Yatharth Hospital plans to acquire one hospital this fiscal; aims to double bed capacity by FY27

Yatharth Hospital and Trauma Care, a private multi-specialty hospital chain in Delhi National Capital Region (NCR) region, plans to double its bed capacity to around 3,000 within three years through brownfield expansions and acquisitions. The healthcare company, which announced a ₹116 crore acquisition of Faridabad-based Asian Fidelis in February this year, is in the process of acquiring one more hospital this year, reveals Yatharth Tyagi, Whole-Time Director, Yatharth Hospital and Trauma Care Services.

“The hospital group aims to double its bed capacity within approximately three years, which includes both brownfield expansions and acquisitions,” says Tyagi in an exclusive interaction with Fortune India.

“The group plans to double its bed capacity from around 1,400 beds to 2,800-3,000 beds in the next 2.5-3 years. It has already added a 200-bed hospital in Faridabad last quarter,” explains Tyagi, who was appointed as a director of the company on September 15, 2021.

Yatharth also says that the group plans to acquire “at least one hospital each year”. “It is in the advanced stages of acquiring another hospital in the NCR market this financial year,” he adds.

The top executive further states that the company is also expanding its existing hospitals in Noida Extension and Greater Noida by adding 200 and 250 beds, respectively, through brownfield expansion. “We have recently bought the adjacent land parcels, so we are adding 200 beds and 250 beds, respectively, within our two hospitals,” he notes.

Established in 2008, Yatharth Hospital and Trauma Care started operations with 250 beds in Noida in 2010 and has consistently increased capacity over the years to about 1,605 beds in the June quarter of the current fiscal. Today, the company operates five hospitals; three in Uttar Pradesh (Noida, Greater Noida, and Noida Extension), one each in MP (Jhansi-Orachha) and Haryana (Faridabad). 

The Noida cluster is greenfield with a total bed capacity of 1,100, while hospitals in Jhansi and Faridabad are brownfield in nature with bed counts of 305 and 200, respectively. It derives 90% of its revenues from its Noida cluster, which is strategically placed in the middle of high population-density areas of Delhi and Uttar Pradesh.

According to Yatharth Tyagi, who is responsible for overall operations and business development of the group, efforts and strategic directions undertaken to promise an upsurge in various performance indicators, including average revenue per occupied bed (ARPOB) and overall hospital occupancy rates.

“Currently, there is a noticeable gap in ARPOB compared to leading hospital chains in the area. For instance, other chains range between ₹50,000 to ₹70,000, whereas current figures stand at ₹34,000,” he says.

Going ahead, the discrepancy in ARPOB is expected to close progressively, driven by the introduction of new treatment disciplines. “Oncology, particularly, has emerged as a considerable enhancement in ARPOB, jumping from 3% to 10% in a single year, with projections suggesting a potential increase to 20% going forward.”

Tyagi further says that new hospital sites have buoyed this momentum. “A notable increment in occupancy rates has already been observed, jumping from 40% two years ago to an impressive 61-65% today.” This growth is attributable to the hospital's post-Covid establishment phase, coupled with an influx of experienced and reputable doctors, he adds.

Yatharth Hospital made its stock market debut in August last year after raising ₹686.55 crore via the initial public offering (IPO) route. The company intends to use IPO proceeds to pay off debt, fund capital expenditure expenses of its two hospitals, as well as to fund inorganic growth initiatives through acquisitions and general corporate purposes. 

The shares of Yatharth Hospital have risen 84% since its listing, from its issue price of ₹300 to ₹552.40 today. With a market capitalisation of ₹4,741 crore, the smallcap healthcare stock has delivered 46% returns to its shareholders in the last year; 21% in six months; and 48% in the calendar year 2024. For the first quarter that ended June 30, 2024, the hospital chain posted a 60% year-on-year (YoY) jump in net profit to ₹30.4 crore, led by improvement in occupancy and ARPOB. Revenues rose 37% YoY to ₹212 crore, while EBITDA climbed 30% to ₹53.7 crore during the quarter under review. Occupancy improved to 61% in Q1 FY25 from 51% the previous year, while ARPOB rose to ₹30,551, up 9% YoY.