Apollo Hospitals

Apollo Hospitals has come up with another healthy quarter as Q3'FY 12 standalone net sales grew by 19% YoY to Rs 714.75 crore. The growth in revenues came on the back of 15% revenue growth in Healthcare services to Rs 490.28 crore coupled with robust 30% growth in Pharmacy business Rs 224.63 crore. Also, margins improved by 90 bps YoY to 16.6% led to 26% growth in operating profit to Rs 118.37 crore. There was sharp rise in other income (104% YoY) leading to 30% growth in PBIDT to Rs 128.75 crore.

The growth in Healthcare services business was driven by growth across the Hospitals as the mature clusters such as Chennai witnessed 13% growth (despite the flat growth in inpatient volume) in revenues to Rs 225.8 crore and also Hyderabad cluster witnessed another strong quarter grew by 25% to Rs 90.4 crore. Also, others hospitals revenues grew by 21% to Rs 89.3 crore and Sub/JVs/Associated grew by 16% to Rs 270.9 crore for the same period.

Also, Pharmacy business witnessed margin improvement for another quarter. It continues to consolidate pan-India presence as it added 33 stores on a net basis in Q3FY12 taking its network to 1290 operational stores as on 31^st December 2011. During the quarter, it has added 40 stores and closed 7 underperforming stores.

After marginal decline in interest cost (5% YoY) and increase in depreciation (36% YoY) PBT grew by 35% to Rs 91.83 crore. Thanks to fall in effective tax rate by 320 bps YoY to 29.6% during the quarter there was 41% growth in net profit to Rs 64.65 crore.

On consolidated business, revenues grew by 20% YoY to Rs 802.9 crore for the quarter ended December 2011. Notably, OPM also improved by 80 bps YoY to 16.2% led to 26% growth in EBITA to Rs 130.4 crore. Also, PAT grew by robust 55% to Rs 60.5 crore for the same period.

As on 31^st December 2011, it has 51 hospitals with 8276 beds with 5888 beds from the 37 owned hospitals including JVs/Subsidiaries and associates, also 2388 beds from 12 managed hospitals. Notably, Out of 5888 owned beds 5374 beds were operational and has occupancy of 70%. The Company has discontinued the Management contract with Indore hospital (237 beds).

As part of its expansion plans, it's coming up with the 2860 beds by FY'15. The total estimated project cost is Rs 1861.1 crore out of which AHEL's share is Rs 1646.3 crore. Significantly, it has already invested Rs 223.4 crore (Rs 156.7 crore at the end of Q2' FY 12) as on 31^st December 2011.

Standalone Quarterly Performance:

Net sales grew by 19% YoY to Rs 714.75 crore for the quarter ended December 2011. At operating level, margins improved by 90 bps YoY to 16.6% on the back of fall in consumption cost (130 bps YoY) and decline in other expenses (20 bps YoY) as percentage to sales net of stock adjustments. As a result, there was 26% growth in operating profit to Rs 118.37 crore. Also, there was sharp rise in other income (104% YoY rise due to treasury income) further led to 30% growth in PBIDT to Rs 128.75 crore.

Moreover, there was 5% decline in interest cost to Rs 12.67 crore and depreciation increased by 36% to Rs 24.25 crore. Consequent to this there was 35% growth in PBT to Rs 91.83 crore. Thanks to the fall in effective tax rate by 320 bps YoY to 29.6% net profit grew by 41% to Rs 64.65 crore.

Hospitals Business:

Revenues from the Hospitals grew by 15% YoY to Rs 490.28 crore for the quarter ended December 2011 driven by the growth from the mature clusters as well as healthy performance from Subsidaries/JVs/Assoicates, and other hospitals. At PBIT level, margins improved by 70 bps YoY to 18.8% led to 19% growth to Rs 91.94 crore.

Chennai cluster:

Total net revenues grew by 13% YoY to Rs 225.8 crore in Q3'FY 12 on the back of 14% growth inpatient revenues to Rs 172.1 crore (despite the flat growth in patient volume) combined with 11% growth in outpatient revenues (12% volume growth) to Rs 53.7 crore. Notably, The flat growth in inpatient volume accounts to the elections in the Chennai region in the Q1'FY 12 followed by the seasonality issues.

The no of operating beds remained at same level at 1194 beds as on 31^st December 2011. Also, Occupancy declined to 70% for 9M'FY12 compared to 73% in corresponding previous period. However, Inpatient ALOS improved to 4.46 days in 9M'FY12 compared to 4.52 days in 9M'FY11. Significantly, the ARPOB grew by 11% to Rs 20147 for the first nine months period.

Hyderabad cluster:

Revenues from Hyderabad cluster grew by 25% YoY to Rs 90.4 crore in Q3'FY 12 on the back of 25% growth in inpatient revenues (on 20% volume growth) to 73.7 crore coupled with the 75% growth in outpatient revenues (on 5% volume growth) to Rs 16.7 crore.

