Narayana Hrudayalaya Ltd Management Discussions

Reimagining Access, Affordability, and Accountability in Indian Healthcare

The Evolving Economics of Healthcare in India

As one of the worlds largest and most populous nations, with approximately 1.4 billion people (18% of the global population), Indias health outcomes have far-reaching implications for both national and global health indicators. India is now entering a decisive execution phase in its healthcare evolution, transitioning from historical underinvestment toward more structured and sustained expansion.

However, at approximately _1.06 lakh crore allocation for healthcare, around 2% of the Union Budget for FY27 it continues to trail global benchmarks. This structural gap is not merely a constraint; it represents a significant opportunity for scalable, cost-efficient private sector models to complement public provisioning through innovative financing and delivery mechanisms.

At the same time, India stands at a pivotal moment in its journey toward universal health coverage, a cornerstone of the Viksit Bharat 2047 vision. Backed by strong political intent and sustained economic growth, the current environment presents a time-bound opportunity to accelerate systemic reforms and unlock significant unmet healthcare demand, particularly across the underinsured and middle-income segments. This evolving landscape is expected to expand the role of integrated, cost-efficient private healthcare platforms that can bridge the gap between affordability and access.

Source: https://www.indiabudget.gov.in

From Fragmentation to a Layered Coverage Architecture

Indias healthcare financing framework is increasingly taking the shape of a layered, pragmatic ecosystem one that reflects both economic realities and demographic diversity.

• Affluent and organized-sector populations are well penetrated by employer-led and private insurance arrangements.

• Economically vulnerable groups are progressively protected by government-sponsored health assurance programs that are increasing both in scale and scope.

• The underserved middle income segment, however, remains exposed often earning too much to qualify for state support, yet lacking adequate risk protection against healthcare shocks.

This "missing middle" continues to bear a disproportionate share of healthcare costs through direct out-of-pocket expenditure, limiting timely care and exacerbating financial stress. Bridging this gap is essential to unlocking true healthcare inclusion. This gap persists despite nearly four decades of voluntary health insurance, which, as of 2023–24, covers only 312 million people (21.5% of the population), with coverage largely concentrated among employer-linked beneficiaries, underscoring the need for targeted interventions to achieve inclusive financial protection. Source: The Lancet Commission report, 2026

Aditi: Converting Insurance from a Barrier into an Enabler

During FY26, Narayana Health continued to scale Narayana Aditi, our purpose-built health insurance product for the missing middle. Designed around simplicity, predictability, and affordability, Aditi challenges the traditional insurance paradigm by tightly integrating clinical care delivery with financial protection.

With a modest monthly premium structure and high coverage limits for families, Aditi is not positioned as a transactional insurance offering-but as a long-term healthcare partnership. As adoption expands, we see Aditi playing a pivotal role in reshaping how Indian families engage with preventive care, elective procedures, and long-term health planning.

Insurance Growth Meets a Trust Deficit

Indias health insurance segment maintained strong momentum in FY26, reporting ~15% year on year growth to reach a record gross written premium of _1.37 lakh crore. The expansion was primarily driven by strong traction in retail health policies following the GST rate reduction implemented in late FY25, alongside robust renewal performance, with persistency levels reaching all time highs during the year.

Source: https://www.financialexpress.com

Yet this growth co-exists with persistent skepticism. Policyholders frequently encounter opaque exclusions, inconsistent care pathways, and unexpected expenses leading to a trust deficit that restricts deeper penetration.

At Narayana Health, we believe this trust gap can only be addressed by re-engineering incentives not by incremental fixes. Our response has been to tightly align medical decision-making, cost structures, and patient outcomes within a single, accountable ecosystem.

Underwriting is a core component of our health insurance operations, underpinning effective risk assessment and long-term sustainability. For retail indemnity products, including Narayana Aditi, Arya Health Insurance and individually underwritten group affinity offerings, at Narayan health we follow a structured medical and lifestyle underwriting framework based on declared information, questionnaires and medical examinations, where applicable. This approach enables informed risk evaluation and appropriate structuring of policy terms while supporting prudent and responsible expansion of health insurance coverage.

Embedding Clinical Accountability at Scale

In India, an estimated 1.6 million deaths annually are attributed to poor quality of care, exceeding those caused by lack of access, highlighting the critical importance of clinical governance and standardisation.

