Strategic expansion, digital and offline pharmacies driving growth: Dr. Suneeta Reddy, Apollo Hospitals

Apollo Hospitals posted robust quarterly results, driven by strong revenue growth in its healthcare and pharmacy businesses. The company reported revenues of ₹6,477 crores, up 17%, which translated into EBITDA of ₹965 crores, up 27%. Net profit rose 35% to ₹502 crores, due to the impact of higher volumes in high-end specialties and operational efficiencies.Dr. Highlighting the performance of the hospital segment, Suneeta Reddy, MD, Apollo Hospitals, said, “The hospital performed very well. Revenue growth of 14% with revenues of ₹3,183 crores, EBITDA of ₹790 crores, representing a 17% increase in EBITDA and hospital profit of ₹422 crores, representing a 21% improvement in profit.”

The occupancy rate for the quarter was 67.1%, slightly below expectations. “There was a 4% improvement in ALOS, which meant we got back to 3.14 days. If we had been at four days ALOS, we would technically have had a 72% occupancy rate. So we have been careful to reduce the average length of stay so that patients can really get home faster and reduce their bills,” said Dr Reddy.Apollo’s expansion plans remain aggressive. During the quarter, the company opened 100 beds in Pune and 40 beds in Defense Colony. By the first quarter of the next fiscal, Apollo expects to open 1,035 beds across several new facilities, including Belenus Hospital in Sarjapur (Bangalore), Sonarpur (Kolkata) and Sandhya Elite (Hyderabad), with further expansion planned in Gurgaon.

Turning to profitability, Dr. Reddy explained the company’s margin performance: “If you look at healthcare services, we are at a very healthy 24.8%. Apollo Health and Lifestyle is at 10.2%. They have grown their EBITDA margin by 141 basis points. Apollo Healthco is at 4.5%, but that is a different retail business. Offline pharmacies are at 7.8%.”

The pharmacy segment continues to grow strongly. Healthco added 185 physical pharmacies this quarter, bringing the total to 7,113 – the largest pharmacy network in India. “They have a private label share of 15.53%, which gives them a margin of 7.8, a very healthy margin, which has improved by 12 basis points. The offline continues to grow with a GMV of ₹525 crores for the quarter, and they have three revenue streams: insurance, doctor consultations, diagnostics and home delivery of pharmaceuticals, all of which are growing somewhere at 23%, but growing strongly at 20%,” she added.

The company’s Health and Lifestyle business, despite being loss-making, showed strong growth with a 20% increase in sales and a 39% increase in EBITDA. Dr. Reddy expects the segment to turn profitable in the coming quarter: “If you look at the different lines of business, they are all profitable. A little focus on admin costs, etc., they should be profitable, and they are expanding the diagnostic scale, which gives them a healthy margin of 10.8%. That margin trajectory will grow.” Internationally, Apollo focuses on project work and consultancy rather than setting up hospitals abroad. “We have about ₹20 crores of revenue from the work we do and project in,” Dr Reddy noted.

Apollo’s capital expenditure plan for expansion includes 1,385 new beds at an estimated cost of ₹2 crores per bed, totaling ₹3,000 crores for the current phase, with another ₹3,000 crores planned for the next phase. On other business sectors, Dr Reddy said, “Healthco is now a separate company. It is fully capitalized and does not require any further capital. Apollo Health and Lifestyle is considering a restructuring that will provide the capital for growth…Apollo is always there to support them with capital for growth.”

With strong operational performance and strategic expansion plans across hospitals, pharmacies and lifestyle businesses, Apollo Hospitals continues to strengthen its position as a leader in the Indian healthcare sector.