Apollo Hospitals announces Q1 FY19 results

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Gunjan Chauhan

Q1 FY19 Standalone Revenues up 16% at Rs.1,910 crore EBITDA at Rs. 227 crore, higher by 31% yoy PAT at Rs. 60 crore, up by 71% yoy
SAP reported 20% growth in Revenues in Q1 FY19 EBITDA grew by 30%, EBITDA margins at 4.7% in Q1 FY19
Net addition of 64 stores in Q1 FY19, Pan-India network now at 3,085 stores

Q1FY19 Standalone Revenues grew 16% to Rs.19,104 million compared to Rs.16,504 million in Q1FY18, aided by SAP growth of 20% and Healthcare services growth of 12% YoY. HC services growth of 12% YoY was led by new hospitals which reported 23% YoY Revenue growth while existing hospitals grew 10% YoY. EBITDA was at Rs.2,267 million in Q1FY19 as against Rs.1,734 million in Q1FY18 a YoY growth of 31%. PAT grew by 71% to Rs.602 million in Q1FY19. The strategy around both services pricing as well as cost optimisation has delivered initial results. Healthcare Services EBITDA grew by 31% YoY to Rs. 1,849 million. Existing health care services EBITDA margins have improved from 20.4% last year to 21.6% in the current quarter. Apollo Hospitals stands committed to continue on this trajectory to further improve the margins to 23% over the next few quarters. The impact on EBITDA margins from commissioning of new facilities, GST implementation, regulations on stent pricing and knee implants as well as from investments in medical teams has bottomed out. The recent performance has demonstrated resilience of the business model which is well diversified across specialties, geographies and maturities. Of the 7,000+ operating beds across the network (excluding AHLL & managed beds), 13 hospitals with 1,650 operating beds are new and the progressive increase in volumes and utilisation in the quarters ahead will aid EBITDA growth and sustain margin expansion through the rest of the fiscal and beyond. Dr.Prathap C Reddy, Chairman, Apollo Hospitals said,“ The first quarter of this fiscal has got off to a good start. Our Clinical leadership was further reinforced by path-breaking surgeries across our centres. We continue to strengthen our healthcare portfolio to benefit our patients and arm our doctors with the latest in Artificial Intelligence and medical technology. This has cemented our patients’ faith in our quality of care, and they continue to entrust us with their health, which is reflected in our strong numbers this quarter. The acquisition of a 50% stake in Medics International Lifesciences Ltd., Lucknow provides us a valuable asset in a good location with a highly skilled and proficient medical team clearly enriching our North Indian and Pan-India presence. I was honoured to be conferred with the Lions Humanitarian Award by the Lions Club International Foundation in recognition of our work in increasing accessibility and affordability of healthcare. The value of such awards is in the motivation they provide me to continue to relentlessly pursue our Institution’s passion towards bringing health and happiness for all.” Dr. Reddy added, The Government’s Ayushman Bharat initiative will widen healthcare access to millions of under-served families, and will serve as an inflection point in the healthcare journey for the nation. We will work with the Government as they roll-out the initiative, and hope that the final framework will enable the private sector to participate in the scheme wholeheartedly and ensure that the highest quality care reaches underserved citizens on a sustainable basis.” Financial Highlights  Standalone Q1FY19 Performance

Revenues grew by 16% to Rs. 19,104 million compared to Rs. 16,504 million in Q1FY18.
EBITDAR was higher by 28% to Rs. 2,892 million as against Rs. 2,258 million in Q1FY18.
EBITDA grew by 31% to Rs. 2,267 million as against Rs. 1,734 million in Q1FY18. o PAT was Rs.602 million compared to Rs.352 million in Q1FY18.
Diluted EPS of Rs.4.33 per share in Q1FY19 (not annualised).

 Consolidated Q1FY19 Performance

Revenues were higher by 16% to Rs. 22,046 million compared to Rs. 19,072 million in Q1FY18.
EBITDAR was higher by 33% to Rs. 3,177 million as against Rs. 2,386 million in Q1FY18.
EBITDA was at Rs. 2,323 million against Rs. 1,647 million in Q1FY18.
PAT was Rs.351 million compared to Rs. 9 million in Q1FY18.
Diluted EPS of Rs.2.52 per share in Q1FY19 (not annualised).

