Apollo Hospitals misses Q1 profit view on digital healthcare costs

BENGALURU, Aug 11 (Reuters) - Apollo Hospitals Enterprise (APLH.NS) reported a bigger-than-expected 47.5% fall in first-quarter profit on Friday, dragged by operating costs related to its digital healthcare platform.

Consolidated net profit fell to 1.67 billion rupees ($20.2 million) in the quarter ended June 30. Analysts, on average, had expected a profit of 2.25 billion rupees, according to Refinitiv IBES data.

The companys year-ago profit of 3.17 billion rupees was boosted by a deferred tax gain of 1.55 billion rupees.

Apollo, which runs more than 73 private hospitals, pharmacies and diagnostic clinics across India, said revenue from operations rose over 16% to 44.18 billion rupees.

Revenue from its hospitals, which accounts for 52% of total revenue, grew by nearly 14%.

However, its cash-guzzling digital health and pharmacy business, which makes up nearly 41% of Apollos revenue, reported a widened loss of 830 million rupees compared with 460 million rupees a year earlier.

The Chennai-based hospital chain aims to turn its pharmacy business profitable by the end of fiscal 2024 by moderating spending, its finance chief told Reuters last year.

The companys diagnostics business also reported a loss that widened to 150 million rupees, in the absence of Covid-related revenue, from 60 million rupees a year earlier.

Total expenses, including those related to the purchase of goods in the line of business, rose 18%, it said on Friday.

A post-pandemic boom in demand for private healthcare in India has led to global investors seeking entry into the healthcare chains in the country.

Apollos peers have also gained from this demand, with Max Healthcare Institute (MAXE.NS) and Fortis Healthcare(FOHE.NS) reporting a 39% and 9% rise in June-quarter earnings, respectively.

Apollo shares fell as much as 2.3% after the results, before paring some losses to close at 0.6%. The stock has gained 18% in the April-June quarter compared with the Nifty 50s 10.5% rise.

($1 = 82.8150 Indian rupees)