Source: The Lancet Commission report, 2026

Our integrated care model places clinical governance at its core. During FY26, we further strengthened enterprise-wide mechanisms to ensure consistency, transparency, and evidence-based decision-making:

• Institutionalized peer reviews and second opinions for complex interventions

• Continuous monitoring of procedure appropriateness and outcome variance

• Rigorous compliance with standardized clinical protocols By anchoring care in data, outcomes, and ethical clarity, we aim to eliminate unnecessary variability protecting both patients and the system from avoidable costs.

Global Diversification and Domestic Capacity Expansion

As part of our long-term growth strategy, Narayana Health expanded its global footprint with the acquisition of UK based Practice Plus Group Hospitals in FY26. Practice Plus Group, the fifth largest private hospital group in the UK, operates 12 hospitals and surgical centres and performs approximately 80,000 surgeries annually across specialties such as orthopaedics, ophthalmology and general surgery. This strategic investment reflects a measured approach to geographic diversification, enabling the Company to access a stable, mature healthcare market while mitigating concentration risk and enhancing revenue resilience. It also provides exposure to differentiated operating environments and payer systems. In India, the Companys expansion continues to be guided by a disciplined capacity creation agenda aligned with strategic intent. All previously committed projects are progressing as planned, supporting the scaled augmentation of infrastructure in line with demand growth and network optimisation priorities. We continue to view physical infrastructure as an outcome of strategy, not its driver. Each expansion decision is evaluated through the lens of clinical capability, digital integration, and ecosystem synergies.

Technology as Core Infrastructure

Technology continued to be the defining backbone of Narayana Healths operating model in FY26.

Our digital platforms Athma and Medha advanced from efficiency tools into strategic assets. Athma further unified clinical, administrative, and patient engagement workflows, increasing self-service adoption and reducing friction across touchpoints. Patient-led digital engagement now constitutes a majority of outpatient interactions.

Clinical productivity gains accelerated through:

• OPD Digitalisation

• Automation of documentation and discharge workflows

• Upgradation of the ATHMA website and launch of a SaaS-based patient portal

• Launch of the One Health Plan Manager

• Mobile-first tools for doctors and nurses

Collectively, these initiatives demonstrate Narayana Healths continued commitment to digital excellence and scalability, while delivering measurable improvements in turnaround times, workforce utilisation, and consistency of patient care across the network.

Medhas expanding analytics capabilities are enabling more personalized care pathways, predictive risk identification, and continuous outcome feedback laying the groundwork for true value-based healthcare.

AI-Led Intelligence Transformation

During FY26, Narayana Health advanced its AI strategy through a structured intelligence maturity framework spanning foundational, actionable, and agentic intelligence, with a unified data layer enabling a single source of truth across operations. Building on this, targeted use cases such as revenue leakage, clinical care gaps, and cash optimization were embedded into workflows and tracked for ROI. We have deployed 40+ bots across patients, clinicians, payors, and back-office functions, with patient-facing solutions managing over 35,000 daily interactions and clinical AI tools enhancing diagnosis and documentation (including ECG AI and AI scribe with 2.5 lakh documents completed). Agentic systems are increasingly enabling automated monitoring and decision support across demand planning, clinical workflows, and discharge processes. This disciplined, outcome-driven approach has delivered tangible impact, including savings of over 100,000 clinical hours, ~40% reduction in inventory days, and cost efficiencies through automation of medical coding and administrative processes, while also advancing scalable, non-invasive screening solutions for early disease detection.

Outlook

Indias healthcare transformation is no longer a question of intent but of execution at scale. As demand rises and complexity deepens, the system will increasingly reward models that combine affordability with accountability.

Narayana Health enters FY27 with a clear strategic conviction: the future belongs to integrated platforms that align incentives across prevention, care delivery, and financing. By embedding trust, technology, and transparency into every layer of care, we aim not just to participate in Indias healthcare evolution, but to help shape it.

Our focus remains steadfast delivering clinically excellent, financially accessible, and deeply human healthcare to every family we serve.

