India's healthcare sector experienced substantial expansion in Fiscal Year 2026, with hospitals and diagnostic companies emerging as primary catalysts for growth. A recent EY-Parthenon report details how heightened patient volumes, strategic capacity additions, and continued investor interest collectively propelled the industry forward.
India's Healthcare Sector Sees Robust Expansion
According to the EY-Parthenon findings, major hospital operators recorded impressive year-on-year revenue and EBITDA growth exceeding 15% during FY26. Occupancy rates across these facilities consistently ranged between 60% and 75%. This strong performance was further bolstered by higher average revenue per occupied bed (ARPOB) and increasing contributions from specialized departments such as cardiology and oncology.
Hospitals and Diagnostic Chains Lead the Way
Organized diagnostic companies mirrored this positive trend, reporting revenue growth of over 15% and maintaining average EBITDA margins above 25%. These companies actively expanded their networks, adding new laboratories, radiology centers, and collection points across various regions. Similarly, single-specialty hospital operators also saw revenue growth exceeding 15%, coupled with healthy EBITDA margins of approximately 30%.
Conversely, the medical device sector faced a more challenging period, experiencing slower growth. This was attributed to several factors, including US tariffs, escalating raw material costs, global logistics disruptions, and integration expenses stemming from acquisitions and capacity expansions.
Sustained Investor Confidence Fuels Growth
Despite a quarterly decline in deal volumes during the fourth quarter of FY26, private equity interest in the healthcare sector remained robust. The report indicates that valuations held firm as investors strategically focused on healthcare businesses demonstrating strong growth potential. Amit Gupta, Partner – Healthcare and Life Sciences Investment Banking at EY India, noted a rise in private equity-backed hospital acquisitions during FY26, aimed at building comprehensive regional networks.
In the diagnostics segment, investment is increasingly directed towards integrated platforms, advanced digital infrastructure, and expansion into new markets. Industry experts anticipate this high level of transaction activity to persist throughout FY27, signaling ongoing confidence in the sector's prospects.
Outlook: Continued Expansion and Consolidation
Looking ahead, demand for healthcare services in India is expected to remain strong. This is supported by several key trends: a growing public awareness of health issues, an increasing burden of chronic diseases, ongoing capacity expansion initiatives across hospitals and diagnostic centers, sustained capital inflows, and continued consolidation through mergers, acquisitions, and strategic partnerships.
“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,” stated Kaivaan Movdawalla, National Healthcare Leader, EY-Parthenon India. “Investor interest and a pipeline of public market activity are expected to support growth in the coming year.”
These combined factors are set to underpin the sustained dynamism and growth of India's healthcare ecosystem in the foreseeable future.