Apollo Hospitals Enterprise Limited (NSE:APOLLOHOSP) Q4 FY23 Earnings Concall dated May. 31, 2023
Corporate Participants:
Mayank Vaswani — Investor Relations
Suneeta Reddy — Managing Director
Shobana Kamineni — Executive Vice Chairperson
Sanjiv Gupta — Chief Financial Officer, Apollo 24/7
C. Chandra Sekhar — Chief Executive Officer, AHLL
Obul Reddy — Chief Financial Officer, Pharmacy business
Analysts:
Damayanti Kerai — HSBC — Analyst
Prakash Agarwal — Axis Capital — Analyst
Gina Kim — Schroders — Analyst
Shyam Srinivasan — Goldman Sachs — Analyst
Tushar Manudhane — Motilal Oswal — Analyst
Aneesh Deora — Nomura — Analyst
Shaleen Kumar — UBS — Analyst
Nitin Agarwal — DAM Capital — Analyst
Sayantan Maji — Credit Suisse — Analyst
Rishabh Tiwari — Allegro Capital Advisors — Analyst
Presentation:
Operator
Ladies and gentlemen, good day, and welcome to Apollo Hospitals Limited Q4 FY ’23 Earnings Conference Call. [Operator Instructions] Please note that this conference is being recorded.
I now hand the conference over to Mr. Mayank Vaswani from CDR India. Thank you, and over to you, sir.
Mayank Vaswani — Investor Relations
Thank you, Nirav. Good afternoon, everyone, and thank you for joining us on this call to discuss the financial results of Apollo Hospitals for Q4 and FY ’23, which were announced yesterday.
We have with us on the call today, the senior management team comprising, Ms. Shobana Kamineni, Executive Vice Chair; Ms. Suneeta Reddy, Managing Director; Dr. Hariprasad, President of the Hospitals Division; Mr. A. Krishnan, Group CFO; Mr. C. Chandra Sekhar, CEO of AHLL; Mr. Obul Reddy, CFO of Pharmacy business; and Mr. Sanjiv Gupta, CFO of Apollo 24/7.
Before we begin, I would like to mention that some of the statements made in today’s discussion may be forward-looking in nature and may involve risks and uncertainties. Please note the disclaimer mentioning these risks and uncertainties on Slide 2 of the investor presentation that was shared with all of you earlier. Documents relating to our financial performance have been circulated and these have also been uploaded on the corporate website and the websites of the respective stock exchanges.
I would now like to turn the call over to Ms. Suneeta Reddy for her opening remarks. Thank you, and over to you, ma’am.
Suneeta Reddy — Managing Director
Good afternoon, everyone. Thank you for taking time off to join our earnings call. I trust that you have received our earnings document, which we shared yesterday.
Before we get into the details of our quarterly and full year performance, I would like to take you — take a few minutes to be in precise, our vision and journey towards creating Asia’s largest integrated healthcare ecosystem with the consumer at the center. While high quality healthcare has always been our core offering, we have systematically over the years created several 1,000 touch points of care through offline pharmacies, multi-format clinic, diagnostics and now a comprehensive digital health platform, Apollo 24/7.
This health infrastructure is formidable in terms of footprint and scale. The key — and key to us being able to be the most trusted healthcare partner for discerning customers across the value chain. We are confident that the investments we have made and the solutions that we are working on, whether it’s AI for clinical decision-making or digital therapeutics and condition management will result in providing consistent and seamless hybrid customer journeys. This will be a key differentiator and it will give us the right to win a disproportionate share of the health wallet spend of affluent households.
All our efforts are oriented towards unlocking network effects, and we are sure that we are building strong upstream and downstream fundings. Against this backdrop, let me take you through our financial results, which reflect the strength of our core business and the potential of our investments for future growth.
We have reported a very strong fourth quarter with the Healthcare Services business witnessing a robust 18% year-on-year growth in quarter four FY ’23, driven by growth in volume and supported by pricing and case mix gains. During quarter four FY ’23, occupancy across the Group was at 5,041 beds or 64%, mature hospitals were at 65%, and new hospitals were at 62%. This was achieved — this was planned and achieved after a sustained reduction in looping institutional business over the last six months. This has resulted in a lower reported occupancy, but has visibly strengthened our margins.
Alongside the trend of increasing insurance business, which continued — which is currently 43% of revenues and 40% of volume, contributed by this channel in quarter four. This was less than 30% pre-COVID. ARPOB increased 10% year-on-year to INR53,232.
Consolidated financials for the quarter. Our consolidated revenues grew by 21% on a year-on-year basis to INR4,302 crores. On a year-on-year basis, Healthcare Services revenue grew by 18% to INR2,195 crores. Mature healthcare services grew by 18% to INR1,519 crores, while new hospitals grew by 16% to INR676 crores.
Revenues from Apollo Healthco stood at INR1,799 crores in quarter four, against INR1,375 crores, representing a growth of 31%. AHLL revenues stood at INR309 crores in quarter four FY ’23 with the core revenue growth excluding COVID and vaccination of 23% in quarter four. Consolidated EBITDA stood at INR488 crore without the effect of the operating cost of Apollo 24/7. The EBITDA was actually at INR706 crores. Within this, Healthcare Services EBITDA grew by 31% to INR535 crores. Healthcare Services margins expanded by 249 basis points to 24.4%.