NH Consol P&L Review

Financial Performance Overview

The discussions in this section relate to the consolidated, Rupee-denominated financial results pertaining to the year that ended March 31, 2026. The financial statements of Narayana Hrudayalaya Limited and its subsidiaries (collectively referred to as ‘NH) are prepared in accordance with the Indian Accounting Standards (referred to as Ind AS) prescribed under Section 133 of the Companies Act, 2013, read with the Companies (Indian Accounting Standards) Rules, as amended from time to time. Significant accounting policies used in the preparation of the financial statements are disclosed in the notes to the consolidated financial statements. The following table gives an overview of the consolidated financial results (excluding NH UK and PPG, UK) of the Company: (NH Group) (‘in Rs million)

Particulars	FY 2025-26	FY 2024-25	Growth %
Revenue from Operations	65,968	54,830	20%
EBITDA**	16,657	13,684	22%
EBITDA (% Of Revenue)	25.3%	25.0%
PBT Before Exceptional item**	11,266	9,355
PBT (% of Revenue)	17.1%	17.1%
PBT after Exceptional item**	10,756	9,355	8.2%
PBT (% of Revenue)	16.3%	17.1%
TAX	1,675	1,457
PAT (Without UK)**	9,081	7,898	6.9%
PAT (Without UK) (% of Revenue)	13.8%	14.4%
PAT Including UK**	8,743	7,898
PAT Including UK (% of Revenue)	13.3%	14.4%

** One time UK Acquisition cost added back into EBIDTA.

Analysis of Consolidated revenue growth and margin performance

NH Consolidated Operating revenue grew 20% YoY without Practice Plus Group Hospitals, UK (PPG UK) revenue and with PPG UK revenue grew by 44% (H 78,960 million) reflecting strong operational performance. The Company has maintained its growth movement in domestic as well as Cayman hospital business.

Consolidated EBITDA grew by 0.3%, increasing from FY25 at 25% to FY26 at 25.3% (excluding PPG UK) and Excluding PPG Acquisition Cost. EBITDA for India operations stood at 21.3% and PPG UK reported EBITDA at 9.8%. The Company maintained stable margins during the year, reflecting consistent operational efficiency and disciplined cost management.

Finance Cost rose sharply by 60 % from H 1,464.08 million to H 2,437.40 million driven by new borrowings for capacity expansion impacting the PBT and PAT.

The effective tax rate (including PPG UK) increased from 15.6% in FY25 to 16.3% in FY26.

NH India Hospitals

During the year under review, the India Hospital business recorded income from operations.Rs 47,396 million in FY26 against Rs 43,051 million in the corresponding period last fiscal.

The following graphs and tables highlight the revenue mix and key drivers for the revenue of periods presented:

Revenue Mix for India Hospitals Operations:

Key Drivers of Revenue-NH India Hospitals:

Particulars	FY 2025-26	FY 2024-25	Growth %
ARPP IP (_000)	154.8	141.9	9.09%
ARPP OP (_000)	4.9	4.6	6.52%
ALOS	4.3	4.5	-4.44%
IP Footfall (000)	218	220	-0.9%
OP Footfall (000)	2517	2443	3.02%
NH India Hospitals Business Highlights:
Particulars	FY 2025-26	FY 2024-25	Growth %
Revenue from operations	47,396	43,051	10%
Other Income*	926	647	43%
Total Income	48,322	43,698	11%
Consumption of Pharma/consumables and Implants	10,951	9,974	10%
Employee Benefit Expenses & Professional fee to doctors	18,101	16,961	7%
Other operational and administrative Expenses	8,321	7,833	6%
EBITDA	10,949	8,930	23%
EBITDA MARGIN	23.1%	20.7%	11%

