Here’s what is fuelling India’s healthcare sector growth

India's healthcare sector posted growth in FY26, led by hospitals and diagnostic chains, as higher patient volumes, capacity additions and continued investor interest supported the industry, according to an EY-Parthenon report.

The report said major hospital operators recorded revenue and EBITDA growth of more than 15% year-on-year during FY26. Occupancy levels remained between 60% and 75%, while higher average revenue per occupied bed (ARPOB) and greater contribution from specialties such as cardiology and oncology supported earnings.

The findings reflect the expansion underway across the hospital sector, with companies adding beds through greenfield and brownfield projects, partnerships and acquisitions.

"We are witnessing a structural shift in the sector, with players increasingly focusing on disciplined expansion through brownfield and greenfield projects, strategic partnerships and selective acquisitions," said Kaivaan Movdawalla, National Healthcare Leader, EY-Parthenon India. He said investor interest and a pipeline of public market activity are expected to support growth in the coming year.

Organised diagnostic companies also reported revenue growth of more than 15%, with average EBITDA margins above 25%. The report said companies continued to expand laboratories, radiology centres and collection points across multiple geographies.

Single-specialty hospital operators reported revenue growth of more than 15% with EBITDA margins of around 30%. Medical device companies, however, reported slower growth, affected by US tariffs, higher raw material costs, global logistics disruptions and integration costs related to acquisitions and capacity expansion.

Private equity interest in healthcare remained intact despite a sequential decline in deal volumes during the fourth quarter of FY26. According to the report, valuations remained firm as investors focused on healthcare businesses with growth potential.

Amit Gupta, Partner – Healthcare and Life Sciences Investment Banking, EY India, said private equity-backed acquisitions in hospitals increased during FY26 as investors sought to build regional networks. In diagnostics, investment is moving towards integrated platforms, digital infrastructure and expansion into new markets. He said transaction activity is expected to continue through FY27.

The report expects demand to be supported by rising healthcare awareness, a growing burden of chronic diseases, continued capacity expansion across hospitals and diagnostics, capital inflows and consolidation through mergers, acquisitions and partnerships.