Apollo Hospitals: Q1FY15 Result Analysis

The standalone net profit after tax (PAT) of Apollo Hospitals increased by 5% to Rs 82.74 crore in June’14 quarter as compared to Rs 78.94 crore in June’13 quarter. This was mainly due to increase in net sales which increased by 17.17% to Rs 1053.72 crore in June’14 quarter from Rs 895.04 crore in June’13 quarter. The PAT rose comparatively lesser as compared to increase in net sales mainly due to increase in expenses. The financing costs of the company also came down marginally to Rs 18.92 crore in June’14 quarter as compared to Rs 20.47 crore in June’13 quarter. The PAT margin decreased by 96 basis points to 7.85% in June’14 quarter as against 8.81% in June’13 quarter. It decreased due to increase in expenses. For March’14, December ’13 and September ’13 quarter the PAT was Rs 81.34 crore, Rs 83.44 crore and Rs 87 crore respectively; with profits margins in the range of 8-9%.
 
The total expenses of the company increased by 16.5% to Rs 897.43 crore in June’14 quarter as compared to Rs 749.10 crore in June’13 quarter (YoY). This can be attributed to increase in cost of raw material consumed and increase in employee benefit expenses which rose by 25.15% and 22.27% respectively.
 
The operating profit margin stood at 15.44% in June’14 quarter as against 16.99% in June’13 quarter. It has also been declining on a quarterly basis. It stood at 15.74% in March’14 quarter, 16.27% in December’13 quarter and at 16.98% in September’13 quarter. Apollo Hospital’s EBITDA rose by 7% to Rs 156.3 crore in June’14 quarter from Rs 145.9 crore in June’13 quarter.
 
Coming to the segment wise performance, revenue from the healthcare services registered an increase of 13% to Rs 667.59 crore in June’14 as compared to Rs 590.89 crore in June’13 quarter. The utilization rate of the beds in Hyderabad, Bhubaneswar and Vanagram, Chennai stood at 65%, 81% and 51% respectively. In the previous quarter (Mar’14) the company had added 300 beds and in this quarter it has added 200 beds in Nellore, 2 hospitals in Chennai OMR, 170 beds in Perungudi and 45 beds in Chennai OMR- (Women & Child). EBITDA for this segment grew by 5% to Rs 144.3 crore in June’14 quarter from Rs 136.9 crore in June’13 quarter.
 
Revenues from pharmacy segment increased by 26.95% to Rs 386.22 crore in June’14 quarter as compared to Rs 304.22 crore in June’13 quarter. Apollo Pharmacies added 32 stores during the quarter taking the total number of operational stores to 1664. Increasing proportion of private labels helped mitigate impact of drug price control order. EBITDA for this segment grew by 33% to Rs 12 crore in June’14 quarter from Rs 9 crore in June’13 quarter.
 
Apollo Munich health insurance company’s gross written premium increased by 25% to Rs 138.3 crore in June’14 quarter from Rs 110.4 crore in June’13 quarter. It registered a net loss of Rs 1.4 crore in June’14 quarter as compared to Rs 0.6 crore in June’13 quarter. The assets under management stood at Rs 659.3 crore.
 
Apollo Health & Lifestyle, a wholly owned subsidiary of Apollo hospitals, which is in the business of retail healthcare business reported total income of Rs 17.7 crore. However, the EBITDA loss was at Rs 4.8 crore on a YoY basis. In July’14 Apollo Hospitals gave Ms. Preetha Reddy an expanded role and re-designated her as Executive Vice-Chairperson and Ms Sangeetha Reddy has been appointed as Joint MD. Also, Ms. Shobana Kamineni has been re-designated as Executive Vice-Chairperson (currently Executive Director - Special Initiatives) 
 
Dr.Prathap.C.Reddy, Chairman, Apollo Hospitals group, said “As the healthcare landscape in the country changes and expands, this strategic realignment, we believe, will enable Apollo to focus on growth opportunities in hospitals, pharmacies, clinics and health insurance while furthering its clinical leadership and service excellence. We aim to deepen our focus in each of these verticals as well as drive synergies between them with technology and an ecosystem focused on wellness, innovation and productivity”.