Segment-wise Performance Update Hospitals Standalone Revenues of the healthcare services division increased by 12% to Rs. 10,183 million in Q1FY19 compared to Rs. 9,075 million in Q1FY18. This growth was primarily driven by volumes. The Revenue of existing hospitals grew 10% while the new hospitals grew by 23% to Rs. 2,120 million. EBITDA was at Rs. 2,267 million in Q1FY19 compared to Rs. 1,734 million in Q1FY18. EBITDA was higher by 31% yoy. Navi Mumbai startup losses have compressed to Rs. 1.6 crore and it is on the verge of breakeven – this is despite ongoing investment in adding specialties. The Navi Mumbai facility has an average occupancy of 124 beds in Q1FY19 (66%). Revenues in the Tamil Nadu cluster grew by 13%, IP Volumes grew by 4%. ARPOB grew by 6% to Rs. 43,391 (including HBP). Overall occupancy in the cluster was 1,188 beds (56% occupancy) as compared to 1,120 beds (53% occupancy) in the previous year In AP Telengana region, Revenues grew by 7% while IP volumes grew by 4%. ARPOB grew by 7% to Rs. 31,694. Occupancy in the cluster was 810 beds (60% occupancy) as compared to 805 beds (59% occupancy) in the previous year. The Karnataka region has seen good growth. Malleswaram has witnessed an IP volume growth of 29%. Bangalore, & Jayanagar revenues grew by 11% and 2% respectively. Occupancy in the cluster was 511 beds (72% occupancy) as compared to 500 beds in the previous year. Revenues of Others Cluster grew by 37% while IP volumes grew by 34%. ARPOB grew by 8% to Rs. 23,640. Occupancy in the cluster was 675 beds (77% occupancy) as compared to 532 beds (68% occupancy) in the previous year. Standalone Pharmacies In Q1FY19, we added 73 stores and closed 9 stores for a net addition of 64 stores. The total store network as of June 30, 2018 stands at 3,085 operational stores. Revenues grew by 20.1% to Rs. 8,921 million in Q1FY19 from Rs. 7,429 million in Q1FY18.EBITDA grew 30.3% from Rs.320 million in Q1FY18 to Rs.417 million in Q1FY19. The EBITDA margin was at 4.68% in Q1FY19 compared to 4.31% in Q1FY18. Private label sales are now at 6.1%. Revenue per store grew 7% for the pre 2010 batch of stores with EBITDA margins remaining strong at 7.6%. The pre 2010 stores EBITDA growth was at 12% with an EBITDA margin of 7.4%. Apollo Munich Health Insurance Company Limited Gross Written Premium grew by 32% from Rs. 2,652 million in Q1FY18 to 3,490 million in Q1FY19. Earned premium increased by 33% from Rs. 1,815 million in Q1FY18 to Rs. 2,413 million in Q1FY19. The incurred claim loss ratio was at 93% in Q1FY19 compared to 96% in Q1FY18. The business reported a net loss of Rs.548 million in Q1FY19 compared to a net loss of Rs.661 million in Q1FY18. AUMs stood at Rs. 12,044 million as of June 30, 2018. Retail Health Apollo Health & Lifestyle Ltd. (AHLL) is a wholly owned subsidiary which houses the retail healthcare business of Apollo Hospitals. This includes the lifestyle birthing centers known as ‘CRADLES’, Daycare and short stay surgery centers, Diagnostic centers, Dialysis centers, Dental Care Centers and Apollo Clinics catering to a variety of ailments such as liver disease, joint pain, advanced fever and diabetes among others. The AHLL network has 559 centers in total as of June 30, 2018. AHLL Consolidated Revenues grew to Rs. 1,316 million in Q1FY19 compared to Rs. 1,059 million in Q1FY18. The business reported an EBITDA loss of Rs. (197) million in Q1FY19 compared to a loss of Rs. (283) million in Q1FY18. CLINICAL EXCELLENCE HIGHLIGHTS  Apollo Hospitals, Chennai successfully performed a rare ‘Quadruple Joint Replacement’ surgery on an ‘Ankylosing Spondylitis’ diagnosed Bangladeshi patient, which enabled him to walk after more than four years. After being wheelchair bound for more than four years and trying several therapeutic modalities in Bangladesh, the patient was brought to Apollo Hospitals in a state with completely destroyed and fused hip joints and severely damaged and deformed knee joints. Post the surgery at Apollo Hospitals, he recovered well and underwent rehabilitation therapy.  Apollo Hospitals is the first hospital in India to perform many successful Knee Replacement Surgeries (Unilateral & Bilateral) in the remote village of Aragonda. The modern-rural Aragonda facility which is fully equipped with Telemedicine facilities and State-of-art technology; successfully performed 26 Knee Replacement surgeries (22 unilateral & 2 Bilateral), 1 Shoulder Arthroscopy and 1 ACL Left Knee construction.  In a milestone achievement, Apollo Hospitals Navi Mumbai, successfully performed a liver transplant on a four-month old infant from Tanzania, the youngest ever recipient in Western India. The life-saving procedure marks a breakthrough in Apollo Hospitals, Navi Mumbai's Liver Transplant program, which has to date seen over 30 liver transplants being performed successfully, since its launch.  