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Apollo Hospitals Enterprise Limited — Q2 FY26 earnings call

Call held 7 Nov 2025

Management summary

Apollo Hospitals reported a strong Q2 and H1 FY26 performance, with consolidated revenue growing 13% YoY to INR 6,304 crore and EBITDA increasing 15% YoY to INR 941 crore. The Healthcare Services division maintained robust margins at 24.6% despite slower revenue growth, while Apollo HealthCo significantly improved its EBITDA by 110% due to reduced digital losses. The company is on track with its capacity expansion plans, with several new hospitals expected to be commissioned in FY26 and FY27, though these will incur initial EBITDA losses.

Highlights

Consolidated revenue grew 13% YoY to INR 6,304 crore in Q2 FY26, demonstrating strong momentum.
Consolidated EBITDA increased 15% YoY to INR 941 crore in Q2 FY26, reflecting resilient operating metrics.
H1 FY26 PAT grew significantly by 33% YoY to INR 910 crore, reinforcing the ability to sustain growth momentum.
Apollo HealthCo's EBITDA surged 110% YoY to INR 110 crore in Q2 FY26, driven by reduced digital vertical losses.
AHLL delivered 21% YoY EBITDA growth to INR 50 crore, with margins improving to 11% from 10% in Q2 FY26.
Healthcare Services ROCE remained robust at 30.3%, with strong ARPP growth of 9% to INR 173,380.

Concerns

Healthcare Services revenue growth was 9% YoY, impacted by lower medical admissions due to a high base in Q2 FY25 and a 1% reduction in patients from Bangladesh.
Keimed EBITDA margins saw a slight drop in Q2 FY26 due to one-time integration and scheme-related expenses, though these are not expected to recur.
New hospital commissioning will lead to an estimated INR 150 crore in EBITDA losses for FY26, impacting overall profitability in the short term.

Key financials

2 periods

Headline

Consolidated Revenue
₹6,304 Cr
YoY +13%
Consolidated EBITDA
₹941 Cr
YoY +15%
Healthcare Services EBITDA Margin
24.6%
Healthcare Services ROCE
30.3%
Healthcare Services Occupancy
69%
Healthcare Services ARPP
₹1,73,380
YoY +9%
Apollo HealthCo EBITDA
₹110 Cr
AHLL EBITDA Margin
11%

H1

Consolidated Revenue
₹12,146 Cr
YoY +14%
Consolidated EBITDA
₹1,793 Cr
YoY +20%
Consolidated PAT
₹910 Cr
YoY +33%

What they filed

Q1 FY27: revenue up 20.6%, net profit up 38.3% against the same quarter last year.

₹ Cr · quarterly

Line item	Q2 FY25	Q3 FY25	Q4 FY25	Q1 FY26	Q2 FY26	Q3 FY26	Q4 FY26	Q1 FY27
Revenue	5,589	5,527	5,592	5,842	6,304 +13%	6,477 +17%	6,606 +18%	7,044 +21%
Expenses	4,774	4,765	4,822	4,990	5,362	5,512	5,594	5,951
EBITDA	816	762	770	852	941 +15%	965 +27%	1,011 +31%	1,092 +28%
Margin	15%	14%	14%	15%	15%	15%	15%	16%
Other income	44	69	72	54	61	48	54	62
Interest	118	110	115	108	110	113	119	120
Depreciation	184	185	211	215	218	219	224	235
Profit before tax	557	536	516	583	675 +21%	682 +27%	722 +40%	799 +37%
Tax rate	29%	29%	20%	24%	27%	24%	24%	24%
Net profit	396	379	414	441	494 +25%	516 +36%	551 +33%	610 +38%
EPS	26.34	25.89	27.10	30.10	33.19	34.93	36.81	40.39

How to read this

₹ crore, as filed. The percentage beside a figure is the change against the same quarter a year earlier — never the quarter before, which would make every seasonal business look like it collapses and booms each year.

