Rainbow Hospitals Set to Expand with Four New Facilities, Adding 270 Beds in H2 of FY24

Rainbow Children’s Hospital, recognized as the largest pediatric and maternity hospital chain in India, is embarking on a significant capacity expansion in the second half of FY24. The plan includes the launch of four new hospitals, adding a total of 270 beds across Hyderabad, Bengaluru, and Chennai.

The first of these hospitals, equipped with 60 beds, is set to open in Central Hyderabad this month, followed by a 50-bed facility in Hydernagar by the end of 2023. Subsequently, Rainbow Hospitals plans to introduce two spoke hospitals, each with a capacity of 80 beds, in Anna Nagar, Chennai, and Sarjapur, Bengaluru, slated to become operational in the first quarter of 2024.

Rainbow Children’s Hospital currently boasts a capacity of 1,655 beds, with 1,290 beds currently operational. The expansion aligns with the company’s strategy to add 1,000 beds over four years, including two greenfield hospitals in Gurgaon with 400 beds, expected to be ready by FY27 at a capex of ₹550 crore.

Funding for the expansion will be sourced from internal accruals, according to Ramesh Kancharla, Chairman and Managing Director of Rainbow. The company also remains open to potential acquisitions of children’s hospitals in the West and Northeast regions, with ongoing evaluations of a couple of assets.

Kancharla emphasized the robust financial position of the company, citing a net cash position of ₹472 crore as of September 30. He expressed confidence in completing planned capital expenditures through internal accruals, without resorting to debt financing, given the current and anticipated cash flow generation.

The cost per bed varies, with greenfield projects involving land ownership and construction amounting to over ₹1 crore per bed, while an asset-light model, which includes leasing real estate, ranges from ₹50-70 lakh per bed.

Rainbow Hospitals follows a hub-and-spoke model, with the hub offering specialized facilities, complex surgeries, and cancer care. The expansion aims to strengthen this model in cities where Rainbow already holds a dominant market share in pediatric and maternity care.