Apollo Hospitals: Ushering in a New Era

“Our hospital business is on a very strong growth trajectory and will continue to grow. We will improve not only in revenues but margins but most importantly in the type of clinical offerings that we give to our patients.

Apollo Health and Lifestyle, which is our primary care vertical, the focus on diagnostics and primary care clinics will continue. And this will give us, it will enlarge our patient base, which will increase revenues and therefore, margins. Apollo Pharmacies, which is our retail play is something where we’ve demonstrated strong growth, and they’re on track for a INR 10,000 crore revenue target. All of this comes together with Apollo 24/7. And I think that the losses that we made here, which are close to INR 170 crore, you must think of it as an investment into the future because there can be no healthcare institution without a digital platform.“

– Suneeta Reddy, Managing Director (In Q2FY23 Earnings Conference Call)

Stock Data
Ticker	APOLLOHOSP
Exchange	NSE & BSE
Industry	HEALTHCARE

Price Performance
Last 5 Days	-0.81%
YTD	-1.00%
Last 12 Months	-12.94%

*As per 9th Jan, 2023

Company Description:

Apollo Hospitals Enterprise Limited possesses a significant presence across the healthcare ecosystem, including hospitals, pharmacies,  primary care & diagnostic clinics, and multiple retail health models, it has established itself as India’s top integrated healthcare services provider.

Key Estimates regarding the future of the Company:

The company has presented an optimistic outlook on all aspects of its business. Here are the projections made by the management on the company’s future prospects:

• Healthcare Services: There is an abundance of space for growth and occupancy in the Healthcare Services business. It is here that the company visualizes around 70% occupancy in the next twelve months which is a big step considering the existing occupancy rate shown in the diagram below.

 On doing so, margins will be strengthened and operating leverage will be unlocked. The company expects growth in international business and consolidation of the payer mix while they set out to focus on centers of excellence that will drive high-end clinical work. It is forecasted that margins will increase 100 to 150 basis points over the next 18 months owing to their cost and productivity initiative.

• Retail Health– When it comes to retail health, the area of focus for the company relies mostly on primary care and diagnostics. A growth of INR 500 crore in revenue is expected in the next fiscal year while an INR 1000 crore of topline is the achievable forecast over the next 3 years. Apollo Hospitals credits their delivery of high-end Diagnostic testing to their depth of clinical understanding and thus holds themselves to be  a reference unit for hospitals from around the country.

• Pharmacy Distribution- The company is confident of their pharmacy distribution business to sustain its current margins and momentum. Apollo 24/7 has already established itself to be the fastest-growing healthcare platform in this part of the world. It continues to break new ground in terms of providing consumers with a consistent continuity of clinical treatment.

Analytical Insights:

Apollo Hospitals has made continuous efforts to ensure that the company ushers in the new generation of the healthcare industry. The company’s focus on expanding its existing dominant hospital business seems like the right move for the company.

As rightly pointed out by the management, it would be very difficult for a company to remain dominant as a healthcare institution without having an attractive digital platform. However, with other companies having already established a high quality digital platform it would be a challenge for Apollo to remain dominant in the long run. Despite the challenges, the Apollo brand in healthcare garners immense value that will help the company in all its endeavors. 

The next step for the company in order to secure its future as the leading healthcare service provider is to ensure that they remain at the forefront of all innovations that provide healthcare services to people at the comfort of their homes.