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Fortis Healthcare posts Rs 187.88 crore net loss for June quarter due to COVID-19, plans to rebrand as ‘Parkway’

Despite the constrained environment, the company has been able to successfully manage its liquidity position by extending its cost rationalisation initiatives.

Fortis Healthcare on Friday reported a consolidated net loss of Rs 187.88 crore for the quarter ended June 30, owing to the impact of COVID-19 pandemic. The company had posted a net profit of Rs 78.01 crore for the corresponding period of the previous fiscal, Fortis Healthcare said in a filing to the BSE. Its consolidated income from operations stood at Rs 605.95 crore for the quarter under consideration. It was Rs 1,138.31 crore for the corresponding period a year ago, it added.

“The results in the quarter reflect the impact of the COVID-19 pandemic that began in February and the subsequent nationwide lockdown that was witnessed,” Fortis Healthcare said.  With the gradual opening up of the economy in May, the business momentum improved and saw initial signs of gradual uptick in progressive months, it added.

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“However, given the increase in cases across the country, the international travel restrictions still in force, the limited period lockdowns in select states and the ongoing regulatory uncertainty; the company continues to face challenges resulting in the pace of recovery being slower than expected,” the filing said.

It said that for the hospital business, both OPD (out-patient department) and IPD (inpatient department) volumes have shown a month-on-month improvement resulting in a gradual recovery of non-coronavirus patient flow in the company’s facilities. While encouraging, majority patients are still choosing to further postpone elective surgeries, it added.

“The overall diagnostic business revenues reached 80 per cent and 86 per cent of pre-COVID-19 revenues in June’20 and July’20, respectively. COVID-19 test volumes continue to witness a robust increase and contributed approximately 29 per cent to overall diagnostic revenues in the quarter,” Fortis Healthcare said.

Despite the constrained environment, the company has been able to successfully manage its liquidity position by extending its cost rationalisation initiatives including voluntary salary reductions, lower administrative and sales and marketing costs and undertaking only necessary capex allocation, it added.

Hospital occupancy for the first quarter of the current financial year was at 37 per cent versus 66 per cent in the quarter one of FY20, the filing said. Hospital business revenues stood at Rs 488.3 crore for the quarter ended June this year as against Rs 913 crore in the same period year ago. Diagnostic business revenues were at Rs 140.4 crore for the Q1 of FY21 as against Rs 258.4 crore for the corresponding quarter of the previous fiscal year, it added.

“The quarter has expectedly witnessed a muted performance though initial signs of green shoots in the business are being witnessed. I believe this is a temporary situation and Fortis has done well to navigate successfully the current environment,” Fortis Healthcare Board of Directors Chairman Ravi Rajagopal said.

Fortis Healthcare MD and CEO Ashutosh Raghuvanshi said the quarter has seen a host of challenges both in terms of business and regulations.

“Despite this, we have been able to ensure the sustainability of our business by adapting measures in terms of significant cost rationalisation and making sure that our liquidity position remains comfortable,” he added.

In a separate filing, Fortis Healthcare said its board has given an in-principle approval for the change in the name and branding of the company and its subsidiaries.

As part of its commercial strategy, the company intends to, going forward, obtain a licence to use the brand ‘Parkway’ as the corporate name, brand and logo of the company and all its subsidiaries in relation to the hospital business, it added.

Separately, SRL Ltd would seek to develop a new neutral brand name, brand and logo, unrelated to the IHH Group and the Fortis brand, for use in the diagnostics business, Fortis Healthcare said. When asked about details of the new brand licence agreement it intends to enter into, Raghuvanshi told PTI, “Terms of agreement will be discussed, as all this is subject to the approval of the Supreme Court and the requisite authority. So, we will be discussing with IHH to determine what kind of agreement has to be made. However it will be an arm’s length kind of agreement.”

The company’s board has also approved the appointment of Takeshi Saito as an additional director (non-executive) of the company with effect from September 1, 2020, the filing said. Shares of Fortis Healthcare on Friday closed at Rs 135.80 per scrip on the BSE, up 2.41 per cent from its previous close.

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