Apollo Hospitals Enterprise Ltd: Robust Q3 Performance Despite Regional Challenges

Apollo Hospitals Enterprise Ltd (BOM:508869) reported a strong performance in the third quarter of FY25, with mid-teen revenue growth across all three business segments. The company's healthcare services business achieved a 13% year-on-year revenue growth, driven by favorable trends in centers of excellence, case mix, and pay mix. Revenue from cash and insurance patients increased by 15% year-on-year, accounting for 83% of inpatient revenue. Apollo Health Co, the company's digital health arm, reported its first-ever quarterly profit in Q2 and further strengthened its performance in Q3 with a profit of 32 crores.

However, the company faced regional and digital business challenges. It experienced a 1.5% drop in overall revenues due to a decline in footfall from Bangladesh. There was a muted trend in the Tamil Nadu and West clusters, with weaker inpatient volume growth attributed to the Bangladesh effect and moderation of CGHS cases. The digital business, Apollo 24/7, is still working towards achieving break-even, with a focus on recalibrating its cost structure and growth strategy. The company faces challenges in the online pharmacy segment due to high competition and the need for significant investment.

Apollo Hospitals is addressing these challenges by focusing on high-end specialties and exploring new markets like Indonesia and the Middle East to offset the impact of the decline in Bangladesh patient footfall on the Tamil Nadu cluster. The company aims to drive case mix towards more complex cases to address the muted trends in these clusters. To achieve break-even for the Apollo 24/7 platform, the company is targeting a GMV of 900 to 1,000 crores by the end of Q2 or Q3 of the next fiscal year. It plans to open three new facilities in the second half of FY26, including Gurgaon and Hyderabad, which are expected to achieve break-even quickly due to the company's existing presence and brand recognition.



In conclusion, Apollo Hospitals Enterprise Ltd's robust Q3 performance demonstrates the company's ability to navigate regional challenges and maintain strong revenue growth. By focusing on high-end specialties, exploring new markets, and recalibrating its digital business strategy, the company is well-positioned to continue its growth trajectory. Investors should closely monitor the company's progress as it works towards achieving break-even for its digital platform and expands its hospital capacity.