Please note that this conference is being recorded. I now hand the conference over to Mr. Mayank Vaswani from CDR India. Thank you, and over to you, sir.
Thank you, Darwin. Good afternoon, everyone, and thank you for joining us on this call hosted by Apollo Hospitals to discuss the financial results for the fourth quarter of financial year 2024, which were announced yesterday. We have with us today the senior management team, represented by Mrs. Suneeta Reddy, Managing Director, Mr. A. Krishnan, Group CFO, Mr. Sriram Iyer, CEO of AHLL, Mr. Ashish Maheshwari, CFO of AHLL, Mr. Obul Reddy, CFO of the Pharmacy business, and Mr. Sanjiv Gupta, CFO of Apollo 24/7. Before we begin, I would like to mention that some of the statements made in today's discussion may be forward-looking in nature and may involve risks and uncertainties. Documents relating to our financial performance have been circulated earlier and will be referenced during this call. I would now like to turn the call over to Mrs. Suneeta Reddy for her opening remarks.
Thank you, and over to you, ma'am.
Thank you, Mayank, and good afternoon, everyone. Thank you for taking time to join our earnings call. It has been just over a month since our previous investor interaction, and it is my pleasure to interact with all of you once again. I trust that each of you have our earnings document, which we had shared earlier. FY 2024 has been an eventful year for Apollo Hospitals. We have reported strong double-digit growth in consolidated revenue and profit after tax, with a solid traction on all of our business lines. Continued solid operational progress in the healthcare services business across parameters of case mix, payer mix, and ARPOBs. Investments in high-end technology, cutting-edge treatments for patients are gaining traction, with increasing number of robotics and minimally invasive surgeries and advanced procedures like cardiovascular care, with outstanding clinical outcomes.
We have maintained the pace of network expansion with the addition of beds in Indore and Rourkela for the hospital business, a net addition of 489 pharmacies, and several additions across the Apollo Health and Lifestyle facilities and diagnostic centers. Against that backdrop, here are a few highlights for our quarter four and FY 2024 performance. Our healthcare services business witnessed a strong 17% year-on-year revenue growth, picking up the pace of growth from a relatively slower start at the beginning of the fiscal year. Within this, the cash and insurance revenues grew by 17% year-on-year and contributed to 82% of hospital, IP hospital revenue. Revenue from international patients also grew by 24% year-on-year. These represent the outcome of our focused efforts to optimize our payer mix. IP volume grew by 6.1% year-on-year.
Within this, surgical volumes grew by 9% year-on-year, maintaining a healthy trajectory. Tertiary care specialties like oncology, neurosciences, and gastro sciences grew at a healthy rate. Higher secondary specialties too witnessed a robust growth due to patients preferring the organized sector care enabled by insurance products. Overall occupancy across the group was at 65%. This has been achieved despite a marginal reduction in ALOS year-on-year and after recalibrating some beds for focused specialty clinical requirements and optimizing realization. ARPOB on an overall basis increased 12% year-on-year to INR 59,523. Financial results. Our consolidated revenue grew by 15% on a year-on-year basis to INR 4,944 crore. Healthcare services grew by 13% to INR 2,562 crore.
Revenues from Apollo HealthCo over these INR 2,027 crore in quarter four, growing by 13% year-on-year. Revenues from Apollo Health and Lifestyle registered a growth of 15% year-on-year at INR 355 crore in quarter four, FY 2024. Consolidated EBITDA was at INR 641 crore, registering an increase of 31% year-on-year. Within this, the healthcare services EBITDA was at INR 593 crore, registering a growth of 11% year-on-year, and healthcare services margins were at 23.1%. The marginal dip in margins was due to curated investments in new doctors and enhanced sales and marketing costs. We believe that these investments in clinical talent will lead to traction and volumes in FY 2025, and our increased focus on discretionary costs will help us restore and grow margins.
The pharmacy distribution business in Apollo HealthCo recorded an EBITDA of INR 134 crore, year-on-year growth of 11%. Apollo 24/7 operating costs were at INR 151 crore, lower than the operating costs of INR 156 crore in the previous quarter of quarter three, FY 2024. Apollo HealthCo has therefore reported an EBITDA of INR 12 crore, sustaining its trajectory of positive EBITDA. AHLL recorded an EBITDA of INR 36 crore, 40% year-on-year growth, and an improved margin of 10.1% as compared to 8.3% in quarter four FY 2023. [audio distortion] INR 4 crore, a strong growth of 76% year-on-year. Within the healthcare services business, we have delivered an ROC of 26.1%, with balanced ROCs across all our geographies, the Metro, the Tier 1, and the Tier 2.
