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Apollo Hospitals announced the results for the quarter ended September 2013 and held a conference call to discuss the results and future growth strategies. The key takeaways of the call are as follows.
Highlights of the call:
The Standalone Revenues up 17% to Rs 975 crores for the quarter ended September 2013 and PAT was up 5% at Rs 87 Crore for the same period. On Consolidated basis, The Revenues were up 17% YoY to Rs 1111 crore for the quarter ended September 2013 and PAT was up 7% to Rs 90 Crore for the same period.
The new hospitals Vanagaram ] Ayanambakkam, Chennai and Jayanagar, Bangalore, reported operating loss of Rs 5 crore during the quarter. The Hospitals in tier II cities in Mysore and Madurai demonstrated improvements in EBITDA margins.
Excluding the impact of the initial operating losses of the new facilities - a 200 bed Multispecialty hospital at Vanagaram ] Ayanambakkam, Chennai and a 140 bed Ortho and Spine Specialty Hospital at Jayanagar, Bangalore, AHEL reported a 15% (y]on]y) rise in EBITDA to Rs 1652 million in Q2FY14 with an improvement in EBITDA margins in both healthcare services and standalone pharmacy businesses.
The focus is currently on aggressively strengthening medical teams in new startups in Vanagaram, Chennai and Jayanagar, Bangalore while adding new specialties too.
It has witnessed good QoQ traction in most of large hospitals in both Standalone and Consolidated. The larger units like Ahmedabad, Hyderabad, and Bangalore & Kolkata have improved their performance over Q1.
The Existing hospitals have demonstrated sustained improvements in operational performance through strategies to enrich the case mix at major clusters in Chennai & Hyderabad. This has been supported by robust volume growth at hospitals in Bangalore, Bhubaneswar and Mysore. A steady reduction in ALOS across the entire network is also contributing to the improved EBITDA margin
The Bhubaneswar occupancy at 213 beds (85% utilization on an increased capacity of 250 beds) as compared to 189 beds in Q2FY13.
The Hospitals at Karur and Karaikudi have reported positive EBITDA in H1FY14 compared with a negative EBITDA in the same period last year.
The no of Operating bed increased due to 5659 in H1fFY14 compared to 5265 in H1fFY13. The increase in no of operating beds is due the new hospitals at Chennai and Bangalore coupled with additions in others at Madurai, Karimnagar, karaikudi etc.
The Total in patient volumes grew by 6.1% and the out-patient volumes grew by 7.7% for the half-year ended September 2013. Also, The ARPOB grew by 11% to Rs 23502 for the same period. However, Occupancy decreased to 72% during the half year compared to 76% in the corresponding previous period. This is due to the new additions as the absolute occupancies have increased. Notably, the ALOS declined to 4.55% compared to 4.70% in the previous half year.
During the quarter, Apollo Pharmacies added 51 stores and closed 17 stores for a net addition of 34 stores, with total store network stands at 1560 operational stores as on 30th September 2013.
In addition to an enhanced focus on Retail Healthcare Centres, AHEL will leverage its existing network of over 1500 retail pharmacies across India to optimize touch points for patients. Following the stabilization of operations and improved performances of the Retail Pharmacy network, there are plans to increase the pace of expansion of the pharmacy network to between 200 and 250 stores a year to drive the next stage of growth for this segment.
The improved performance in the Pharmacy business is due to the higher proportion of the private labels coupled with better product mix and the consolidation of stores.
On Pharmacy margins, it indicated that there is some DPCO impact during the quarter. Itfs working on improving the private labels the matured labels to improve the margins going forward. It expects 1% improvement in margins every year with continued growth.
It expects the Pharmacy business to accelerate in H2 and growth momentum will continue. Further, it expects the net addition in the H2 will be higher than the H1 due to reduced closures anticipated.
The Expansion plans on track and 1000 beds to be added in fiscal 2014.
It Plans to add 13 hospitals from the current 38, is to add 2685 beds to the current 6400 by FYf16. The estimated Capex is Rs 2245.9 crore and AHEL share of Capex is Rs 2220.5 crore. It has already invested Rs 559 crore of the Rs 2220.5 crore of its total capex as of 30th September 2013.
The total debt is approximately at Rs 1000 crore and the Cash is at Rs 500 crore as on 30th September 2013. It further indicated that current D/E ratio is at 0.3 and comfortable up to 0.7 (in couple of years) as it expected to fund its expansion plans through debt and internal accruals going forward.
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