Q1 Results: Margin Of Older Apollo Hospitals To Rise To 23% In Coming Quarters, Says Group CFO

Apollo Hospitals Enterprise Ltd. expects margin of its mature hospitals segment, which includes its older health centres across India, to rise to 23 percent in the coming quarters.

“The segment’s Ebitda (earnings before interest, tax, depreciation and amortization) margin stood at 22.10 percent in the June quarter, which was in line with market expectations,” Apollo Hospitals’ Group Chief Financial Officer Krishnan Akhileswaran told BloombergQuint in an interaction.

The company had reported its earnings for the three months ended June 30 earlier this week, which exceeded analysts’ expectations.

Apollo Hospitals Q1 Results 2019-20: Key Highlights (YoY)

• Revenue up 16.30 percent to Rs 2,571.90 crore.
• Net profit up 68.70 percent to Rs 57.20 crore.
• Ebitda up 56.40 percent to Rs 363.70 crore.
• Margin at 14.10 percent versus 10.50 percent.
• Finance cost up 65 percent.
• Depreciation up 51 percent.
• Healthcare services revenue up 14 percent to Rs 1,358.60 crore.
• Pharmacy segment revenue up 18 percent to Rs 1,056.80 crore.

Watch the full conversation here:

Key highlights from the conversation

On Apollo Proton Cancer Centre

• We have just commissioned it and the first quarter has that impact.
• Ebitda breakeven at this centre is expected at almost 12-18 months.
• Expect Ebitda loss of about Rs 25 crore because it’s not a very high fixed cost centre.
• Don’t expect there will be further impact on a quarterly basis because of the centre.

On Apollo Health And Lifestyle

• Expect the segment to achieve Ebitda breakeven in September quarter.
• We had Ebitda loss of Rs 4 crore during the quarter compared with over Rs 7-8 crore in the last quarter.
• Expect Ebitda margin of 12-15 percent.

On Plans To Pare Debt

• Have added around 13 hospitals with nearly Rs 2,000 crore of capital that we have deployed over the last three-to-four years.
• Free cash flow from the business will be used to reduce debt.
• Expect debt to drop to Rs 2,500 crore by March from Rs 3,000 crore at present.
• Our debt-to-equity ratio will be at 0.8 and debt-to-Ebitda ratio will be lesser than 2.5.

On Promoter Pledge

• Promoter pledge will be below 50 percent by end of the quarter from the present 73 percent.
• Committed to bring it down to less than 20 percent in the next 12 months.

Other Highlights

• Overall volume growth was 6 percent for the quarter.
• The company didn’t initiate price hikes during the quarter.