Ladies and gentlemen, you have been connected to the Apollo Hospitals conference call. Please stay connected. The call will begin shortly. Participants, you have been connected to the Apollo Hospitals conference call. Please stay connected. The call will begin shortly. Thank you. Ladies and gentlemen, good day and welcome to Apollo Hospitals' earnings conference call. As a reminder, all participant lines will be in the listen-only mode, and there will be an opportunity for you to ask questions after the presentation concludes. Should you need assistance during this conference call, please signal an operator by pressing star then zero on your touch-tone phone. Please note that this conference is being recorded. I will hand the conference over to Mr. Mayank Vaswani from CDR India. Thank you, and over to you, sir.
Thank you, Neeraj. Good morning, everyone, and thank you for joining us on this call hosted by Apollo Hospitals to discuss the earnings for the fourth quarter and full year of financial year 2024-2025, which were announced yesterday. We have with us today the senior management team represented by Ms. Suneeta Reddy, Managing Director; Mr. A. Krishnan, Group CFO; Dr. Madhu Sasidhar, President and CEO of the Hospitals Division; Mr. Madhivanan Balakrishnan, CEO of Apollo HealthCo; Mr. Sriram Iyer, CEO of AHLL; Mr. Sanjiv Gupta, CFO of Apollo HealthCo; and Mr. Obul Reddy, CFO of the pharmacy business. 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. Please note the disclaimer mentioning these risks and uncertainties on slide two of the investor presentation that has been circulated earlier.
Documents relating to our financial performance have also been posted on the corporate website. 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.
Good morning, everyone, and thank you for joining our call this Saturday. I trust that all of you are well and have received our earnings document, which we shared yesterday. I'm happy to share at the outset that in FY 2025, we have achieved two significant milestones. We crossed INR 20,000 crore in consolidated revenue and came in at INR 21,794 crore. Alongside, healthcare services revenue crossed the milestone of INR 10,000 crore and came in at INR 11,147 crore. We believe these milestones reflect the scale and depth of our operations and give us the impetus to move ahead. Our performance in quarter four, FY 2025, reflects continued strength in execution, underpinned by resilient operating metrics and sustained growth across specialties and geographies.
This has helped us to conclude FY 2025 on a very strong note with healthy momentum and double-digit growth across all three verticals of healthcare services, Apollo HealthCo, and AHLL. Our healthcare services business continued to benefit from strategic investments in high-end specialties and a sharper focus on optimizing both payer and case mix, all of which contributed to steady improvement in ARPOB and margins. Our investments in clinical programs, medical talent, and digital transformation have further strengthened Apollo's position as a leader in integrated healthcare delivery. Apollo HealthCo has now delivered a third successive quarter of profitability after breaking even in quarter two earlier in FY 2025. AHLL has sustained its growth trajectory, supported by ongoing expansion in diagnostics and primary care formats. This performance positions us well for sustainable growth and enhanced profitability as we step into FY 2026.
Against this backdrop, let me share some of the key highlights of our performance for the quarter. Consolidated revenue grew by 13% year-on-year to INR 5,592 crore. Within this, healthcare services business delivered 10% year-on-year revenue growth to INR 2,822 crore in quarter five. This is after a 2% impact on account of patient flows from Bangladesh. Revenue from cash and insurance segments saw a year-on-year increase of 11%. Collectively, these segments accounted for 83% of our inpatient hospital revenue. Inpatient volumes grew by 4% year-on-year. Our focus specialties, cardiac oncology, neurosciences, gastro-sciences, and orthopedics, continued to expand at a healthy pace, recording a volume growth of 8%, which reflects in our ARPP as well as margin despite the setback from the Bangladesh patient flow.
In addition, higher secondary specialties saw robust growth too, supported by the expansion of insurance coverage in the recent years, which has increasingly enabled patients to access organized healthcare services. Group-wide, occupancy stood at 67% in quarter four. Occupancy in metro cities was at 70%. ARPOB grew 7% year-on-year, touching INR 63,569. We believe that the key driver, such as increased surgical volumes, a higher complexity case mix, and further incremental improvement in payer mix in select geographies, will continue to support ARPOB growth going forward. Apollo HealthCo reported revenues of INR 2,376 crore, growing 17% year-on-year in quarter four on the back of omnichannel pharmacy growth and double-digit growth in GMV. Revenues from Apollo Health and Lifestyle increased by 11% on a year-on-year basis to INR 394 crore during the quarter. Consolidated EBITDA was at INR 770 crore, registering an increase of 20% year-on-year.
Within this, the healthcare services EBITDA was at INR 686 crore, a growth of 16% year-on-year. Healthcare services margins remained robust at 24.3%, reflecting the high proportion of tertiary care in the mix. Pharmacy distribution business within Apollo HealthCo recorded an EBITDA of INR 162 crore, a growth of 21%. In the digital segment, cash loss was at INR 80 crore compared to the INR 111 crore in quarter four, FY 2024. In addition, there was an accelerated ESOP charge of INR 45 crore in this quarter. Therefore, Apollo HealthCo reported an EBITDA of INR 36 crore in quarter four, FY 2025, up three times from INR 12 crore in quarter four, FY 2024. AHLL delivered an EBITDA growth of INR 47 crore, representing a 32% year-on-year growth, with margins improving to 12% from the 10% in quarter four last year. Consolidated PAT was at INR 390 crore, growing 54% year-on-year.
Within healthcare services, we delivered an ROC of 27.5% with balanced ROCs across all geographies, metro Taiwan and Taichung. Private label and generics revenue were at 15.6% of total pharmacy revenues. Our digital platform 24x7 added 2 million users. The platform GMV was at INR 795 crore, representing a growth of 11% over the same period last year. I now come to the summary of the full-year performance for FY 2025. FY 2025 consolidated revenue was at INR 21,794 crore, a year-on-year growth of 14%. Healthcare services revenue was at INR 11,147 crore, a growth of 13%. Apollo HealthCo reported revenue of INR 9,093 crore, a growth of 16%. AHLL revenue grew by 14% to INR 1,554 crore. Full-year consolidated EBITDA grew by 26% year-on-year to INR 3,022 crore. Healthcare services EBITDA grew by 15% to INR 2,701 crore. This represents a margin of 24.2%.
