Detailed Narrative
Robust Q2 & H1 FY26 Performance Across Verticals
Apollo Hospitals delivered a strong financial performance in Q2 FY26, with consolidated revenue reaching INR 6,304 crore, marking a 13% year-on-year growth. Consolidated EBITDA also increased by 15% year-on-year to INR 941 crore. For the first half of FY26, consolidated revenue grew 14% to INR 12,146 crore, and PAT significantly increased by 33% to INR 910 crore, demonstrating sustained momentum across all three verticals: Healthcare Services, Apollo HealthCo, and AHLL.
Healthcare Services Division Maintains Strong Margins Despite Headwinds
The Healthcare Services business reported a 9% year-on-year revenue growth to INR 3,169 crore in Q2 FY26, with EBITDA at INR 781 crore, an 8% growth. The division maintained a robust EBITDA margin of 24.6% and a strong ROCE of 30.3%. While medical admissions were lower due to a high base from Q2 FY25 and a 1% impact from reduced Bangladesh patients, surgical volumes grew 3%, and ARPP increased by 9% to INR 173,380, driven by a better clinical mix.
Apollo HealthCo Shows Significant EBITDA Improvement Driven by Digital
Apollo HealthCo's revenues grew 17% year-on-year to INR 2,661 crore in Q2 FY26. The segment's EBITDA significantly improved to INR 110 crore, up from INR 52 crore in Q2 FY25, primarily due to a reduction in digital vertical losses from INR 101 crore last year to INR 71 crore this quarter. The pharmacy distribution business contributed INR 181 crore in EBITDA, a 19% increase. The digital platform GMD grew 16% to INR 723 crore, and the company is on track for the 24/7 platform to achieve breakeven by the end of the fiscal year.
Strategic Capacity Expansion Underway with Phased Commissioning
Apollo Hospitals is actively pursuing its capacity expansion plans, with new facilities in Pune and Defense Colony soft-launched in Q3 FY26. Sarjapur and Calcutta hospitals are slated for commissioning in Q4 FY26, followed by Hyderabad and Gurugram in Q1 FY27. These new hospitals are expected to incur an overall EBITDA loss of approximately INR 150 crore for FY26, but management aims for them to break even within 12 months of commissioning, with all census beds fully operational by the end of next fiscal year.
Focus on Operational Efficiency and Cost Management Initiatives
The company has initiated a cost-cutting plan targeting INR 120 crore, with INR 60 crore already achieved in H1 FY26. This initiative, alongside efforts to improve payer mix and increase corporate and international patient volumes, is expected to support robust hospital EBITDA margins. ALOS has dropped by 7% due to new technologies, and the company aims for a 70% occupancy rate, with an internal target to increase established hospital margins by 500 basis points from the current 24.6%.
Limited Impact from CGHS Rate Revisions
Management noted that while CGHS rates have increased for certain specialties like cardiac, oncology, and orthopaedics, the overall impact on profitability is not significant. This is because empanelment rules require admitting all patients, and the CGHS rates still represent a substantial discount (65%) compared to overall realizations, limiting the margin contribution from these patients. The company does not expect this to be a major driver of profitability.