Offline pharmacy distribution EBITDA was at INR121 crores, the margin remaining very healthy at 7.8%. Net EBITDA loss in Apollo Healthco was at INR72 crores. AHLL recorded an EBITDA of INR26 crores, compared to an EBITDA of INR37 crores. The decline was owe to a drop in COVID-related revenues and increased cost to expand the high-end testing and phlebotomy network. Healthcare Services PAT was at INR257 crores, a growth of 46%. Consolidated PAT was at INR145 crores, a 60% growth on a year-on-year basis.
We closed FY ’23 with consolidated revenues of INR16,613 crores, a growth of 13% over FY ’22. EBITDA was at INR2,050 crores and PAT was at INR819 crores, after accounting for higher operating costs of Apollo 24/7 and due to the non-recurring revenues from COVID and vaccination.
The financial performance of the core business is robust. The margins are healthy and the operating indicators continue to improve. Our focus on the tower specialities of cardiac sciences, oncology, neurosciences, gastroenterology and orthopedics have ensured that they now contribute 60% of the hospital revenues. Our ALOS was at 3.39 days for quarter four. It is the best-in-class considering the severity and acuity of our mix.
In terms of inorganic expansion, we have made significant progress on implementing our plans to add 2,000 beds at an outlay of around INR3,000 crores over the next four years in key metros. Alongside this, we are on track to improve hospital occupancy to 70% by the end of FY ’24 and unlock margins by revenue and cost optimization. We serve over 7 lakh footfalls a day in our offline pharmacies. Over 15% of revenue in this vertical now comes from private label and generics. We are therefore making sustained efforts to increase this number consistently.
Our investments in the future are also yielding results. I’m happy to report that Apollo 24/7 achieved a GMV of INR1,643 crores for FY ’23, delivering on our commitment to exceed a GMV of INR1,500 crores this fiscal. The platform has over INR25 million registered users. The committed trajectory of GMV and revenue growth is on track and breakeven achievement at an entity level in Q4 FY ’24 is well on target.
In AHLL, the non-COVID diagnostic business has grown by 45% year-on-year, and it’s currently at a run rate in excess of INR100 crores for the quarter. We expect to grow this to INR500 crores for FY ’24 and to INR1,000 crores in three years. This should be accompanied by an expansion in EBITDA margin from 5% at the present to about 10% to 12% in the next two quarters, three quarters as we focus on expanding the test menu to include specialty high end testing modalities and genomics, while recording an increased utilization of our phlebotomy network.
The structural strength of healthcare services and offline pharmacy, combined with the potential of our growth verticals gives us immense confidences in the impacts that we can make in shaping the healthcare ecosystem of this country and delivering high quality care to our consumers in a most seamless ubiquitous way and value a distinction [Phonetic] way.
We acknowledge the short-term concerns around the cash burn in Apollo Healthco. Several measures have been initiated that will reduce costs by INR125 crores to INR150 crores in this fiscal. We would like to assure our stakeholders that we are on the cusp of change and we are building a platform that is sustainable and value accretive, with fiscal prudence and distinctive consumer value proposition as our twin goals.
On that note, I would like to hand it over to our moderator and open the line for questions. I have Shobana, Dr. Hariprasad, our CFO, Krishnan, Obul Reddy, Chandra Sekhar from AHLL and Sanjiv from 24/7 with me to take all your questions. Thank you.
Questions and Answers:
Operator
Thank you very much. We will now begin the question-and-answer session. [Operator Instructions] The first question is from the line of Damayanti Kerai from HSBC. Please go ahead.
Damayanti Kerai — HSBC — Analyst
Hi. Good afternoon and thank you for the opportunity. My question is on Apollo 24/7. So you recorded GMV of INR5.9 billion for fourth quarter, which has seen 9% sequential growth. So although like you have beaten your earlier expectations for full year, but for next year, I guess, you have earlier indicated that you would like to double up your GMV compared to FY ’23 level. So from this level, like how do you see GMV is picking up in coming quarters, so that you can almost double up GMV in FY ’24 versus FY ’23 levels because fourth quarter growth seems bit low I’ll say?
Shobana Kamineni — Executive Vice Chairperson
I’m happy to — this is — this question. This is Shobana Kamineni. This is on growth. We’d like to tell you that we’ve initiated many programs. Hello, am I audible?
Suneeta Reddy — Managing Director
Yes, yes, ma’am, you are.
Shobana Kamineni — Executive Vice Chairperson
Okay. So the plan here — the plan very clearly is that we have tailored our growth to achieve a 100% increase from the last year. So we will finish this FY ’24 with INR3,000 crores. Most of this will come from pharmacy, and while keeping our marketing spend at the same level. And what we’ve seen in Q4, which is the early shoots of how we do this for the following year, is that we’ve been seeing a lot of retention. And then our monthly — the monthly customers, that keep coming back to our platform has actually increased, people who make clear [Phonetic] transactions. It used to be in the range of less than 500,000 people last year. Now this is inching up towards the 1 million plus.
And I think that this is very significant to people as we continue to get traction of doctors that continue to come on. And please understand that what we’ve done is that where we also yet to get, Ms. Suneeta said, our journeys within — is especially within the offline and online. We have not been able — all these years, we’ve just been creating the pathways, and now we are actually seeing traction where in community by community, we’re able to get more and more people coming back to our pharmacy that shop omni [Phonetic]. And the thing is that we’ve actually opened up a new age group of customers that it is not our healthcare users, many of who are digital first, so the 25 listed who are digital first, many of them, almost 2 million of them shop [Technical Issues] for someone else in their family. These are very interesting cohorts that we’ve seen.
