Narayana Health is betting on operational efficiency, digital integration, and a shift in UK healthcare dynamics to turn around its Rs 2,135 crore (£183 million) acquisition of Practice Plus Group Hospitals, aiming for a return on capital employed (RoCE) of 20–22% by FY30.
The Indian hospital chain, known for its low-cost, high-throughput model, is entering the UK market through its Cayman Islands subsidiary, acquiring the secondary care division of Practice Plus Group — the fifth-largest private healthcare network in the UK and fourth-largest NHS service provider.
“We’re confident we can replicate what we’ve done in Cayman, but on a much larger scale,” said Dr. Anesh Shetty, MD of Health City Cayman Islands, a subsidiary of Narayana Health told analysts on Monday. “The management team is aligned with our vision, and we see significant headroom for growth,” he added.
The deal is structured as a leveraged buyout, with £150 million financed through long-term debt and £33 million in equity from Narayana’s Cayman entity. The acquisition is debt-free on Narayana’s books, with no cash outflow from its India balance sheet, the company said.
“We’re acquiring the company on a debt-free basis,” said Group CFO Sandhya J. “EPS impact will be broadly neutral, possibly mildly positive in year one.”
Practice Plus Group posted FY25 revenue of Rs 2916 crore (£250 million) and adjusted EBITDA of Rs 233 crore (£20 million). Post-IFRS adjustments, EBITDA stands at £29 million. The company operates 330 beds across 10 hospitals and surgical centers, with over 700,000 cases attended in FY25.
Shetty said UK healthcare market presents a compelling opportunity.
According to the investor presentation - NHS waiting lists have ballooned to 7.4 million patients, with over 2.8 million waiting more than 18 weeks. NHS outsourcing has grown at a 6% CAGR, reaching £18 billion in FY24, while private outpatient and day-care services are expanding at 10% CAGR.
Private payors — including insurance and self-pay — now contribute around 17% of total health spend, offering a low base for future expansion. “This is a relatively low base, so there’s safety in knowing we’re not entering a shrinking market,” Shetty said.
Currently, 93% of Practice Plus Group’s revenue comes from NHS contracts, but Narayana plans to gradually increase the private pay mix.
“We are definitely going to enable that journey,” Shetty said, noting that the company has already begun steps to attract private patients through asset upgrades and targeted marketing. The company also sees scope to add new specialties within existing facilities, boosting revenue without major capex," Shetty said.
Shetty added that operational efficiency will be key to the turnaround. Narayana plans to apply its Cayman playbook — streamlining administrative processes, reducing human touchpoints, and automating workflows — to improve margins.
“We’re not just bringing capital — we’re bringing efficiency,” Shetty said. “This asset already operates at 93% NHS mix with margins that few peers can match. Our tech and process simplification will turbocharge that.”
While Narayana refrained from giving short-term margin guidance, it has set a medium-term target of 20–22% RoCE by FY30. “We wouldn’t have entered this if we didn’t believe we could hit that,” Shetty said. “This is a high-conviction bet,” he added.
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