Ladies and gentlemen, good day, and welcome to Apollo Hospitals Enterprise Limited Q2 FY 2022 earnings conference call. As a reminder, all participant lines will be in the listen-only mode, and there will be an opportunity for you to ask questions after the presentation concludes. Should you need assistance during the conference call, please signal an operator by pressing star then zero on your touchtone phone. Please note that this conference is being recorded. I now hand the conference over to Mr. Mayank Vaswani from CDR India. Thank you, and over to you, sir. Thank you, Faizan. Good afternoon, everyone, and thank you for joining us on this call to discuss the financial results of Apollo Hospitals for the second quarter and the first half of FY 2022, which were announced yesterday. We have with us on the call today the senior management team represented by Mrs. Shobana Kamineni, Executive Vice Chair, Mrs. Suneeta Reddy, Managing Director, Dr. Hari Prasad, President of the Hospitals Division, Mr. A. Krishnan, Group CFO, Mr. C. Chandrasekhar, CEO of AHLL, Mr. Obul Reddy, CFO of the Pharmacy Division, Mr. Sanjiv Gupta, CFO of Apollo 24|7. Before we begin, I would like to mention that some of the statements made in today's discussion may be forward-looking in nature and may involve risks and uncertainties. Please note the disclaimer mentioning these risks and uncertainties on slide two of the investor presentation shared with all of you earlier. Documents relating to our financial performance have been circulated earlier, and these have also been posted on our corporate website. I would now like to turn the call over to Mrs. Suneeta Reddy for her opening remarks. Thank you, and over to you, ma'am. Thank you, Mayank. Good afternoon, everyone. Thank you for taking time to join us on a Saturday afternoon. I trust all of you have received our earnings document, which we shared yesterday. The second quarter of FY 2022 witnessed a strong revival of the non-COVID business, with elective surgeries, out-of-station patient volumes picking up. We have continued to gain local market share, aided by a healthy uptick in local patients. There was also high growth in the insurance patient segment, especially from corporate. During the quarter, there was a renewed focus on the centers of excellence within our institutions, with high-end specialties like oncology, advanced cardiac sciences, robotics, neurosciences, and critical care accounting for a large portion of inpatient volumes. At the same time, we continued to keep beds allocated for COVID patients, and the strong iron curtain between COVID and non-COVID continues to be in place. However, the percentage of COVID patients treated in Q2 was much lower than in Q1. This combination of factors has improved our revenue intensity. The year-on-year growth was 11%. This growth has to be viewed against the lens that during quarter one this year, there was a concentrated purchase of pharmacy items due to COVID leading to overstocking of medical supplies in individual households, resulting in muted purchasing in quarter two. Given the swings in pharmacy buying and behavior during COVID, the revenue growth patterns of the last six quarters have been rather inconsistent. We believe that this performance in this vertical will normalize in quarter three, and we are committed to a growth of close to 20% overall in the offline business. This is already evident from the number of daily footfalls, which has moved from 400,000 footfalls to 527,000 footfalls per day. Overall, the company recorded a year-on-year growth of 17% in standalone revenues at INR 2,823 crore. Our new hospitals recorded revenue growth of 68%. Our mature hospitals revenue grew by 49% year-on-year. Margins in mature hospitals were strong at 26.2%, and I am happy to state that our margins in new hospitals continue to witness improvement, moving up to 17.5% for the quarter, registering a 653 basis points improvement on a year-on-year basis. Standalone Ind AS 116 EBITDA was at INR 439 crore, registering a year-on-year growth of 76.8%. Healthcare services EBITDA was at INR 392 crore, a year-on-year growth of 196%. Pharmacy distribution EBITDA post Ind AS 116 stood at INR 95 crore with an EBITDA margin of 8.1%. This excludes the Apollo 24|7 cost of INR 48 crore. Standalone PAT was at INR 186 crore as compared to INR 33 crore in Q 2 FY 2021. Net debt as of 30th September 2021 was at INR 1,297 crore, with a debt equity ratio of 0.43. Consolidated results. Our consolidated revenues stood at INR 3,717 crore against INR 2,761 crore in Q 2 FY 2021. On a year-on-year basis, healthcare services revenue grew by 75% to INR 2,169 crore. Mature Healthcare Services grew by 70% to INR 1,157 crore, while new hospitals grew by 84% to INR 664 crore. Group occupancy was at 65%. Despite the uncertainty caused by COVID, our retail Apollo Health and Lifestyle Limited has recorded an impressive growth of 122%. Q2 FY 2022 was driven by a rapid ramp-up in diagnostics as well as primary care business and a rebound on the secondary care