We’ve also accelerated the ability, like if you look at our figures, we have now one in four of them actually doing on other service, mostly it’s a diagnostic service that they take. And I think that this kind of traction is what will — what we will be able to build throughout this year. Yes, 9% was muted, but that was largely because if you see during that period, everyone pulled back in terms of discount. And that short period of you know scoring 3% less in discounts [Technical Issues] all the high-value seekers just moved out, and which is good for the business, because now we have much more traction of serious customers engaging.
Damayanti Kerai — HSBC — Analyst
Okay. Ma’am this discount that you said, you are like less than — you are offering a 3% less discount versus most of other peers, is that…
Shobana Kamineni — Executive Vice Chairperson
No, no, most of them had moved down. But yes, we continue to stay at least 1% less than the others.
Damayanti Kerai — HSBC — Analyst
Okay. My second question is AHLL spend seems to have plateaued during the quarter. So are we going to see similar run rate ahead? And if you can — if you can elaborate where all the spread has gone in various buckets, so that will be helpful?
Shobana Kamineni — Executive Vice Chairperson
Sanjiv, please.
Sanjiv Gupta — Chief Financial Officer, Apollo 24/7
Yes, so I think [Technical Issues] I think there are two, three things. You know, if you look at in Q4, our AHLL overall EBITDA is at INR72 crores negative versus Q3 of INR63 crores. There is a one-off marketing intake integration tie-up cost with insurance and corporate health benefit platform. This is for the distribution and servicing medical insurance policy holders. So, I think, with this one-off tech integration, we would be well positioned to start taking B2B, which is the corporate health business as well as the insurance side of the business.
As far as the sales [Phonetic] side is concerned, I think as stated in the last earnings call also, we don’t see any difference as far as Q2 versus Q3 is concerned. About 20% of the expenditure goes into product and tech side. We’ve got around 25% of expenditures into the op side. The marketing, which is the brand, communication, collecting in the customers’ content so on and so forth is roughly about 20%. The call center and other lines, our telehealth and all that takes about 15% and the remaining 10% is towards support and other things.
And I would also like to state one more point that we have a line of sight for at least INR20 crore to INR25 crore of reduction in losses by the end of H1. And we should be seeing this INR72 crores of Q4 losses to come down sub INR50 crores by H1.
Damayanti Kerai — HSBC — Analyst
Sorry, Sanjiv, you said INR25 crore to INR30 crore cost reduction by H1. That’s what you are aiming for?
Sanjiv Gupta — Chief Financial Officer, Apollo 24/7
That’s right. And so, we have [Indecipherable] INR25 crore of EBITDA improvement or a loss improvement, but more work going on. We will update you in the next earnings call with [Indecipherable].
Damayanti Kerai — HSBC — Analyst
Perfect. Thank you. I have more question, I’ll get back in the queue.
Operator
Thank you. Next question is from the line of Prakash Agarwal from Axis Capital. Please go ahead.
Prakash Agarwal — Axis Capital — Analyst
Yes, hi, good afternoon to all. Just carrying over the last participant, the voice quality was not clear. You were saying your spend from INR189 crores would come down by INR25 crores to INR30 crores, which means you will be doing INR150 odd crores per quarter starting first half or quarter one onwards. I could not get this.
Sanjiv Gupta — Chief Financial Officer, Apollo 24/7
I think what we suggested is that as a company, we are into the endeavor of ensuring that Q4 is breakeven for the company. Q4 of the current fiscal year is to be breakeven for the company. As far as the last quarter is concerned, we made a loss of INR72 crore. The line of sight that we have is to — for the next two months to three months suggest us that by H1, this INR72 crore of loss should be around INR45 crores to INR50 crores. So there would be reduction in losses by about INR25 crores from the current level in next three months to four months.
Prakash Agarwal — Axis Capital — Analyst
Okay, that is clear. But this loss reduction is by higher sales or you plan to reduce this INR189 crores burn rate also?
Sanjiv Gupta — Chief Financial Officer, Apollo 24/7
Absolutely, so that’s a good point. And we would — we have taken couple of areas where we can and as suggested by Suneeta and that, you know, there is a reduction in the discount by about 3%. We were at about 18% to 19% in Q2. Now to — in the current quarter we are at about 15%, apart from the fact that we’ve got 20% reduction in the logistics. There is lot of headcount rationalization and productivity coming out of the automation, which would also support us in the expense reduction. So there are certain areas where action has already been taken and those actions were taken in the fag end of Q4 and early April. That is the reason we couldn’t see anything in Q4. But indicative numbers for April and May suggests that there will be reduction in the operating cost. Okay, understood. And one more if I may on the HealthCo, so if you see the offline pharmacy Y-o-Y is pretty soft 12%. Any particular reason, was it due to any COVID base last year or how to think about that? Obul?
Shobana Kamineni — Executive Vice Chairperson
Obul?
Obul Reddy — Chief Financial Officer, Pharmacy business
Yes. You were right, last year first Q1 and Q2, we had a huge COVID sales. If you adjust for that, we — our offline growth is in the range of about 19% to 20%.
Prakash Agarwal — Axis Capital — Analyst
Q4, sir, not Q1, Q2, Q4 of last year.
Obul Reddy — Chief Financial Officer, Pharmacy business
Q4 of last year to Q4 of last year — this year, there is a 21% growth.
Prakash Agarwal — Axis Capital — Analyst
On the offline pharmacy platform, right.
Obul Reddy — Chief Financial Officer, Pharmacy business
Yes. That’s right.
Prakash Agarwal — Axis Capital — Analyst
Okay, understood.
Obul Reddy — Chief Financial Officer, Pharmacy business
Q1 of last year, there is a 19%.
