Medicover India turn profitable 18 months
Medicover India, after a €1.2bn buyout by KKR, plans to make all 25 hospitals profitable within 18 months and lift its EBITDA margin to over 20%.
Medicover India expects all 25 of its hospitals to become profitable within 18 months, after KKR bought its India business for €1.2bn ($1.4-$1.5bn). The private-equity deal, announced earlier this month, is one of the largest in India’s hospital sector and includes funding that will also help repay debt and allow shareholders to exit.
Acquisition Details
KKR agreed to acquire 100% of Medicover India from Swedish group Medicover AB and other shareholders. The transaction is subject to regulatory approvals. The investment provides capital that the company can use to expand and upgrade its infrastructure.
Profitability Outlook
P Hari Krishna, executive director of Medicover Hospitals India, told the Economic Times that 19 of the 25 hospitals are already profitable. The remaining six are at various stages of ramp-up. Newer facilities typically take 12-18 months to break even. Some of the recently opened hospitals have already turned profitable, while others are still weighing on consolidated margins.
Medicover India’s current EBITDA margin is about 14%. Krishna said the margin should rise to 20-25% once occupancy reaches around 3,000 beds, compared with the current 2,500-2,600 occupied beds. The improvement will come as newer hospitals mature, turn profitable, and the company gains greater utilisation of its existing infrastructure.
| Metric | Current | Expected |
|---|---|---|
| EBITDA margin | 14% | 20-25% |
| Occupied beds | 2,500-2,600 | 3,000 |
| Total hospitals | 25 | 25 |
| Profitable hospitals | 19 | 19 |
| Unprofitable hospitals | 6 | 6 |
Expansion and Operational Plans
The chain plans to operationalise another 1,200 beds over the next 12-24 months from its existing 6,000-bed capacity. Currently, 4,800 beds are operational, and the company expects that out of the 6,000 beds it will operationalise in the next two years, about 5,000 will be chargeable.
The immediate focus will be scaling up the existing network rather than pursuing a major new-hospital expansion. KKR-backed funding will be used to add beds, upgrade equipment, and enhance infrastructure at current sites. For more details on the company’s performance, see the stats page.
Operational Focus and Relocation
Krishna said the ownership change is not expected to materially alter day-to-day operations. The hospital names will change after regulatory approvals. The company is also evaluating the relocation of five hospitals from high-rent locations to sites where it could own the land or secure lower rentals, aiming to improve profitability.
The company initially planned to tap the financial markets, but Krishna said bringing in a private-equity partner would provide more capital than an IPO could generate, allowing the company to fund its expansion and infrastructure needs more adequately. The expansion plans are outlined in the squad section.
The Economic Times reports that the acquisition and the subsequent funding will help Medicover India achieve its profitability targets and strengthen its position in the private healthcare market.