Apollo HealthCo reported EBITDA of INR 168 crore after considering non-cash impact of INR 108 crore for the year. AHLL EBITDA grew 32% to INR 154 crore. Consolidated PAT was at INR 1,446 crore, a growth of 61% year-on-year. Healthcare services PAT was INR 1,426 crore, an increase of 25%. Within this, we have ended the year with a robust set of financials. As we look ahead, we are on track to operationalize our previously announced facilities in Gurgaon, Pune, Kolkata, and Hyderabad later this fiscal year. In addition, we are happy to announce a significant expansion in the Sarjapur micro-market in Bangalore with an addition of 700 beds in two stages. Stage one, the acquisition of an existing 200-bed hospital, a lease facility where we can commence services within two months. Stage two, establishing a 500-bed greenfield hospital in very close proximity for which the land has already been purchased.
Within this, we will operate a 700-bed integrated facility and will take our bed strength in Bangalore to 1,500 beds along with our strong network of clinics, extra, and Cradle facilities. We are also pleased to announce capacity expansion of 160 beds in our existing Jubilee Hills and Secunderabad facilities in Hyderabad, which will be operationalized this year, along with our planned expansion in Gachibowli, which will take our overall bed strength to 1,500 beds in Hyderabad. With this, we are committed to spending over INR 8,000 crore for the additional 4,300 capacity beds over the next three to four years. We have already spent INR 1,000 crore for land acquisition, security deposits, and project development. Talent project costs to be incurred over the next three to four years is around INR 6,000 crore.
We have significant cash and cash equivalents on hand and generate healthy free cash flows in excess of INR 1,000 crore per year after accounting for routine items. We believe we can fund this portfolio expansion primarily through existing funds and internal accruals. We continue to execute on our strategic priorities, strengthening our core healthcare services, building clinical differentiation, expanding our digital retail healthcare footprint, and enhancing patient outcomes through rigor and innovation. With strong fundamentals across the business, plans in place to mitigate the headwinds caused by disruptions in inpatient flows from Bangladesh and several facilities set to be commissioned in a phased manner, we are confident of sustaining our growth trajectory in FY 2026. As always, our focus remains on creating long-term value for our patients, partners, and stakeholders while driving operational excellence across the board.
On this note, I would like to hand it over to the moderator and open the line for questions. I have our CFO, Krishnan, with me, Dr. Madhu Sasidhar, CEO of the hospital division, Sriram Iyer from AHLL, Madhivanan, 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 with the question and answer session. Anyone who wishes to ask a question may press star and one on the touch-tone telephone. If you wish to remove yourself from the question queue, you may press star and two. Participants are requested to use handsets while asking your question. I request all the participants kindly restrict to two questions per participant and rejoin the queue for a follow-up question. The first question is from Damayanti Kerai from HSBC. Please go ahead.
Hi, good morning, everyone. Thank you for the opportunity. My first question is on 24/7. Sir, I'm wanting to understand some of your competitors have tied up with quick commerce platform to deliver medicines in 10 minutes, 10, 15 minutes. How do you see competition ahead for your e-pharmacy business? Also, for 24/7 on a standalone basis, when do you see cost break-even in view of higher ESOP charges which we found in the fourth quarter? That's my first question. Thank you.
Madhivanan, will you take that?
Yes, ma'am. Good morning to everyone. Good morning, ma'am. To answer the first question, as far as the QCommerce alignment is concerned, as of now, we do not have any plans of working with any of these. We have received multiple offers, but we believe that it's not in the best interest of what we are trying to put forward. We already have an alliance with Amazon over the last two to three years. That, we are continuing to build, wherein we will try and work towards how to make that a sustainable growth engine. As far as the response to the quick commerce companies is concerned, this particular phenomenon started around a year back. Since then, Apollo 24/7 has also launched a 19-minute proposition, which today contributes to almost 30% of our total GMV.
We believe when it comes to medicine, as against a 10-minute proposition, something in the range of 19 minutes makes a lot of sense as it drives emergency purchases and at the same time ensures that we are completely in line with all the regulations that are needed from a healthcare perspective. This particular 19-minute has already been rolled out in our top six cities. As we progress, we intend to extend it to the next 10. As we speak, we have no intentions of tying up with anybody because that basically relegates us to a back office kind of a function, which one of our group companies, Keimed, is already doing. That is something which will not work. Over the last two quarters, this particular approach of ours has been sustained.
When the quick commerce initiative started, we actually saw a little bit of a drop in our health essentials, the FMCG products that we sell. That has come back again reasonably well, and we think we will continue to stick to our guns of building our own capabilities. That was on point one. Point two, as we have always commented, we stick to a path of converting into a cash break-even between Q3 and Q4. The last one quarter, that is Q3, Q4 sequentially for FY 2025, it was a bit flat in terms of bringing down our expenses because of one or two one-time expenses. Our trajectory to continuously reduce costs at the same time increase our net revenue on the pharmacy business, which effectively drives the turnaround, is on course. Our unit economics is steadily increasing.
If I were to see the trends for quarter one of this financial year, we are very much on that path of meeting cash even between Q3 and Q4.
Okay. Actually, just to.
I'll take the.
Yes.
Yeah, this is Sanjiv. I'll take the last question of yours, which is related to the ESOP cost. Yes, as Suneeta Ma'am mentioned, we had accelerated ESOP cost coming in Q4. That is one of the reasons that we have a higher cost in Q4. However, for the current fiscal year, which is FY 2026, we are looking at about INR 100 crore of overall ESOP cost in line with the previous year. However, the next year, it is going to be almost one-third of the cost. Much of the cost is going to be only till this year-end, current fiscal year-end.