Prakash Agarwal — Axis Capital — Analyst
Got it. And second question on hospital business. So, glad to know, we are on track on this 70% occupancy levels. This quarter I heard that the ARPOB and case mix actually have been — the focus has been to improve that. Typically the seasonal is strong Q4. So did we see any seasonally soft quarter or and what is the bridge to move from 65% to 70% by end of this year? Thank you.
Suneeta Reddy — Managing Director
So, if you look at occupancy, we’ve reduced the number of institutional people that patients that we usually get. And with this, the occupancy dropped by at least 3%, so this is why we also saw the ARPOB increase by 10%. Yes, our case mix has also improved. But it is a combination of both these that has led to an ARPOB increase.
Prakash Agarwal — Axis Capital — Analyst
Okay. So despite this thing, improvement in the case mix and institutional going down, you expect 65% to move to 70%.
Suneeta Reddy — Managing Director
Yes, and this will come from the program that we have to recruit new doctors, which is already happening across the system. The second is to really to look at what our network funnel is going to bring us. We have started getting patients from 24/7, and we believe that we have created a strong funnel. The third lever that we’re using is really to look at how we leverage our corporate relationships, our corporate relations, as well as international. So we are looking at this. Currently, if you look at our payer mix, 45% is retail and another 45% is private insurance. So that is really going to contribute to an increased occupancy. And finally for the Tier 1 cities international patients currently were at about 7%. We’re moving this to 10%, so that should add another 3% in terms of occupancy.
Prakash Agarwal — Axis Capital — Analyst
Got it, got it. And lastly on, you mentioned there is a reasonable progress on your inorganic initiatives of adding 2,000 beds. Last time, you mentioned three, four locations. If you could just highlight any particular location, any particular development that will be helpful?
Obul Reddy — Chief Financial Officer, Pharmacy business
We should be in a position to come back to you in the coming quarter, hopefully on this, Prakash. We are — we have line of sight across all of these. We are focused — we are progressing on Delhi — Delhi and Mumbai, Delhi and Chennai, as you already know. We are working on Bangalore, we are working on Mumbai as well.
Suneeta Reddy — Managing Director
And Kolkata.
Obul Reddy — Chief Financial Officer, Pharmacy business
And Kolkata. So Hyderabad also we are working on. So there are multiple options. By the coming quarter, you should get a clarity.
Prakash Agarwal — Axis Capital — Analyst
Okay. I have more question. I’ll join back the queue. Thank you.
Operator
Thank you. Next question is from the line of Gina Kim from Schroders. Please go ahead.
Gina Kim — Schroders — Analyst
Hi. Hello, Suneeta, and every one.
Suneeta Reddy — Managing Director
Hi.
Gina Kim — Schroders — Analyst
Just I don’t know if this is a minor point. But on Page 15 of your presentation, it’s the financial performance for the fourth quarter of AHLL. But specialty — everything makes sense, but specialty care side, EBITDA, EBIT sales are growing, my guess, except for PAT. So PAT has — losses have ballooned it seems in the fourth quarter of last year. Can you explain why?
Suneeta Reddy — Managing Director
Chandra Sekhar, will you take this question?
C. Chandra Sekhar — Chief Executive Officer, AHLL
So we have higher depreciation because of new centers. Specialty care includes lot of the fertility centers, which are opened in the year before. And all of these depreciation and the effect of depreciation in the Ind AS treatment also has effective backlog.
Gina Kim — Schroders — Analyst
Sorry to interrupt. On the depreciation, that would have been if reflected in EBIT, right. So, EBIT grew from INR1 million to INR64 million if you’re looking the line above, but only PAT went the opposite direction.
Obul Reddy — Chief Financial Officer, Pharmacy business
There was also a deferred tax reversal in — a deferred tax asset reversal in this quarter which is a one-off, which will not recur from the next quarter. There was a INR12 crores deferred tax asset reversal.
C. Chandra Sekhar — Chief Executive Officer, AHLL
Yes.
Obul Reddy — Chief Financial Officer, Pharmacy business
So that’s a charge to the P&L which will not recur from next quarter.
Gina Kim — Schroders — Analyst
That’s [Speech Overlap].
C. Chandra Sekhar — Chief Executive Officer, AHLL
That’s the one-off. Yes, got it.
Gina Kim — Schroders — Analyst
Okay. And just generally, I guess, that you’ve mentioned some sort of guidance in bits and pieces. Occupancy of 70%, your capex plan, Healthco revenue growth, but can you provide an overall picture of what you expect for this year FY ’24 as a Group?
Suneeta Reddy — Managing Director
Our Healthcare Services, we are looking at 15% growth coming from higher occupancy and therefore better EBITDA. This quarter, we showed an increase in EBITDA margin by 249 basis points. We believe that we can improve this by another 100 basis points. And this will come from pure from occupancy covering fixed costs and making sure that higher occupancy is better to be done, therefore, higher profitability.
Moving on, I think, 24/7, Sanjiv or Shobana, would you like to talk and Chandra Sekhar on AHLL.
Sanjiv Gupta — Chief Financial Officer, Apollo 24/7
Yes, I can take it. Hi, it’s Sanjiv. I can take it up for Apollo 24/7 on the digital front. On the digital front, we are looking at about 100% growth on platform transaction. We did roughly INR1,640 crore. We are looking at doubling it. On the pharmacy side, we are looking at about 29% growth, 28% to 29% growth in the current fiscal year versus the previous year. Over to Chandra Sekhar for AHLL.
