India’s Apollo Hospitals misses Q2 profit view, to focus on specialty care for growth

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By Rishika Sadam and Kashish Tandon

(Reuters) -Apollo Hospitals reported second-quarter profit slightly below estimates and said it would lean more on specialty care to drive growth, the company said on Thursday.

The hospital chain reported a 26% rise in second-quarter profit to 4.77 billion rupees ($54.3 million) for the July-September period, although those numbers fell short of analysts’ estimate of 4.87 billion rupees, according to data compiled by LSEG.

Lower incidence of seasonal illnesses such as flu and dengue fever led to a drop in admissions, compared with a year earlier, the company said in a statement.

The hit from a drop in admissions was partly offset by a 14% rise in revenue from specialty care in cardiology, oncology, neurology, gastroenterology and orthopedics (CONGO).

“Our cancer center in Chennai treats patients who are turned down or cannot be treated elsewhere … Patients from developed international markets come to us for high-end complexity care,” CEO Madhu Sasidhar told Reuters, adding that these services will help Apollo differentiate itself in the market.

Revenue from specialty care contributes 60% of total revenue, and Apollo expects this to rise to 65% in the coming quarters, the company said.

“These require advanced technologies, and we’re deliberately investing in all our facilities, which will naturally lead to higher growth in CONGO,” CFO Krishnan Akhileswaran said, noting a surge in specialties such as neurosciences and oncology.

Overall revenue for the quarter rose 12.8% to 63.04 billion rupees, edging past estimates of 62.84 billion rupees, aided by 10% growth in the healthcare services business.

Apollo Hospitals, like its peers, is aiming to boost market share by acquiring smaller hospitals and increasing its bed capacity. The company, which currently has over 9,483 operational beds, plans to add 3,600 beds over the next five years.

(Reporting by Rishika Sadam, Kashish Tandon and Anuran Sadhu in Bengaluru; Editing by Janane Venkatraman and Anil D’Silva)