Krishna Institute of Medical Sciences (KIMS) has signed a 5-year Operations and Management agreement for Arete Hospitals in Hyderabad. The deal includes a call option for future acquisition, offering KIMS an asset-light expansion strategy in a high-growth region.
KIMS Hospitals Expands Hyderabad Presence with O&M Agreement
Krishna Institute of Medical Sciences Ltd (KIMS) has entered into an Operations and Management (O&M) Agreement and a Call Option Agreement with Aurevia Hospitals Private Limited (AHPL). Reader Takeaway: Asset-light expansion via O&M deal; future acquisition option. ## What just happened KIMS will manage and operate Arete Hospitals, a nearly 250-bed multi-specialty facility in Gachibowli, Hyderabad, for an initial term of five years, extendable for another five. This follows AHPL's acquisition of the Arete Hospitals business. KIMS will receive 9% of the net revenue generated by the hospital. ## Why this matters This move allows KIMS to expand its operational footprint in the Cyberabad region of Hyderabad, a significant IT and commercial hub, without the immediate capital outlay of building a new hospital. The O&M model generates a fee-based revenue stream, leveraging KIMS's management expertise and brand. ## The backstory AHPL acquired the business of Arete Hospitals on July 3, 2026. The O&M and Call Option agreements with KIMS were signed on August 20, 2026. ## What changes now KIMS takes over the operational management of Arete Hospitals, providing medical services and directing its operations. KIMS also holds a call option to potentially acquire the business in the future. ## Risks to watch While the O&M model is asset-light, the success hinges on KIMS's ability to effectively manage the facility and generate sufficient revenue to meet the 9% net revenue target. The future acquisition is contingent on future agreements and KIMS's strategic decision. ## Peer comparison Other hospital chains in India increasingly utilize O&M or management contracts to expand their network and brand presence in new geographies with lower initial investment compared to greenfield projects. ## Context metrics (time-bound) Arete Hospitals is a ~250-bed facility. The O&M agreement has an initial term of 5 years, with an option to extend for another 5 years. KIMS will earn 9% of Net Revenue. ## What to track next Investors will be keen to see how effectively KIMS integrates Arete Hospitals and what revenue growth is achieved. The potential exercise of the call option in the future will also be a key development to monitor.