C. Chandra Sekhar — Chief Executive Officer, AHLL
Yes, on AHLL, I think we have had a base reset kind of the year. So the one-offs on COVID, etc., completely reduced this year. So optical view shows a flat year to minor de-growth. But then AHLL core revenues on a year-on-year basis have grown by 28%. Diagnostics continues to grow at a pace, but again optically shows 4% de-growth. But that is because of very high component of COVID testing the previous year. Non-COVID diagnostics, excluding COVID testing and the COVID allied testing actually grew 63% year-on-year. So that’s I think the flavor that I think we are carrying forward. The overall growth at AHLL level from INR950 crore odd number to INR1,280 crore number approximately is a reflection of about — of continued growth path. The growth has been driven by the core business.
Now on a future outlook, primary care had a one-off significant INR185 crore revenues on vaccination the previous year, which has subsequently, obviously has fallen off. So these were the flavor of the year and the overall year’s performance. So we remain bullish about continuing the growth, that’s 40-odd-percent growth rate that we have demonstrated in the non-COVID segment. For the previous year, it was approximately INR250 crore which has moved up to the INR384 crore number, representing about 44% growth in terms of the non-COVID testing.
We are making investments on adding and changing our mix from routine basic to semi-specialized, specialized, and super-specialized towards this year taking additional cost by way of both skilled doctors, specialized sales forces. We’re also investing continuously, and we are yet to receive the complete benefit of the ramp-up of our phlebotomy capacity because the consumer demand and something that we are very committed to is to serve the home collection requirements. These will compress the margin for a little while wherein diagnostics. However, our growth rates will continue to be at the 40%, 35% to 40% level. And we would like it to be even higher further. So that is the plan that we are taking on the growth path.
On the other segments, we continue to have growth rates which I think we will sustain and add a few centers in the Cradle segment are being added, which will again cause a slight gestation based depression in margin, but will continue to give us benefits. Cradle is operating on a high 18% to 20% EBITDA margin at this level and that will continue to be neutral. IVF which is fertility, they are more newer line of business for AHLL. We have made investments in — during the midst of the COVID years. The last year has seen a significant growth year-on year, but we are yet to come to a level of completely utilizing the potential of being probably upgraded. So without any new center additions, we are going to grow the utilization at IVF. So that’s hitting the broad plan. Our Diagnostics division, margin has been at the 7.5% on a aggregate annual level and we are making efforts to take it up, 10% to 12% and progressively aiming to take it to the ’15 level. There can be quarters of slight fluctuation because we are making investments. And most of the investments in our expansion are operating expense in nature. So that’s the broad outlook for AHLL.
Operator
Thank you. Gina, I’ll request to come back for a follow-up question. [Operator Instructions] The next question is from the line of Shyam Srinivasan from Goldman Sachs. Please go ahead.
Shyam Srinivasan — Goldman Sachs — Analyst
Yes, good afternoon and thank you for taking my question. Just some of the metrics that we track on Apollo 24/7. Little confused, so daily active users, I’m looking at the last four quarters. So June 2022, 6.5 lakh daily active users. It became 10.6 lakh in September. December, 7 lakh and now fourth quarter again 7 lakh. So some of the comments that have made on the — us dropping discounts and some of these value customers moving away, so did that happen two quarters back? Or I’m just trying to map it to the trajectory of daily active users?
Sanjiv Gupta — Chief Financial Officer, Apollo 24/7
Yes, so I think, as far as the upward movement from June to September and some pick up October was on account of the kind of campaigns that you were running across pan-India and those campaigns was more of a broad-based than of a — you know, kind of a very, very particular opportunity for select catchment. So one is that we shifted our campaign from broad-based to more data related [Indecipherable]. So that in any case we believe would result into a lot of active users, which only come for kind of a comparison between the — between various websites, they won’t come in. On the brand new tickets, we will start dropping in. And in any case, we never wanted to have a value seeker coming into our platform. So this was one of the conscious decision to ensure that value seeker does not land into the platform. And more of a chronic, more of a customer who is looking out for continuum of care and whereas other offerings of Apollo ecosystem. So this is one conscious decision.
Now between December and March, I think one of the reasons, and you rightly pointed out, could be a cry to the discount being lowered. So discount in Apollo 24/7 have always been about 2% to 3% lower than the market. You will recall that, 24/7 [Phonetic] in FY ’22 discount for 32%, 33%, in last year, we came down to 18%, 19%, 20% and you were always less. And [Indecipherable] we have brought it down to sub-15% apart from the fact that — you know, so I think one reduction to also be attributed to lower discounts being offered by platform, plus, you know, we are also not looking at those orders, which are, you know, less than INR200 because that distorts the entire economics of the pharmacy delivery.
I think these are the two reasons, our [Indecipherable] of many features going out of the platform. Could be the reason resulting into daily active users to be constant between December and March. But current quarter, we see upliftment as far as the now is concerned.
Shyam Srinivasan — Goldman Sachs — Analyst
That’s helpful, Sanjiv. Just — I’m just a little worried about like active as a percentage of registered users, right. Registered users have gone from 14 million last year to 25 million. And we are at the same level of active users. So, am I reading it too much, you think, or you know…
Sanjiv Gupta — Chief Financial Officer, Apollo 24/7
The way to look at is that — I think the message which we need to look at it is that to what an extent the peak percentage is flowing through the platform between the two endpoints. So one is that the repeat percentages as high as 40% for the last year for the company, which was probably among 22% to 25% in FY ’22. So one is that, that more and more repeats are coming into the platform. As far as the overall days versus daily active, please don’t rush, you know, chronic customers — as a matter of fact, any customer would open the app only when our service is needed, and not necessarily, we never expect that 25 customers to open that every day and become a daily active user.
