Capital Intensity, Sales Growth, and Profitability: The Moderating Role of Leverage in Healthcare Firms

Abstract

This study investigates the effects of capital intensity and sales growth on profitability and examines the moderating role of leverage in healthcare firms listed on the Indonesia Stock Exchange during the 2020–2024 period. Using a panel dataset of 35 healthcare firms with 175 firm-year observations, this study explores how investment intensity, sales growth, and debt financing influence corporate profitability. The data were analyzed using panel data regression with moderating interaction terms in STATA 18 to examine the direct and moderating effects of the proposed relationships.  The findings reveal that capital intensity has a significant negative effect on profitability, indicating that higher investments in fixed assets do not necessarily improve financial performance. In contrast, sales growth positively affects profitability, suggesting that firms experiencing higher revenue expansion tend to achieve superior financial outcomes. Regarding the moderating effects, leverage does not significantly moderate the relationship between capital intensity and profitability, implying that debt financing does not alter the profitability consequences of fixed asset investments. However, leverage strengthens the positive relationship between sales growth and profitability, indicating that debt financing enables growing firms to convert revenue expansion into higher profits more effectively. These findings highlight the importance of efficient asset utilization and prudent financing decisions in enhancing firm performance. By integrating capital intensity, sales growth, and leverage into a single framework, this study contributes to the profitability literature and provides practical implications for managers, investors, and policymakers in the healthcare sector.