Analyst Concall
Apollo Hosp sees healthcare op margin rising 100 bps in a yr
This story was originally published at 17:51 IST on 7 November 2024
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--Apollo Hosp: Expect 100 bps margin expansion in hospital ops next 12 mos
--Apollo Hosp: Insurance penetration helping hospitals' occupancy, margins
--Apollo Hosp: Jul-Sept average revenue per bed/day INR 59,011, up 3% YoY
--CONTEXT: Apollo Hospitals mgmt's comments in post-earnings analyst concall
--Apollo Hosp: Hospital ops' EBITDA for existing assets may improve
--Apollo Hosp: EBITDA growth for new hospital assets slow vs old assets
--Apollo Hospitals: Have enough cash to fund expansion plans
--Apollo Hospitals: FY26 capex on expansion seen INR 12 bln-INR 13 bln
--Apollo Hosp: Low patient inflow from Bangladesh impacted Jul-Sept ops
--Apollo Hosp: Bangladesh patient flow to recover in next few quarters
--Apollo Hosp: International patients' share in revenue 6% now, aim for 9%
--Apollo Hosp:Focusing on other countries to up international patient inflow
--Apollo Hosp: To leverage pharmacy network to grow Apollo 24/7's reach
--Apollo Hosp: Expect 6-7% rise in average revenue per bed/day
--Apollo Hosp: Working to launch own generic pharma pdts going forward
--Apollo Hosp: Currently selling own branded FMCG pdts via pharmacies
--Apollo Hosp: Apollo 24/7 to break even in Oct-Dec FY26
--Apollo Hosp: Aim to cut Apollo 24/7 operating costs further
By Narayana Krishna and Ayushman Mishra
HYDERABAD/MUMBAI - Apollo Hospitals Enterprise Ltd. on Thursday said it expects the average revenue per occupied bed per day to improve in the coming days, helped by expansion and increased health insurance penetration. In a post-earnings conference call, the company management said it expects the margins of the hospital business to increase 100 basis points in the next 12 months as the mix of the revenues may change going forward.
Apollo Hospitals reported an average revenue per occupied bed per day of INR 59,011 in Jul-Sept, up 3% from a year ago. The margin of hospital business, classified as the healthcare services segment, was at 24.9%, almost flat on year.
The company reported better-than-expected earnings during the September quarter, posting a 63% year-on-year growth in consolidated net profit at INR 3.79 billion. The revenue rose by 15% on year to INR 55.89 billion. The healthcare services segment revenue rose 14% on year to INR 29.03 billion in Jul-Sept.
The company management said average revenue per occupied bed and margin will improve further for existing hospitals, while the growth will be slow in new hospitals.
Apollo Hospitals has announced plans to add 3,512 beds in the next four years from the 7,994 operating beds the company had as of Sept. 30. With the expansion and increasing footfall across hospitals, the company is expecting a 6-7% increase in average revenue per bed in coming years.
The management said the company has comfortable cash reserves to fund its expansion plans for the next few years. The company expects INR 12 billion to INR 13 billion of capital expenditure in 2025-26 (Apr-Mar).
The company said the current revenue mix is from metro cities, tier-I and tier-2 cities and each one has a different revenue profile. The mix of cities will influence overall growth in revenue and margins. The company said 44% of its revenue is coming from the insurance channel, which is growing and helping the margins.
PHARMACY OPS
Apollo Hospitals is working on launching its own branded generics soon, the management said. Currently, the company is selling fast moving consumer goods including nutrients, surgicals and other medical equipment under the Apollo brand through the Apollo Pharmacy network.
The company is working on leveraging its pharmacy, hospital and clinic networks. The company has 6,228 Apollo Pharmacy outlets spread across the country. The management said Apollo HealthCo, the holding company of Apollo 24/7, is working on cutting the operating costs of the digital platform. Though the company has set a target of achieving a gross merchandise value of INR 40 billion for Apollo 24/7 in the next few years, it is now focussing on cutting costs and improving profitability rather than volumes. The company is expecting Apollo 24/7 to break-even around Oct-Dec of FY26.
INTERNATIONAL OPS
Apollo Hospitals said the company’s revenue from international patients is currently at 6% of the total revenue, and it is aiming to increase it to 9% by expanding its marketing reach to newer geographies.
The company said due to political turmoil in neighbouring Bangladesh, the patient inflow from that country has dropped significantly in recent months, which has impacted the business of its hospitals in the Tamil Nadu region. Most patients from Bangladesh prefer to take treatment in the company’s hospitals in Chennai, the management said. The company is expecting the Bangladesh patient inflow to recover in the next few quarters, as the situation in that country is stabilising.
On Thursday, shares of Apollo Hospitals ended at INR 7424.85 on the National Stock Exchange, up 6.6% from its previous close. End
IST, or Indian Standard Time, is five-and-a-half hours ahead of GMT
Edited by Saji George Titus
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