We would have only as many active users onto the platform. We’re coming to consume either a product or a service, in terms could be content also. So, I think, this is to be seen from this perspective that whether your active user base is increasing obviously, percentage is increasing. And your total platform transaction start increasing year-over-year. So If I look at it year-on-year, we have about 266% growth in the platform transition. So, I think, this is how I would sum-up that we should look at the numbers.
Shyam Srinivasan — Goldman Sachs — Analyst
Got it. Last question from me, just a divergence in GMV Q-o-Q growth, I think, 9%, like I think one of the other participant asked, but revenue has grown 44% to about INR2,539. So just trying to understand, hey if I use revenue to GMV ratio that’s bumped up. And also if you could help us with the split of the GMV in the different services that we share? Thank you.
Sanjiv Gupta — Chief Financial Officer, Apollo 24/7
Okay. So, in the last earnings call, also we had a question regarding GMV tools revenue ratio and to what an extent this would look into as a stable number. Last quarter we had 42% as the — 42.9% to be precise. So, the revenue is a percentage to GMV. I think, pretty healthy. And we continue to look at this number in the range of about 45% to 50% between current quarter to the next quarter. So it should stabilize somewhere there. As to the — you also checked on what is the distribution of INR593 crores which means various verticals. So pharmacy, we did about INR375 crores which is roughly 74%.
Shyam Srinivasan — Goldman Sachs — Analyst
Fair enough.
Sanjiv Gupta — Chief Financial Officer, Apollo 24/7
I think we’ll need INR22 crores which is 16% and remaining 10% is on the competition side. Thank you.
Operator
Thank you. Next question is from the line of Tushar Manudhane from Motilal Oswal. Please go ahead.
Tushar Manudhane — Motilal Oswal — Analyst
Thanks for the opportunity. Sir, just on this number of offline stores, for the quarter, there has been bit of slowdown, while for a full year basis, the number has been quite aggressive compared to FY ’22. So if you could throw some light on the number of stores that would be added in the coming years?
Suneeta Reddy — Managing Director
Obul will take that.
Obul Reddy — Chief Financial Officer, Pharmacy business
The last quarter, we added about 300 stores. But there is a bit of higher closure, that is why net addition is less. And we are on track with the new openings.
Suneeta Reddy — Managing Director
And for the year 1,100…
Obul Reddy — Chief Financial Officer, Pharmacy business
For the full year, we have opened our 1,050 stores. Next year, we are planning to be in the range of about 500 stores, 600 stores and then see what next.
Tushar Manudhane — Motilal Oswal — Analyst
So any particular reason for this fail [Phonetic] in terms of slower pace of additional stores?
Obul Reddy — Chief Financial Officer, Pharmacy business
We want to focus on the predictability and that is the reason we want to add lesser stores.
Tushar Manudhane — Motilal Oswal — Analyst
And at the same time, there are certain incremental costs as a whole. So, for FY ’24, how to think about the offline pharmacy distribution margin?
Obul Reddy — Chief Financial Officer, Pharmacy business
We expect to be some — offline about seven…
Shyam Srinivasan — Goldman Sachs — Analyst
Distribution.
Obul Reddy — Chief Financial Officer, Pharmacy business
7% — that’s the structured business, which is in the range of 7%, about 0.5%, maybe around 7.5% to 8% that will be the range.
Tushar Manudhane — Motilal Oswal — Analyst
Understood. And on the hospital side, the operational beds has been pretty stable in ’23 as well, so while the occupancy can increase to 70%, but the bed addition will happen only after the major capex [Indecipherable] or is there a scope of adding beds at the existing sites?
Obul Reddy — Chief Financial Officer, Pharmacy business
There are some beds, which will be added, but it would probably be in the year after next. It is particularly in Bangalore and Mysore, which is where we are looking at some additions. So, mostly after next year.
Operator
Thank you. Tushar, sorry to interrupt you, I’ll request to join the queue again for a follow-up question. [Operator Instructions] The next question is from the line of Aneesh Deora from Nomura. Please go ahead.
Aneesh Deora — Nomura — Analyst
Yes, hi, thanks for the opportunity. So, firstly, a clarification on the private label contribution that we’ve reported. So this quarter it was 15.5% of the total pharmacy revenue, whereas in the previous quarter, it used to be in the range of around 11% or so. So have you like club private label and trade generics in this quarter for the reporting?
Obul Reddy — Chief Financial Officer, Pharmacy business
That’s right. Pure FMCG private level is about 11%. With generics, it is about 16%.
Aneesh Deora — Nomura — Analyst
So there were a set of people who were asking for this number after the last call and which is why we decided to include this as well.
Sanjiv Gupta — Chief Financial Officer, Apollo 24/7
So, the generics is basically of the other players. It’s not Apollo private, I mean, Apollo manufacture or like it’s the trade generics of other players. We have few SKUs Apollo manufactured and we will be adding further into that, even on the generic side.
Aneesh Deora — Nomura — Analyst
Okay. All right. And secondly on the hospital’s ARPOB base is the clusters. So if we look at the ARPOB increase, it has been a bit diverse across the clusters like certain clusters has seen a very healthy ARPOB growth during the year, while certain have been flat. So any particular reason, and any particular trend that we can see out of this particular thing?