*Excludes Dividend Income

Analysis of NH India Hospitals revenue growth and margin performance

Particulars	Analysis
Operating Revenue	The India hospitals has reported a 10% year-over-year (YoY) increase in revenue, marking a significant milestone in its financial performance. This growth is primarily attributed to three key factors:
	1. Improved Payor Mix: The overall payor mix has shown a positive shift during the period, with a higher contribution from cash and general walk-in and Insurance segment patients. This improvement reflects stronger direct patient inflow, reduced dependency on institutional or credit-based payors, and enhanced revenue quality with quicker realizations.
	2. Enhanced Realisation Rates: There has been a notable improvement in realization rates, driven by a 9% increase in ARPIP (Average Revenue Per In-Patient) compared to the previous year. This growth has been supported by a favourable payor mix, including higher contributions from cash/general walk-in patients, insurance, and CGHS segments.
	3. Case mix: The case mix has evolved towards higher-value and more complex cases, leading to improved revenue per patient. A greater proportion of specialized procedures and treatments has contributed to better utilization of clinical capabilities and infrastructure, thereby enhancing overall profitability and operational efficiency.
	Together, these factors reflect the hospitals continued focus on financial sustainability, quality care delivery and strategic growth. The outlook remains positive as the institution builds on these gains through further innovation and operational excellence.
Consumption	Hospital consumption efficiency improved by 6 basis points (bps) year-over-year, reflecting enhanced cost control and resource optimization. This improvement is indicative of better inventory management, reduced wastage, and more efficient utilization of medical consumables.
	The gain underscores ongoing efforts to streamline operations and drive margin enhancement through disciplined consumption practices.
Employee Benefit expenses and Professional fees to Doctors	In FY26, Employee Benefits Expenses and Professional Fees to Doctors accounted for 38.2% of revenue, an improvement from 39.4% in FY25, despite an increase in absolute costs from Rs 16,961 million to Rs 18,101 million.
	This modest improvement in the cost ratio reflects operating leverage, with revenue growth outpacing the rise in Employee-related expenses.
	The increase in absolute costs was primarily driven by:
	Higher payouts to doctors, including continued investment in clinical talent.
	Annual appraisals and salary revisions aligned with market benchmarks and employee retention strategies.
	The improved ratio highlights the hospitals ability to manage workforce costs efficiently while continuing to invest in talent and incentivize performance.
Particulars	Analysis
Other operational and administrative Expenses	Hospital Other Operational and Administrative Expenses increased from Rs 7,833 million (18.2% of operating revenue) in FY25 to Rs 8,321 million (17.5%) in FY26. Despite the increase in absolute costs, the decline in cost as a percentage of revenue reflects improved operating leverage and continued cost discipline. Key contributors include:
	1. Marketing Cost:
	Reduced by Rs 129 million, driven by more focused and strategic campaign planning base, Improved targeting based on revenue achievements and prioritization of high- impact channels led to better utilization of marketing spend.
	2. Housekeeping Expenses:
	Rose from Rs 872.3 million (2.03%) to Rs 962.20 million (2.03%), primary driven by minimum wage increases across states.
	3. Rentals:
	Increased from Rs 1,040.30 million (2.4%) to Rs 1,175.60 million (2.5%) excluding the impact of IND AS 116, due to incremental revenue share arrangements and annual escalations.
	4. Repairs and Maintenance:
	Grew from Rs 1,571.9 million (3.65%) FY25 to Rs 1,697.92 million (3.59%) FY26, reflecting ongoing infrastructure upkeep. Though as a % of revenue it is reduced.
	5. Rates and Taxes
	Increase in Rates and taxes from Rs 43.02 million (0.1%) to _109.89 million (0.23%), due to MMRHL and NHIC Merger stamp duty fees _45 million and _8 million respectively.
	6. Printing & Stationary:
	Reduced from _198.95 million in FY25 (0.45%) to Rs 168.1 million in FY26 (0.35%), Primary due to various digital initiates taken by the Company.
	Despite an increase in absolute expenses in certain areas, the Company has demonstrated effective cost management by maintaining or reducing expenditure in other components.
	Overall, the hospital has successfully kept its cost ratios aligned with industry benchmarks, reflecting strong financial discipline, efficient cost governance, and a strategic approach to reinvestment in operations.
Other Income	Other Income recorded a 43% year-over-year growth, largely driven by returns from short-term investments and foreign exchange gains. This increase reflects enhanced treasury management and favourable market conditions, leading to improved yields on surplus funds invested in short- duration instruments.
EBITDA	The Company registered an EBITDA of Rs 10,949 million (23.1% of Revenue) in FY26 for its India business against Rs 8,930 million (20.7% of Revenue) in FY25, a growth of 23% YoY. We noticed growth momentum across all our hospitals.

NH Integrated Care

Narayana Healths_Integrated Care business_continued to build on the foundation laid in FY24. With 11 points of presence (clinics) across Bengaluru, the business has rapidly scaled operations since its inception in FY24.

Operating revenue grew_from _418 million in FY25 to _772 million in FY26, reflecting increasing patient adoption and service expansion. The Insurance vertical was launched in FY25. It has covered more than 1.2 Lacs lives as of March 2026. It is still in the early stages of its development.

The business reported a_burn of _673 million in FY26, reflecting continued investments in infrastructure, talent, and technology to support long-term scalability and integrated care delivery.

The Integrated Care model remains a strategic pillar for Narayana Health, aimed at delivering_accessible, preventive, and continuous care. The early success and rapid scale-up reinforce confidence in its potential to become a significant value driver in the years ahead.

