insurance coverage (28.9 per cent CAGR over FY14-FY16) is positive for the sector as it increases the addressable market size,” the agency said.
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However, profit margins will continue to be impacted by expansion plans across the sector, owing to long break-even periods for new facilities, it added.
“EBITDA margins and cash flow margins of companies operating in the sector will remain under pressure due to initial losses or lower profitability during the ramp-up phase of new facilities,” India Ratings and Research said.
The rating agency said that large corporate hospital chains would attract patients to their facilities on account of their established brands and ability to attract reputed doctors.
“Hence, the sector will continue to witness significant interest from private equity and strategic foreign investors, looking at leveraging the established brands of regional or sub-regional players to create strong national or regional chains,” it added.