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    Apollo Hospitals

    APOLLOHOSP
    Healthcare·11 Feb 2025
    Management Summary

    Apollo Hospitals reported a strong Q3 FY25, with consolidated revenue growing 14% and EBITDA up 24% year-on-year, driven by robust performance across all segments. Apollo HealthCo achieved its first-ever quarterly profit, signaling progress towards digital business breakeven. Despite headwinds from reduced Bangladesh footfalls and a seasonally muted quarter, the company maintained strong margins in Healthcare Services and outlined clear expansion and profitability targets for its various verticals.

    Highlights

    5

    • Consolidated revenue grew 14% YoY to INR 5,527 crore, with all three business segments reporting mid-teen revenue growth.

    • Consolidated EBITDA increased 24% YoY to INR 762 crore, demonstrating a sharp rise in profitability.

    • Apollo HealthCo achieved its first-ever quarterly PAT of INR 32 crore, a significant improvement from a loss of INR 28 crore in the prior year.

    • Healthcare Services maintained robust EBITDA margins at 24.1% and saw ARPOB grow 8% YoY to INR 60,839.

    • Specialty segments (CONGO) drove strong growth, with Oncology revenue up 25%, Neurosciences up 23%, and Gastro up 20%.

    Concerns

    3

    • A decline in footfalls from Bangladesh resulted in an overall 1.5% drop in revenues, impacting the Tamil Nadu cluster by over 3%.

    • The quarter was seasonally muted, which partially offset operational progress.

    • Online Pharmacy Distribution and Digital business still incurred INR 141 crore in operating costs, despite reporting a positive EBITDA of INR 38 crore excluding these costs.

    What Changed2

    vs Q2 FY26

    Guidance items10 → 15 (+5)Risks discussed5 → 3 (-2)

    Key financials

    Single quarter

    18 metrics
    1. 01Consolidated Revenue₹5,527 Cr+14.0%YoY
    2. 02Consolidated EBITDA₹762 Cr+24%YoY
    3. 03Consolidated PAT₹372 Cr+52%YoY
    4. 04Healthcare Services Revenue₹2,785 Cr+13%YoY
    5. 05Healthcare Services EBITDA₹671 Cr+14.0%YoY

    Segment breakdown

    EBITDARevenue
    Healthcare Services₹671 Cr₹2,785 Cr
    Apollo HealthCo₹57 Cr₹2,352 Cr
    Apollo Health & Lifestyle (AHLL)₹34 Cr₹390 Cr
    Offline Pharmacy Distribution (HealthCo)₹159 Cr—
    Online Pharmacy Distribution and Digital (HealthCo)——
    Heatmap· 2 shared metrics

    Capital allocation

    1
    medium confidence
    CategoryHeadline
    Capex

    Capex disclosed

    Guidance & targets

    15
    CategoryTargetPriority
    Capacity
    New Beds Commissioning
    3 facilities in FY25/26 H2, Gurgaon and Hyderabad by end of FY26
    		High
    Capacity
    New Beds Commissioning (50% of 1737 beds)
    50% in FY26, 50% in FY27
    		High
    Occupancy
    Hospital Occupancy Rate
    72-73%
    		Medium
    Margin
    Healthcare Services EBITDA Margin
    around 24%
    		Medium
    Margin
    AHLL EBITDA Margin Improvement
    2 percentage point per year
    		High
    Margin
    Apollo HealthCo EBITDA Margin
    18-20%
    		High
    Margin
    Apollo HealthCo EBITDA Margin
    6-7%
    		High
    ARPOB
    ARPOB Growth
    6-7%
    		High
    Profitability
    24/7 Digital Business Breakeven
    EBITDA positive
    		High
    Profitability
    Greenfield Projects EBITDA Breakeven
    EBITDA positive
    		High
    GMV
    24/7 Breakeven GMV
    INR 900-1,000 crore
    		High
    Growth
    AHLL Revenue Growth
    15-18%
    		High
    Growth
    Digital Business Growth Rate
    20% plus
    		Medium
    Market Expansion
    Digital Business Market Reach
    25-odd markets
    		High
    Revenue
    Apollo HealthCo Revenue
    INR 25,000 crore
    		High

    24/7 Digital Business Breakeven

    Q2 end FY26 or Q3 FY26
    CurrentEBITDA loss (net of 24/7 operating costs)
    TargetEBITDA positive

    Why it matters

    Achievement of profitability in the digital segment is crucial for Apollo HealthCo's overall financial health and valuation.

    by end of Q2 of the next year or positively in Q3, we will be able to break even on the digital side.