Moreover, the no of operating beds were at 930 in 9M'FY12 compared to 809 beds in the corresponding previous period. Also, inpatient ALOS improved to 4.62 days in 9M FY12 compared to 4.82 days in 9M FY'11. Further, ARPOB grew by 12% to Rs 27331 crore for the same period. However, there was decline Occupancy to 73% in 9M'FY12 compared to 74% in 9M'FY 11.

Pharma Business:

Revenues grew by robust 30% to Rs 224.63 crore for the quarter ended December 2011 on the back of higher LTL sales growth in Pharmacy stores. At PBIT level, it has posted segment profit Rs 2.18 crore compared to segment loss Rs 0.86 crore in the corresponding previous period.

Notably, the revenues per store improved by 15% to Rs 1.74 crore for the quarter ended December 2011. Also, EBITDA margins expanded by 160 bps YoY to 2.3% as the EBITA per store was at Rs 0.04 crore compared to Rs 0.01 crore in the corresponding previous period. Interestingly, the Company has 1290 stores as on 31^st December 2011 compared to 1142 stores in the corresponding previous period.

Nine Months Performance:

Net sales grew by 20% YoY to Rs 2055.51 crore for the nine months ended December 2011. Also, OPM slightly improved by 30 bps YoY to 16.7% led to 22% growth in operating profit to Rs 344.04 crore. Other income grew by 42% to Rs 21.99 crore. However, there was 13% growth in interest cost to Rs 48.61 crore and depreciation by 29% to Rs 66.81 crore, also there was 24% growth in PBT to Rs 250.61 crore. Consequent to fall in effective tax rate by 210 bps YoY to 31.5% there was 28% growth in net profit to Rs 171.68 crore.

Apollo Health Street and Apollo Munich Health Insurance:

• Apollo Health Street total revenues grew by 18% to Rs 369.1 crore for the nine months ended December 2011. Also, EBITDA margins improved by 110 bps YoY to 15.2% led to 22% growth EBITDA to Rs 56.2 crore. However, at PAT level it posted loss of Rs 10.2 crore (as the H1FY12 PAT had one off litigation cost of aprox Rs 10.1 crore and interest reset) compared to profit of Rs 0.1 crore in the corresponding previous period.
• Apollo Munich Health Insurance grew by sharp 118% YoY to Rs 232.4 crore for the nine months ended December 2011. However, at PAT level it posted loss Rs 26.3 crore compared to loss Rs 62.4 crore in corresponding previous period.
• Apollo Munich Health Insurance gross written premium grew by 81% YoY to Rs 262.1 crore for the nine months ended December 2011. Also, the Assets under Management stood at Rs 334.6 crore as on December 31^st 2011.

Other Business Highlights:

• Apollo Hospitals is in partnership with Trivitron Healthcare and relaunched Dental care chain as 'White Dental Clinics' and drawn up an aggressive rollout plan. Significantly, it targets to have hundred white clinics across the various formats over the next 2-3 quarters at an approximate investment of Rs 100 crore.

• The Consolidated Debt is 829.7 crore as on December 31^st 2011 and Cash & Cash equivalents (includes investments in liquid funds) were at Rs 436.9 crore.

Other Information:

• During the quarter, the company allotted 30.89 lakh equity shares of face value of Rs.5/- each to Dr. Prathap C Reddy, Promoter of the Company at a price of Rs. 385.88 per share (including a premium of Rs.380.88 per share) calculated in accordance with SEBI (ICDR) Regulations, upon conversion of share warrants allotted to him on 12th June 2010. Consequent to the allotment, the paid up equity share capital has increased from Rs.6568.86 lakhs to Rs.6723.33 lakhs.
• The scrip was hovering at Rs 633.10 at BSE, India on 13^th February 2012.

Management Comments:

Commenting on the group's Performance Dr. Prathap C Reddy, Chairman said, We are pleased to report sustained progress in revenues and profitability during the quarter. The growth rates in the standalone entity as well as at the consolidated level have been equally strong indicating that all our businesses are contributing to this performance.

We are honoured by the presence of Prime Minister Dr. Manmohan Singh at the inauguration of our REACH hospital at Karaikudi. We are confident that the gradual expansion in geographic reach as well as delivery formats will help to further strengthen our position.

The recognition of Apollo Hospitals, Chennai as the best private sector Multi-Specialty Hospital in the country by the Week survey in November 2011 is a moment of great pride for the Group and motivates us to strive even further.

We are also delighted with the ranking of our Hospitals at Chennai, Ahmedabad, Delhi, and Hyderabad & Kolkata as the best Multi-specialty hospitals in their respective cities. The recognition for our Hospitals across the East, West, North & South of the Country speaks volumes of the quality of healthcare at every single Hospital in the Apollo Group

Apollo Hospitals - Standalone Financial Results

Apollo Hospitals - Standalone Segment Results

Apollo Hospitals: Standalone Hospitals Cluster wise performance Q3'FY 12

Apollo Hospitals: Standalone Hospitals Cluster wise performance 9M'FY 12

Apollo Hospitals: Key Operating Metrics 9M FY'12