HCG FY26 Results: Growth with Deleveraging and Strategic Focus

HealthCare Global Enterprises Limited, India’s largest oncology focused hospital chain, closed FY26 with steady growth and a cleaner balance sheet. Consolidated revenue for FY26 rose to INR 25,454 Mn, up 15% year on year. That growth translated into stronger operating profit as adjusted EBITDA increased 19% to INR 4,711 Mn and margin improved to 18.5% from 17.8%. Adjusted profit after tax for FY26 climbed 25% to INR 557 Mn.

The March quarter followed the same pattern. Q4FY26 revenue grew 11% to INR 6,523 Mn and adjusted EBITDA grew 17% to INR 1,252 Mn. Adjusted EBITDA margin expanded to 19.2% in the quarter from 18.3% a year ago. Adjusted PAT for Q4FY26 rose to INR 341 Mn, helped by normalization for a one time goodwill impairment item. Reported PAT is lower because FY26 includes extraordinary items, but the operational story in the presentation is about volume led growth, incremental improvement in realizations, and operating leverage.

A volume led year, with pricing support and mix shifts

HCG’s FY26 performance was built on network wide patient growth and modest improvement in average revenue per patient. Volumes excluding the fertility business increased 12% to 294,912 in FY26, and ARPP rose 3% to INR 84,261. The company’s comments suggest this was broad based: South, West and East clusters delivered about 13%, 14% and 11% year on year revenue growth, respectively, while international operations in Kenya scaled sharply.

The quarter also showed the same mechanics. Volumes excluding fertility grew 9% year on year to 74,748 in Q4FY26, while ARPP rose 2% to INR 85,176. In other words, patient throughput did most of the work. ARPP improvement added support, but did not carry the quarter.

This matters because it frames what drove the margin expansion. When growth is led by higher volumes across an existing network, fixed costs are absorbed better. The presentation attributes Q4 margin improvement to operating leverage and improved network productivity. FY26 margin improvement of 68 bps reinforces the same point. The company also reports a pre tax ROCE of 14.0% for FY26, up 87 bps, linking profitability gains to higher utilisation and centre maturity.

Financial summary

Notes: Adjusted metrics are normalized for ESOP and one time expenses. FY26 adjusted PAT is normalized for the impact of a new labor code item and goodwill impairment of the fertility business.

Cluster performance: West leads, South stays steady, East works through mix

The regional split shows why HCG’s growth looked durable in FY26. West is the largest cluster and also the most consistent growth driver. In Q4FY26, West revenue rose 13% year on year to INR 2,865 Mn, with volumes up about 10% and ARPP up 2% to INR 94,710. For the full year, West revenue grew 14% to INR 11,330 Mn and ARPP improved 5% to INR 94,067. Management also highlighted an improvement in cash plus TPA mix in Q4, which can support collections and reduce working capital stress over time.

South is HCG’s second largest cluster and appears to be growing steadily while preparing for a new capacity phase. Q4FY26 revenue rose 9% to INR 2,607 Mn and volumes grew 6%. The presentation notes softer contribution from international patients in the quarter, but still shows healthy performance across tier 2 centres, particularly Vizag and Vijayawada. For FY26, South revenue increased to INR 9,950 Mn. The company points to the new North Bengaluru facility and a planned addition of about 25 beds at the Bangalore centre of excellence in FY27.

East delivered a different shape of growth. Q4FY26 revenue rose 8% to INR 699 Mn while volumes grew 13%. But ARPP declined 4% year on year to INR 63,018, with management attributing this to clinical transitions in Kolkata affecting case mix. For FY26, the East cluster still grew 11% to INR 2,830 Mn and ARPP increased 1.4% to INR 65,759, indicating that the Q4 dip may be specific to the transition. The company expects improvement with a new doctor team in Kolkata in Q1 FY27.

International operations in Kenya remain a small but fast scaling contributor. Revenue grew 39% year on year in Q4FY26 to INR 196 Mn and rose 71% in FY26 to INR 740 Mn, supported by ramp up in radiation oncology and PET services and stronger patient inflows.

Specialty and payor mix show a balanced oncology model

HCG’s FY26 revenue mix by specialty underlines a broad oncology platform rather than dependence on a single modality. Medical oncology accounted for 38% of revenue, surgical oncology 21%, OP onco services 16%, radiation oncology 14%, and non oncology specialties 11%.

The payor mix also explains the resilience in volumes. Cash plus TPA plus corporate accounted for 65% of revenue, government for 33%, and medical value travel for 2% based on the presentation’s mix chart. Management commentary on South noted softer medical value tourism, which is consistent with MVMT being a small share but a swing factor for some centres.

Profitability and returns: centre maturity is the lever

A key slide in the presentation connects profitability and ROCE to the migration of centres into higher revenue per month buckets. In FY26, centres with more than INR 100 Mn revenue per month contributed 44% of revenue and increased from three centres in FY25 to four centres in FY26. This cohort carries a centre level EBITDA margin of 26% and ROCE of 27%.

