KIMS Hospitals FY26: Rapid Expansion Lifts Revenue, But New Units Pull Margins Down

Krishna Institute of Medical Sciences Limited reported a strong FY26 on revenue growth, but profitability came under pressure as the company scaled aggressively across multiple states. For FY26, consolidated total revenue rose to INR 3,930.8 crore, up 28.2% year on year. EBITDA increased marginally to INR 828.2 crore, up 1.6%, while EBITDA margin fell to 21.1% from 26.6% in FY25. PAT declined sharply to INR 242.0 crore versus INR 414.8 crore in FY25.

Management framed FY26 as a year of expansions. The operating metrics continued to improve despite margin compression. In FY26, in-patient volumes reached 246,297 and out-patient volumes reached 2,300,360. ARPOB increased to INR 44,644 and ARPP rose to INR 159,575, reflecting higher pricing and mix even as the company added newer hospitals that were still ramping up.

What changed in FY26: scale came first, margins came later

The investor deck and the earnings call pointed to the same driver behind weaker profitability: a heavy mix of new hospitals and transitions, which carry upfront costs and take time to reach steady utilisation. Management explicitly stated that mature hospitals continued to operate at roughly 30% EBITDA margins, but newly commissioned units created a meaningful drag.

In Q4 FY26, management quantified this impact clearly. Out of quarterly revenue of about INR 1,085 crore, mature units contributed about INR 862 crore and newer units about INR 224 crore. On EBITDA, the mature units generated about INR 250 crore, while newer units caused an EBITDA erosion of about INR 32 crore.

This pattern also appears in the state-level tables in the presentation. Telangana and Andhra Pradesh remained profitable, while newer geographies were still loss-making. Karnataka reported negative EBITDA in FY26, and Maharashtra reported a small negative EBITDA in FY26 despite improving occupancy.

Financial summary (consolidated)

Cluster performance: Telangana drives profits, new markets building scale

KIMS remains heavily anchored in Telangana and Andhra Pradesh. In FY26, Telangana contributed 57.0% of group revenue and 82.4% of group EBITDA, while Andhra Pradesh contributed 24.2% of revenue and 28.2% of EBITDA. Maharashtra contributed 11.8% of revenue but had a small negative EBITDA contribution. Kerala and Karnataka contributed 4.4% and 2.6% of revenue respectively, with Karnataka still loss-making.

Operationally, mature clusters continued to show higher monetisation. In FY26, Telangana ARPOB was INR 69,450 and ARPP was INR 242,340, materially higher than Andhra Pradesh where ARPOB was INR 25,595 and ARPP was INR 92,766. Management also indicated that in Bengaluru, ARPOB can be modelled at around INR 75,000 as a base due to changes in length of stay and case mix.

The Q4 call provided additional unit-level colour for newer hospitals. For Q4 FY26, Mahadevapura (Bengaluru) revenue was INR 49 crore, PES or Electronic City revenue was INR 17 crore, and Thane revenue was INR 47 crore. Losses were stated at INR 14 crore for Mahadevapura, INR 25 crore for Electronic City, INR 5 crore for Thane and INR 1 crore for Nashik.

Expansion, Kondapur transition, and the QIP plan

A major operational event for FY27 is the shift of Kondapur into a new 800-bed facility. Management stated the transition would begin in the first week of June, and the old hospital would be shut down after the transition, potentially with 2 to 3 months of overlap. Management also indicated that an additional INR 50 to 75 crore of capex may be incurred in FY28 or FY29 to complete two additional floors, which are not required immediately.

On the balance sheet, management discussed a planned INR 1,500 crore QIP. The rationale was to reduce debt, which management stated had reached close to INR 3,000+ crore, and move toward a healthier net debt to EBITDA range of 1:2 versus about 1:3. Management later indicated about INR 1,000 crore could be used to retire debt, with the balance used for losses and additional capex in current facilities.

The call also highlighted a practical bottleneck affecting ramp-up of new hospitals: insurance empanelment delays. Management linked this to a new common empanelment initiative, creating uncertainty on whether empanelment is handled by GIC or individual insurers. They stated this has delayed ramp-ups in new hospitals compared to prior experience.

Operating metrics remain positive, with mix showing resilience

Despite margin pressure, FY26 showed meaningful operating momentum. In-patient volumes rose 15.4% year on year and out-patient volumes rose 25.4%. Group ARPOB increased 14.0% to INR 44,644, and ARPP increased 11.4% to INR 159,575.

The FY26 revenue mix underscores diversification within clinical services. Specialty mix for FY26 included cardiac sciences at 17%, neuro sciences at 11%, orthopaedics at 13%, mother and child at 10%, and renal sciences at 9%, among others. Payor mix was skewed toward cash at 53%, followed by insurance at 30%, corporate at 12%, and Aarogyasri at 5%.

Takeaways for investors

KIMS delivered a high-growth FY26 in revenue and operating volumes, but the year also exposed the near-term profitability cost of rapid expansion. Management has been explicit that mature hospitals continue to operate at strong margins, while new units are still loss-making but ramping. FY27 will likely be shaped by three execution variables discussed in the call: the pace of insurance empanelments for newer units, the Kondapur transition, and the speed of losses narrowing in Bengaluru and other new hospitals.

The planned QIP is positioned as a balance sheet reset to reduce leverage and create room for future greenfield expansion. The company’s ability to convert new capacity into steady occupancy and margins will determine how quickly consolidated profitability normalises.