India’s Apollo Hospitals aims for profitable online pharmacy in a year – CFO

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BENGALURU (Reuters) – India’s Apollo Hospitals Enterprise Ltd aims to make its online pharmacy business profitable by the end of the next financial year, including by moderating spending, the company’s finance chief told Reuters on Wednesday.

The healthcare group reported a 33% drop in third-quarter net profit on Tuesday, dragged by losses in its online pharmacy business, which accounts for about 4% of overall revenue.

While Apollo’s offline pharmacy business, the country’s largest, posted a core profit last quarter, the losses in the online business weighed on the combined pharmacy business, which accounts for 41% of the total revenue.

“We would like to grow in online pharmacy business as well, that is why a lot of growth capital is being used for this segment,” Chief Financial Officer Krishnan Akhileswaran said in an interview.

“In our pharmacy business, we are trying to moderate the overall spending and see how we can become PAT (profit after tax) positive by the third or fourth quarter of financial year 2024.”

And while the Chennai-based company expects to moderate spending, its total expenses, which jumped 22% in the third quarter, could continue to rise, Akhileswaran said.

Still, the cost moderation will boost EBITDA margins in Apollo’s healthcare services business by 200 basis points next financial year, the CFO added.

The business, which contributes to nearly 52% of total revenue, posted EBITDA (earnings before interest, taxes, depreciation, and amortization) margins of 24.7% in the latest quarter.

Apollo’s shares closed 5.1% higher at 4,487.90 rupees on Wednesday in their biggest one-day gain in nearly five months.