Health of healthcare industry hit in Q1; hospitals, diagnostics take massive blow on sales, profit

While the coronavirus pandemic worsened the health of almost all the economic sectors, the healthcare industry too was not immune from the disruptions. Even being the most essential industry and one of the few businesses operating during the lockdown, its sales and profit were severely hit. Sales of hospitals and other healthcare services companies fell sharply by 28 per cent on-year and their profit fell by 7.7 per cent in the first quarter of FY21, said a report by Care Ratings. Lower footfalls due to domestic and international travel restrictions affected the performance of the industry.

While the healthcare industry faced some challenges in the initial phase of lockdown due to restricted movement of healthcare workers, supplies of medical equipment, and transport of drugs, etc, primary importance was given to the treatment of Covid-19 patients. Consequently, the government had encouraged the suspension of routine services and non-emergency services by hospitals so as to prioritise the treatment of Covid-19 patients and to ensure social distancing norms to prevent infection of the virus.

In addition to it, some hospitals had also suspended the outpatient departments (OPD), which further led to the decrease in footfalls and thus the operations of the healthcare industry dealing with non Covid-19 patients were impacted. It is to be noted that  the industry’s sales had grown in double-digits in each of the quarters in FY20 except for Q4FY20 and the industry had reported profits at the net level in each of the quarters during FY20.

Meanwhile, the Average Revenue per Occupied Bed (ARPOB) for the top 5 players in the industry fell 4.3 per cent on-year to Rs 31,910 during Q1. Lower patient visits not only impacted the hospitals segment but also the diagnostics and testing segments of the industry, as the healthcare industry comprises hospitals, pharmaceuticals, diagnostics, medical equipment and supplies, medical insurance, and telemedicine.

While operations of the healthcare industry are estimated to return to normal levels only from Q3 FY21 onwards, operations may not revive to the pre-Covid level rates in the current quarter for all the players, Care ratings added. Also, while Covid treatments and testing continue to be a part of the business for the healthcare industry, getting back to non-Covid business remains the focus point of the industry.