Health City Cayman Islands

Health City Cayman Islands delivered a robust performance in FY26, with operating revenue growing by 53 %, from USD 139.9 million in FY25 to USD 213.9 million in FY26. This growth was primarily driven from HCCI Hospitals and Insurance company. HCCI Hospital has shown growth in revenue around 28% from 140 USD million in FY25 to 179 USD million in FY26. Notably, the Cayman operations sustained healthy overall operating margins. This performance highlights Health Citys strategic emphasis on geographic expansion and integrated care delivery, positioning it for continued growth and value creation across the Caribbean region.

Practice Plus Group, UK (PPG)

Practice Plus Group Hospitals Limited was acquired by Narayana in mid-November 2025. For the initial 4.5-month period post-acquisition, the hospital reported revenue of GBP 110 million and an EBITDA of GBP 10.7 million after eliminating one time acquisition cost of PPG, UK, EBITDA 9.8%. The Company remains highly optimistic about its future growth trajectory, with a strong focus on expanding its presence and enhancing both business performance and profitability in the UK region.

Expansion and Growth Strategy

Narayana Health has embarked on a significant capital expenditure program to enhance its healthcare delivery capabilities and build a robust foundation for future growth. An initial outlay of approx. _30,000 million has already been announced, with additional investments currently under consideration.

The current phase of expansion focuses on strengthening existing hubs with a substantial presence, including Bangalore, Kolkata, and Raipur. These investments are aligned with the organizations long-term vision and will enable Narayana Health to broaden its reach, making high-quality, affordable healthcare more accessible to a larger section of society.

This growth-oriented strategy reaffirms Narayana Healths commitment to innovation, scalability, and its mission to democratize healthcare across India.

Location	Type	No. of Beds	Project Cost (INR Mn)	Completion	Current Status
HSR, Bangalore	Greenfield	215	4,900	FY28	Main contractor onboarded; Project is progressing as per schedule.
Rajarhat, Kolkata	Greenfield	350	9,000	FY28	Sanctions in place, Project is progressing as per schedule.
Central Bangalore	Lease	220	1,600	FY28	Lease & Construction Agreement is executed, design and approvals are in process.
South Bangalore	Greenfield	350	8,000	FY29	Design and approvals are in process.
Raipur	Expansion	300	5,400	FY28	Main contractor on-boarded; Project is progressing as per schedule.
South-West Bangalore	Lease	100	840	FY27	Structural work completed, MEP and interior work in progress.

In summary, Narayana Health delivered a resilient financial performance in FY26, with consolidated operating revenue growing by 44% & EBITDA 25% (including PPG), maintaining a stable margin without PPG. While PAT has marginally improved in compared with FY25, primary due to increase in finance cost (due to new acquisition) and also exception cost of Labour code and PPG acquisition, the underlying business fundamentals remained strong and cash generation continues to remain healthy. The India Hospital business saw a 10% revenue increase, driven by an improved payor mix, enhanced realization, and steady patient volumes, alongside disciplined cost management that expanded EBITDA margins.

NH CONSOL Balance Sheet Review

	FY 2025-26	FY 2024-25
	NH India (INR million)	HCCI Consol (US$ million)	NH Consol (INR million)	NH India (INR million)	HCCI Consol (US$ million)	NH Consol (INR million)
Borrowings	18,930	367.6	48,661	14,859	85.0	22,134
Trade Payables	5,546	54.8	10,321	4,887	12.6	5,745
Gross Tangible Assets	40,187	311.8	68,716	37,380	168.9	51,670
Trade Receivables	3,870	32.7	6,557	3,136	29.9	5,555
Inventories	775	9.9	1,545	741	5.0	1,103

Borrowings

NH India

Total Borrowings increased from _14,859 million as on March 31, 2025 to _18,930 million as on March 31, 2026 to fund increased capital expenditure (including greenfield projects) incurred during the year.

HCCI

Total Borrowings increased from US$ 85.0 million as on March 31, 2025 to US$ 367.6 million as on March 31, 2026, to fund the acquisition of PPG UK during the 3^rd quarter.

Trade Payables

NH India

The trade payables have increased from _4,887 million as on March 31, 2025 to _5,546 million as on March 31, 2026.

HCCI

The trade payables increased from US$ 12.6 million as on March 31, 2025 to US$ 54.8 million as on March 31, 2026.

