How will Narayana Hrudayalaya’s ₹2,203 Cr UK hospital chain acquisition benefit them?

Narayana Hrudayalaya Acquires UK’s Practice Plus Group for ₹2,203 Cr; How Will This UK Expansion Boost Growth

Synopsis: Narayana Hrudalaya is in focus after it acquired Practice Plus Group hospitals for Rs 2,203 crore, making its way into the UK market. With this acquisition, it is supported by the NHS-backed revenue stream, can enjoy state-of-the-art medical facilities, and take advantage of highly trained personnel

The shares of this leading healthcare services provider are in focus after annoucing a recent expansion to the UK by acquiring the fifth largest healthcare provider in that region. In this article, we will dive more into the details.

With a market capitalization of Rs 36,070 crore, the shares of Narayana Hrudayalaya Ltd made a day high of Rs 1813.50 per share, up by 1 percent from its previous day closing price of Rs 1792.95 per share. Over the past five years, the stock has delivered a robust return of 415 percent, outperforming NIFTY 50’s return of 122 percent.

About the Acquisition

Narayana​‍​‌‍​‍‌​‍​‌‍​‍‌ Hrudayalaya Limited announced that its fully owned subsidiary, Health City Cayman Islands Limited, through its UK arm, Narayana Hrudayalaya UK Ltd, has purchased 100 percent of the equity of Practice Plus Group Hospitals Limited, a healthcare company based in the United Kingdom. The overall transaction value is GBP 188.78 million (Rs 2,203 crore), and the acquisition will be finalized within six business days, subject to the usual closing conditions.

Practice Plus Group Hospitals Limited operates 7 hospitals, 3 surgical centers, 2 urgent treatment centers, 3 diagnostic centers, and 1 ophthalmology center spread across the UK, with a total of 330 beds and around 2,500 staff (of which nearly 1,300 are doctors and clinical staff). The company made a turnover of GBP 229 million (Rs 2,672 crore) in FY24 and is projected to make GBP 250 million (Rs 2,918 crore) in FY25.

Practice Plus Group is the fifth largest private healthcare network in the UK. The healthcare major is owned by Bridgepoint, which is one of the leading private investors with over $86 billion in assets under management. 

The​‍​‌‍​‍‌​‍​‌‍​‍‌ NHS (National Health Service) is the state-funded medical care system that is operated by the government in the United Kingdom. It offers medically necessary services either free of charge or at a very low cost to all those who live in the UK. 

The NHS often partners with private healthcare companies like Practice Plus Group to handle extra patient load or specialized treatments. So, while the NHS pays for the treatment, the actual medical services are provided by private hospitals under contract.

As of the latest details available, Practice Plutus Group derives a major 93 percent chunk of its revenue from the NHS, and the remaining 7 percent is derived from private pay services. On a volume basis, the NHS contributed to 99 percent of the total volume, and the rest by private pay.

Its​‍​‌‍​‍‌​‍​‌‍​‍‌ therapy mix is largely weighted with the support of Orthopedic services that account for 45 percent of the whole. After that, the two biggest parts are from the Outpatient Department (OPD) services, which make 13 percent, and Ophthalmology, which makes 12 percent. The leftover mix consists of the different smaller service areas, such as Diagnostics (6 percent), Urgent Treatment Center (UTC) (5 percent), Endoscopy (5 percent), General Surgery (5 percent), Oral Surgery (4 percent), and Others ​‍​‌‍​‍‌​‍​‌‍​‍‌(6 percent).

Narayana​‍​‌‍​‍‌​‍​‌‍​‍‌ Hrudayalaya’s UK expansion is a significant strategic step as it offers the healthcare major a firm base in one of the most globally advanced healthcare markets. With the acquisition of Practice Plus Group Hospitals, it can enjoy a flow of NHS-backed revenues, state-of-the-art infrastructure, and a qualified medical workforce. 

So, besides spreading its global footprint outside India, it is also giving itself a safety net in the form of a steady, recurring revenue stream from government-funded healthcare services—thus increasing its growth potential and profitability over ​‍​‌‍​‍‌​‍​‌‍​‍‌time.

Written by Satyajeet Mukherjee

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