Coronavirus pandemic leaves private healthcare sector in financial distress

With strict lockdown measures being imposed to contain the outbreak of COVID 19, hospitals are witnessing a drop in both domestic and international patient footfalls and elective surgeries. This has resulted in a fall in occupancy levels to a mere 40% and footfall reduced to 80% by late-March.

The aggregate quarterly revenue of healthcare sector is estimated to to be Rs 59,000 crore in normal and general conditions. Annual revenue for the private healthcare sector is estimated at Rs 2.4L crore, EBITDA is estimated at Rs 31K crore (13%) and PAT is estimated at Rs 7K crore (3%). The sector's median returns on capital employed is ~7% which is lower than cost of capital of 14%.

Operating losses are estimated to the tune of Rs 4,500 crore for a month and Rs 13,400 crore for a quarter if revenues are at 50% (occupancy of 35%). Losses are estimated to the tune of Rs 7,300 crore for a month and Rs 21,900 crore for a quarter if revenues are at 30% (occupancy of 20%).

Due to lockdown in the covid-19 crisis, tertiary hospitals are estimated to incur losses of around 14000 cr on quarterly basis. Per day loss of aggregate tertiary hospital is estimated at Rs 5,000 to 8,000.

Under the lockdown, the secondary segment of hospitals, which plays a significant role in overall healthcare sector, is estimated to go through a loss between Rs 4,800 - Rs 8,000 Cr in a quarter, and also a loss of around Rs 2,500 on earnings per occupied bed per day.

If there's an 80% fall in patient visits and revenue, short term operating losses for the diagnostic sector will be to the tune of Rs 200-800 crore for a month and Rs 600- 2,200 crore for a quarter (assuming 50-80% decline in revenue).

It is estimated that FY21 performance for the sector will be muted with revenue lower by 20-35% and negative EBITDA. Occupancy to gradually ramp-up from 30 - 35% in Q1 to 60 - 65% in Q4 FY21.