Assets

Gross Block

NH India

Gross Block (tangible assets) increased from _37,380 million as on March 31, 2025 to _40,187 million as on March 31, 2026. We have made investments in land, medical equipment, new capabilities, and facility transformation across our network.

HCCI

Gross Block (tangible assets) increased from US$ 168.9 million as on March 31, 2025 to US$ 311.8 million as on March 31, 2026 which is due to fixed assets asset acquired through PPG UK acquisition.

Trade Receivables

NH India

The trade receivables (net of provision for doubtful receivables) increased from _3,136 million as on March 31, 2025 to _3,870 million as on March 31, 2026. There is credit increase in revenue, however collections have delayed from government players.

HCCI

The trade receivables (net of provision for doubtful receivables) increased from US$ 29.9 million as on March 31, 2025 to US$ 32.7 million as on March 31, 2026.

Inventories

NH India

The inventory value increased from _741 million as on March 31, 2025 to _775 million as on March 31, 2026.

HCCI

The inventory increased from US$ 5 million as on March 31, 2025 to US$ 9.9 million as on March 31, 2026.

Material developments in Human Resources / Industrial Relations front, including number of people employed.

The NH brand continues to command strong goodwill in the healthcare delivery space and remains one of the most preferred employers for high-quality talent. Our presence across multiple geographic locations has enabled us to effectively leverage expertise, best practices, and capabilities across group entities. We have capitalized on this brand equity to design customized talent strategies aimed at attracting skilled professionals from the market, engaging them meaningfully, and retaining them effectively, thereby creating a strong and sustainable talent pipeline within the organization.

The Company recognizes the unique value and contribution that every employee brings to the organization and remains committed to nurturing both competence and potential. We continue to invest significantly in training and development initiatives across clinical and non-clinical domains, as well as in technology-related skills. These learning interventions have contributed to enhanced performance standards, improved productivity, and overall quality outcomes. In addition, we have introduced comprehensive employee well-being programs focused on supporting both mental and physical health, reinforcing our commitment to holistic employee care.

As an organization, we strongly believe in maintaining full compliance with all applicable statutory and labour-related laws. We extend this commitment to compliance to our partners and vendor organizations, who play an integral role in service delivery at NH, ensuring they adhere to the same ethical and legal standards. Compliance is closely overseen by a centralized team and is further reinforced through regular monitoring at each location where NH operates.

Learning & Development at Narayana Health: Investing in Our People, Advancing Our Mission

At Narayana Health, we believe that clinical excellence and compassionate care begin with a future-ready workforce. Our commitment is to invest purposefully in the holistic development of every associate, because in healthcare, capability directly translates to patient outcomes. Our learning and development ecosystem is designed to empower associates to upskill, adapt to rapid medical and technological advancements, and deliver measurable impact at the point of care.

Through a blended approach of classroom programs, virtual learning, and digital modules, we deliver competency-based development that is relevant, accessible, and aligned to evolving healthcare needs. Beyond internal offerings, we actively support associates in pursuing external certifications, participate in conferences, and get nominated in domain-specific programs. This ensures our people remain at the forefront of clinical protocols, healthcare innovations, and industry best practices — enabling them to serve patients with greater confidence, safety, and expertise.

Enabling Continuous Learning at Scale

To strengthen a culture of continuous learning at Narayana Health, EdSpark — our Digital Learning Management System — has expanded significantly in both reach and capability this year. The platform now supports a wider associate base through an enriched portfolio of curated, competency-based learning pathways. EdSpark delivers a seamless, self-directed learning experience with asynchronous, multi-device access, enabling associates to access learning content at their convenience. The platform hosts diverse knowledge repositories spanning clinical operational programmes, non-clinical programmes, functional programmes, programmes on business skills, compliance, and other domain related material. These are provided through e-books, and podcasts, empowering associates to take ownership of their professional growth.

This year, we took a significant step to integrate mandatory compliance programs with the Performance Management System (PMS). Linking completion of critical compliance and safety modules to the PMS framework has strengthened accountability, improved adherence, and reinforced our collective commitment to patient safety, regulatory standards, and ethical care delivery.

Leadership & Functional Capability Building

As part of our Talent Development agenda, we continue to invest in building leadership depth and functional excellence aligned to our business growth strategy.