    How to verify

    key_financials.segment_breakdown[name='Online Pharmacy Distribution and Digital (HealthCo)'].metrics[label='EBITDA (excl. 24/7 operating costs)']

    Risks & concerns

    3
    RiskSeverity

    Bangladesh Footfall Decline

    A 1.5% overall revenue impact, and over 3% in Chennai/Tamil Nadu, due to reduced patient flow from Bangladesh. — Management acknowledged

    medium

    Seasonally Muted Quarter

    The Q3 performance was achieved despite the seasonally muted nature of the quarter, indicating underlying strength. — Management acknowledged

    low

    Online Pharmacy Profitability Challenges

    Concerns raised by an investor regarding the bleeding nature of the online pharmacy business and high ESOP costs, despite management's focus on breakeven. — Analyst acknowledged

    medium

    Q&A highlights

    8

    “As of now, our GMV is around INR 3.5 crore for the full quarter, because we have been focusing purely as a marketing setup, and the product is only group health insurance. In this quarter, we will be having at least 3 life insurance companies and 3 health insurance companies, which will get enabled on our Apollo 24/7 platform. And from April 1 onwards, we expect the numbers to start building up.”

    Provides initial scale and timeline for the new insurance offering on the 24/7 platform, and clarifies the scope of the Microsoft partnership.

    asked by Binay Singh

    2 min read6 chapters

    Detailed Narrative

    01

    Q3 FY25 Consolidated Performance Overview

    Apollo Hospitals reported a robust Q3 FY25, with consolidated revenue growing 14% year-on-year to INR 5,527 crore. This growth was accompanied by a significant 24% year-on-year increase in consolidated EBITDA, reaching INR 762 crore. The company's consolidated PAT also saw a strong rise of 52% year-on-year, totaling INR 372 crore, reflecting a sharp improvement in overall profitability across all three business segments.

    02

    Healthcare Services Segment Strength

    The Healthcare Services business delivered a strong 13% year-on-year revenue growth, reaching INR 2,785 crore. Its EBITDA grew 14% year-on-year to INR 671 crore, maintaining a robust margin of 24.1%. Group-wide occupancy improved to 68% in Q3 FY25 from 66% in Q3 FY24, and ARPOB increased 8% year-on-year to INR 60,839. The focus on high-end specialties like Oncology (25% revenue growth) and Neurosciences (23% revenue growth) contributed to a 17% overall revenue growth in the specialty segment.

    03

    Apollo HealthCo's Path to Profitability

    Apollo HealthCo marked a significant milestone by reporting its first-ever quarterly PAT of INR 32 crore in Q3 FY25, a turnaround from a loss of INR 28 crore in the same quarter last year. Its total EBITDA for the quarter was INR 57 crore, a strong improvement from INR 2 crore in Q3 FY24. The Offline Pharmacy Distribution business contributed INR 159 crore in EBITDA (up 19% YoY), while the Online Pharmacy Distribution and Digital business reported INR 38 crore in EBITDA, excluding INR 141 crore in 24/7 operating costs.

    04

    AHLL's Consistent Growth and Margin Expansion

    Apollo Health & Lifestyle (AHLL) continued its strong performance, with revenues growing 15% year-on-year to INR 390 crore in Q3 FY25. The segment's EBITDA increased 32% year-on-year to INR 34 crore, leading to an improved margin of 8.8% compared to 7.7% in Q3 last year. Management expects AHLL to maintain a growth rate of 15-18% for the next couple of years and anticipates a 2-percentage point improvement in EBITDA margin annually.

    05

    Strategic Expansion and Digital Initiatives

    The company is actively pursuing capacity expansion, with plans to open three new hospital facilities in the second half of FY25 and FY26, including Gurgaon and Hyderabad by the end of FY26. Approximately 50% of the planned 1,737 new beds are expected to be operational in FY26, with the remainder in FY27. The digital platform, Apollo 24/7, added 2 million new users, and its GMV grew 11% year-on-year to INR 760 crore. Management aims for the digital business to achieve breakeven by Q2/Q3 FY26 with a GMV of INR 900-1,000 crore.

    06

    Payer Mix Optimization and Regional Headwinds

    Apollo Hospitals successfully optimized its payer mix, with revenue from cash and insurance patients increasing 15% year-on-year and accounting for 83% of inpatient total revenue. However, the company faced headwinds from a decline in footfalls from Bangladesh, which resulted in an overall 1.5% revenue drop and a more significant impact of over 3% in the Chennai/Tamil Nadu region. Management is focusing on complex cases and exploring new international markets to mitigate these regional challenges.

    This is an AI-generated summary of a publicly available earnings call transcript. It is for informational purposes only and does not constitute investment advice, a recommendation, or an endorsement. inve.money is not a SEBI-registered investment advisor. Please consult a qualified financial advisor before making any investment decisions.