formats, which are inching closer to the pre-pandemic levels. Diagnostics witnessed a significant growth in Q2, registering a 52% year-on-year increase to INR 93 crore, including 56% year-on-year growth in non-COVID business, driven by network expansion and new and existing geographies as well as continued growth in capacity to serve the rising demand for home collections. The consolidated post Ind AS 116 EBITDA for Q2 FY 2022 was at INR 615 crore compared to INR 300 crore in Q2 FY 2021. Within this, Healthcare Services EBITDA was at INR 506 crore compared to INR 163 crore in Q2 FY 2021. AHLL recorded an EBITDA post Ind AS 116 of INR 62 crore as compared to INR 21 crore in FY 2021. Consolidated PAT is at INR 248 crore as against INR 60 crore in Q2 FY 2021. AHLL is PAT positive in H1 FY 2022, a key milestone in its journey. Apollo 24|7 continued to improve on its consumer acquisition trajectory with over 12 million registrations and an increase in the number of PIN codes to over 19,000. Our subsidiary Assam Hospitals Limited has entered into a definitive agreement to acquire 64% majority stake in the 200-bed Excelcare Hospital in Guwahati. The acquisition demonstrates our focus on the Northeast and strengthens Apollo's leadership position in the city and in the eastern region, with a combined capacity in the Northeast exceeding 400 beds, including the existing hospital. Looking ahead, we believe that these results give us an insight into the strong baseline that we've established post-COVID and the potential that lies ahead. Our occupancy and volumes are at healthy levels, and margins have continued to expand. There is still significant headroom for growth in volumes and occupancy in both mature and new hospitals as surgical cases continue to grow and international patients come back. The revenue growth and EBITDA expansion will only pick up from here. Our pharmacy distribution vertical also has the canvas to deliver strong rates of growth along with the higher online penetration of Apollo 24|7. AHLL has hit its stride and will continue its trajectory of accelerated growth in both diagnostics and primary care. As the COVID challenge recedes into the background, the outlook for the medium and long term is positive, as all our verticals are primed for even better performance and will live up to their full potential. I have Shobana Kamineni, Dr. Hari Prasad, our CFO, A. Krishnan, Obul Reddy, Chandrasekhar, and Sanjiv Gupta from 24|7 with me to take all your questions. Thank you. Thank you very much. We will now begin the question and answer session. Anyone who wishes to ask a question may press star and one on their touch-tone telephone. If you wish to remove yourself from the question queue, you may press star and two. Participants are requested to use handsets while asking a question. Ladies and gentlemen, we will wait for a moment while the question queue assembles. Reminder to the participants, anyone who wishes to ask a question may press star and one at this time. The first question is from the line of Anubhav Aggarwal from Credit Suisse. Please go ahead. Yeah. Thank you. Good afternoon to all. First question is on the hospital segment. If I look at the segment, let's say if I just filter FY 2024, and I'm combining the Metro, New, and Proton all together into one bucket. After this strong quarter, do you see that if I were to talk about EBITDA in FY 2024, just as a number, INR 2,100 crore, INR 2,200 crore, does that look as an aspirational number to you, or that looks as a very easy target, what you've already done, INR 500+ crore in this quarter? See, Anubhav, obviously we wouldn't want to give any forward-looking statements as always, right? We continue to stick to the perspective of how we have performed in the quarter. If you look at the quarter, clearly the INR 500 crore is something that we have delivered, and there is clear headroom for growth in our existing businesses, as you can see, because the occupancy still in the metro is 67%. The new hospital still has abilities to grow. You know, the point that you should remember is we have invested in significant capacities in the last five years. You know, we know that there is a potential for us to fire, and this is why the results are looking good. If we continue to look forward, we are quite comfortable to deliver margins even above this percentage that we have already delivered now. There is some benefit of vaccine which is still there in this Q2 also. You know, at the hospital level it is almost around INR 100 crore, but at the EBITDA level it is almost around INR 15 crore-INR 20 crore. That's the benefit of vaccines that is there in the results. Then OPs have still not come back, medical tourism has still not come back. We would like to believe that we should be able to perform on these numbers just because there is headroom, and we have been continuously investing for that growth as well. Just for clarity on that response, as Suneeta, ma'am mentioned that there seems to be some benefit of bunching up of some high-end surgeries in