India's Apollo Hospitals misses Q4 profit estimates on higher expenses

A man walks on a pedestrian bridge in front of an Apollo hospital building in New Delhi

By Kashish Tandon

BENGALURU (Reuters) - Indian hospital chain operator Apollo Hospitals slightly missed fourth-quarter profit estimates on Thursday, as higher expenses offset revenue growth in its healthcare services business.

Consolidated net profit rose nearly 76% to 2.54 billion Indian rupees ($30.5 million), missing analysts' average estimates of 2.65 billion rupees, according to LSEG data.

The company, which runs over 70 hospitals across the country, said revenue from the healthcare services business, its biggest revenue generator, rose 16%, driving overall revenue up 15% to 49.44 billion rupees, in line with analysts' estimates of 49.43 billion rupees.

"The results are largely in line with our estimates, though the pharmacy distribution business revenue fell short by 5%," said Dhara Patwa, an analyst at SMIFS Institutional Research.

Apollo Hospitals plans to add over 2,000 beds by fiscal 2027.

Revenues at hospital chains, including Apollo and Max Healthcare have been boosted by increased capacity and the number of surgeries.

However, an over 13% climb in total expenses ate into revenue growth.

Moreover, the company's digital health and pharmacy business, which is the second-biggest by revenue with a 40% contribution, continued to pressure Apollo Hospitals' profit as it reported a loss for the seventh straight quarter.

The unit, which offers online consultations and operates the "Apollo 24/7" platform, has been grappling with soaring costs due to its cash-guzzling pharmacy vertical.

The company had earlier said it aims to turn this unit profitable by the end of fiscal 2024 by moderating spending.

The company's margins on earnings before interest, tax, depreciation and amortization (EBITDA) also improved due to reduced losses from 24/7 operations, Patwa added.

($1 = 83.2650 Indian rupees)

(Reporting by Kashish Tandon in Bengaluru; Editing by Ravi Prakash Kumar)