Okay. Actually, one clarification, which I was looking on the quick commerce page. Aren't you a bit worried that your competitors might be taking a larger chunk of the volume because of this 10-minute delivery or so? Actually, I was looking for some clarification on that part.
Let me clarify. That is what I said. Over the last two to three quarters, this particular trend essentially impacts us on the OTC products because the processes that are required to ensure that we are completely on board when it comes to various regulatory requirements. I think Apollo Pharmacy and Apollo 24/7 are in a much better position to validate that. While we saw some numbers going down, we are back on course. We are watching the space very carefully. A lot of these players are doing some experimental efforts in Bangalore. Our Bangalore numbers are holding up. In fact, we continue to grow there. We will watch it. We are very much aware about it. We are not being continuously. We are not being stonewashed about it. We will keep looking at it.
At this point of time, the equations do not justify that. We believe we are on the right path.
Sure. My second and last question is on the healthcare business. You have maintained a margin close to 24% or so. How should we look at this trajectory given a couple of new units are coming up in 2026 and beyond?
Sir, I think the thing to keep in mind is that the existing units will continue to generate very strong cash flows and therefore stronger EBITDA margins. The second initiative of ours, which is to lower the cost, will somehow bridge the gap between the losses that we might incur in the last quarter of the year. It'll probably be about 140 basis points estimate is what we see. And 80 basis points improvement will come from cost. The balance, 60 basis points, will come from improved revenues because of the initiatives that we are taking within the hospital from improving payer mix to complexity to improving our PUG. All of these initiatives will. And higher occupancy. All of these will generate very strong cash flows and therefore minimize the impact of new hospitals.
Very broadly, you can maintain margins around 24% despite new beds coming in. Closer to that?
This year, yes.
Thank you very much. Sorry to interrupt you, Damyanti. I'll request you to come back for a follow-up question, please. Thank you. A kind request to all the participants, please restrict to two questions per participant and rejoin for a follow-up. Next question is from the line of Neha Manpuria from Bank of America. Please go ahead.
Yeah. Thanks for taking my question. Just to follow up on the digital business, could you give us an update on how the new businesses are doing? I think we introduced insurance in March. Has that started reflecting in GMV in the quarter, or that's yet to come by? My follow-up question on the digital business is, if I look at the pre-op margins, they seem to have moderated in the quarter. When do we start seeing that improving to achieve that cash break-even in the second half that you mentioned?
Madhi, please take it.
Yes, ma'am. Sorry, I was having a little bit of a disturbance. If I can just have the repeat, please.
Oh, can you repeat the question, please?
Yeah. Sorry about that. I asked about the new business segments in digital. I think we introduced insurance in March. I wanted to check if that's already started contributing to the GMV in the quarter or that should come through. What's the progress we've seen? A follow-up on the digital business is on the pre-op EBITDA margins. When do we start seeing improvement in that number? That seems to have moderated quarter on quarter.
Okay. On the first bit of it, the insurance business, we officially started from the 1st of April when we became a full-fledged corporate agent. Before that, we were a marketing agent. Once we got the license, our number compared to last quarter has already doubled. We are on course this quarter to move at around INR 6 crores -INR 7 crores at a top-line basis. On an annualized basis, we have plans to be exploring in the range of around INR 75 crores . This particular business gets driven primarily by the number of insurance partners who we are able to add to our portfolio. As of now, we have four operating. While we have signed up around 12, four of them are already operational, which is Niva Bupa, ICICI Lombard, Star Health, and HDFC Ergo. In this quarter, even before June, you would have another four people coming in.
This has a direct impact. This is a combination of digital, telecalling, and certain POSP on the field. We expect the first quarter to close around INR 6 crore-INR 6.5 crore. This will continuously progress so that we exit with around INR 8 crore-INR 10 crore on a monthly basis. We are pretty much on course. The technology is getting built up. The fields are all coming in. Like I said in the earlier investor call also, this year, we do not expect it to contribute to our bottom line. At the same time, we are not expecting any kind of losses. We will break even on this business on an end-to-end year. Next year, there would be a considerable/significant increase in the margin that this business will cover.
On the second line of business, more than as a standalone, it is actually a contribution to our pharma business. This is our HDFC cards. It got launched just around this month. We are seeing some very good interest. We already have some 40-90 people who have registered and expressed their interest. We hope to get into a reasonably strong number, which will help us to get some fee income. More importantly, it will actually drive us towards ensuring a sustainable business on both the pharmacy as well as the diagnostic side. These two are on course. As far as your second item is concerned, Q3, Q4, in fact, our margins compared to the last quarter are slowly increasing. I'll ask Sanjiv to sort of add on to it.
We are on a consistent trajectory, both in terms of cost reduction or unit economics, which at the same time, last year, was in the range of around INR 60 negative, is already down to around -INR 27 on the digital side. The unit economics continues to improve. As our AOE is stabilizing, our cost of delivery, which is roughly around 9% of my total operational expenses at a unit economics level, is also coming down. We are reasonably confident that we've been on that path. Both on the revenue side as well as the cost of delivery side, we're bringing down. At the same time, our discount structures, which used to be reasonably higher, are also stabilizing in the range of between 13%-14%. All these three things should start seeing from Q. If this quarter one, you will see upward trajectory.
Yeah, that's helpful, sir. Thank you so much. My second question is on the hospital margin. Ma'am, is it fair to assume that a lot of the capacity that we are adding will probably come through only in the later part of the year based on your commentary that the losses would only be visible in the fourth quarter? So we don't expect any of these hospitals to actually start in the first half of the year?
We will not the first half. Some of them, which are expansions, for example, Second Avadh, Vellines, which is an existing hospital. We do not expect significant losses. Pune, which is a new hospital, is where we could see a slight, we could see some small losses. We are not really expecting to see huge losses. In the second quarter, definitely not, where we would have added another 150-200 beds. By the end of the year, yes. The fourth quarter, there will be significant bed addition.
Would you feel as the Chandrabhaga coming through in this year itself?
Yes.
Okay. Thank you, ma'am.
Thank you. Next question is from Tushar Manudhane from Motilal Oswal. Please go ahead.
