On November 24, Fortis Healthcare Limited, an integrated healthcare delivery service provider, stated that it has inked formal agreements to sell Fortis Malar Hospital in Chennai to MGM Healthcare Private Limited for about Rs 128 crore.
The agreement is “for a sale consideration of approx. INR 1,28,00,25,000 (Rupees One hundred and twenty-eight crores and twenty-five thousand) (subject to customary closing adjustments as agreed in definitive agreements),” Fortis Healthcare said in an exchange filing.
The transaction involves the sale of the commercial activities, as well as the land and building assets, of Fortis Malar Hospital, which is located in Gandhi Nagar, Adyar Chennai.
The transaction will be all-cash and is expected to close by the end of January 2024, subject to certain conditions precedent and closing conditions as specified in the definitive agreements, including shareholder approvals from both Fortis Healthcare and Fortis Malar Hospitals Limited, according to the press release.
It went on to say that the disposal is part of Fortis’ continuing portfolio reduction plan to concentrate on expanding its footprint in key geographic clusters where it has a significant presence.
The Fortis Malar Hospital is approx. a 140-bed facility and has been facing certain legacy issues. “The proposed divestment of the Fortis Malar facility underpins our focus on optimizing the current portfolio of our hospital assets to prioritize our growth and expansion in other key markets and re-allocate capital judiciously,” said Dr. Ashutosh Raghuvanshi, Managing Director & CEO, Fortis Healthcare Limited in the press statement.
“This is our second underperforming asset divestment in the last 2 quarters and emphasizes our resolve to improve our overall profitability and margins in the hospital segment,” he added.
The transaction includes the divestment of the Company’s listed subsidiary, Fortis Malar Hospitals Limited, in which Fortis Healthcare owns a 62.7 percent equity stake, as well as its OPD and radiology business operations related to the Fortis Malar Hospital (including the land and building on which Fortis Malar Hospital is located) and multiple related land parcels adjacent to the property.
MGM Healthcare Private Limited is one of South India’s fastest expanding quaternary care providers, offering sophisticated healthcare services. It runs two quaternary care hospitals with a total bed capacity of 600 beds in Tamil Nadu’s Pondicherry area, as well as one additional greenfield hospital under development.
Previously, Fortis Healthcare Ltd recorded a 15.7 percent year-on-year (YoY) drop in net profit for the July-September quarter, totaling Rs 183.9 crore. At the same time last year, Fortis made a net profit of Rs 218.2 crore. The hospital operator recorded revenue of Rs 1,770 crore, a 10% increase from Rs 1,607 crore the previous year.
