Apollo Hospitals aims at mid-teen growth for core business in FY25

Apollo plans to operationalise four new hospitals, with combined bed capacity of 1,500 through 2025-26.

Apollo Hospitals aims to deliver 15 percent growth for its core healthcare services business in FY25, Managing Director Suneeta Reddy stated in the post-Q4 earnings call.

Reddy also highlighted several drivers that will propel growth for the company's healthcare services business. "Growth beyond 15 percent to be driven by an increased focus on volumes and cost optimisation," Reddy said.

Apollo expects its network expansion and better payor mix to drive volume growth for its healthcare services business. Meanwhile, the chunk of international patients in its payor mix, which currently stands at about 9 percent of total revenue, is also expected to increase. Reddy based her expectations of a rise in international patients in FY25 on better connectivity and access compared to the preceding fiscal year.

Reddy remains confident that the above-mentioned measures would also lift the company's occupancy level as well as its ARPOBs (Average Revenue Per Occupied Bed).

Moving along those lines, Reddy also outlined Apollo's plan to increase occupancy levels for its hospital business to 68-70 percent in FY25.

It is worth noting that the hospital major had rolled out a similar guidance for FY24 as well, which it failed to achieve. The company's core hospital business only recorded a slight improvement in occupancy to 65 percent in FY24, as compared to 64 percent in the prior fiscal year. Reddy attributed the slow growth in occupancy levels to a marginal reduction in beds due to reallocations for specialised services and a lower-than-expected rise in international patients.

Occupancy levels also varied across metro and non-metro locations. While metro cities recorded occupancy levels of around 67 percent, those in non-metro areas lagged at 62 percent.

Despite the miss, the management has come up with plans to increase its occupancy numbers even further. Reddy explained that the healthcare services company plans on achieving its target by increasing its focus on volumes this fiscal year, which should reflect in higher occupancy.

Also Read | Apollo Hospitals Q4 net profit jumps 77% to Rs 258 crore, meets expectation

Along with that, improved insurance penetration and onboarding of 150 new doctors will aid occupancy levels towards the 70 percent mark, Reddy said.

Reddy also highlighted that the increase in ARPOBs (Average Revenue Per Occupied Bed) has provided the company with the headroom to offer more beds, which can further help improve its occupancy.

Meanwhile, the management also announced plans to operationalise four new hospitals, with a combined bed capacity of 1,500 through 2025-26.

Lastly, Reddy also gave an update on the company's digital business, Apollo 24/7, which she expects to achieve an EBITDA breakeven in the next six-eight quarters.

This comes after the company's arm Apollo HealthCo turned EBITDA positive in Q4FY24, as guided by the management earlier.

Also Read | Apollo Hospitals rises 3% as investors cheer robust Q4 results

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