Apollo to open hospitals in Mumbai, Bengaluru after Advent investment deal

The Mumbai and Bengaluru plan is part of the long-term strategy by the hospital chain operator to invest around Rs 3,000 crore over a period of three years to add another 2,400 beds

Apollo HealthCo will open three more hospitals in Mumbai and Bengaluru, said its parent company on Thursday a month after signing a deal with private equity firm Advent International (Advent).

Apollo HealthCo will start two hospitals of 500 beds each in Mumbai for an investment of around Rs 2,000 crore and another in Bengaluru of 400-500 beds. Advent in April agreed to invest Rs 2,475 crore in Apollo HealthCo, a subsidiary of Apollo Hospitals Enterprise (AHEL). The Rs 890 crore that AHEL received from the deal will be used for “organic and inorganic expansion”, said a statement.

AHEL said in a statement expanding in Mumbai and Bengaluru is part of its long-term strategy to invest around Rs 3,000 crore in three years to add 2,400 beds.

"In all urban locations, we are looking at 400- to 500-bed facilities. The investment in Mumbai will be around Rs 2 crore per bed, and we will be coming up with two 500-bed hospitals in Mumbai," said Krishnan Akhileswaran, chief financial officer of AHEL.

Keimed, a wholesale distribution company owned by the promoters of the Apollo Group, will merge with Apollo HealthCo. "The merger is going to take 24 to 30 months. Apollo 24x7 will also become neutral to profitable in the next six to eight quarters,” he said, referring to the company’s pharmacy business. “When that happens, HealthCo itself will be a large business. With the addition of Keimed, we are talking about a Rs 25,000 crore business, which should be an integrated pharma distribution company in three years. We have set a path of making it a profitable operation."

AHEL reported a consolidated net profit of Rs 258 crore for the fourth quarter of the financial year 2023-24, a 77 per cent rise compared to Rs 146 crore in the same quarter last year. "Overall, the business has done well. Revenue saw a 15 per cent growth. We have achieved almost a 31 per cent growth in ebitda and a 77 per cent increase in PAT (profit after tax), driven primarily by profitability in (Apollo) HealthCo and AHLL. HealthCo has turned around from losses to an overall profit situation, and the overall profit of AHLL has also improved, while healthcare has continued to maintain its momentum."

Akhileswaran said that in the next six to eight quarters, HealthCo would continue to do well and move towards profitability in the online segment.

"Going forward, Apollo Hospitals will continue to strengthen its endeavours to identify and introduce best-in-class, technology-enabled healthcare solutions to enhance patient outcomes and improve access to quality care. Together, we embark on a journey towards a healthier, more resilient future, where every individual receives the highest standard of care," said Prathap C. Reddy, chairman of Apollo Hospitals Group.