An 81-year-old Patient, who was denied for Surgical Aortic valve at three hospitals and Transcatheter Aortic Valve Replacement (TAVR) by another hospital being very highrisk case was successfully operated at Apollo Hospitals, Chennai. The doctors at Apollo Hospitals successfully performed “TAVR” on this complex high-risk cardiac patient. Apollo Hospitals, Chennai once again proved 'Centre of Excellence' by handling such a 'High-Risk' case which many other hospitals denied.  Doctors in the Apollo Hospitals saved the life of a 54-year-old software engineer by a new technique after he was diagnosed with giant ballooning of the blood vessel (aneurysm) in the brain. Measuring 2cm, not only was the aneurysm categorized as being a “giant”, it was also located in an unusual spot – at the base point where the blood vessels branch out and was growing. Following the procedure, the patient was discharged from the hospital on the fourth day of treatment.  Apollo Hospitals, Chennai treated a patient suffering from Cardiac Arrhythmia using the 3D Heart Mapping technique. The 47-year-old patient was admitted to Apollo Hospitals, Chennai with palpitations and shortness of breath; was diagnosed with Cardiac Arrhythmia. Dr. AM Karthigesan and his team from Apollo hospitals decided to use 3D mapping smart touch technology (CARTO3 system) in radio frequency ablation to safely ablate tiny areas of diseased heart tissue that caused rhythm disturbances. NEW LAUNCHES, INITIATIVES AND PARTNERSHIPS  Apollo Hospitals have acquired 50 percent equity stake in a Lucknow-based 330-bed super speciality hospital project for a consideration of Rs. 91 crore. This acquisition in ‘Medics Super Speciality Hospital’ would help Apollo Hospitals to consolidate its position in Uttar Pradesh. The project, comprises a 330 bed quaternary care hospital spread over a 3.5 lakh square feet area in Lucknow. This acquisition is through a primary issuance of shares by Medics which would be utilized towards hospital project completion expenses and should enable the project to be commissioned during the current financial year itself.  Apollo Hospitals has brought the state-of-art PET CT Scanning machine and unique Gallium 68 (G68) scans to Chennai. The G68 scan allows surgeons to pinpoint the precise location of neuroendocrine tumors (NETs) before beginning a surgery. Also, this technology needs shorter examination time to pinpoint the precise location of tumors in Oncology; Non-Oncological FDG applications include Neurology, Cardiology and infections. The level of details provided by the Gallium 68 scan allows doctors to more accurately stage the disease. Doctors can then provide their patients with a treatment regimen aiming at achieving better outcomes.  Apollo Hospitals, Navi Mumbai has introduced the ‘Robotic Spine Surgery’ technology. This technology is one such advancement which is helping to make extremely delicate surgeries much safer. It is one such advancement that now allows surgeons to insert screws into the bones on the spine without having to slice open the patient’s back.  Apollo Children's Hospital, Chennai in collaboration with Global Gene Corp Pvt Ltd, Mumbai launched the first comprehensive, one-stop Clinic for Rare diseases. This Centre for Rare Diseases will be exclusively dealing with these rare diseases; which are mostly life-long conditions and very difficult to diagnose.  Apollo Hospitals has opened an information centre in Laitumkhrah, Shillong to facilitate appointments and follow up care. Additionally, Cardiologists, Oncologists, Nephrologists, Joint Replacement surgeons and Gastroenterologists from Apollo hospitals in Chennai, Kolkata, Delhi and Guwahati shall also visit the Centre on a regular basis for consultation. The information centre would help to facilitate advance appointments of the needed doctor, follow up care etc. AWARDS AND ACCOLADES  Dr. Prathap C Reddy was conferred with the ‘Lions Humanitarian Award’ for his work in increasing accessibility and affordability of world-class healthcare and to bring quality healthcare within the reach of millions. Dr Prathap C Reddy is the fifth Indian and second medical doctor to be conferred with this honour.  Apollo Hospitals received three awards under the categories of "Best Cost - Effectiveness Solutions by a Hospital" and "Best Patient Safety Practices" at Healthcare senate 2018, organized by Express Healthcare.  Apollo Hospitals secured top position in National, City and Regional rankings in Times Health Multi Specialty Hospital Survey 2018.  Prof. K. Ganapathy, President, Apollo Telemedicine Networking Foundation, Chennai joined the editorial board of Telemedicine and eHealth which is the official journal of the American Telemedicine Association and ranked as the number one telemedicine journal in the world.  Dr. Rajkumar P. Wadhwa, Chief Gastroenterologist and Head, Institute of Gastrosciences at Apollo BGS Hospital, Mysuru, has been recognised and awarded as “One of the Inspiring Gastroenterologists of India” at ‘The Economic Times Doctor’s Day Conclave 2018.