Apollo Hospitals Q4 FY22 Earnings Conference Call Insights

Key highlights from Apollo Hospitals (APOLLOHOSP) Q4 FY22 Earnings Concall

Q&A Highlights:

• Anubhav Aggarwal from Credit Suisse asked what impacted the pharmacy segment margin that was only 6.1% in 4Q22. Obul Reddy CFO said that there was an increase in the customer discount from 10.5% overall last year to 12.5% in 4Q22 and also the online cost contributed to it.

• Anubhav Aggarwal from Credit Suisse asked about the annual spend on Apollo 24/7. Sanjiv Gupta, CFO 24/7 answered that the company is looking at around INR400 crores overall expense for FY23, irrespective of any funding vs. INR84 crore in 4Q22.

• Anubhav Aggarwal from Credit Suisse enquired about ARPOBs, if the company expects them to increase from 4Q22 or moderate. Suneeta Reddy MD replied that there will be an increase and it will come from payer mix, cost reduction and case mix.

• Anubhav Aggarwal from Credit Suisse asked if the company has taken any headline increase in cash patient and insurance segments. Obul Reddy CFO replied that headline price increase for the coming year would be around 4-5%, which is not taken yet.

• Tushar Manudhane from Motilal Oswal asked about online orders per day and average realization per order for Apollo 24/7 in May. Obul Reddy CFO answered that currently they are running at about INR70 crore of GMV and at around 30,000 orders per day vs. 21,000 in 3Q22.

• Tushar Manudhane from Motilal Oswal asked about the occupancy rate at new hospitals in April, May. Suneeta Reddy MD answered that it is picking up in the new hospitals, which is mostly surgical work.

• Shyam Srinivasan from Goldman Sachs enquired if the online discount will be higher at say 13-14% and competition being at 18-20%. Sanjiv Gupta, CFO 24/7 replied that it’s in the right direction; the discounts would be in the range of about 15-16% on the online side.

• Sameer Baisiwala of Morgan Stanley asked about the capital allocation for FY23. Suneeta Reddy MD replied that the company had INR600 crores of cash surplus; INR800 crores invested in MF. On deployment, over the next two years, the company is looking at INR800 crores of capital deployed.

• Sameer Baisiwala of Morgan Stanley also enquired if the company would be left with surplus to continue deleveraging or if it would largely go into growth going forward. Suneeta Reddy MD replied that it would go into growth. The company is in a very comfortable position with debt and equity, at 0.45 debt to equity.

• Neha Manpuria from Bank of America asked if diagnostic business expansion will be organic as it’s historically or APOLLOHOSP will be looking at inorganic acquisitions. C Chandra Sekhar, CEO AHL replied that the main emphasis will be on organic growth. The company is open to inorganic option but has some rules to do it.

• Ranvir Singh with Sunidhi Securities asked about the ticket size in 1Q22 per order. Sanjiv Gupta, CFO 24/7 said that currently the company is running at about in the range of about INR900 to INR1,000 as the average order value across the system.