Apollo Hospitals misses Q1 profit view on digital healthcare costs

Max Healthcare Institute

11/08/2023 11:18

BENGALURU, Aug 11 (Reuters) - Apollo Hospitals
Enterprise  APLH.NS  reported a bigger-than-expected 47.5% fall
in first-quarter profit on Friday, dragged by operating costs
related to its digital healthcare platform.
    Consolidated net profit fell to 1.67 billion rupees ($20.2
million) in the quarter ended June 30. Analysts, on average, had
expected a profit of 2.25 billion rupees, according to Refinitiv
IBES data.
    The company's year-ago profit of 3.17 billion rupees was
boosted by a deferred tax gain of 1.55 billion rupees.
    Apollo, which runs more than 73 private hospitals,
pharmacies and diagnostic clinics across India, said revenue
from operations rose over 16% to 44.18 billion rupees.
    Revenue from its hospitals, which accounts for 52% of total
revenue, grew by nearly 14%.
    However, its cash-guzzling digital health and pharmacy
business, which makes up nearly 41% of Apollo's revenue,
reported a widened loss of 830 million rupees compared with 460
million rupees a year earlier.
    The Chennai-based hospital chain aims to turn its pharmacy
business profitable by the end of fiscal 2024 by moderating
spending, its finance chief told Reuters last year.
    The company's diagnostics business also reported a loss that
widened to 150 million rupees, in the absence of Covid-related
revenue, from 60 million rupees a year earlier.
    Total expenses, including those related to the purchase of
goods in the line of business, rose 18%, it said on Friday.   
    A post-pandemic boom in demand for private healthcare in
India has led to global investors seeking entry into the
healthcare chains in the country.
    Apollo's peers have also gained from this demand, with Max
Healthcare Institute  MAXE.NS  and Fortis Healthcare  FOHE.NS 
reporting a 39% and 9% rise in June-quarter earnings,
respectively.
    Apollo shares fell as much as 2.3% after the results, before
paring some losses to close at 0.6%. The stock has gained 18% in
the April-June quarter compared with the Nifty 50's 10.5% rise.
    
($1 = 82.8150 Indian rupees)

 (Reporting by Kashish Tandon in Bengaluru; Editing by Janane
Venkatraman)
 ((Kashish.Tandon@thomsonreuters.com;))