- Consolidated revenues for the nine months grew by 17% y-o-y to INR 5,422 Crores (Standalone: +15% to INR 4,780 Crores). However, in the third quarter standalone revenues grew by 18% y-o-y to INR 1,681 Crores.
- Revenues were impacted by INR 25 to 30 Crores due to consolidated revenue impact (more than half of that was in Chennai cluster)
- Standalone revenues, healthcare services grew by 9% for the period of nine months – driven by a volume growth of 5% y-o-y & improved case mix
- Standalone pharmacy witnessed revenue growth of 24% for the nine month period. ROCE was at 15% level for the nine months period and over 18% over annualized Q3.
- Standalone EBITDA increased by 7% to INR 6044 Crores. EBITDAR growth was 9% - mainly because some new hospitals are on long term leases
- Healthcare business EBITDA increased by 2% to INR 511 Crores whereas, the Standalone pharmacy business EBITDA grew by 55% to INR 93 Crores
- PAT before extraordinary items fell by 6% to reach INR 237 Crores (Previous year – PAT included a one off gain of INR 47 Crores for the transfer of Dental and Dialysis business to AHLL)
Key Operational updates:
- New hospitals reported 53% y-o-y growth in revenues to INR 421 Crores.
- New doctors that are being hired are the anchor doctors or on a guarantee model basis.
- Within the new hospitals, Vanagram and Woman & Child – SMR have observed a healthy volume growth of 15% and 2% respectively (turned +ve EBITDA)
- OMR, Trichy and Woman & Child – SMR Karapakkam registered a growth of 23%, 9% and 19% respectively (turned +ve EBITDA)
- In the third quarter, Apollo hospitals achieved the milestone of 10,000 beds capacity across India with the new launch of Navi Mumbai hospital
- The Navi Mumbai hospital is the first tertiary care facility and with the addition of this new facility, Apollo currently has 13 new hospitals with a bed capacity of 2,400 beds in Mumbai (a capital employed of INR 1,700 Crores).
- Incremental impact of depreciation and interest cost due to Navi Mumbai Project – Depreciation: INR 2 to 3 Crores per quarter. Benefit of lower interest cost will be seen next year due to low interest rates.
- Currently two Day Cares in Mumbai – focus is to make them profitable before expanding
- Currently, the Navi Mumbai hospital is at an occupancy level of 50% - in line with the budget. (Breakeven period – to reach about 150 beds (current: 100 beds) which will take about 24 months)
- Mature hospitals operate at a 17% ROCE, whereas the ROCE of standalone pharmacy business has crossed 15% benchmark
- EBITDA margins for pre-2008 batch of stores witnessed a growth of 7.4% in the nine months period. About 76 new stores were added in Q3 FY 17 – total number of stores in the network now 2,506.
- Revenues from Apollo Munich grew by 25% for YTD Dec 2016. EBITDA reached INR 57 Crores for the nine months period (last year: INR 10 Crores)
Cluster performance updates
- Chennai cluster witnessed a positive growth in IP and OP volumes for the nine month period. Revenues grew by 4% with 12% growth in ARPOB.
- Utilization of the Chennai main hospital is 61% – which is not much different from the cluster utilization of 59%
- New initiatives at Chennai cluster
o Addition of new doctors in the pipeline
o Creation of new facilities
o Bringing in visiting consultants
o Creating one Apollo concept – where clinics & pharmacy will act as a gateway to patients
- Occupancy at the Chennai cluster hovered at 59% (mainly due to new hospitals and beds were added in the recent quarter)
- Hyderabad – observed a double digit growth in OP and IP revenues mainly due to better patient mix (decline in ALOS). ARPOB grew by 17%.
- Karnataka region – includes the hospitals in Bangalore and Mysore. Occupancy improved from 428 beds to 479 beds in the nine months period.
Key investment/initiatives updates:
- Apollo hospitals’ investment in the Ask Apollo platform will enable the network to strengthen the digital connect with the patients
- Platform traffic has increased at a healthy pace over the past 3 months
- Apollo with Bajaj Finserv has launched a zero interest EMI based financing scheme across the country
- Apollo has partnered with the State Government of Andhra Pradesh in a PPP model to establish 164 Electronic Urban Primary Health Centers (eUPHC).
- eUPHC will enable poor patients to access specialists through telemedicine and diagnostics in their neighborhood
- IFC has acquired a 29% stake in Apollo Health and Lifestyle Ltd – an investment for INR 450 Crores. The proceeds will be used to expand its network of clinics, cradles and diagnostics centers across India.
- Operational & Strategic priorities of Apollo Hospitals
o To increase the occupancy levels
o To make case mix richer
o To increase the ROCE for mature hospitals from 17% to 20% level
- Apollo hospitals is confident that the company will attain 18% - 20% ROI levels in the next five years
- The company will focus on elevating the performance of the new hospitals (which were added in the last 3 years) – by enabling the right mix of specialties, reinforcing the local market connect and strengthening the medical teams.
- Net debt is expected to increase this year due to two ongoing projects – Bombay and Proton
- Capex for FY 17 and FY 18 would be in the range of INR 100 to 125 Crores. Maintenance capex will typically come out of free cash flows (Project requirement is almost INR 350 Crores)
- Company plans to add about 200 stores every year – about 180 new stores opened in the nine months – for the next two to three years