KIMS Hospitals Navigates Growth and Profitability in Q2 FY26

KIMS Hospitals, a prominent player in the Indian healthcare sector, has released its financial and operational highlights for the second quarter and half-year ended September 30, 2025. The company demonstrated robust top-line growth, with consolidated total revenue reaching INR 964.9 crore in Q2 FY26, marking a significant 23.3% increase year-on-year and a 9.8% rise quarter-on-quarter. This strong revenue performance was underpinned by healthy growth in both Inpatient (IP) and Outpatient (OP) volumes, which grew by 15.3% and 25.1% year-on-year, respectively. However, the quarter also saw a contraction in profitability, with consolidated EBITDA declining by 6.7% year-on-year to INR 208.2 crore and Profit After Tax (PAT) falling by 40.3% year-on-year to INR 72 crore. The EBITDA margin stood at 21.6% compared to 28.5% in Q2 FY25, primarily due to the ramp-up costs associated with newly commissioned hospitals.

Management attributed the profitability dip to the initial operational losses from several new hospitals in Maharashtra, Kerala, and Karnataka, which are yet to achieve breakeven. Despite these short-term pressures, the company remains confident in its long-term growth trajectory, emphasizing strategic expansions and technological advancements. The Andhra Pradesh cluster, for instance, showed margin expansion, benefiting from the ramp-up of the Srikakulam hospital and the Vizag acquisition turning EBITDA positive. The company's focus on affordable healthcare models, advanced transplant programs, and cutting-edge medical technology continues to drive its market positioning.

Strategic Expansion and Operational Ramp-up

KIMS Hospitals is actively pursuing a strategic capacity expansion, with plans to add over 2100 beds through greenfield projects and Operations & Management (O&M) opportunities. Key projects include a 361-bed expansion in Bangalore (Project-2), 550 incremental beds in Kondapur, and a new 350-bed facility in Rajahmundry, with various timelines extending to Q4 FY27. These expansions are aimed at establishing a dominant presence in target geographies and accelerating new business growth. The company's journey from a regional leader to a national healthcare provider is evident in its growing footprint across Telangana, Andhra Pradesh, Maharashtra, Karnataka, and Kerala.

The ramp-up of new units is a critical focus. For instance, the Thane hospital, a 300-bed quaternary care facility, is expected to achieve breakeven within the next two months. Similarly, the Mahadevapura unit in Bangalore is projected to break even within 12 months of its commissioning. Management highlighted that the performance of Mahadevapura has been better than expected, with the first liver transplant completed within 45 days. In Kerala, both Kannur and Kollam units are undergoing significant enhancements, including clinical talent expansion, advanced surgical capabilities, and critical care upgrades, aiming to boost procedural volumes and patient inflow.

Technology and Market Penetration

KIMS Hospitals continues to invest in modern medical technology to enhance clinical outcomes and operational efficiency. Recent procurements include the 4-Arm HD da Vinci Robotic Surgical System, MrGFUS Focussed Ultrasound, Mako Robotic for Knee Replacement, ESWL Dornier, Tulsa-Pro System, and Gamma Knife. These technologies enable complex, minimally invasive procedures and advanced diagnostic capabilities, positioning KIMS at the forefront of medical innovation. The company has also launched Asia's first XR experience lab at its Gachibowli unit, leveraging augmented and virtual reality for improved patient experience and clinical care.

Market penetration strategies involve strengthening insurance and TPA network empanelments for new hospitals. While there have been some delays, particularly in Nashik due to the 17 (2)(ii)b license requirement for CGHS and related parties, management expects to complete empanelment with the top five companies by Q4 FY26. This is crucial for attracting a larger patient base, as insurance and CGHS-related businesses typically account for a significant portion of revenue in these markets. The recent CGHS price hike is also expected to provide a 15-20% benefit on the CGHS business across three clusters, with the full impact anticipated in Q4 FY26.

Outlook and Investor Confidence

Despite the short-term margin pressures from new hospital ramp-ups, KIMS Hospitals maintains a confident outlook. Management projects a sustainable consolidated EBITDA margin of 27-30% over the next two to three years and 25-28% for the Andhra cluster. The company's strategic levers, including consistent growth, successful acquisitions, doctor partnerships, and regional market leadership, are expected to underpin its next phase of expansion. The focus on building volume through affordable pricing in new micro-markets is a key strategy to attract a larger audience and ensure long-term growth. The company's commitment to transparent disclosures and disciplined capital allocation reinforces investor trust, as evidenced by its consistent stock performance since listing.