1. ACE Leadership Academy: Launched this year to build a robust pipeline of future leaders. The Academy focuses on core leadership and management capabilities for high-potential talent across Senior and Middle management levels, with emphasis on operational excellence, cross-functional collaboration, and people leadership.

2. Functional Academies: Introduced a role-based, competency-driven approach to upskill and reskill associates within key business verticals: Mastering Marketing Hub for Marketing & Sales Function, Finance Patshala for Finance, SCM Functional Academy for Supply Chain Management These academies standardize functional knowledge, accelerate role readiness, and align skill development directly with business outcomes.

3. Clinical & Service Excellence: Designing impactful clinical programs in collaboration with our in-house doctors and consultants remained a hallmark of the year, strengthening clinical capability for enhanced patient outcomes. Parallelly, training for nursing and patient-facing associates on interpersonal and communication skills continued as a core L&D priority. Through year-round Service Excellence Programs, we reinforced our commitment to compassionate care and best-in-class patient experience.

Compliance & Community Impact

We strengthened our focus on mandatory and safety-related training for all new hires to ensure compliance and readiness from day one. This year, we also launched RAKSHAK — our Basic Life Support (BLS) Program — with the objective of developing associates as certified first responders. The program empowers our workforce to act decisively during medical emergencies, extending our culture of care beyond hospital walls and into the community.

Through these integrated initiatives, the L&D team remains steadfast in building a future-ready, clinically strong, and compassionate workforce that advances Narayana Healths mission of delivering high-quality, affordable healthcare.

Recruitment

Recruitment during FY26 was guided by a strategic shift towards capability-led hiring and centralised execution, in line with the organisations broader focus on manpower optimisation and cost discipline amidst a competitive healthcare talent market. A key initiative during the year was the introduction of the Talent Acquisition Shared Services (TASS) model, moving away from decentralised, unit-led hiring to a centralised, pod-based structure. The model aims to improve recruitment efficiency through shared talent pools, process standardisation, and enhanced visibility of manpower demand across units. The Health City pilot, launched in January 2026, has demonstrated early improvements in recruiter utilisation and process control, and will serve as the basis for a phased enterprise-wide rollout. Hiring during the year remained selective and investment-driven, focused on critical roles, leadership positions, and future-ready capabilities, while overall headcount rationalisation continued. Leadership hiring was addressed through a balanced approach of internal talent movement and targeted external recruitment.

The organisation continued to emphasise internal talent mobility as a key lever for both role fulfilment and retention, thereby strengthening the leadership pipeline and reducing dependency on external hiring.

The Management Trainee (MT) programmes across Operations, Finance, and Supply Chain remained a cornerstone for building future talent. These programmes saw strong deployment across units, with trainees contributing effectively to evolving operational requirements. Retention levels have remained stable at approximately 70%, reflecting continued programme relevance despite market competition.

Overall, recruitment in FY26 reflects a transition from volume-driven hiring to a more strategic, capability-focused talent acquisition approach, anchored on centralisation, selective hiring, and investment in internal and early-career talent pipelines. This positions the organisation to enhance hiring efficiency while building a sustainable and future-ready workforce.

Compensation

Our compensation philosophy is built to create a sustained competitive advantage by strengthening our reputation, enhancing employee engagement, and reinforcing our position as a preferred employer within the hospital industry. We believe that a well-designed reward framework plays a critical role in attracting, motivating, and retaining high-quality talent, which directly supports superior patient care and organizational performance.

Our compensation strategy is anchored in fairness, transparency, and market competitiveness, while also promoting a healthy work–life balance. To achieve this, we offer a holistic mix of monetary and non-monetary benefits that are aligned with prevailing market practices and tailored to meet the evolving needs of our workforce.

As part of our commitment to pay equity and competitiveness, we conduct annual market benchmarking exercises to evaluate our salary structures against industry standards. Based on these insights, we implement merit-based salary increments that recognize individual performance, contribution, and potential. This performance-driven approach to rewards is a core driver of the hospitals long-term success and operational excellence. In addition, we have introduced robust and differentiated incentiveprogramsdesignedtorewardexceptionalperformance. These incentive plans are customized for distinct employee groups and are directly linked to clearly defined role-specific outcomes, ensuring a strong line of sight between performance and reward. Through this approach, we reinforce a culture of accountability, excellence, and continuous improvement across the organization.