Thanks for the opportunity. Just a clarification on the operating beds, while most of it, as in operational beds, are expected to come from fourth to FY 2026, which is where that impact of 140 beds. Is that my understanding correct?
That is correct. What will happen is by Q3, you will see us operationalizing Pune. You will see us operationalizing Kolkata, a defense colony, and the first Sarjapur acquisition that we have said. All four of them should get operationalized by Q3. That is the internal target that we have.
Got it. And so just on GMV, if you could sort of clarify, what kind of growth one should think of with these new business initiatives for FY 2026?
This is for Apollo 24/7?
Yes, yes.
Yes. Okay. No, so we are planning on the digital side alone, a GMV increase of 25%-30% on an annual basis. We are already seeing that trajectory happening. We closed Q4 with INR 795 crore GMV, which is a combination of pharmacy, consult, and the hospital IPOP and diagnostics. We did not see a big growth in our IPOP business. We are working towards that. Pharmacy, we are very much on course. If you remember last time I spoke that our new normal is 140, the first two months we are already at around between INR 135-INR 136 crore on pharmacy alone, which is just on the direct platform. You combine the Amazon platform as a part of that. We are very much on course. 30% growth in GMV, like I said last time, around INR 1,000 crore is when we expect this break-even to happen.
Got it. Just one more, if I may. Considering the cash break-even for Apollo 24/7, maintaining the EBITDA margin in the healthcare services side. If I sort of combine this at a consult level, what kind of EBITDA growth one should think of for FY 2026?
I think, as you know, we do not guide you for any EBITDA growth. I think you are right in your assumption that you will see EBITDA expanding because of HealthCo clearly helping us in the overall EBITDA. You will have to model both the EBITDA separately, and we have and you can look at the numbers. As we said, at a broad level, we would like to maintain our healthcare services numbers, including the new hospitals for the coming year.
Okay. Thank you.
Thank you. Next question is from Shyam Srinivasan from Goldman Sachs. Please go ahead.
Good morning. Thank you for taking my question. Just the question is on hospital growth. If you could guide us on how we should look at growth for the current fiscal, fiscal 2026. Also, if I were to look at Q4, actually growth slowed down for the hospital business, 10%. You attributed at the start to 2% from Bangladeshi patients. Is it the one that has had the most impact if you could clarify?
Yeah, that's correct. If you look at the overall hospitals growth, Bangladesh, the impact was pronounced in Q3 and very pronounced in Q4. Clearly, the Bangladesh business has for the whole year impacted our revenues by at least INR 100 crore, which is 1.5% for the full year . And somewhere, if you look at our EBITDA margin also, had Bangladesh been there with us, we would have been in line with what we had guided to you of at least closer to another 50 basis points on the EBITDA as well. Could have been possible had Bangladesh continued, which was in line with what we had committed to all of you a year back. That's something.
Going forward, I think we have always said that we would like to look at it organically at a low-teens growth is what we would like to focus on, low to mid-teens on the organically itself, on the healthcare services. The potential for new is all these beds coming together, it will start contributing significantly from FY 2027. We are hoping that in FY 2027, we can add over INR 1,000+ crore of revenues from the new hospitals itself.
Krishnan, there is no mitigation for Bangladesh, right? We should assume it's not coming back in 2026?
I think we have mitigated it with the higher Congo tea and other things. Madhu, if you want to chip into that Congo tea revenues.
Yes. A couple of things that we have done, we have focused on the quality of our revenue. As Ms. Suneeta alluded to earlier, there is a much higher contribution of Congo specialties to our revenue. We have also pivoted to other international markets, and we continue to do that. Those markets have increased substantially year on year. We will continue to focus on those markets for next year as well.
In terms of local market share, I think that we are seeing improvement in local markets and the fact that the coronary healthcare hospitals that we have in the metros are really bringing in patients from surrounding markets. This is why we're witnessing a high occupancy in these markets. We will continue to work with the surrounding localities and the cities around us. This flow will continue into the next year.
Helpful. The second question is on the 80 basis points and the 60 basis points you called out. What are these? I'm not sure that you articulated what are these cost measures. I think 60 basis points is ARPOB increase, like I think the Congo and other things. If you could just qualitatively give color on what are we cutting on costs and what are some of the improvements we foresee on ARPOB. Thank you.
Sure. I think we spoke about this a couple of calls back. We have invested substantially in technology. Now we are starting to see the application of that technology and improvements in productivity. Some of these are related to how we deploy our workforce and improve the productivity of the workforce. We are also being very careful with our expenses on materials cost and understanding how we can improve sustainability as it relates to materials when we take care of the high complexity cases. I think what is important to keep in mind is that while the complexity of our cases has increased, we have still, despite that, been able to expand our margins. We are very focused on both the materials cost as well as the productivity of our workforce.
Thank you.
Thank you. Next question is from Abdulkader Puranwala from ICICI Securities. Please go ahead.
Hi. Thank you for the opportunity. A couple of questions on your HealthCo business and on Keimed. Starting with Keimed, I think this year we have seen close to 22%-23% kind of a revenue growth, while the margins on a year-on-year basis have dipped a bit. Do you have your thoughts on what has happened in Keimed, which is still having this kind of a growth, and why we were expecting some better margins? The reason for this margin slip to happen on a year-on-year basis?
Sanjiv, would you have visibility now?
To an extent, we can give answer to this question, sir. I think, Keimed, you saw a slight dip in the margin for our EBITDA for the current fiscal year or for the previous fiscal year only because of the reason that one-time expenses related to the entire acquisition of various subsidiaries into the company as well as the overall, there were a little bit of legal fees, higher legal fees for the year. That is one of the reasons that has knocked out about a few basis points. This is one point. The second is that I think during the year, we also saw a certain mix undergoing change and resulting into a few drops.
As we move into this year, I think the current fiscal year, you would see a better margin not only by virtue of the one-time or the things not being there in this year, but also a focus on certain different categories of the products would also mean a better EBITDA margins for the company. Certainly from this fiscal year, you would see we are going back to the better EBITDA profile.