The private label and generics business of Apollo Pharmacy was at 16.1%. Also, 16.1% of total Apollo Pharmacy revenue. Our digital platform, Apollo 24/7, added 2 million new users. The platform GMV was at INR 681 crore, representing a growth of 35% over the same period in the previous year. The outlook for FY 2025 is clear and exciting. We are pursuing multiple vectors to drive growth and improve profitability and ROC. These include a plan to operationalize 4 new hospitals with 1,500 beds in the existing markets. It is well on track. We will go live with our new hospital in Gurugram as our anchor hospital for NCR, as well as Kolkata, Hyderabad, and Pune, within the calendar year 2025-2026.
In the healthcare services delivery business, there is a concentrated effort to enhance surgical volume across key centers of excellence. These will be driven by the augmented medical teams, higher-end procedures, innovative therapies such as CAR- T cells, and aided by payment provided by steadily increasing proportion of insurance patients in our payer mix. We are also implementing cost optimization measures, which, accompanied by growth in surgical volumes, should help improve healthcare services EBITDA margin by 150 basis points. We are committed to achieving breakeven for Apollo 24/7 digital business within AHLL in the next six to eight quarters. We will continue to grow the platform GMV for Apollo HealthCo in FY 2025 while progressing on the transaction and integration. We will deliver the healthy growth on the diagnostics vertical with an expanded test menu and therefore increasing margins.
On that note, I would like to hand it over to our moderator and open the line for questions and answers. I have Krishnan, our CFO, Sriram Iyer from Apollo Health and Lifestyle, as well as Obul Reddy and Sanjiv from Apollo HealthCo with me to take all of your questions. Thank you.
Thank you very much. We will now begin the question-and-answer session. Anyone who wishes to ask a question may press star and one on their touchtone telephone. If you wish to withdraw yourself from the question queue, you may press star and two. Participants are requested to please use handsets while asking a question. Ladies and gentlemen, we will now wait for a moment while the question queue assembles. The first question is from the line of Kunal Dhamesha from Macquarie. Please go ahead.
Hi, good afternoon. Thank you for the opportunity. Ma'am, can you provide—while we have said that there are multiple vectors of growth—more quantitative details on the growth outlook for each of our top three business, healthcare services, pharmacy, and AHLL for FY 2025?
So, on healthcare services, let me start with healthcare services. So we are looking at a growth of beyond 15%. This growth will be driven by volume. And, and we say this with confidence, because as we look at partly by our network expansion and better asset utilization, we also look at our payer mix within these markets. There is, a significant growth in the penetration of private insurance, and this is enabling people who would otherwise go to smaller nursing homes to come into the Apollo system. I think it's creating access, and that is really driving, this is driving volumes. The second aspect of it is, you know, we have, been focused on international patients. However, you know, all of the, the connectivity was not as good last year as it is this year.
With that, international patient revenue is currently at 7% of total revenue, but in Delhi, it's at 20% of total revenue. So we do hope that this will again move up the occupancy in our firm. The third is centers of excellence. You know, we've made investments in oncology and neurology, but beyond that, we've been able to attract the best doctors in these fields, and with that, we have seen a growth of about 20%. I think we ended the year with close to INR 2,300 crore of revenue in oncology alone, as an example. So there's also cardiac. So we've onboarded 150 new doctors who, you know, this year is like a cost and really took away from margin. But as we go forward, these doctors have already started contributing.
They will contribute, and some of them will be moved into our new hospitals so that we can achieve break-even faster as we open these new hospitals.
Can we want to talk about-
Sanjiv want to, HealthCo?
Yeah, I'll take HealthCo. So a couple of things, you know, if you look at FY 2024, we grew by about 73% in the digital business versus FY 2023. As far as the current fiscal year is concerned, FY 2025, we're looking at anything closer to 50% growth from the current levels of INR 2,700 crore of GMV that we did in the previous year. Majority of the growth is going to come from the pharmacy, and we have got certain action plans, you know, which talk about you know, increasing the private label, increasing the assortment, and then also looking into the only way of acquisition of the customers.