Segment breakdown

Share of Revenue

₹6,304 Cr Total

Healthcare Services ₹3,169 Cr 50.3%
Apollo HealthCo ₹2,661 Cr 42.2%
AHLL ₹474 Cr 7.5%

Capital allocation

medium confidence

Capex Capex disclosed
- Doctor hiring for new hospitals ₹67 Cr
- Comprehensive oncology program in Hyderabad hospital ₹35 Cr
- New hospital costs (Q2 FY26) ₹10 Cr
Suneeta Reddy: "considerable amounts above INR 67 crore spent on doctor hiring."; A. Krishnan: "costs have gone up by INR 35 crore because we have now decided to add a comprehensive oncology program also there"; A. Krishnan: "As of now, there are costs of roughly around INR 10 crore which is built in."

Guidance & targets

Revenue

Organic Hospital Growth Revenue · Next year · Medium confidence 30%

Yes. I think we are quite confident that we will get back into 30%.

— Suneeta Reddy

Profitability

EBITDA Losses from New Hospitals Profitability · FY26 · High confidence INR 150 crore

We continue to believe that next year, overall EBITDA losses from these hospitals should be around the INR 150 crore number, which is what would be the EBITDA losses from these hospitals, but we will come back to you closer to the Q3, Q4 to once we commission some of these hospitals, but we do not expect it to be higher than that.

— A. Krishnan
Apollo 24/7 Cost Breakeven Profitability · End of this fiscal · High confidence Breakeven

We are on course. There might be one hiccup in the form because we are investing reasonably strongly on the insurance side of the business... but we are on course, as we speak.

— Madhivanan B
Apollo HealthCo Overall EBITDA (including digital losses) Profitability · Q4 FY27 · High confidence 7%

From 4.4% (H1 FY26) today

As far as the overall 7%, which I think you are referring to the guidance of Q4 FY27, wherein we are suggesting about INR 25,000 crore of revenue run rate, with a 7% EBITDA. I think we are hopeful that we should be able to hit that mark.

— Sanjiv Gupta
Established Hospitals EBITDA Margin Profitability · Ongoing · High confidence Higher by 500 basis points

From 24.6% (Q2 FY26) today

And clearly, we would, the internal target is to take it higher by 500 basis points.

— A. Krishnan
New Hospitals Breakeven Profitability · 12 months · High confidence Breakeven

our internal target is to get all of them breakeven in 12 months.

— A. Krishnan

Capacity

Healthcare Services Growth (Existing Beds) Capacity · Over a three-year period · High confidence 13%

I think over a three-year period, you will see that, there is headroom for growth within the system. This should result in 13% growth in the existing beds and an additional 5% coming from new beds in the next 36 months.

— Suneeta Reddy
Healthcare Services Growth (New Beds) Capacity · Next two years · High confidence 5%

Next two years, you will see another 5% coming.

— Suneeta Reddy
Hospital Occupancy Rate Capacity · Ongoing · High confidence 70%

From 69% (Q2 FY26) today

So, 70% is definitely a benchmark that we are looking at.

— Suneeta Reddy
All Census Beds Operational Capacity · End of next fiscal · High confidence Fully operational

So, by end of next year, all the census beds that you are seeing should be fully operational.

— Suneeta Reddy

What to watch in Q3 FY26

New Hospital Commissioning & Ramp-up

Q4 FY26

Current Pune & Defense Colony soft-launched in Q3 FY26.

Target Sarjapur & Calcutta commissioning in Q4 FY26.

Why it matters

Successful commissioning and initial ramp-up of new facilities are key to future growth and capacity utilization.

Come to Q4, we will be starting the Sarjapur Bangalore Hospital as well as Calcutta.

Risks & concerns

Initial EBITDA Losses from New Hospitals
high

New hospitals commissioned in FY26 are expected to incur around INR 150 crore in EBITDA losses for the fiscal year.

Management acknowledged, quantified
Seasonal Impact on Medical Admissions
medium

Q2 FY26 saw lower medical admissions compared to a high base in Q2 FY25, which had a higher incidence of seasonal medical admissions.

Management acknowledged
Reduction in Patients from Bangladesh
medium

Reduction in patients from Bangladesh had a 1% impact on Healthcare Services revenue in Q2 FY26, though 60% have started returning in October, and new markets are being explored.

Management acknowledged, mitigating
Competitive Headwinds in Specialty Care (Diagnostics)
medium

Competition in Diagnostics within the Specialty Care segment of AHLL is noted, leading to a re-evaluation of approach.