Sure. Understood. Secondly, on the annual guidance of CAGR guidance of close to 24% from 2025 to 2027, while this year, I think our pharmacy business would have grown close to 16%-17%, and on top of that, Keimed would have added. If you could throw some light on how are we planning to achieve that 24% growth for this combined business, taking it to close to INR 25,000 crore?
Yeah. So a couple of things. One is that while we still believe that we'll be able to hit about INR 25,000 crore in FY 2027, at this stage, the clear visibility comes around INR 24,000 crore. I think somewhere in Q3 or Q4 of FY 2027, the run rate should be in the range of about INR 25,000 crore. As we said in the previous calls also, the growth across all the businesses is very strong. When it comes to Keimed, we grew nearly 20%, and there are a variety of reasons for that growth coming in over there. As far as the pharmacy front-end business is concerned, last year we saw a slight dip in the growth only because of the reason that a couple of things happened. One is that we had the general elections in the country, so many of the approvals took time.
Secondly, we had most of the stores coming into the fag end of the year versus equal or asymmetrical quarter-on-quarter increase or new openings. I think those things have passed, and some bit of private label work that we saw happening in Q4. I think current year, as we see the pharmacy business, the front-end business should be able to grow anything upwards of 20%. Of course, digital business, Mr. Madhivanan talked about the growth of about 25%-30%. All this put together, we strongly believe that we should be able to hit a number close to INR 24,000 crore for FY 2027. Somewhere in Q3, Q4 of FY 2027, the run rate should be hitting or crossing INR 25,000 crore.
Thank you.
Understood. Thank you.
Thank you. Next question is from [Nananthusharan Srinivasan from MSN Capital]. Please go ahead.
Yeah. Hi. Am I audible?
Yes.
Yes. Yeah. I only had a small clarification regarding Bangladesh we have spoken about. Should we say that the worst is over and on the base of FY 2025, which will not be much impact next year?
You will see one more quarter impact, which will continue in Q1 because clearly Q1, we did not see any impact in last year of Q1. The impact has been most pronounced in Q4. After that, you should see it go away.
Okay. Thank you.
Thank you. Next question is from Dheeresh Pathak from WhiteOak Capital. Please go ahead.
Yeah. Thank you for the opportunity. Just to clarify, so in the presentation, you show ESOP charges only under 24/7 and online pharmacy distribution. So in the firm, only employees working on this vertical are getting ESOPs, and senior employees in other verticals are not getting ESOPs?
No, no. We do have a plan for ESOPs for senior employees and others, use for our doctors. So there is a plan. I think after the first quarter is over, we will announce that plan.
As of now, the last so many quarters, I see only ESOP charge under that vertical. As of now, only those employees in the firm are getting ESOPs.
The board has basically cleared a plan. We will work on the implementation and the impact and share it with you the next quarter.
Understood. Just a second, clarity on this, the ESOPs, when the charge that you showed, these are ESOPs given of the listed entity or the HealthCo, which is now merged with Keimed? So which company's shares are they given?
HealthCo. HealthCo.
HealthCo. Okay. Understood. One more question, if you allow. In the HealthCo, there is online pharmacy distribution, and there is offline and online distribution, and then 24/7. When I just look at the EBITDA for the full year, there is a slide which talks that pre-24/7 cost, EBITDA is INR 140 crore, right? Now, this INR 140 crore would have a take rate on the INR 3,000 crore GMV and would have EBITDA margin on online pharmacy distribution. Based on earlier conversations, if I take out the take rate on INR 3,000 crore of GMV on the platform, then there is not much EBITDA left for online pharmacy distribution EBITDA. Is there a fair understanding? How are you allocating cost? Because, see, you have an offline distribution and online distribution sharing a lot of infrastructure common among the two.
How are you distributing the cost between offline pharmacy distribution and online pharmacy distribution?
Sanjiv, please answer that. Which one's common?
Yes. Yeah. So it's a common platform for the entire thing, as you rightly said, that the same platform is working towards fulfilling pharmacy, diagnostic, consultations, insurance now, and subscription packages, so on and so forth. It is extremely difficult to allocate expenses for five, six verticals which are firing as of now. This is first point. Second, the way we look at it is the way we have presented in the earnings call also. What we look at is that overall year basis, we had a revenue of about INR 1,080 crore with an EBITDA margin of 13.1% for the last year versus 11.4% of FY 2024. There is approximately 200 basis points of upward movement.
We have been guiding on this point that 13.1% in this year should be in the range of anything upwards of 17%-18% with addition of insurance, with addition of various other levers of growth and margin that the company is working on. I think we believe that that is the way to look at it. However, in case you would like to understand the allocation, maybe we can take this point offline and work out something and then can discuss with you for sure, sir.
Yes. We'd love to do that. Thank you so much.
Thank you.
Thank you. Next question is from Harith Ahamed from Avendus . Please go ahead.
Hi. Good morning. Thanks for the opportunity. Can you clarify the timelines for completing the Keimed merger?
15 months.
Fifteen months from now. Okay. And the guidance that you've given for fiscal year 2027 for the combined business of both HealthCo plus Keimed, you clarified on the top-line part. On the margins front, the guidance is 7%-8% for FY 2027. I'm assuming it's the exit rate. From the current level of around just over 3%, that's a significant expansion. If you can give some color on the drivers for this.
Sanjiv?
Yeah. Let me just take this question. Thank you, ma'am. See, if you look at today, when we closed Q4 or the full FY 2025, we had 3.2%, and our guidance is 7% plus. Now, this 3.2% also carries ESOP cost as well as the operating losses at 24/7. In case, as I said, that ESOP cost is going to be tapering down by almost one-third, they will come down to one-third from next year onwards, which is FY 2027. Digital losses will also be made break-even by, I mean, we believe that the revenue growth as well as various other things that we are doing in the digital segment would make the digital P&L break-even.