And then looking into the entire Apollo ecosystem to ensure that, you know, we have more access to the customers, and we have more number of transactions over there. Diagnostics will continue to grow, and, apart from this, we are also banking on, insurance and digital therapeutics. These are the two verticals that should give us a decent margin. And, apart from the fact that corporate partnerships across the Apollo ecosystem is what something which we believe that currently will give us the growth momentum. As far as the front end or the offline store circumstance, we closed with about 6,000 stores in FY 2024. We added about 500 stores in the previous year.
We strongly believe that we would add another 500-550 stores in the current fiscal year, and we'll see anything between 20%-21% as the growth in the offline business. That's from the Apollo Health.
Sure. Thank you on that. And just since we are kind of discussing the offline pharmacy, the growth in the quarter four looked quite below the run rate, right? And we have highlighted that there is some liquidation at the front-end stores. So can you quantify that impact? You know, had that not been there, what could have our growth looked like?
Overall look, overall look-
Yeah. Hi. Yeah, last year, you know, FY 2023, we, as you are aware, we have added about 1,100 stores. In view of that and also to increase the stocking in our existing stores, we have increased the stock by about INR 248 crore. Against this, in the current year, the stock increased only about INR 97 crore. We have not added anything in the existing stores. Only for the stores opened during the year, we added the stores. This is because of the store level stock rationalization, which consciously we planned and worked. That is the reason. So there is a delta of about INR 150 crore, lesser stock at the front end, which means lesser sales for the AHLL pharmacy distribution. This is the only factor that has influenced the growth.
As we move into the next year, we are factoring about 22% growth in the front end, which should reflect in the back end.
And sir, the 248 stores that we have opened, that would have also led to, some more inventory filling in those stores, right? So that should have also positively impacted-
Not, not 248 stores. It is about 550 stores we opened during the year, wherein we stocked about INR 80 crore worth of stock. Against last year, where we opened 1,100 stores, where we stocked about, say, INR 150 crore. Apart from this, in the existing stores, we have increased the stock last year for the rationalization of SKUs, et cetera, by about INR 90 crore. So overall, from the beginning to the year, year-end, there is a INR 248 crore increase in the stock in FY 2023 over 2022. Whereas the similar number in 2024 against 2023 is only INR 90 crore. The difference is a delta that reflects in the sales of backend because APL is the exclusive, I mean, AHLL is the exclusive supplier for the APL.
Okay. So there is inventory rationalization at the APL level, right?
Yeah, almost. You know, that, that impact is about INR 150 crore on the sales of backend, pharmacy distribution.
And when you open a... Just, just one more, if with your permission.
Okay.
When you open a new store, typically, how much month of inventories do you carry, or is pushed into a new store, on an average?
We generally keep stock the new store with about anywhere 10-12 lakhs per store stock when we operationalize this store, and then over a period of three years, move to INR 18-20 lakhs.
Perfect. Thank you. I have more question. I'll join back with you.
Thank you.
Thank you.
The next question is from the line of Neha Manpuria from Bank of America. Please go ahead.
Yeah, thanks for taking my question. Ma'am, if I look at the occupancy number, you know, in the last year, we haven't seen too much of an improvement year-on-year. I know ALOS has, you know, sort of, sort of moderated, so that benefits volume. But we have, you know, sort of guided to that 70% margin over time. You know, one, when do we think we get to that 70%? And what, according to you, will take us there? I know we've invested in all of these doctors, et cetera, but, you know, is this enough to give us confidence to get to the 70% occupancy level?
... Yes, I think, you know, the doctors are important. But second, I think the health insurance penetration, including into the Tier 1 and 2 cities, is really going to improve occupancy. And I have to state at this time that in our metro cities, we're above 70%. You know, average is 69%, but some hospitals already at 80%. So, you know, when they're at 80%, their ALOS is at 4. So there is a direct correlation between ALOS and occupancy, and therefore, that's why we say that, you know, that we're focused on the volumes. And we're quite sure that in this year we have budgeted 68%-70% volume. So we are really focusing on improving volume, improving case mix, and that's why we've, you know, onboarded these doctors.
We've also got tie-ups with private insurance that will make sure that, you know, it creates access for the Tier 1, Tier 2 cities besides the Metro. All of these efforts will result in, you know, in higher occupancy.
The doctor hiring, you know, I know we hired the 150 doctors, which are, you said some of them would be shifted to the newer hospitals. But since we're commissioning four other hospitals next year, wouldn't that hiring again happen next year? And wouldn't that be an offset to the margin expansion that we see from the existing beds?