this quarter, and that was reflecting in a very strong ARPOB across the clusters also. Does this quarter ARPOB seems reasonable or once we normalize? That's why I was just taking FY 2024 as a little bit idea. The question was largely that once things normalize, like the patients, international patients come back, et cetera, surgeries are not as strong as what, let's say the mix is not as favorable as was in this quarter. Is this INR 500+ crore performance still doable? Yes, of course. I think it's very sustainable. The way that you should look at it is that if you replace the 5% that is COVID and low ARPOB and bring in the 10% international patients which pay a premium, I think this ARPOB is more than sustainable. Okay. That's helpful. Second question is on Apollo 24|7. We did a rough analysis of EBITDA loss of INR 200 crore on this. Just a question there, what could be a peak loss from Apollo 24|7, let's say? And when do we aspire to achieve EBITDA breakeven in this segment? This INR 200 crore, can it go to, like, INR 400 crore, INR 500 crore annual loss? Or what could be the peak number, and when will the EBITDA break even? I think Shobana will take that. It's actually not a direct question, because one of the things we have to understand is that this company has been taken out into a subsidiary. What we do believe that as most digital companies, as we hit the velocity, for us to break even would be in two to three years for sure. What we believe is that if we're doing 40-50 million customers, so that is almost 200 times what we're doing now. At that point of time, you know, we would think that we should be able to fund not the same proportion of losses. As we get further down the journey, we'll be more efficient. I think our IM feels that at peak we should be at a loss of. Sanjiv, would you have that figure off the top? But again, it's based on, you know, a fundraise that we're currently in. I think yeah, ma'am. In case I add one more point, I think what is important to see today is that are we positive on the unit economics. With the current set of numbers that we are doing it from 24/7, we are contribution positive. Some of the high-end geographies where we have large volumes are you know doing pretty good, and they're also contributing towards the fixed expenses. As ma'am rightfully said, it's a matter of I think the journey to the breakeven for the company would be two to three years from now. As far as the further funding is concerned, I think it's a little forward-looking statement. I think the assurance is that, you know, given our unit economics are positive, I think we are doing pretty good, as far as this set of segment is concerned. Sure. Just one last question on the pharmacy segment. We've been adding for many years about 350-400 stores each year. Just wanted to get an idea, what is the constraint in adding, let's say, 700-800 stores? Because this will only aid us in, let's say, faster penetration of online segment as well, because we can deliver medicine faster to more number of people. Actually, overall, if I can take that question. Our logic really is that we continue to add 400 stores, especially in newer geographies. What we're understanding is that we're also able to do a lot of serviceability with dark stores, which we will have a combination of both of those. I think as we keep increasing the PIN codes we serve via omni-channel, both these strategies will go into play. Definitely we don't emphasize doing less than 400 stores a year. Can you talk about how many million square feet or what square feet you have on the dark stores today? That's a strategy for the future. That's clarity for the future. Right now, what we're doing is that we're using our bigger stores to serve a certain PIN code. What we're, you know, just with our stocking, and we're just becoming more efficient on that. The dark stores will probably be in geographies that, you know, we're just getting into or which have very much online lift. If you see places like Telangana and Andhra and Karnataka, NCR, where we have pretty deep penetration, Calcutta, you know, we have less dark stores that are required. Maybe Mumbai, because of real estate, we'll have to do a combination or a hybrid. Sure. Thank you. I'll reach out. Thank you. The next question is from the line of Damayanti Kerai from HSBC Securities and Capital Markets. Please go ahead. Hi. Good afternoon. Thank you for the opportunity. My first question is on your operating costs. We have seen an increase in staff and other operating costs, largely in line with the normality in business. On the gross margin part, we have seen a very strong 400 basis point sequential improvement. Can you explain what has led to this, and how sustainable is this, the Q2 gross margin numbers? Yeah. I'll ask Shobana to take that. That's a right observation, Damayanti. The gross margin has improved significantly, mainly because of the increase in food volumes, because at a contribution level, material costs were rather high in earlier quarters due to the extended material use