Apollo Hospitals Q4 net profit grows 29%, new hospitals show higher growth

Apollo Hospitals Enterprise Ltd (AHEL) on Thursday posted a growth of 28.6 per cent in net profit at Rs 76.68 crore during the quarter ended March 31, 2019, as compared to Rs 59.64 crore in the corresponding quarter of the previous year. The total income for the quarter stood at Rs 2169.26 crore as against Rs 1868.79 crore during the same period of the previous year, with a growth of 16.08 per cent.

The growth in revenue during the quarter was aided by the 15 per cent year on year (YoY) growth in healthcare services and 18 per cent growth in standalone pharmacy business. The growth in healthcare services was led by new hospitals, which reported a 25 per cent YoY revenue growth. Mature hospitals grew 12 per cent YoY.

The overall strategy of the company continues to focus on improving asset utilisation, superior margin profile through case mix and quality of revenue, along with optimisation costs, said the company. This approach is paying off with the healthcare services' Ebitda growing by 21 per cent.

"The quarter was very good. We have seen continued good performance on new hospitals, and we have crossed Rs 1000 crore mark on revenue on a run rate basis from new hospitals," ," said Akhileswaran Krishnan, chief financial officer of the company. New hospitals reported Ebitda margins of 7 per cent in the quarter as compared to 4 per cent in the previous year. 

"Hopefully, by the end of next year we will be in double digit Ebitda margins also from new hospitals. Capex size is behind us, we will not see debt increasing from here on and it should start coming down by the coming year. You will see that Ebitda should continue to increase and our overall performance should augur well," he added. The company has crossed Rs 1,000 crore of Ebitda on a standalone basis during the whole year ended March 31. 2019.

The total Ebitda margin grew to 12.3 per cent during the quarter, from 11.5 per cent during same quarter last year. The company has seen a growth in margin from new hospitals. The reorganisation of the pharmacy business continued to progress during the quarter and is expected to be completed by November, 2019. Proton therapy will break even by the end of current financial year. The Proton Therapy Centre, launched in Chennai, will break even by the end of current financial year. It will have a capex of around Rs 300 crore, including some brownfield expansion plans and some routine capex. Krishnan refused to comment on the plans to acquire stake from its partner IHH in Apollo Gleneagles Hospitals, Kolkatta.

Apollo Health and Lifestyle Ltd (AHLL), the subsidiary floated by the company for the primary, secondary and speciality care business, has seen overall Ebitda loss coming down to less than Rs 10 crore for the quarter and the company is expecting the Ebitda to break even by Q2 of current financial year, as targeted earlier. The company will implement Ayushman Bharat in its select hospitals. The process is on and the company expects most of the tier II location hospitals to be empanelled, apart from some of the tier I location hospitals. The hospitals are looking at getting a list of doctors who are willing to work on Ayushman Bharat, said Krishnan. 

Prathap C Reddy, chairman of Apollo Hospitals, said that the company had consolidated its position as India's largest private healthcare provider in FY18-19, with its numbers signalling growth in multiple verticals. 

As on March 31, 2019, Apollo Hospitals had over 7,200 operating beds across the network (excluding AHLL and managed beds), out of which 13 were new hospitals with 1,790 operating beds. The new hospitals are expected to see an increase in volumes and utilisation going forward. On its pharmacy business, the company has seen a net addition of 407 stores in FY19 and the total store network as of March 31, 2019, stands at 3,428 operational stores.

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