No, no, there will definitely be some hiring at that time, but we will... I think what we're trying to establish here is that last time we added beds, we were slow to see breakeven. But this time, when we establish beds, you know, we're quite confident of seeing faster breakeven because, you know, we've identified certain key doctors for all of the specialties, and they are getting trained within their roles.
Understood. My second question is on, you know, Apollo 24/7, the breakeven guidance that you met. What sort of a GMV should we get to, to get to that breakeven in six to eight quarters? You know, how should that mix of the GMV look? I mean, how much of that should come from the newer areas like, you know, insurance and digital therapeutics? Am I thinking about this the right way, or you know, that breakeven is, you know, also dependent on costs being lower versus what we are doing now?
Mm-hmm.
Yeah, I'll, I'll take the question. So, I think first, you know, where we are today is we are at about INR 700 crore of GMV. If you look at Q2 numbers, INR 600 crore-INR 700 crore. Now, as we look into six quarters, what we are targeting is the total GMV for that quarter to be the range of about INR 1,700 crore. And how the contribution will change is that, if you look at current composition of INR 700 crore, it's about 46% is Apollo Pharmacy. This particular, you know, division should give us about 55%, in six quarters from now. And, we are also looking at about 10% of INR 1,700 crore to come from newer segments, which is the digital therapeutics, insurance, and the monetization.
Some parts of this, which is insurance and monetization, has already started. We are into a run rate of about INR 20 crore annually, that is, which is about INR 65 crore currently per quarter. So, 10% mostly comes from the newer segment. About 55% is from the pharmacy, and the rest all diagnostics contributions and all these things will continue to be there. Now, we are also mindful to the fact that, you know, this is planning that, you know, you're getting to a top line of about INR 1,700 crore of GMV. And, the current take rate, if you look at it, is about 4%, which is the commission that we call it, and the 4% should be up to 8% in six to seven quarters from now.
While these things, we have got plans and to ensure that, you know, we see that target. So mindful that at some point, in case we think that there's a little bit of, you know, lesser volume coming into the picture. We also take care of the expenses. We'll also rationalize and optimize that. The planning would also look into the expenses base, because we said we had INR 190 crore of quarterly expenditure. We brought it down to INR 140 crore in Q4. But that will be dependent on how growth is coming up. So I think next week it is a sum total of both the things really, we're looking to. We are working on the growth levels as well as we are looking into the cost side.
Got it. Thank you so much . I appreciate the answer.
Thank you.
Thank you. The next question comes from the line of Bino Pathiparampil from Elara. Please go ahead.
Hi, good afternoon. So a couple of clarifications on the number of beds. Just wanted to know if the Rourkela has been added, is it operational already?
Yeah, it has got operationalized, and it's part of the numbers here.
Okay. Because in the eastern region, I am seeing only about 50 beds in the added to the operating beds in your presentation.
It is added now, operationalized. It is gradually getting operationalized. It will get higher with time.
Understood. Okay. Second, in western region, I can see the operating beds increased by 60, but I don't know of any new facility added there. Where is that increase coming from?
...Indore is part of Western region, and that is something that we have added in the 60. So we have an expansion in Indore that we have done recently. And so that-
Okay.
That's the number which is coming there.
So in that case, the northern region has gone up by 100+ beds . Where would that be coming from?
So Lucknow also added in Lucknow in northern. In northern, if you look at it, Lucknow added by almost around 40. So actually, northern includes Lucknow and Indore. So to your point, you know, 60 and 50 of 60 beds of Lucknow and 50 of Indore actually got added in northern. So if you look western region, it will be, you know, we had this Ahmedabad, where we had bought over this one of these facilities called CBCC, which was a 50/50 JV. And, you know, that is something that's which is now getting consolidated. It's a small JV, so the beds have come into that.
Okay, understood. Thank you. And just a follow-up question, in answering another question previously, Suneeta mentioned about some tie-ups with insurance companies to drive up volumes. Could you elaborate a bit on what sort of tie-ups are these? How does it work?
So if you look at the insurance, you know, there are multiple things that we are doing. You know, one is, you know, the insurance itself is broken up as retail as well as corporate. So on the retail side, we are also working with, we have started working with a lot of insurance brokers and agents as well, because they have strong connects also in the market, who are also enabling patients to take decisions at the time of need. So at one end, we are working with some of them to see how we can. We have started working on that front very recently. So it's something that we are seeing whether we can get traction on that.