due to COVID. Now that has come down and our guarantee fee base from the partners are actually better in terms of volumes, our gross contribution has gone up. We believe this is sustainable because we believe our mix will continue to keep going forward what it was in this quarter, rather than what it was in an earlier quarter. We see these contribution margins as going forward sustainable, unless something changes on the COVID front. You can take that as fairly stable. Okay, ma'am. My second question is, can you update on some of the key metrics on 24/7, the way we have heard in the previous quarter, say in terms of number of deliveries which you are doing per day or number of consultations, which you are doing. The INR 200 million-INR 250 million revenue target for 24/7, I hope like you are broadly on track to achieve that for this fiscal. Sanjiv. Yeah. I think, you know, some of the broad numbers that I can talk about is that, you know, today 24/7 has got, 10 million registrations. You know, we've got, 19,000 PIN codes that we are servicing. We've got 6,000 doctors, you know, for 130 specialties. The promise to the users or the customer is 15 minutes, you know, you consult, with any doctor. We have a very good traction in the platform. Today, we have about, closer to 2+ million, weekly active users. Our organic traffic share is also, increasing, you know, week by week. As far as the delivery side is concerned, I think, at an omnichannel level, we are doing about, you know, 45,000 deliveries a day. Apart... This is for the pharmacy side. Apart from the VC and the diagnostic, we are closer to about, you know, five to six thousand deliveries a day. I mean, the completion of the orders of the day. You mean to say five to six thousand video consultations or teleconsultations you are doing right now? Correct. Okay. In terms of revenues around the number which earlier indicated, around INR 200-INR 250, that looks reasonable? Yeah. That looks promising. I think, you know, we are meeting those targets. Okay. My final question is on, you know, diagnostics. Ma'am, so like we have seen very strong traction there. If you look at the margins, this quarter, I guess they came at around 13%. Previous quarter, one quarter definitely had benefit of COVID and all. How should we look at margins for diagnostic business, which has been volatile for last, I'll say couple of quarters? Chandra Sekhar. Yes, ma'am. The Q1 FY 2022 had a significant component of COVID. The important point that we need to note here is that our non-COVID from Q1 to Q2 grew by 22%. Our core business sustainable is continuously growing, and we are also investing. We've added our home collection capabilities are adding roughly around 500 labs. Which are now trying to saturate PIN codes of interest and work along with 24/7 to be able to do that. That adds to fixed costs. Overall, our current EBITDA margins are in the region of 11%, but that is a conscious decision to have incurred additional fixed costs. We also have added a few labs in some of the new markets which are yet to start delivering the required results. I think a move to 15% over the next couple of quarters is very much in line, and we are in control with that to begin with. Just to give you some figures, diagnostics delivered revenues of INR 51 crore, EBITDA of 91. INR 11 crore. INR 91 crore. INR 91 crores, ma'am. INR 91 crore. Yes. Thank you. Thank you for response. I'll get back in the queue. All the best. Thank you. The next question is from the line of Prakash from Axis Capital. Please go ahead. Yeah, hi. Thanks for the opportunity, and congrats on the numbers. Just again, you know, we believe last on ARPOB only, and my question also is around that. I understand the case mix and all have improved. There could be some pent-up also. This international one, if you could throw some light, where are we today versus the 10% historical peak of international patients? And then what are the other levers for margins? Like, you know, this quarter is obviously all-time high across new as well as mature hospitals. Do we see this as sustainable base? Do we expect over next three to four quarters more improvement? What is the outlook here at least? Thank you. Yes. If you look at ARPOB HCS, we're at 47,361 versus 38,000 last year. Mm-hmm. We really do believe that this is sustainable. I think the icing on this would definitely be the fact that if international patient travel resumes in the third and fourth quarter, you will see ARPOB going up. The reasons for the high ARPOB are clearly our focus on, you know, on centers of excellence, and this is really yielding the high ARPOBs. You could see this especially in our tier-one towns and our mature hospitals, which are at an ARPOB of INR 80,000-INR 60,000. The blended ARPOB is INR 47,000. As mature continues to mature with international patients, and as new hospitals continue to pick up traction with surgical intensity increasing, we do believe that this is more than sustainable. What's our international patient mix currently? Hari, you want to