Healthcare Sector Faces Slowdown Amid Seasonal Disruptions in Q4FY25

The healthcare sector anticipates a 17.2% YoY growth in EBITDA for Q4FY25, driven by hospital and diagnostics growth, despite challenges. Seasonal events and low patient footfall have hindered performance, raising concerns over future earnings projections as companies grapple with a less than typical Q4 performance.

The healthcare sector in the country is poised for a 17.2% year-on-year (YoY) growth in EBITDA for the fourth quarter of FY25, according to a report by Nuvama. This growth is attributed to an 18.1% rise in hospital revenue and a 9.4% increase in the diagnostics segment. Despite these figures, the report highlights that the overall performance of healthcare companies in Q4FY25 has been lackluster due to a softer-than-usual season.

Nuvama's report emphasizes that a 17.2% YoY growth in the healthcare sector's Q4FY25 EBITDA is expected. This growth is largely supported by hospitals, which anticipate an 18.1% rise, and diagnostics, expecting a 9.4% increase. Historically, the fourth quarter outshines the third, but various challenges have impacted earnings this time.

The report identifies low patient footfall as a concern, linked to a weak acute season and disruptions from festivals like Mahakumbh, which led to postponements in diagnostic tests. These factors have suppressed demand for hospital and diagnostic services, with diagnostics revenue growth projected at just 12.6% YoY. This segment notably suffered from reduced footfall as public prioritization skewed towards travel and festivities over health concerns.

Seasonal disruptions have diminished the urgency for medical testing, resulting in subdued performance across the sector. Hospitals typically perform well in the fourth quarter, yet they too face slower growth this period.

Hospitals under Nuvama's analysis are likely to report a 12% YoY revenue growth and a 14% YoY EBITDA increase, largely driven by volume yet indicative of a sluggish demand environment. With Q4 falling short of expectations, the report cautions of potential earnings reductions for FY25 across the healthcare sector.

The report suggests that seasonal disruptions have interrupted the usual growth momentum, posing difficulties for companies striving to meet previous earnings forecasts. While growth persists, the outlook remains cautious, urging analysts to monitor how subsequent quarters perform as seasonal trends stabilize and patient footfall improves. (ANI)

(With inputs from agencies.)