Capacity Expansion to Test

APOLLOHOSP

’s Earnings Resilience

delivered a better-than-expected Q3FY26 performance, with revenues from its core hospitals business rising 14% YoY, supported by higher patient volumes and improved case mix. Margins expanded meaningfully, aided by higher average revenue per patient and stable costs. Apollo’s operating performance stood out against peers Max Healthcare and KIMS, both of which faced disruptions and margin pressures. However, upcoming capacity expansion will add sizeable costs, making utilisation levels critical for sustaining earnings momentum. Financial & Operating Performance - Hospitals revenue: +14% YoY, driven by patient volume growth. - Margins: Expanded on higher realisations and better case mix. - Apollo outperformed peers: - impacted by insurance/cashless disruption. - margins weighed by new hospital costs. - Apollo benefited from insurance patient growth and absence of disruptions. Case Mix & Strategy - Tactical focus on high-value work boosted realisations. - Stable cost base compared to peers with aggressive expansion. - Patient volumes and insurance inflows supported profitability. Capacity Expansion Plans - New hospitals planned in Pune, Kolkata, Hyderabad, Karnataka, Gurgaon. - Over 1,000 beds to be added in coming months. - New hospitals expected to incur ₹150 crore EBITDA loss in first year. - Faster ramp-up in existing clusters (Hyderabad, NCR, Kolkata). - Revenue and cost optimisation in established hospitals. Utilisation & Subsidiaries - Target: 40% occupancy in year one, break-even thereafter. - Subsidiaries Apollo Health & Lifestyle and Apollo HealthCo remain key to overall returns. - Apollo’s 24/7 digital platform break-even delayed by one quarter. Valuation & Outlook - Near-term performance hinges on pace of new hospital commercialisation. - Strong core hospital earnings and insurance inflows provide resilience. - Expansion costs will weigh on margins, but cluster strategy and optimisation levers could offset.