take this? Yeah. Currently it's about 5% of what we normally get because we're getting small batches of patients from a few countries. What we see is it's increasing month-on-month, and the trend looks good. It is not just the international patients. I think it's even the local travel which makes a big difference because many of our large facilities get a large number of outstation patients from other states in the country, and we're seeing that travel also improving. Most of these patients who travel distances, whether international or from outstation, they come in for more complex procedures or more high-end procedures, where ARPOB and margins are definitely going to be higher. Yeah. Okay, I understand that. You don't see this as bunching up like, you know, for last three months, six months, post wave one, there would have been some bunching up. You are not expecting this to be a bunched up kind of case mix with the opening of travel. No, we are actually expecting this to improve with the opening of the travel. Okay, got it. Also if you could help us with the payer mix versus currently what you are observing in Q2 versus maybe last year. The payer mix in terms of you know cash patient, insurance and the government scheme. Yeah. A. Krishnan. Yeah. As of now, the cash mix is much better. You know, clearly if you look at the mix, you know, if you look at the overall volume that we had this year, we made almost around 50% came from cash. Typically, you know, we have been looking at it as insurance has clearly gone up. If you look at the insurance patients for the quarter, insurance has gone up, and the CGHS patients, et cetera, have been similar to what we had earlier. If you look at the payer mix, it's not significantly, you know, tilted towards walk-ins and insurance. The IP or the medical tourism is actually high because we had only, you know, around 1,400 or 1,000 patients in this quarter, as opposed to, you know, almost 8,000-9,000 that we had in FY 2020, etc., in the same quarter. Clearly there is a fillip which can come from medical tourism, as we said. Broadly, I think insurance has seen some increase, but walk-ins, etc., are broadly similar. Not significant increase that I would say. What I understood was cash is largely similar, insurance share has gone up. Yeah. What has gone down? That is the public sector has gone down a bit, and medical tourism has gone down. Okay, fair enough. Lastly, on the you know 24/7 fund-based plan that we had, if there could be more color there, sir, in terms of timelines or any thoughts around you know strategic partners, what kind of partners and timelines, please? I think we are almost at the last stage. You know, I think you will have to give us some time to come back on that. Is it this calendar year or is it moving to next year? Definitely in this calendar year. We hope that in the next month or so to announce two significant partnerships and some significant strategic- Okay, lovely. Great. Thank you and all the best. Thank you. Thank you. Ladies and gentlemen, in order to ensure that the management is able to address questions from all participants on the conference, please limit your questions to two per participant. Should you have a follow-up question, we would request you to rejoin the question queue. The next question is from the line of Sameer Baisiwala from Morgan Stanley. Please go ahead. Hi. Thank you so much, and good afternoon, everyone. On this 24/ 7 platform, what is the immediate priority in six to nine months to build this up? Is it, you know, building your technology backbone? Is it your fulfillment or is it customer acquisitions? If you can just talk about that. Sure. You know, I think that what we've actually proven during this difficult time during the pandemic is that we've been able to open PIN code after PIN code, and we're the fastest delivery two-hour delivery. We've done this across states and across PIN codes, something like 16,000 PIN codes. We've also seen that in terms of availability, we've improved our availability. We want to push it to 95%, which will be the industry highest, almost comparable to Amazon in terms of availability. These are some of the things that with the natural strength of the pharmacies we're able to do, we're able to do well. In terms of doctor consults, I think our technology platform is one of the strongest. While we keep improving on it, the ability to get an Apollo doctor in 15 minutes has proven to be an outstanding success, and we'll continue to grow on that. The diagnostics we thought we would start later. Fortunately, the diagnostics team was very eager, and they included almost 400 phlebotomists. We were able to actually come in very fast into that area, and we continue to grow that more than our business plan for diagnostics. These are our three actual service delivery platforms. Behind this, I think we have a suite of products which is in condition management, which is in the ability to better manage patient records, to be able to move the CDS, the clinical decision support system, for