Risk and Concerns

NH leadership believes that continuous and timely investment in people, process and right technology to identify, monitor and mitigate critical risks is non-negotiable. Sustained and profitable growth is possible only with a complete 360 degree view of the overall business risk milieu. The formulation of a comprehensive risk strategy and robust mitigation actions are key differentiators in our journey toward sustainable excellence.

1. Cybersecurity and Data Privacy

Cyber risks continue to be the industry wide top concern. NH continues to invest in best-in-class technology, infrastructure and processes to attain and maintain the optimal security posture. Our early investments to comply with the Digital Personal Data Protection Act (2023) are paying rich dividends as we move towards full compliance with the Act and Rules thereunder.

2. Fire Safety and Emergency Preparedness

During the year, there were number of media reports on serious fire incidents in multiple hospitals across the country. Given the inherent difficulties and risks involved in evacuating critical patients, prevention is the only practical option in mitigating the fire risk. At NH, in the last 2-3 years, we have gone the extra mile to invest in infrastructure upgrades, fire-resistant materials, and regular training including mock drills etc. to foster a culture of vigilance and prevention across all facilities.

3. Environmental and Climate Risks

We recognize the growing impact of climate change and environmental regulations. NH is enhancing energy efficiency, water conservation, and biomedical waste management practices to reduce environmental footprint and ensure regulatory compliance.

4. Business Continuity and Disaster Recovery

As an essential 24X7 service provider, NH continues to invest in developing robust business continuity plans to ensure uninterrupted operations during pandemics, natural disasters, or IT outages. These include scenario planning, backup systems, and crisis communication protocols.

5. Supply Chain and Vendor Management

The ongoing Ukraine and now the Iran war situation continues to disrupt supply chain across the world. We surely are not immune from those impacts. Our focus is to improve resilience by vendor diversification, increased and closer monitoring of life saving and critical supplies as well as implementing risk-based vendor assessments to predict and reduce disruptions.

6. Reputational Risk

While NH continues to invest in achieving and maintaining the highest Quality Accreditations to ensure enhanced clinical outcomes and patient experiences, we acknowledge that public and media perception are equally central to our reputation. Continuous monitoring tools are deployed to receive and quickly respond to inputs from feedback channels, social media, and media coverage to proactively manage reputational risks.

7. Workforce and Talent Management

In healthcare, the greatest asset are our people. NH invests in continuous training, employee well-being, and leadership development to mitigate workforce-related risks. The consultant doctors, nurses and other medical support technicians community at NH are recognized and respected as the most important stakeholders in ensuring excellence in delivery of health care.

8. Technology Obsolescence

We continually assess and upgrade medical and IT infrastructure to avoid obsolescence. In many specialty treatment areas, NH has been in the forefront in deploying latest robotic equipments to ensure world class medical care with highest safety and quickest recovery times.

9. Expansion and Integration Risks

This year, NH marked a major milestone with the successful acquisition of 12 hospitals belonging to Practice Plus Group in the United Kingdom. As NH continues to expand its global footprint, we are mindful of risks related to integration of new facilities, cultural alignment, and operational consistency. Structured onboarding and governance frameworks are in place to manage these transitions.

10. Internal Controls and Governance

Our internal control systems are robust and commensurate with the scale of operations. The Audit, Risk, and Compliance Committee, supported by the Internal Audit Team, ensures continuous evaluation and improvement of risk management systems. A dynamic risk register is maintained and reviewed periodically.

Key Financial Ratio Analysis

Standalone

Ratios	FY 2025-26	FY 2024-25
(i) Debtors Turnover	13.84	16.35
(ii) Inventory Turnover	21.82	16.96
(iii) Interest Coverage Ratio	6.13	7.35
(iv) Current Ratio	1.47	1.50
(v) Debt Equity Ratio	0.76	0.73
(vi) Operating Profit Margin (%)	21.12%	18.71%
(vii) Net Profit Margin (%)	12.66%	12.01%
(viii) Return on Net Worth	21.04%	21.42%
Consolidated
Ratios	FY 2025-26	FY 2024-25
(i) Debtors Turnover	13.04	11.22
(ii) Inventory Turnover	11.45	10.32
(iii) Interest Coverage Ratio	4.97	7.39
(iv) Current Ratio	2.15	2.18
(v) Debt Equity Ratio	1.29	0.67
(vi) Operating Profit Margin (%)	20.47%	23.28%
(vii) Net Profit Margin (%)	10.26%	14.40%
(viii) Return on Net Worth	19.75%	24.29%