The initial inflows that we are getting has been good. The second has been corporate. On the corporate side, we are directly working with large corporates across each of the units, because, you know, from that perspective, the decision-making is really the employee at the time of the need. And he has to really think of Apollo when he needs to come in. So we are working with them, and I think there is a team now across each of the geographies to see how we can improve our penetration there. So these are the two things that we are doing. With the insurance companies, there is very little that we can particularly do, because they are not able to really channelize patients to a particular set of doctors.
I think with the new regulations, the coverage scope has expanded. So they've included robotic surgeries, which were not allowed before. They've included some digital therapeutics. They've included stem cells.
Oncology.
So, yeah, some of the oncology procedures, neuro-guided navigation. So several new clinical procedures have been added.
Understood. Thank you very much. I'll come back to you.
Thank you. The next question comes from the line of Shyam Srinivasan from Goldman Sachs. Please go ahead.
Yeah, good afternoon, and thank you for taking my question. Just the first one on the margin for the hospital services or healthcare services this quarter. Several comments have been made around new doctor hire, marketing, IT expenses, also one-off fixed asset impairment of INR 12 crore, INR 120 million, right? So, has it all come through? Is that impairment also above the EBITDA line? And if you could say how we are gonna recoup some of this in the next fiscal. Sorry, fiscal year 2025.
The asset impairment is below the line, because that's for one, depreciation of assets which are being aged. You know, which is something which came as part of the audit, you know, that we did, the year-end audit. The first one, which is about the new doctors hire, marketing and IT, is all above the line. And this, because the IT expense was kind of a one-time reset that we had to do when we moved into the cloud and also migrated from one provider to the other. So, you know, so given that, there has been a shift in the cost line, and we don't see that increasing from here on.
So as you see some of this, revenue increase coming into the next year, you will see that it will get defrayed with a higher base of revenue. The new doctors hire, obviously, you know, it's a clear decision to hire doctors to improve revenues and increase them in specific specialties, and that has started playing already, but we will see fuller benefit of it by Q2. As we speak in Q1, we are seeing some benefit in some geographies already. Marketing, again, you know, it is a bit of increase that we did, on purpose on digital marketing.
Again, we saw that, benefiting us, but with that benefit on the revenue, we are now, that also has been a quantum jump, but we are not seeing a jump from here on, and we are also calibrating some of the other non-digital expenditures on marketing as we speak. So because with all these three efforts, we are quite confident that the margins in the next year should go back to the earlier margins and even higher.
Yeah, Krishnan, if you could quantify, like, when I look at 24% for fiscal year 2024, are any guidance that we are offering?
Our target is to get to 25%. That's what we have as internal targets. You know, let's see how we are able to get there by end of the year.
Yeah, so you're not giving that as a full year target, but just as a maybe quarterly one, perhaps?
That is correct. That is correct.
Understood. Okay, thank you. The second question is just on AHLL and specifically on diagnostics. You know, we have now improved to, like, 11%, 10%, 11% margins. Quarterly margins have been even higher. Anything that we are calling out in terms of how should we look at the path forward? I remember in the past, we've had INR 1,000 crore revenue target as well. So are we on track for both those two things?
Yes, Oh, yeah, Ashish is here. Ashish, you wanna-
Yeah, I will begin, Sriram here. I can take this, ma'am?
Yes, please do.
Yeah. Okay. Yeah, so we are, first of all, yes, our margins have improved this year to 10.8%, which is a 3.2% jump over the previous year. And, we clearly have goals as well to hit INR 1,000 crore, which will take a couple of years. The good thing is we are continuing to cycle at 20% growth now for third year in row, and we are quite confident and bullish of continuing to keep growing the top line at that rate, and at a better margin level as well. So we have initiatives. One is the higher volumes that comes into play will give us the operating leverage. At the same time, we have tightened our unit economics and taken a lot of initiatives, that is helping us improve our margins.
To reach INR 1,000 crore as well, we have our investments outlined, and we are planning for a aggressive growth. It's we are very bullish on diagnostics and, we are on path, as I said, the next couple of years to get to the INR 1,000 crore number.