If I remove these two things, if I assume these two things even today and remove these losses and the e-shop cost, the new number that comes for the EBITDA percentage is 6.4%. That means clearly, once the digital losses are off, the e-shop cost is rationalized to a lower number. We should be seeing blended with offline pharma and Keimed to be in the range of about 6.5%-7%. This is one point. The second important point is that they themselves would, these businesses are also bettering their gross margin, net margin, and the expenses line, resulting into the EBITDA percentage being better. While offline pharma, we are seeing 7.4%. There is a clear room of expansion of another 100 basis points over there as we progress into next year.
In the Keimed also, since the last fiscal year, we had one-off expenses, which I talked about a while ago. We believe that at least 40-50 basis points upward movement in Keimed EBITDA is also onto the table. These two things put together, plus the digital, I think 6.4%, which is today, or 3.2% blended, should certainly be hitting a 7% number.
Okay. Just to confirm, the break-even that you plan to achieve in online pharmacy distribution in 24/7 by the end of FY 2026, that's excluding e-shop costs?
That's right.
Yeah. The second question is on, yeah, the 24/7 GMV, which is around INR 800 crore for the quarter. Online pharmacy? Within online pharmacy, how much is prescription drugs versus, let's say, OTC, FMCG type of formats, which I believe are more vulnerable to e-commerce competition?
Our ratio is roughly 80:2.
In the sense that our Rx medicines and other part of the OTC products contribute around 75%-80%. Health essentials, FMCG business like moms and babies, etc., contribute another 20%. Like I told you, we did see a blip in the last Q2, Q3, but we are back to our normal numbers. In fact, we are seeing many more categories opening up, such as nutritional supplements, which will go forward. In spite of the quick commerce, we should be able to hold on our numbers.
Thank you very much. Harith, I'll request you to come back for a follow-up question, please.
Sure.
Thank you. Next question is from Nitin Agarwal from DAM Capital. Please go ahead.
Hi. Thanks for taking my question. Just following up a little bit on the previous question. On the 24/7, you've talked about 17%-18% EBITDA margins. On the operating—sorry. On the operating expenses, how do you see the operating expenses playing out? They were about like INR 480 crore this year. Do you see them coming off in absolute terms?
Let me just—thank you, Deepak. I think certainly there is a room of reduction for about 15%-20% on the expenses. I strongly believe that while the expense for the whole year has been in the range of about INR 480 crore, current fiscal year, we should be seeing anything less than INR 400 crore or maybe INR 400-INR 425 crore. That should be the number on the expenses side. You would appreciate that running a business would require certain expenses.
Obviously, beyond a certain point, expenses will not fall down. I think the overall business that we've created so far, the overall investment that we've done into the branding, technology, and what many other things will help us scale our business. Insurance will help us build our margin profile. Expense lines, anything around INR 425, we should be able to bring it down to. That should help us hit the break-even in Q3, Q4.
This is the number which stays more or less with inflation increases going forward? That's the way to think about it?
Yes. Yes.
From a GMV to revenue conversion, what should we look at with the new services as a number?
Currently, we are at roughly 37%. I think my estimate says that we should be able to hit closer to 45%-47%. That should be the revenue to GMV conversion ratio.
Essentially, we're looking at 45%-47% GMV to revenue conversion, margins inching closer to 20% in FY 2027, and operating expenses staying around INR 420-INR 430 levels. That's the way the P&L should shade up for 24/7.
Yeah. Absolutely.
Secondly, on the diagnostic business, there has been some bywise slowdown in this business, clearly, at least especially in the last quarter. There has been a very sharp improvement in the specialty clinics business. Two things. One is, A, if you can explain these two. Third, what is the overall plan for AHLL? Strategically, where does it fit in in the overall scheme of things for Apollo?
Yeah. Hi. Good afternoon. Sriram here. Can you hear me?
Yes, sir.
Yeah. I think I'll take your first part. Yeah. In diagnostics, there has been a slowdown. I think one of the things is we had to reset the model of our franchisee business. I think for that, we had to do some changes with respect to the pricing and the commission modeling. Obviously, we had to do that change. Hence, there was a bit of a slowdown, I think. We have successfully managed to build a model which is more sustainable and profitable going ahead. I think the entire last four quarters, there was a lot of work around different channels and getting the cost under control. If you look at diagnostics over the last two years, we have improved EBITDA by 4.5%. There was a journey that was taken. I think now we are done with that.
You'll get to see starting this quarter high-teens growth in terms of diagnostics. That is point. The second point, you're right. On clinics, definitely, our focus is on working very closely with hospitals and really driving ProHealth and the specialty checks by a further number. We have done very good volume growth last year. We are continuing to see a very good uptake in our ProHealth volumes even in this quarter. That will continue to be our focus on clinics. I think with respect to AHLL, we are clearly, while we have a range of business units, and each one of them has a separate target segment, we are really doubling down on diagnostics and on primary care clinics.
Clinics is all about being in the catchment, working closely with hospitals to drive the IPs, and of course, drive more preventive health in that particular catchment. We are confident about driving a high-teen growth as we start this year.
Just to add, in clinics, this is probably the only conceptually clinics that are created with GPs and some specialists that will look after primary care. Probably the only model in India that has this primary care focus. We believe that in the long term, this should not only be we'll be able to take it to scale, get better revenues, but funnel into AHLL will also be significant.
If I may last answer on that, on the diagnostic business, what kind of the fear set is around in the mid-20s EBITDA margins? Where do we see our diagnostic business really lending up over a period of time and over the next three years thereabout?
Definitely, I think we are also looking to a number of over 20%. I think we are about a couple of years away. Steadily, as I said, we will be looking forward to grow about 2%-3% this year on our diagnostic margins. Compared to our peers who have already expanded and have a full volume, our focus this year is to drive volume growth because we have our significant expansion right now in this financial year. When we go and expand, there are a lot of comes in. The operating break-even is about 18-24 months for every new lab that we expand. We definitely have a target of 20% in mind that is a couple of years away. Focus is on driving volume growth, focus is on improving lab expansion, and on sustainably growing volume and profitability.