Management acknowledged, re-focusing
Keimed Margin Compression
low

Keimed EBITDA margins saw a slight drop in Q2 FY26 due to one-time integration and scheme-related expenses, not expected to recur from next quarter.

Management downplayed (one-time)

Q&A highlights

7 direct

Organic Hospital Growth & Bangladesh Impact Direct

Yes. I think we are quite confident that we will get back into 30%. We say this because Bangladesh, at least 60% has started coming back in October and we believe that we will mitigate the impact of losing one territory.

Addresses a key concern about hospital growth drivers and the recovery from the Bangladesh patient reduction, providing a specific growth target.

Asked by Binay Singh

Capacity Expansion Timeline and Ramp-up Direct

So, the way you should look at it is Q3, Q4, Q1. In that order, we will be looking at starting all these six hospitals. The balance brownfield, which is also something that we have now added. We have also started work on Jubilee Hills and Secunderabad now. So, all those brownfield expansions will also come next year, mid of next year, etcetera, mid- to end of next year.

Provides a clear, phased roadmap for new hospital commissioning and clarifies the timing of capacity additions, including new brownfield projects.

Asked by Binay Singh

Impact of New Hospitals on EBITDA Margin Trajectory Direct

We continue to believe that next year, overall EBITDA losses from these hospitals should be around the INR 150 crore number, which is what would be the EBITDA losses from these hospitals, but we will come back to you closer to the Q3, Q4 to once we commission some of these hospitals, but we do not expect it to be higher than that.

Quantifies the expected drag on EBITDA from new hospitals for FY26, which is crucial for understanding the short-term margin outlook.

Asked by Damayanti Kerai

Apollo 24/7 Spend, GMV, and Breakeven Direct

So you have to look at the GMV from three perspectives. One, how is the pharmacy business growing... In this quarter, we actually exited out of a few B2B businesses... And the third was the GST... So, you will start seeing the increase on a quarter-on-quarter basis because now it is a new normal.

Provides a detailed explanation of the drivers of GMV, the impact of B2B exits and GST changes, and reiterates the path to breakeven for the digital business.

Asked by Damayanti Kerai

Keimed Margins and Overall Apollo HealthCo EBITDA Target Direct

Yes, you are right in saying this Q2, we had slightly drop in the EBITDA margins for Keimed, but this is only one time integration and scheme related expenses, which got accounted in Q2. So, you did not see the same happening in, from next quarter onwards. And as suggested earlier also, over a period of time, you are looking at 20 to 30 basis points over and above 3.1%, which normally used to be Keimed EBITDA since last two, three quarters to be happening as we move forward.

Clarifies the temporary nature of Keimed's margin compression in Q2 and provides a long-term margin outlook for the segment, linking it to the overall 7% EBITDA target for Apollo HealthCo.

Asked by Harith Ahamed

Hospital ALOS and Occupancy Targets Direct

So, 70% is definitely a benchmark that we are looking at. ALOS has dropped by 7%... We are focusing on the corporate, which earlier, I think we had not put enough focus there. We also focus on retail as well as international coming back to us.

Discusses key operational metrics for hospitals, the drivers of ALOS reduction, and strategies to improve occupancy, which are critical for efficiency and revenue.

Asked by Shyam Srinivasan

Hospital EBITDA Margin and Offsetting New Unit Losses Direct

And also, there is a plan to cut costs by about INR 120 crore. I believe that we have achieved about INR 60 crore of it. So clearly, this will continue to support the EBITDA margins in the range of 24.6% to 25%.

Details the ongoing cost-cutting initiatives and their contribution to maintaining robust hospital EBITDA margins despite the initial losses from new units.

Asked by Kunal Dhamesha

CGHS Rate Hike Impact Partial

So, the point is that I see there are certain specialties where they have increased the prices reasonably. So cardiac, onco, ortho etcetera will be reasonably better now. But the point is when you empanel yourself for CGHS, under the rule book, we have to take whichever patient they send to us or whoever comes to us. You cannot deny admissions for the others.

Clarifies the limited impact of recent CGHS rate hikes on overall profitability due to the nature of empanelment and patient mix, indicating it's not a significant margin driver.

Asked by Nitin Agarwal

3 min read 6 chapters

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.

This is an AI-generated summary of a publicly available earnings call transcript.

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