Just to add to what Sriram said, on the... [audio distortion] We have also been able to improve our gross margin by 3% on the diagnostics front. We have moderated our overall cost. We have changed our methodology from dry to wet, and that has also helped in our gross margin expansion. So, while, as Sriram said, when the revenue will scale up, then the fixed cost absorption will also get better, and hence, the projected EBITDA margins will also significantly go up.
Helpful. Just one sub-question on diagnostics. What's our B2B, B2C split of the diagnostic venture? And, you know, is there any targets that we are giving even for the margin side, please?
I think our, currently, our B2C, our B2B mix is about 25%-30%. That's our B2B, B2B mix. The rest of the things comes from our B2C and, and digital put together. So we expect the B2B business to be around 1/3 of our business, and the rest 2/3 to continue to come from B2C and B2B. In terms of margin, we should be around mid-teens. That is what the target is, to be around mid-teens in this financial year.
Got it. Yeah. Helpful, and all the best.
Thank you.
Thank you.
Thank you. The next question is from the line of Damayanti Kerai from HSBC Securities and Capital Markets India Private Limited. Please go ahead.
Hi, good afternoon, and thank you for the opportunity. My question is on your cluster-wide performance. So, ma'am, you said, for occupancy, you are targeting somewhere 68%-70% for next fiscal year. When I'm looking at region-wide occupancy, I guess, AP, Telangana, and western region are two clusters where occupancy seems much lower than the network occupancy. So would you like to call out any specific region? And, will improvement in this, these two clusters will be, meaningfully adding on to your 68%-70% occupancy connect here?
I think you, you have, you have got it right, actually. You know, I think these are the two regions that we are really focusing on for the occupancy, because in AP and Telangana, you know, if you look at it, you know, the even in Hyderabad, we have two smaller hospitals in two, two different areas, and the large hospital is already at close to 70%, which is the Jubilee Hills one. 69%, 70%, we are at. But if you look at the other two hospitals, we are at a number which is 50%, et cetera. So we are working specifically on those areas to see how we can take that to at least 63% in the coming year, especially in the AP and Telangana region.
And also there, of course, you know, we have places like Vizag, where we have seen, you know, a good traction, which is now coming, and we should... You know, we are the leaders now in Vizag, and we should hope that Vizag should also help us get the overall occupancy higher. The second point, as you rightly said, western is a bit of a drag because of Nashik. You know, that's one that we are not very comfortable taking the occupancy at a higher level, but Mumbai and Ahmedabad is something that we are quite... Mumbai is doing well, but Ahmedabad has some options to go out, and that is something that we are working on.
So these two geographies will definitely are important to get our overall occupancies higher, in the overall when we take it to 68%-70%.
Okay, just a clarity, although Nashik is a small unit, but, what is the main issue there? Like, why it's a drag?
I think, see, we have the. There is a, though it is a small market unit, there are multiple players in that market who have come in already, you know? I don't even understand why so many players are contending in that small market, and multiple different players have come in. The second point is we are not taking scheme patients, et cetera, because we don't want to, the market is also a bit of a low-paying market, and then you have a scheme. So clearly, I think it's a market that is, you know, not a very. We are not investing there. We just want to make it, it's profit. It's, it's reasonably, it's just getting break even. I think we would just continue to grow it from here and see what we can do better.
That's helpful. My next question is bit of clarity on your margins. Did Ma'am mention that for next year there will be 150 basis point improvement in margin despite, like, four new facilities coming on board?
So the most of the facilities are coming really by Q4, right? If you look at the facilities, you know, and one of them could probably even go to Q1. So I think, pretty much, I think, you know, we are looking at the full year margins to get to expand by at least 150 basis, what we would like to do full year. As I said, 25% is the, is the target that we have for the end of the year also.
... Okay. The last question is on your AHLL business, especially on specialty care. So when I look at revenue, it's very similar in fourth quarter and the third quarter. But in terms of margin, I guess, this quarter is around 5% compared to 13% in sequential quarter. So what has happened? Why, like, so much of swing?
Yeah. So, yeah, hi. So one of the things on specialty care is that we had a lot of centers that were coming up last year, and most of some of the centers will have gone live in this quarter of this financial year. So a lot of cost had got baked in, and of course, the revenue had not come. So that was one of the reasons. And in this financial year, you will see improvement in margins coming in the specialty care business. So that is one of the, one of the reasons that is, that happened in the specialty care. Ashish, do you want to add anything else?