Thank you. I will request you to come back for a follow-up question, please. Thank you. Next question is from [Nananthusharan Srinivasan from Unibed Corporate]. Please go ahead.
Good morning. Am I audible?
Yes, yes. You're audible.
Yeah. Can you share the timeline for company's Gurgaon project, a reference of which was made in the opening remarks? Secondly, can you share the progress made in the Verli project Mumbai, which was announced earlier?
We have the Gurugram project, which should be more in Q4, more towards the end of Q4. Around March is when we are expecting that to be commissioned. That would be the time frame when we should look at even the hospital in Hyderabad around that same time frame. Verli, we are getting all approvals, and we are hoping that we should start to dig ground after the rains. That is the planning.
Okay. My second question is regarding the associate company, Indraprastha Medical. Ma'am, in the earlier conference call, you had mentioned about the capital expenditures to be made in that. Has the capital expenditure been completed, or is it in progress as of now?
No, it's in progress. That will be made by Indraprastha Medical.
You had mentioned earlier about the parking, neuro center, and the expansion of rooms. Which part is pending in that?
I think we've not yet started, but we have all the drawings, and it's in the process of getting the approvals.
Oh, you have not got the approval for capital expenditure. Okay. Okay.
No, no, no. We've got approval for capital expense. We've got approval for FSI. We're just going through the submission of drawings.
What should be the timeline for that, for the expenditure?
No, it should take two years.
Okay. Okay. Fine. Two years from now, from May 25. Okay. Thank you. Thanks a lot, ma'am.
Thank you.
Thank you. Next question is from [Srivam ], individual investor. Please go ahead.
Thank you for the opportunity. My question is on the market structure of the pharma industry. Both retail and distribution today are fragmented. Where do you see the long-term trends for each of them, or what is the level of consolidation that can happen in India?
Madhi, you want to take that?
Yes, ma'am. Two things. Let me handle the online business first. Like I said, online today contributes only 15% to our own pharmacy business. If you had to take the much larger industry, it continues to remain fragmented. There are only two or three major players besides us. One is Tata 1mg and MedPlus Pharmacies. All of them are in a consolidation mode. This is where I think the Apollo Pharmacy story plays out to its advantage of looking at a very strong omni model. Internally, we would like to keep a target that we can be focused on, which is how does the 15% of contribution to the overall pharmacy business move up to the range of around 30%. I think that's been the significant ability to retain customers, offer an omni kind of a proposition will work.
As far as the physical business is concerned, the Apollo Pharmacy story still plays out. It is 6,600+ outlets, the footprint that we are creating. There are still some markets which are available, such as the western part of the country, to some extent the north, which we will continue to grow. We almost opened one outlet a day. We are still looking at anywhere between 375-500 odd outlets is still in the plan. We see this consolidation happening. In between, we do keep getting offers of other chains, which we evaluate very, very carefully. At this point of time, we are not seeing any major synergies which could accrue given our roadmap. That is something very much not there. We still feel that this business will continue.
If you have to look at our growth itself, which is 17%, but if you look at only RX, RX was actually growing at more than 23%-24%. The slowdown in the growth actually happened on the FMCG and other health essential sites. We are very bullish that the RX business will continue. We would stick to our plan of opening up stores, increasing our digital penetration, and looking at the synergies between these two businesses. Now with Keimed also coming into the scope, there is enough of supply chain synergies which we should be able to take advantage of.
I think.
So.
Go ahead. There has been a slowdown in the FMCG sector that has been there throughout the country. I think it was reflected in AHLL's performance.
Okay. So my question is, so there are about 600 stores for you, and the organized chain, correct me if I'm wrong, might be less than 20,000, right? But then there are about 900,000 pharmacies today in India. So I'm just trying to understand the big picture. How many, let's say, in terms of the total addressable market for the offline channel, how many store count can we have? Let's say 5-10 years down the line.
Yeah. As you know, we are expanding every year with the additional. Organizing the market is a very small organizing market.
I'm sorry. Can you tell me, we lost your audio?
We lost audio.
Hello?
Yes, sir.
Can you give me the answer once again, please?
Yeah. As we have already informed the market, we have been adding over 600 stores every year, and we will continue to add that. As you rightly observed, organized market, as I shared today, is very insignificant against the total market of 900,000 retailers. It will take a long time to get a market share of that. Today, given our scale, we are at about 8% of the market. We should aim for 20% in the next five-six years with the network addition, and also entering into the new geographies where we are not present. For your other question, distribution business will remain separate from the retail because distribution business is geographically organized in India, and we do not see any shift happening in that. That business continues to be separate with its character separately.
Thank you very much. Sorry to interrupt you, Sriram. I'll request you to come back for a follow-up question, please. Next question is from Adamya Sharma from Deloitte. Please go ahead.
Hello. Good morning. Good afternoon, everyone. My question is regarding Apollo Cradle, the mother and child segment of Apollo. I just wanted to get an understanding what would be the current revenue mix within the gynecology, pediatrics, and any other segment at the Apollo. What is the growth rate that we are seeing for the Apollo Cradle and expansion pipeline, whether it would be a greenfield or a brownfield projects? What are we aiming at?
Sriram?
Yeah. So basically, if you look at our current mix, our current mix is primarily around OBGYN and around women's gynecology surgeries and so on and so forth. Our mix of pediatrics is quite low right now. We are happy to share that we just inaugurated our latest flagship Cradle Royale in Electronic City in Bangalore a couple of weeks back, where we have launched the PICU setup. This has got the pediatric ICU. We will be doing a lot of pediatric cases there. All the complicated pediatrics will then be seamlessly handed over to Apollo Hospitals. I think in the coming year, we will expect the pediatric mix to go about 10%. Right now, it is primarily focused on OBGYN and gynecology. Alongside, saying that we have around 12 cradles pan-India and Electronic Cities and Universe edition.
