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Business News/ Markets / Mark To Market/  Healthcare services business drives Q4 for Apollo Hospitals
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Healthcare services business drives Q4 for Apollo Hospitals

Pharmacy has been a key driver for Apollo as it continues to restructure the business to boost earnings

The pharmacy business has remained another key driver for the company.Premium
The pharmacy business has remained another key driver for the company.

Apollo Hospitals Enterprises Ltd reported a decent set of quarterly earnings with the healthcare services business driving revenue growth. This business, which saw a significant impact in the fiscal first half, has however, recovered well.

The group’s overall occupancy levels stood at 63% in Q4FY21. Mature hospitals had occupancies of 3,365 beds or 64% while new hospitals reported 60% occupancy in the quarter.

With new hospitals progressing well, standalone revenue of the healthcare services division grew 6% year-on-year (y-o-y) to 1,291. Revenue at existing hospitals increased 2% while it grew 16% at the new hospitals. This lifted average revenue per operating bed by 11% y-o-y. The pick up in new hospitals boosted operating performance too. New hospitals, excluding the Proton cancer centre in Chennai, saw Ebitda grow 2.6 times to 43.7 crore in Q4. To fuel expansion, the firm completed the purchase of the balance 50% stake in Kolkata hospital, renamed as Apollo Multi-Specialty Hospital Ltd. The firm also completed the purchase of a majority stake in Apollo Medics, Lucknow.

Good boost
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Good boost

Pharmacy has been a key driver for Apollo as it continues to restructure the business to boost earnings. The demerger of front-end of the pharmacy business came into effect from 1 September 2020, aimed at helping the firm drive e-pharmacy business revenues and partnerships. Apollo continued to handle the back-end pharma distribution. However, due to the demerger, the Q4 figures for the pharmacy business are not comparable to the previous quarters. Pharmacy segment revenues declined 18% y-o-y in Q4. This led a 6% y-o-y decline in Apollo’s standalone revenue.

The firm said combined revenues from the pharmacy business grew 4% y-o-y to 1,417.4 crore. The like-to-like Ebitda (pre-Ind As 116) in Q4 stood at 93.1 crore, a growth of 10%. After completing the demerger process, Apollo has also transferred the back-end pharmacy business and Apollo 24x7 to Apollo HealthCo Ltd (AHL). Apollo Hospital Enterprises Ltd is expected to retain a majority stake in AHL and the restructuring has been done to accelerate growth in e-pharmacy revenue.

The formation of a separate entity with a distinct digital team to manage the business bodes well for growth. This will help Apollo compete better with PharmEasy and 1MG. It will also offer value unlocking opportunities.

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ABOUT THE AUTHOR
Ujjval Jauhari
Ujjval Jauhari is a deputy editor at Mint, with over a decade of experience in newspapers and digital news platforms. He is skilled in storytelling, reporting, analysing and writing about stocks, investment ideas, markets, corporates and more. He is based in New Delhi.
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Published: 24 Jun 2021, 01:04 PM IST
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