Yeah, maybe. So on the secondary care specialty business, there are four centers: Electronic City, Rajajinagar, Indirapuram. So all these, these first three, these three centers, were having only costs. They were, the relaunches or the launches in the current year, in FY 2024, and could not contribute to revenue. Then we had two relocations, one in Jaipur and one in Pusa Road. Also, these relocations, did not contribute the revenue. In terms of quantification, we had a fixed cost due to these changes of almost INR 29 crore, but there were minimal revenue impact. So this really impacted the overall margin.
Okay. So that exercise is done now, and things should pick up from here on.
Yes.
Yes.
So that's the relocation as well as the launch is complete. In FY 2025, we will have revenues for the full year. There are certain last minute and the closing closure of the launches in Electronic City, which is still in progress. But definitely, during FY 2025, we for the major part of the year, we'll have the revenues also coming back.
Okay. That's helpful. Thank you.
Thank you. Ladies and gentlemen, if you wish to ask question, you may please press star and one. The next question is from the line of Siddhant from Tusk Investments. Please go ahead.
Yeah, hello. Good afternoon. So my question is, generally, we have seen that the mature center, centers have an EBITDA margin of more than 20%-21%. But our center in Delhi, it's a mature center with high ARPOB and very high occupancy. Still, we are doing margins around 15%-15.5%. So what is this, what is the reason for this low margin, and any targets for FY 2025 in terms of the margins for the Delhi center?
The Delhi center does a lot of free work. If you added back the free work, it would definitely be in the 24%-27% margin.
Okay. Okay, and, previously, like, it was mentioned that we are looking to do CapEx at the Delhi center. So what is the progress so far and on the CapEx front?
CapEx to be done, what we've done currently is to install the ZAP machine. We have to do, you know, create this parking, the one side parking to be combined for us to add further beds. So we are looking at completing the parking requirement so that we would get additional FSI. So currently that-
Yeah, sorry. Okay, and after the parking issue, what is the amount of beds we are looking to add at the Delhi center?
The amount of beds?
The number of beds, yeah.
Yeah, yeah, we're looking at 100 beds.
100 beds, okay. The leasing was also due at the center. Is that being taken care, the land lease?
That is being taken care of, yes.
Okay. Okay. And, regarding the CapEx, like, since it's a JV, do we need the approval of the center?
We have the approval of the government.
Of government, okay. Okay. Thank you. Thank you so much.
Mm-hmm.
That's it. Yeah.
Thank you. The next question is from the line of Harshal Pangcham from Capgemini. Ladies and gentlemen, the current participant seems to have dropped from the queue. We will take the next question, which is from the line of Kunal Dhamesha from Macquarie. Please go ahead.
Hi, thank you for the opportunity again. Ma'am, can you help us understand our payer mix for FY 2024, for the healthcare services business?
Yes. Currently, we have 39% is cash, over 40%, 41%-
43% .
43% is insurance, 7% of our revenues are international patients, and we still continue to work with state governments and see so 4%, 4%-5%.
Okay. Last year, the government patients, because as far as I remember, last year, it was more like 45%, 45% cash, 7% international and 3% profit. So, has there been change for...?
No, if you, you know, look at different hospitals, it's actually different, but at an aggregate level, this is, it is 7%. It is not dropped.
PSUs are 7% outside of the government, and that is what we are asking.
Mm-hmm.
Okay. Uh-
7%, 3% is government, so between the two, it is 10%.
... To institutional, we have 10%, like PSU and government.
That's correct.
Okay, okay. And how do you see improvement in this, in FY 20-
I think you would be-
I think broadly okay.
Yeah.
Okay. And in terms of number of-
Insurance can grow a bit faster from here on also, because that's something that we will see happening.
We're focusing on international patients, so hoping that will improve to 10% of total revenues.
Sure, sure. Thank you for that. What would be a total number of doctors as of the end of FY 2024?
We'll come back to you, please. We don't have the number, offhand.
It's for 6,100 doctors, I think.
Okay, yeah, I'll get in touch with Krishnan on that. And then the last one on the GMV, since we are expecting around in GMV for Apollo 24/7 , when should we start seeing that jump? Because, for that, for us to meet that guidance, we should see a step jump in the GMV, right? Will it start on ...
Sorry to interrupt, but your line for you seems to be breaking up in between.