At this point of time, we are really focused on driving higher utilization. We are present mostly in Bangalore, Delhi, Hyderabad, and Chennai. These are the cities that we wish to stay within Cradle right now and drive higher traffic for both OBGYN and, as I said, for all the woman-related gynecology and other hysterectomies that we typically do in Cradles.
Thank you for this. Just a follow-up question on the same. What would be, if I talk about the doctor payout structure and the corporate OD, what would be the major contribution in the revenue segment? If you can highlight some, what would be the payout mix that you can see within this particular structure right now?
You want to know the doctor payouts as a percentage of this one, is it?
Right, right, right.
Can you repeat that?
Yes, yes, yes. I just wanted to confirm about the doctor payout structure. Within the industry, we can see a particular rate of 30%-50%. How does Apollo Cradle have this particular structure? Obviously, also to discuss about the corporate expenditure within this particular segment.
Yeah. So basically, as you know, in this industry, there is a mix of structure that we have. We have full-time doctors, and we also have consultants who come and operate. We have a structure where there's a mix of both the structure that operates. You are right. Our payout structures are around 20%-30%. Those are the numbers at a weighted level average. These do differ by city. As I said, these do differ whether we have a full-time doctor, we have a visiting consultant, or we have a free FFS model. We have all these three models working out. Our endeavor always is to have the best, and we continue to be the best brand. I'm also happy to share that we just received the Times Ranking Award yesterday for being the best cradle for the third year in a row.
Cradle continues to be the most loved brand in the mother and child segment in the country.
Thank you so much for this.
Thank you. Next question is from [Fabi Agarwal] from individual investor. Please go ahead.
Hi. Good morning. Am I audible?
Yes.
Yeah. So my question is around the brownfield expansion, specifically the Secunderabad brownfield expansion. In the disclosures for the 80-bed capacity addition, the project cost is estimated to be INR 545 crore, which comes around INR 7 crore per bed and is way higher than the Gen.
No, no. It's INR 55 crore. Second to that.
It's a INR 54 crore. I think there is an error in the slide there, which is the earnings slide.
Yes, yes. Slide 24. Yeah.
Yeah. There's an error in 54.
Understood. We've corrected it. Yeah, we saw this.
Understood. No worries. Understood. Thank you so much. That was my only question. All the best.
Thank you very much. We take the next question from Madhav Marda from FIL. Please go ahead.
Hi. Good afternoon. Just one question from my side. On the 24/7, when you spoke about the margin going to 17%-18%, that was in FY 2026 itself, or that's more like by FY 2027? Because I think the number I'm referring to is 13.1%, which we did in FY 2025.
Yeah. This increase should happen in this year. Yeah.
Okay. And the sales to GMV, you said can get to 45% or 40%-45%? I missed that number.
Should be near 45%.
That is also this year itself?
That's right.
Okay. So that means, I mean, that's a pretty sort of accelerated jump in profitability. So that's all being driven by the insurance vertical scaling up, or are there other initiatives that you could flag? Because that's a pretty sort of solid improvement in profitability, right?
No, I think two, three things. One is, and Madhi, please add in case I'm missing out anything. One is the insurance, which is obviously a high-margin profile business. Secondly, we also started working with many pharma companies to get the app monetization done. Digital inventories being suitably used for showcasing FMCG and OTC brands and so on and so forth. That is the second one. Third, there is overall reduction in discounts that we believe while partnering through some of the banks on the card side, the payment mode side. These three things put together should give us a very high strength on the margin, plus our own margins on the pharmacy, diagnostic, and the consultations, and the current set of business teams has also evolved. They are better for the current fiscal year versus the previous year on the strength of the scale.
All these things put together should help us get a better margin profile for the current year.
Thank you for summarizing pretty accurately. I think all the three, insurance business will obviously have a big chunk, but the top line at this point of time, the GMV for insurance is not significant. By the end of the Q4, we should be in a good position. What he highlighted, there is a very strong focus on monetization of the various digital assets that we have. That is getting some very good traction. We have created some unique digital assets on the lines of what WooCommerce and Amazon do. That is a second contribution. Our partnership with the banks and other financial institutions effectively helps us keep our discounts under control while increasing the GMC. Third, our only proposition that we do between both offline and online has been growing at a very good speed. We will keep enhancing that proposition.
This is all in addition to the margin expansion that we expect to happen in pharmacy as we go towards breakeven. Got it. Thank you.
Thank you. Next question is from the line of Vivek Agarwal from Citigroup. Please go ahead.
Hi. Thanks for taking the question. Actually, my question is related to northern region as far as healthcare business is concerned. What I understand is that this is the region where impact of Bangladesh patients should be minimal. Despite that, the revenue growth is slightly subdued. If you look at this quarter, it's around 9%, and full year it's around 11.6%. What explains this? Although in some of the other regions, we are continuing to do well. Yeah.
I think north Q4 is traditionally subdued because of the winter months. So there is definitely, if you.
Especially in Lucknow and those regions, we see Q4 has always been a cyclical low. Also, there was this effect of calm this time in the quarter. It was a combination of both that we saw an impact. Otherwise, we are back on track in Q1.
Understood. Thanks. That's all my side.
Thank you very much. I will hand the conference over to the management for closing comments.
Thank you, everyone, for joining the conference in spite of it being a Saturday. As you know, Apollo works 24/7. As we conclude our discussion on quarter four, FY 2025, we are pleased with the continued momentum across our core and emerging businesses. Our integrated healthcare ecosystem, which includes hospital diagnostics, pharmacies, and digital platforms, continues to deliver on both growth and efficiency. We are making steady progress on our expansion roadmap with multiple new facilities set to be commissioned over the year. In Apollo HealthCo, we remain focused on driving profitable growth, and the team is firmly on course to achieving breakeven in the digital segment as guided. The Keimed merger process is also progressing well, which will further enhance scale and margin resilience in our pharmacy business.
We thank you for your continued interest and support and look forward to updating you in the coming quarters.
Thank you very much. On behalf of Apollo Hospitals, that concludes this conference. Thank you for joining us, and you may now disconnect your lines. Thank you.