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    Looking forward to outstanding performance from offline pharmacy: Suneeta Reddy, Apollo Hospitals

    Synopsis

    Yes, by the fourth quarter, we will be EBITDA neutral and I think that we are working towards that. Most of our expenditure has already been incurred and as the revenues pick up, we will be EBITDA neutral.

    srAgencies
    We have increased margins by 250 basis points in healthcare services already.
    "The online business has also grown significantly. We have seen that we have crossed our target of Rs 1500 crores of GMV. We have moved to Rs 1643 crores of GMV and we are servicing 7 lakh customers online and offline to our pharmacies. So, there is significant volume growth," says Suneeta Reddy, MD, Apollo Hospitals.

    There was a bit of a disappointment with respect to your Q4 performance, especially on margins. What is the outlook with respect to how FY24 is likely to pan out and how was the GMV or the gross merchandise value of the 24/7 brand?
    As you know, we are a company invested in the future, so we have invested into 24/7 and there you will see that we had Rs 145 crores of EBITDA from the backend which is the physical pharmacies and we had a net burden of Rs 217 crores from 24/7, which makes it a PAT negative of Rs 89 crores and I think this is the reason why you are looking at a muted margin, whereas if you look at the different business verticals, healthcare services margin is at 24.4%, pharmacies margin coming is in at 7.5%. So there are very-very strong margins there in the offline business.
    The online business has also grown significantly. We have seen that we have crossed our target of Rs 1500 crores of GMV. We have moved to Rs 1643 crores of GMV and we are servicing 7 lakh customers online and offline to our pharmacies. So, there is significant volume growth.

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    While you had earlier shared your commitment goals to reduce the losses in healthcare to zero by Q4 FY24, but given the continued losses are you confident of this guidance?
    Yes, by the fourth quarter, we will be EBITDA neutral and I think that we are working towards that. Most of our expenditure has already been incurred and as the revenues pick up, we will be EBITDA neutral.


    Can you just walk us through the outlook for Apollo Health and Lifestyle? What kind of numbers are you pencilling in?
    If you look at this year in the performance of AHLL, I think the difference is last year was a COVID year and this year as we go forward, what they have really invested in is a core diagnostic business where they have 882 new centres and therefore, there has been a cash run on account of that.

    But we expect revenues to grow to Rs 500 crores in the next 24 months coming from the diagnostic business. We also have 500 clinics. So, they have created a huge network that will become a funnel into the AHLL business, plus revenue and profitable vertical by itself.

    You say that you are on track to add 2000 beds and that will entail a capex of almost Rs 3000 crores in the next four years. Will the company look out for brownfield expansion going forward? Will it be largely greenfield and how would you fund the same?
    We are looking at brownfield expansion. In Bangalore, we have 350 beds planned on the land that we already have. In Hyderabad, we are looking at another 150 beds on the land that we have and we will fund it. We have, let me say, cash and bank balances of about Rs 700 crores.

    Your pharmacy division has seen an exponential growth in store addition. What we understand is that the discounts that you offer are less than your peers and currently, what are the plans for store addition in FY24 and how will you keep manage holding market share less than discounts?
    First, our fulfilment ratio is very-very high and I think it is the trust that the Apollo brand brings to it. We have a large network. Last year, we opened a thousand stores and we will add another 350 stores. Having said that, the EBITDA margin coming from these stores, it has been driven by private label, where the absolute percentage is currently at 12% of total sales where our margin is at 20%. So, we do look forward to an outstanding performance again from the offline pharmacy.

    Walk us through the outlook in terms of how you are looking at the share of new hospitals increasing for FY24. Do you see an improvement in your margin profile?
    Currently, if you look at, we are at a blended margin of 24.4% and we have already touched 20% in the new hospitals with higher occupancy. Occupancy is currently trending at around 62%. We have a target of 70%. That 8% will flow down absolutely to the EBITDA and therefore margins will significantly increase. We have increased margins by 250 basis points in healthcare services already.




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    Download The Economic Times News App to get Daily Market Updates & Live Business News.

    Subscribe to The Economic Times Prime and read the Economic Times ePaper Online.and Sensex Today.

    Top Trending Stocks: SBI Share Price, Axis Bank Share Price, HDFC Bank Share Price, Infosys Share Price, Wipro Share Price, NTPC Share Price

    ...more
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