Suneeta Reddy — Managing Director
So, let me first say that it is a function of case mix as well. And I think we have done some tariff increases across the board. So, across the hospital division, there was an increase in ARPOB Q1 to…
Sanjiv Gupta — Chief Financial Officer, Apollo 24/7
So we are — we would be, we have seen a good increase in ARPOB. And as we go into the next year, we are also that — one division that didn’t see some increase was the AP, Telangana region because we also had — we have also Vizag, etc., which was there in this region. So while Hyderabad, the ARPOB has increased, given that it’s the region that you are looking at that, whereas it’s not showing an increase there, because given that it’s a — it’s not a Tier 1 metro. Data ARPOB is a bit lower than that. Occupancy, as it goes up, it impacts the overall ARPOB, more from a mix perspective. Otherwise, all the other regions, we are fine. Others is also something that we are hoping that in this coming year, we should see 5%, 6% increase in ARPOB.
Aneesh Deora — Nomura — Analyst
Understood. And if we — I can just squeeze one last. And just a clarification on the share of profit from the joint ventures and associates that we report. Last quarter, there was a loss of about 20 crores, that was reported. In this quarter, there is a INR3 crore profit. So it has been fluctuating quarter-to-quarter. So any particular reason for this and how should we be looking at this number going forward? Thanks.
Suneeta Reddy — Managing Director
Let me come back to you on this, because there was nothing specific that last — I’ll come back to you offline on this, because I’m just looking at that reasoning — reason for the same. But maybe there was a one-off last quarter, let me come back to you. Because all of them are currently profitably.
Operator
Thank you. Thank you. The next question is from the line of Shaleen Kumar from UBS. Please go ahead.
Shaleen Kumar — UBS — Analyst
Yes, hi, thanks for the opportunity. Just one, it is kind of starting here. So, as we have improved our payer mix, moved out of [Indecipherable]. Question is, our margins should improve, so is there any one-off cost expected aligned in the fourth quarter?
Suneeta Reddy — Managing Director
No, no, no, this is just — margins should improve quarterly. On hospital services, you were not clear in the beginning. You said, hospital services.
Shaleen Kumar — UBS — Analyst
Yes, yes, ma’am, plus [Foreign Speech]. I mean, sequentially margin, and so I’m just wondering, it is a scope our margins improve here.
Suneeta Reddy — Managing Director
Our payer mix work started only barely five months ago. And you will see that there has been a 249 basis points improvement at 24 point — 249 basis points improvement at 24.6% EBITDA margin. So this has — clearly there is an improvement.
Shaleen Kumar — UBS — Analyst
I was actually comparing last quarter Q3 versus Q4. So just wondering if there is more that we can have. [Indecipherable] any one-off costs here in Q4.
Sanjiv Gupta — Chief Financial Officer, Apollo 24/7
Nothing specific.
Shaleen Kumar — UBS — Analyst
Nothing specific. Okay, sir. And just sequentially, again, the difficult pharmacy revenue has not grown or marginally declined, is it because of rationalization of the script. And it should pick-up…
Obul Reddy — Chief Financial Officer, Pharmacy business
Physical towards in the backend, it’s a structured margin which stays around 7.8%. And…
Suneeta Reddy — Managing Director
Growth is 18%, 31% sequential quarter.
Obul Reddy — Chief Financial Officer, Pharmacy business
Sequential growth, this quarter we have slightly slower growth compared to — generally our Q2, Q3 will be the best and Q4 we generally have a muted growth, and that is the reason. Otherwise, even we are at a growth of 2% sequentially.
Suneeta Reddy — Managing Director
No, I think, I have to state that across the board, if you — January is traditionally a month of many holidays in the shelf. So therefore, if you’re comparing sequentially, yes, there was in terms of both occupancy and hospital utilization as well as maybe pharmacy, it could have been a lower growth. If it’s sequential, there was also a mild COVID wave which was only resulted in people taking paracetamol. So, you would not have seen huge growth in the fourth quarter because of this mild COVID wave and because the South — hospitals and pharmacies in the South clearly didn’t see much traction because of the many holidays.
Operator
Thank you. Shaleen, sorry to interrupt your, I’ll request to join the queue again for a follow-up question. I request all the participants, please restrict to two question per participant. The next question is from the line of Nitin Agarwal from DAM Capital. Please go ahead.
Nitin Agarwal — DAM Capital — Analyst
Hi. Thanks for taking my question. Ma’am, on the hospital services EBITDA, just reconfirming you’ve guided to a 15% growth in the EBITDA for the hospital services for this year.
Sanjiv Gupta — Chief Financial Officer, Apollo 24/7
So, yes, it should be higher, the growth in EBITDA is what you’re saying, right.
Nitin Agarwal — DAM Capital — Analyst
Yes.
Sanjiv Gupta — Chief Financial Officer, Apollo 24/7
Yes, it should be higher than that because we are hoping that the overall growth is closer to that 13% to 15% on revenue and EBITDA should be higher than that because of the expansion that we are planning on both operating leverage as well as cost cuts.
Nitin Agarwal — DAM Capital — Analyst
Okay. And when you look through beyond the first year, I mean beyond FY ’24 for, if I take like a three-year view of the hospital services business, at what rate — I mean what’s a broad range in which we think we can grow our EBITDA from FY 2023 base?
Sanjiv Gupta — Chief Financial Officer, Apollo 24/7
I think we should contribute to look at the same numbers, because it is possible to grow at the similar number.
Suneeta Reddy — Managing Director
So the advantage that we have is that we have existing capacity. So without investing too much, we can increase — we are going to increase occupancy. Almost in ’25, ’26, we will have new beds coming up.
Nitin Agarwal — DAM Capital — Analyst
Ma’am, you talked about the occupancy going to 70% for FY ’24 versus 64%, which is a very large increase. I mean, it should ideally lead to the most disproportionate increase in profitability for these hospitals, if we can get this kind of occupancy increase for the year?
