India's Apollo Hospitals beats Q3 profit view on higher healthcare services revenue

BENGALURU (Reuters) -India's Apollo Hospitals Enterprise reported a bigger-than-expected third-quarter profit on Thursday, as higher revenue from its healthcare services business helped offset the impact of losses from its cash-guzzling pharmacy vertical.

Consolidated net profit surged 59% to 2.45 billion rupees ($29.5 million) in the three months ended Dec. 31, beating analysts' average estimate of 2.40 billion rupees, according to LSEG data.

The December quarter is a seasonally weak period for hospitals due to the holiday season, when fewer people schedule health-related appointments. However, a rise in the number of surgical cases in the latter half of 2023 has benefited hospital chains such as Apollo and Max Healthcare, resulting in increases in their third-quarter profits.

The reduced duration of patients' stay also boosted its occupancy rate.

Apollo's shares rose 3% to hit the session's high after the results.

The company, which runs over 70 hospitals across the country, said revenue from the healthcare services business, its biggest revenue generator, rose 12.5%.

This drove its overall revenue up by 14% to 48.51 billion rupees.

However, Apollo Hospitals' bottom line has been under pressure due to losses in its digital health and pharmacy business, which constitutes nearly 42% of its revenue.

The unit continued its streak of posting losses in this quarter as well, marking its sixth straight quarterly loss.

The Chennai-based hospital chain aims to turn this unit, which offers online consultations and operates the "Apollo 24/7" platform, profitable by the end of fiscal 2024 by moderating spending.

"Apollo's revenue aligned with our estimate. However, due to elevated operating costs, EBITDA fell short of our projection by 6.2%," said Dhara Patwa an analyst at SMIFS Institutional Research.

While the overall performance was satisfactory, obtaining further insight into the losses incurred by online pharmacy from the management would provide a clearer picture, Patwa said.

($1 = 82.9622 Indian rupees)

(Reporting by Kashish Tandon in Bengaluru; Editing by Janane Venkatraman and Dhanya Ann Thoppil)