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Apollo Hospitals: Strong performance amid normalcy in operations, uptick in margins

News: Consolidated revenues de-grew 1% QoQ to Rs.3717 crore (but well above I-direct estimate of Rs.3148 crore) due to 23% de-growth in Pharmacy distribution to Rs.1167 crore (I-direct estimate: Rs.1209 crore). Hospitals segment on the other hand grew 11.8% QoQ to Rs.2168.8 crore vs I-direct estimate of Rs.1681.7 crore while AHLL revenues grew 23% QoQ to | 381 crore (I-direct estimate: Rs.257 crore). EBITDA margins improved 272 bps QoQ to 16.5% (I-direct estimate: 15%) mainly due to better Gross profit margins which is attributable to case mix. EBITDA in absolute terms grew 18.3% QoQ to Rs.615 crore (I-direct estimate: Rs.473.4 crore). Adjusted net Profit for the quarter was at Rs.247.8 crore v/s profit of Rs.243.2 crore in Q1FY22 (I-direct estimate: Rs.185.2 crore). Delta vis-à-vis EBITDA was mainly due to higher tax rate and lower other income.

Views: Apollo Hospitals’ Q2FY22 results were a comprehensive beat vis-a-vis I-direct estimates underpinned by strong performance on the Hospitals front. After Covid related hindrances last year , the Healthcare business is more or less back to normalcy due to rebound in patient visit and elective procedures. Structurally, cost reduction drives, expanding of complex procedures and profitability of new hospitals and AHLL remain key management focus areas. The Pharmacy business remains a steady growth engine albeit in a changed structure.