Suneeta Reddy — Managing Director
Yes, I think, we should set our target size and really we have the potential. And this 70% is by quarter four. So like I said, we are working on these initiatives including improving our international patients mix. And with this, we should be able to get 70% occupancy by quarter four. It won’t happen overnight, but definitely in quarter four.
Operator
Thank you. The next question is from the line of Sayantan Maji from Credit Suisse. Please go ahead.
Sayantan Maji — Credit Suisse — Analyst
Yes, thanks for the opportunity. So my first question is on the EBITDA for pharmacy segment. So our back-end when we had done the deal, so the guidance was that 80% of the EBITDA will be captured in back end pharmacy. But over time, it has been sort of almost equal or higher. So this quarter, INR148 crore was captured in the front-end out of 51%, 45% was captured in the back-end. So, when does it go to 80% or is it something that you know our back-end EBITDA margin will always be 7.5% and 8%. And what is the additional costs that are being incurred at the front-end, pharmacy?
Sanjiv Gupta — Chief Financial Officer, Apollo 24/7
As you appreciate, the backend pharma business is a sector business. As EBITA percentage, it will be in the range of about 7.5% to 8% depending upon the cost and other sales movement during that quarter. It remains largely in the range of about 78% to 82% versus the front-end business. As you are aware of it this year, we added about 1,000 stores in the front-end network, we have higher one-time and infrastructural costs. So to that extent, as a percentage, it might look little slightly different, but we will be back in the current year. By end of the current year, we expect that to be in the same range as we explained earlier and as we planned.
Sayantan Maji — Credit Suisse — Analyst
In — for an online order, what are the additional costs that are being incurred at the front-end?
Sanjiv Gupta — Chief Financial Officer, Apollo 24/7
We don’t have any additional costs other than the delivery cost associated with us, because the inventory is coming from the store inventory and only logistics handling costs. And there is a set of dedicated employees. We are largely manageable within the overall cost structure.
Sayantan Maji — Credit Suisse — Analyst
Okay, got it. And my second question is on 24/7. So in 24/7, we have guided for INR20 crores to INR25 crores, say deduction in costs. So this INR189 crores, if I just look at the operating costs, so that is expected to go down to say INR170 crores and what is the next set of investments that we have to do in FY ’24? So are we mostly done with the product? Yes, okay, so what is the next set of investments that you envisage in 24/7 in FY ’24, even at a say INR170 crores quarterly run rate?
Sanjiv Gupta — Chief Financial Officer, Apollo 24/7
I think, as far as the platform is concerned, I think more or less the entire tech and product investment has happened. We don’t see that while we have a target to grow our business by 100% in current year, I’m not seeing any potential investment into the business, other than the fact that we had a one-time tech in part of the development for the insurance and B2B corporate side of it. And there is a clinical intelligence engine, CIE, you know, which is taking a bit of investment, but I guess that, that is something which we can absorb within the various cost initiatives that we have planned for the company.
So there should not be an incremental cost, but having said so, the way we looked at is that what is our expense as a percentage to GMV. If you look at in Q1, start of the previous financial year — financial year FY ’22-’23, we were at 66%. So our expenses as a percentage to GMV started coming down to 52% in Q2 and by Q4 as we end is at 39%. So basically INR189 crores added by INR593 crores, which is about 32%. Now the target for the current year which is FY ’23-’24 is to bring this down to a range between 20% to 23%. And so I think from that sense, we are into very — we have defined the entire equity in such a way that if there is an incremental cost on [Indecipherable] technology that we need to put in that could be the only additional area where investor will grow, but at this stage, we don’t see any material investment into the product and tech side apart from ongoing products.
Operator
Thank you. Ladies and gentlemen, we’ll take the last question from the line of Rishabh Tiwari from Allegro Capital Advisors. Please go ahead.
Rishabh Tiwari — Allegro Capital Advisors — Analyst
Hi. Thank you for taking the question. My question is regarding the hospital services business. Once we reached the occupancy level of say 70% by this year, what are the number of beds that we are looking at adding in over the next two to three fiscals because as a group — as a group my understanding is we are seeing AHLL and Healthco as a growth lever, but within the healthcare services, what are the short-term — few years, what is the growth that we are looking at?
Suneeta Reddy — Managing Director
We have 2,000 beds planned, which by 2027, every year, we will add a new hospital into the system and close to around 700 new beds after ’24.
Sayantan Maji — Credit Suisse — Analyst
Just to confirm, we are adding around 700 beds per year after FY ’24?
Suneeta Reddy — Managing Director
Yes, minimum, yes. We continue to look at brownfields, and we continue to look at acquisitions.
Rishabh Tiwari — Allegro Capital Advisors — Analyst
Okay. And these acquisitions would be focused on Tier 1 cities?
Suneeta Reddy — Managing Director
Yes.
Rishabh Tiwari — Allegro Capital Advisors — Analyst
Okay, thank you.
Operator
Thank you. I now hand the conference over to the management for closing comments.
Suneeta Reddy — Managing Director
Thank you all for taking time off today. It was a pleasure answering your questions. Krishnan, Sanjiv and the entire team would be happy to take any other further questions. You may email them. Let me promise you that we are committed to not only growing this enterprise, but towards delivering outstanding world class clinical healthcare, which is the crux of really what Apollo means for everyone. And let me also reassure you that we continue to improve in terms of market share in terms of clinical leadership and our commitment to our patients. Thank you all.
Operator
[Operator Closing Remarks]