Suneeta Reddy: In the first quarter, while our revenues grew by 30% to Rs 3,760 crore, 26% of this was Covid revenue.
I believe this trend has now started to shift. We saw signs of that shift in July where normal work came back, with surgical volumes starting to pick up.
Vaccination is offering a big opportunity. How do you view the future potential?
At our hospitals, we did about 116 crore vaccinations. In total, we did 167 crore of vaccines. But the margin was only around 15%. I think the purpose of vaccination is safety of our people, rather than numbers and margins.
In the second quarter, the opportunity will only happen in the end of September because of the recommendation to delay it to three months.
You are committed to unlock value in your digital platform. How exactly has the digital platform 24×7 moved?
In the age of the digital, it was important for Apollo to create an omni-channel presence. We have done that with digital. We will use it as part of our journey to move closer to the consumer and offer services that are much easier to access.
Part of it is online pharmacy, where we did about 16.5 lakh deliveries over this period. We have about 10 million active users in Apollo 24×7. There are teleconsultations that are happening everyday. We have got 5,500 doctors in the system. Apollo Hospitals is present in 72 locations and 440 cities through 24×7. It is not only helping us expand our presence, it is also funneling patients into the system.
It is the fastest growing healthcare app in India today. I think this momentum is very important. Yes, it will cost us money. This quarter we spent Rs 37 crore on customer acquisition and marketing. These costs will continue to happen. We have budgeted for about Rs 150 crore for the year. But as we do so, we believe that we are moving in the right direction.
Could you walk us through the individual businesses — diagnostics, traditional hospital business, digital?
I think the hospital business is doing very well. It grew by 31% quarter on quarter. If we look at last year, it will be 73% because of low base effect. Hospital revenues are sustainable revenues. We are looking at an EBITDA margin of 21.1% against last quarter’s 21.7%.
I think our performance has clearly shown that Apollo has the ability, the agility to handle both Covid and non-Covid situations. This quarter, we successfully separated the non-Covid cases and handled them with excellent clinical outcomes. Moving into the second quarter, we believe we will be able to keep doing this.
Apollo Health and Lifestyle did really well. They had a revenue of Rs 310 crore, and a very good EBITDA of Rs 47 crore. So they clearly are on the right track.
As for combined pharmacy distribution, how do you see this particular segment going? How many pharmacies are you likely to add in the fiscal?
In combined pharmacy, we grew at 28% quarter on quarter with an EBITDA of Rs 148 crore. During Covid, the retail pharmacies did exceptionally well because people were stocking for Covid.
Moving forward, 20% growth is something that we have come to expect. Margins are 7.1%, which is very healthy. We continue to add stores. Our plan is to add another 150 stores.
Also, we are present in 16,000 pin codes, which is something I must mention because it enables 24×7 delivery within two hours. I think that is unique to the entire e-pharmacy space.
With many big corporate houses now entering the pharmacy business, do you see competition increasing?
There are many corporates entering this segment, but I think we are the only one which is backed by infrastructure. I know you are referring to online pharmacies, and probably Tata and Reliance. I believe we have the medical infrastructure in terms of online pharmacies.
We have already crossed 4,200 stores. 40% of India is only 40 minutes away from one of our stores. We have a very strong distribution system with presence in 16,000 pin codes. With regard to teleconsults, we have 5,500 doctors; within 15 minutes you can have a teleconsult, which again is an important value that we bring to the system.
The third is the ability to do testing. During this Covid period we did exceptionally well, doing about 2.5 lakh RT-PCR tests. And that is 24×7 — the consumer can order the test and have the results within 24 hours.
I think that in healthcare one has to have the medical infrastructure, skilled medical professionals, and speed. All these are in place at Apollo.
What is the capex plan like for FY22?
We have about Rs 250 crore of capex that is currently allocated. We do have a plan to make an acquisition which would cost us Rs 450 crore. I think we are fully funded to do this. We have about Rs 880 crore in cash and cash instruments. And debt to equities, we are at 0.48. So I believe we are fully funded to do this.
Suneeta Reddy, MD, Apollo Hospitals Group, shares her business outlook. Edited excerpts from her interview to ET Now
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