Yeah, but yeah, I got the question. Maybe I can give the answer. I think what Mr. Kunal is trying to check is that the GMV growth, you know, from which quarter we start looking at increase. I think Q2 onwards, we should start looking at increase. And this is only because of the reason that, you know, we had reset our model in Q3 of the last fiscal year, which impacted our Q4 and a little bit of Q1. Hence, we strongly believe that from Q2 onwards, we'll start seeing the meaningful growth, and that is how directionally we will hit the numbers that we're looking at for six quarter from now.
Sure. And just maybe last one, Abinu. Let's say in all our business growth, how much, you know, we are baking in terms of the effective seasonality or the quarter to quarter three, which generally remains stronger, right? Are we expecting the seasonality to be above the level seen last year, or what are we baking in our base case?
For hospitals, we are looking at a better quarter. So March, April, May, in spite, you know, I think the only deterrent would be this extremely hot weather, which is dissuading some people from traveling. But otherwise, you know, we are looking at a better quarter.
Thank you, and all the best.
Thank you.
Thank you. The next question is from the line of Abdulk ader Puranwala from ICICI Securities. Please go ahead.
Yeah, hi. Thank you for the opportunity. Just two questions from my end. First is on the court case, you know, which was in our public litigation, which was being filed with regards to covering the hospital rates at which, you know, the surgeries are performed. So any update on that front? I mean, you could, you know, provide would be to us helpful.
Yeah, I think the Supreme Court said that, hospital rates are a function of market rates. And in a place where you cannot, in a market where you cannot control input rates, specifically calling out doctor fees, you cannot really put a fix on, you know, what the pricing should be. It should be determined by market forces. He also made a mention of, you know, lawyers are not bound to charge by a certain price, and that same principle should be applied to doctors as well. And having said that, he told the government to come back on September 10th, but I think it was a very good outcome for the private sector.
Got it. Thanks for that. And just a second question again on this. So there have been talks about some revision to happen on the CGHS rate. If yes, I mean, you know, what could be the impact on Apollo? Or, you know, what is the kind of benefit, which
No, I think I was referring to the same when I said this was... So earlier, the court had mandated the government to come out with a pricing policy. At which time, the government came back with suggestions from several of the states, because health is a center and a state subject, where the state said this cannot be implemented. And therefore, this was taken to the Supreme Court. And the response to the Supreme Court, you know, to this was that, yes, it cannot be. It has to be determined by market forces and cannot be done by the government, in fact.
Our exposure to CGHS is very limited.
Yes, and could the CGHS rates go up? I believe there definitely is a possibility.
Got it, ma'am. Thank you.
Thank you. The next question is from the line of Siddhant from Tusk Investments. Please go ahead.
Yeah, thank you for the follow-up question. So at the 100-bed at the Delhi center, what will be the timeframe?
The timeframe for that should be about two years.
Sorry, two years?
... Yes, yes.
Yes. Okay, okay. Thank you so much.
Thank you. The next question is from the line of Kunal Randeria from Axis Capital. Please go ahead.
Hi, good afternoon. Just one question on online pharmacy distribution. It's INR 230.7 crore number, and it's comparable to the INR 199 crore number that you have given in this presentation, because last year you had reported sales of around INR 253 crore. So just wondering what changed here, what are the restatement you have made here?
Yeah, this is, yeah, I'll give the answer. This is the comparable number, and INR 258 crore, which is 35% revenue to GMV. This is in line with INR 199 crore, you know, which is reflected in Q4 FY 2023. So this is revenue to GMV ratio is correct in both instances, and they are apples-to-apples comparison. You can compare them.
Okay. But, you know, maybe just from my benefit, can you explain what's the difference between the INR 253 crore that you had reported last year and INR 199 crore that you have restated?
I will have to come back to you on this particular point. I'm not having the right answer for this, but if you can connect offline, I'll be able to help you with this question.
Sure, I'll connect offline with you. Thank you.
Thank you.
Thank you. Ladies and gentlemen, that was the last question. I would now like to hand the conference over to Ms. Suneeta Reddy for closing comments. Over to you, ma'am.
Thank you. Thank you, ladies and gentlemen, for joining this call. As we enter FY 2025 on a very positive note, with all three business verticals having clear plans for revenue growth, enhanced profitability, and strong operation teams, we strongly believe that we have the most comprehensive and integrated healthcare offering in the region, and are best positioned to deliver the strongest value proposition to our consumers and [audio distortion]. We look forward to your continued interest and support. Once again, thank you all for joining this call, and we-