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Apollo Hospitals Enterprise Ltd

| Q2 & H1 FY26 Earnings Conference Call

NEUTRAL SENTIMENT

Report Source

⬤7th Nov 25

Summary : Apollo Hospitals reported strong Q2/H1 FY26 growth across all verticals, driven by specialty care and digital health, with strategic expansion and cost-cutting initiatives planned despite initial new hospital losses.

Management Perspective positive : We are pleased to talk about the sustained and strong momentum from quarter 1 into quarter 2. We are quite confident that we will get back into 30%. We are confident of enhancing our performance in the coming quarters.

Concall Report Analysis & Insights

Business Overview

  1. Consolidated revenue grew 13% year-on-year to INR 6,304 crore in Q2 FY26.
  2. Consolidated EBITDA increased 15% year-on-year to INR 941 crore in Q2 FY26.
  3. Healthcare Services revenue grew 9% to INR 3,169 crore, with a 24.6% EBITDA margin.
  4. Apollo HealthCo revenue increased 17% to INR 2,661 crore, with EBITDA up significantly to INR 110 crore.
  5. Digital platform 24/7 added 3 million new users, reaching 44 million total users.

Future Growth Prospects

  1. Six new hospitals are scheduled for commissioning in FY26-27, including Pune and Defense Colony in Q3.
  2. Exploring new international markets like Uzbekistan, Africa, Indonesia, and Iraq for patient inflow.
  3. Digital platform 24/7 aims for 25-30% GMV growth, focusing on pharmacy, diagnostics, and insurance.
  4. Targeting 13% organic growth in Healthcare Services, plus 5% from new beds over three years.
  5. Cost-cutting initiatives of INR 120 crore are planned, with INR 60 crore already achieved.

Management Insights

  1. Management is pleased with sustained strong momentum across Healthcare Services, Apollo HealthCo, and AHLL.
  2. Focused execution enabled broad-based growth and resilient operating metrics despite seasonal impacts.
  3. Committed to deepening leadership in core healthcare, accelerating digital retail health, and expanding network.
  4. Confident in enhancing performance in coming quarters and creating long-term value for stakeholders.
  5. Digital transformation and AI technologies are driving efficiency and higher utilization targets.

Signs of Skepticism

  1. Analyst questioned the shift in capacity expansion timeline from FY26 to FY26-27.
  2. Analyst inquired about the sustainability of EBITDA margins despite strong ARPP growth, given new hospital costs.
  3. Analyst asked for clarity on how to improve Apollo 24/7 GMV beyond current growth drivers.
  4. Analyst questioned if the 12-month breakeven target for new hospitals is realistic given past volatility.

Risk Factors

  1. Q2 FY26 saw lower medical admissions due to a high base in Q2 FY25 and reduced seasonal illnesses.
  2. Reduction in patients from Bangladesh impacted Healthcare Services revenue by 1%.
  3. New hospitals are expected to incur EBITDA losses of around INR 150 crore in the next year.
  4. Keimed margins experienced a temporary drop due to one-time integration and scheme-related expenses.
  5. Competition in the Diagnostics segment of Specialty Care is noted as a headwind.

Good To Know

  1. Apollo Athenaa, Asia's first dedicated cancer center for women, was inaugurated in Delhi.
  2. A Multispecialty Tertiary Care hospital in Pune had a soft launch.
  3. Statutory processes for Apollo HealthCo and Keimed merger are proceeding as planned.
  4. CGHS rate hikes by the Central Government are noted as marginally better but do not change overall business view.
  5. The company is building a 300-500 seater call center for its insurance business.

Key Drivers

  1. New hospitals commissioning soon.
  2. Digital platform user growth.
  3. Expansion into new markets.
  4. Improved case mix, higher ARPP.

Key Analyst Discussions

Competitive Environment

  1. Competition in Specialty Care is primarily in Diagnostics; Cradle and Spectra have less competition.
  2. Focus is on primary care, growing diagnostics, and clinics to act as a funnel to Apollo Hospitals.

Market Trends & Consumer Behavior

  1. Seasonal medical admissions were lower in Q2 FY26 compared to a high base in Q2 FY25.
  2. Average revenue per patient (ARPP) grew 9% due to better clinical mix and regular tariff increases.
  3. Occupancy stood at 69% group-wide, with a target to reach 70% by improving payer mix and digital transformation.

Financial Highlights

  1. Management expects organic hospital growth to return to 30% after mitigating Bangladesh impact.
  2. EBITDA losses from new hospitals are estimated at INR 150 crore for the next year.
  3. Keimed margins saw a one-time drop in Q2 due to integration costs, expected to normalize.
  4. Apollo 24/7 GMV growth is driven by pharmacy (30% YoY), diagnostics, and new insurance business.
  5. Cost-cutting initiatives, particularly in materials, HR, and IT, aim to improve EBITDA margins to 24.6-25%.

Product Composition

  1. Surgical volumes grew 3%, with strong growth in CONGO specialties like cardiac, oncology, neurosciences.
  2. High complexity cases contribute to higher ARPP and improved revenue quality.
  3. Digital platform GMV is primarily driven by e-pharmacy (55-60% of total pool), followed by diagnostics and insurance.

Strategic Considerations

  1. Capacity expansion plans include six new hospitals commissioning in Q3, Q4 FY26, and Q1 FY27.
  2. Digital transformation initiatives, including AI agents and command centers, aim to improve operational efficiencies.
  3. Insurance business is being built with a digital-first approach, supported by a call center, targeting EMI-driven policies.
  4. The company is exploring new international markets to offset the impact of reduced Bangladesh patient inflow.