Aster DM Healthcare Navigates Growth and Merger in Q2 FY26

Aster DM Healthcare Limited has delivered a robust performance in the second quarter of Fiscal Year 2026, showcasing consistent growth and strategic advancements amidst a dynamic healthcare landscape. The company reported a 10% year-on-year (YoY) increase in revenue from operations, reaching INR 1,197 crore. Operating EBITDA also saw a significant jump of 13% YoY to INR 263 crore, with margins expanding to 22.0%. This marks the 20th consecutive quarter of YoY revenue growth for Aster DM Healthcare, underscoring its resilient business model and disciplined execution. The Normalised PAT (Post NCI) for Q2 FY26 stood at INR 110 crore, a 14% YoY increase.

The company's performance was largely driven by a substantial recovery in the Kerala cluster, strong growth in international revenue, and an improved case mix. Total patient volume grew by 15% quarter-on-quarter (QoQ), with inpatient (IP) volume increasing by 12% QoQ and outpatient (OP) volume by 15% QoQ. Occupancy rates improved to 64% in Q2 FY26 from 59% in Q1 FY26. The Medical Value Travel (MVT) business demonstrated significant momentum, growing 26% YoY and 60% QoQ, primarily due to increased international patient footfall in Kerala. Oncology revenue also saw healthy growth of 26% YoY, increasing its contribution to total revenue from 9% to 11%.

Segment-wise, Hospitals and Clinics contributed INR 1,160 crore (94%) to the revenue, while Labs generated INR 41 crore (3%), and Pharmacies accounted for INR 31 crore (3%). The Labs business, in particular, has achieved a remarkable turnaround since the start of FY25, with EBITDA margins sharply expanding to 17.8% in Q2 FY26 from 11.0% in Q2 FY25, driven by robust external business growth and improved cost efficiencies. This turnaround has translated into a healthy ROCE of 23%, a significant recovery from negative levels a year ago.

Aster DM Healthcare is actively pursuing strategic initiatives to bolster its market position and enhance operational efficiencies. A significant development is the ongoing merger with Quality Care India Limited (QCIL). This merger has received no-objection letters from both BSE and NSE, marking a crucial step forward. Upon completion, the merged entity will boast 38 hospitals across 27 cities with a combined capacity exceeding 10,360 beds, positioning Aster among India's leading healthcare providers. Management anticipates near-term EBITDA synergies of 10-15% from this integration, driven by clinical collaboration, shared technology platforms, and optimized procurement.

In terms of expansion, Aster added over 200 beds in the last year, bringing its total capacity to 5,199 beds as of September 30, 2025. The Aster MIMS Kasargod, a 264-bed multispecialty hospital, commenced operations on October 2, 2025, reinforcing the company's presence in Northern Kerala. Further, Aster Whitefield and Ramesh Ongole are slated to commence in H2 FY26, with Aster Capital, Trivandrum, Aster Sarjapur Phase-I, and Aster W&C, Hyderabad, planned for FY27. The company also continues to invest in advanced medical technology, with Aster CMI becoming Karnataka's first to install the Philips Excimer Laser Atherectomy System.

Management is focused on driving sustainable profitability through cost optimization and operational efficiencies. Initiatives like centralized procurement and the adoption of renewable energy across hospitals have led to significant reductions in overhead costs. The company has commissioned 13 MW of renewable energy projects and plans an additional 21 MW, contributing to both cost savings and environmental sustainability. The 'Aster Health' App, with over 200,000 downloads, is a testament to their digital transformation efforts, enhancing patient access and experience.

Despite some past challenges, such as leadership transitions and seasonal impacts in Q3 and Q4 FY25, Aster DM Healthcare has demonstrated resilience and a clear path to recovery. The company's strategic foresight, disciplined execution, and continuous investment in capacity expansion, digital transformation, and clinical talent are building a future-ready platform designed for scale and sustainability. With strong fundamentals and a clear pathway to integration and innovation, Aster is well-positioned to deliver sustainable and profitable growth in the quarters ahead.