HCG's Strong Q2 FY26: Oncology Growth Outpaces Challenges

HealthCare Global Enterprises Limited (HCG), India's largest cancer-focused oncology platform, has reported a robust performance for the second quarter and first half of fiscal year 2026. The company's consolidated revenue from operations for Q2 FY26 stood at 647.0 crore, marking a significant 16.9% year-on-year growth. This impressive top-line expansion was complemented by a strong improvement in profitability, with Adjusted EBITDA climbing 18.4% YoY to 123.3 crore. The Adjusted EBITDA margin also saw a positive uptick, reaching 19.1% in Q2 FY26, a 24 basis point improvement over the previous year.

The company's H1 FY26 performance mirrored this positive trend, with revenue from operations growing 16.8% YoY to 1,260.1 crore and Adjusted EBITDA increasing 19.3% YoY to 235.1 crore. This consistent growth underscores HCG's strong market position and effective operational strategies in the specialized cancer care segment. Despite a slight dip in Profit After Tax (PAT) due to higher depreciation and interest expenses from recent growth investments and acquisitions, the underlying operational metrics remain robust.

Segmental and Regional Performance

HCG's core cancer care business continues to be the primary growth driver. In Q2 FY26, medical oncology contributed 41.0% of the total revenue, followed by diagnostics and surgeries at 37.1%, and radiation oncology at 19.5%. The Milann fertility business, while a smaller contributor at 2.3% of total revenue, is currently under strategic evaluation, with potential divestment being considered to sharpen the company's focus on cancer care.

Regionally, the HCG Centers demonstrated strong performance across various clusters. Gujarat led with a 10.7% YoY growth, driven by robust performance in cancer centers and expanded capacity in Ahmedabad and Baroda. Maharashtra also showed significant growth at 19.5% YoY, fueled by clinician additions and improved sales in Nagpur and Mumbai. East India, particularly Kolkata, registered strong growth due to new visiting consultants. Africa operations delivered an exceptional 102.8% YoY growth, indicating successful international expansion. Karnataka, however, saw a moderated 5.3% growth, attributed to a fall in international patient flow due to geopolitical headwinds and underperformance in the multi-specialty business.

Strategic Initiatives and Future Outlook

HCG's management outlined a clear strategic roadmap centered on four key pillars: optimizing the existing network, driving growth through expansion, enhancing network efficiency, and scaling international business. The company plans to deepen its clinical presence, improve talent quality, and expand clinical domains to unlock the full potential of its current facilities. Growth initiatives include brownfield expansion to add approximately 1,000 beds and 10 LINACs, and greenfield expansion into 10-12 new cities over the next two to three years.

Network efficiency will be improved through cost measures, operating leverage, and investing in asset-light adjacencies like day care and diagnostics. HCG is also committed to enhancing the patient experience by upgrading infrastructure and digitizing patient journeys. The international business is a key focus area, with plans to build relationships in Africa, the Middle East, and Southeast Asia to increase its contribution to overall sales.

Management expects to sustain revenue growth faster than the market, targeting 4-5% realization improvement and 9-10% volume growth annually. EBITDA margins are projected to reach 21-22% at a corporate level, with ROCE exceeding 20% over the next five years. The company plans a capex of 600-700 crore over the next two to three years, with a focus on maintaining a prudent net debt to EBITDA ratio of 2-2.5x.

Operational Excellence and Market Leadership

HCG's operational metrics highlight its commitment to excellence. The total Average Occupancy Rate (AOR) improved by 312 basis points to 70.3% in Q2 FY26, reflecting better utilization of operational beds. Emerging centers showed an even more significant AOR improvement of 805 basis points to 56.7%. The company's patient-centric approach, backed by its focused Tumour Board platform and well-defined treatment protocols, has resulted in an industry-leading gross mortality rate of 0.9%. This is a testament to HCG's clinical differentiation and specialized care model.

With a strong emphasis on technology, HCG has consistently invested in cutting-edge solutions like AI, robotic surgery, genomics, and adaptive radiation therapy. The company's leadership in LINAC installations and its plan to introduce MR LINAC further solidify its position as a technologically advanced oncology platform. The recent onboarding of senior leaders in critical functions, including clinical strategy, marketing, and investor relations, is expected to further strengthen the company's execution capabilities and drive the next wave of transformation.

HCG's Q2 FY26 results demonstrate a company firmly on a growth trajectory, leveraging its market leadership, clinical expertise, and strategic investments to capitalize on the increasing demand for high-quality cancer care in India and beyond. The management's disciplined approach to capital allocation and clear strategic vision position HCG for sustained profitable growth in the coming years.