The INR 50 to 100 Mn per month cohort is now the backbone of the network. It represented 50% of revenue and expanded from 12 to 14 centres year on year, with like for like growth of 17%. Its centre level EBITDA margin is 18% and ROCE is 9%, suggesting meaningful upside if these centres continue to mature into the top bucket.

The underperforming cohort shrank. Centres below INR 50 Mn per month fell from nine to six and represent just 6% of revenue. Management’s framing is important: infrastructure is already built out across the INR 50 to 100 Mn cohort, which can support margin expansion as utilisation rises without a similar pace of fixed cost growth.

That utilisation headroom is visible in the FY26 hospital utilisation data. South is at 68%, West at 50%, East at 57%, and overall at 58%. West stands out here. It is the largest cluster by revenue share at 45% and has a 47% bed share, but utilisation is lowest. That gap suggests substantial operating leverage potential if volumes continue to scale.

Capital allocation: growth capex, rights issue, and a clearer balance sheet

FY26 capex was INR 2,885 Mn versus INR 2,197 Mn in FY25. South accounted for the largest share with INR 1,804 Mn. The presentation links growth capex to North Bangalore, Ahmedabad centre of excellence and Kenya.

The capital structure story is straightforward. HCG completed a rights issue of INR 4,250 Mn, oversubscribed by 1.3 times. Net debt excluding leases declined sharply to INR 3,387 Mn as of March 31, 2026 from INR 6,317 Mn a year earlier. On a pre Ind AS basis, net debt to EBITDA improved to 0.98 times in FY26 from 2.27 times in FY25. The company also provides a net debt figure adjusted for the MG Vizag second tranche settlement paid in April 2026, which takes net debt to INR 4,930 Mn and leverage to about 1.43 times.

Cash conversion is another supporting datapoint. The presentation states EBITDA to CFO of about 75%, and the cash flow statement shows net cash from operating activities of INR 3,471 Mn for FY26. That cash generation, combined with rights issue proceeds, underpins the deleveraging even after growth capex.

Portfolio shaping: exiting fertility to sharpen oncology focus

The Milann divestment is positioned as a strategic exit from a non core business. HCG has agreed to divest 100% stake in BACCH Healthcare Private Limited, operating under the Milann fertility brand, to Invigya Healthcare Fund I, managed by Invigya Investment Advisors Private Limited, an entity controlled by the promoter and non executive chairman.

The transaction values Milann at an enterprise valuation of INR 632 Mn. Equity consideration for 100% of the business is INR 376 Mn, payable in two tranches: 75% upfront at closing and 25% within 18 months. The transaction is expected to close within Q1 FY27. The presentation argues that this will improve capital efficiency and management focus, and the financial disclosures already show fertility assets and liabilities classified as held for sale as of March 2026.

For investors, the main implication is cleaner reporting and sharper allocation. HCG has already been presenting key operating metrics excluding fertility. A completed divestment should reduce noise in consolidated results, especially around exceptional items such as goodwill impairment.

Capacity and capability: North Bangalore brings MR LINAC to the platform

The most visible operational milestone is the launch of the North Bangalore facility. HCG describes it as the first in the Bangalore market to offer MR LINAC technology. The facility spans 1.5 lakh square feet, is positioned to serve the northern corridor with a catchment population of over 2 million, and offers a full suite across medical, surgical and radiation oncology, nuclear medicine, PET CT imaging and a bone marrow transplant unit.

The installed capacity is 110 beds, supported by two advanced radiation systems including one MR LINAC and one Tomo, five operating theatres, one PET CT and 18 full time oncologists. This expansion fits HCG’s stated priorities of clinical outcomes and growth, while also reinforcing the technology differentiation described elsewhere in the deck.

Beyond this project, the company notes an additional brownfield expansion of 200 plus beds planned in the next 24 months across Bangalore, Cuttack, Ranchi, Vizag and Bhavnagar. It is also evaluating an alternate location for the Whitefield hospital project, citing leadership position in Bangalore and market attractiveness.

What stands out for investors

HCG’s FY26 presentation is about disciplined execution rather than a single surprise. Growth remained volume led, with ARPP improvement providing a steady tailwind. Profitability improved as utilisation rose, and the centre maturity framework explains how margins and ROCE can keep compounding if the INR 50 to 100 Mn cohort continues to move up.

The balance sheet shift is the other key theme. Net debt excluding leases nearly halved, and leverage moved below one times EBITDA on a pre Ind AS basis after the rights issue. This creates room for planned brownfield expansion without forcing a return to high leverage.

Finally, the Milann divestment and the launch of the North Bangalore facility show strategic clarity. One simplifies the portfolio and capital allocation, the other strengthens the core oncology platform with advanced technology and new capacity in a key market.

The near term watch items are clear from management’s own commentary: sustaining West cluster volume momentum while improving utilisation, stabilising East cluster case mix in Kolkata with the new doctor team, and executing on brownfield bed additions while keeping cash conversion strong. If these pieces hold, HCG’s FY26 pattern of growth plus deleveraging can continue into FY27 with better quality of earnings and higher returns on capital.