instance, has been benchmarked by MIT. What we see with that is that it has one of the best accuracies in the world, it's currently in the testing phase. We've got almost 1,000 disease patterns mapped into this. Again, this is an Apollo advantage that we've been able to get ahead of everybody else. On one side, technology continues to advance. Our service delivery has proven that it can deliver on capabilities. The next thing that we'll be pushing is really now that we know and we have a level of confidence, we will concentrate on scaling. Yeah, that's great. Do you benchmark yourselves versus the three leading health tech platforms? I say that because, you know, they've been raising hundreds of millions of dollars and the kind of spend that they will be doing and are already doing versus we are spending INR 40-INR 50 crore a quarter. You know, at the end of maybe one year, two years from now, we may actually be left behind a lot. No, it's a fantastic question. Thank you for that. First you must understand that all that money is being used to fund discounts. They're taking investor money to fund discounts. I think that is a race to the bottom that we should not be part of because we are a long-term player, and we value shareholder value. You know, we can't respond shareholder value from the other side. Having said that, I think that many of them are looking, you know, some of them are trying to move on me, which means that they're trying to catch up to our INR 2 billion value of pharmacy investment. If you really look at it, like, Suneeta had spoken about the numbers, 527,000 people walk into Apollo every day. Those numbers it would take years for anyone to replicate while we continue to grow strongly and we move digitally. I don't think there's a fear of competition, but I think that there's the responsibility of doing the right things. We see that even in the pin codes that we continue to be in, our customers continue to come back to us. Many of them are not swayed. During the pandemic we had 42 lakh new customers contact with us, and we've been able to retain over 27 lakh of them that we've reached out to again. I think our customer acquisition also has been quite effective, and we'll continue to invest into this. Okay, great, and my next question is on the hospital side. It's been a fantastic last two to three years. Great job done. Thank you. As we look forward, now from INR 2,000 crore sort of annualized EBITDA that you're generating, what's the pathway to, you know, double this to INR 4,000 crore, say, over whatever reasonable time period, four or five years. I mean, do you not need to add 2,000, 3,000, 4,000 new beds, or maybe more? You know, I heard your comment. It's fine. You will, you know, you will squeeze out some more efficiencies. For the big picture, how are you thinking about it? Sameer Baisiwala, that's a good question. I don't know how much of this will be forward-looking, but as you can see, you know, we're very focused on asset utilization. Our current occupancy is in the region of 55%. With ALOS going down, there is a lot of headroom in the existing company. That is the first bucket of it, you know, is the headroom in the existing company to deliver an additional 20%, at least minimum increase in EBITDA. The second part of it is to look at how we are growing our clusters. If you look at the cluster growth, I think, you know, we've completed our, you know, the Calcutta, we've bought out the Gleneagles stake. We strengthened our presence in the Northeast corridor, and therefore effectively, we're looking at the east as a cluster that we hope to dominate. With this, I think definitely you will see healthy ARPOBs. You will see growth in revenue, occupancies which really flows to the bottom line. In Bangalore, we are looking at brownfield expansion. From our current 500 beds, we should look at 800 beds in the next two years, we should be looking at 800 beds. It's a combination of acquisitions. It's a combination of brownfield, organic growth and some brownfield that we're looking at to really increase the number of beds and strengthen our clusters. It's not just random growth. Of course, we are looking to make, to create something in the north where we're looking at an acquisition. We are looking at Mumbai. We're sad we're not present in the city where all of you are present. We are looking at a revenue share model. Hopefully in the next three years you will see a 400-bedded hospital coming up in central Mumbai, supported by our hospital in Navi Mumbai. Also, unlike all the other corporate entities, you know, when we talk about clusters, we must remember that we have the daycare centers which are part of it. For example, in Bangalore, we have three large hospitals, one in Mysore, but we have two daycare centers, we have two birthing centers, and we have about 20 clinics. In terms of creating a cluster for delivering healthcare, I think, you know, we are in a superior position. If you layer this with the connectivity that 24/7 is going to give us and the funnel it's going to create, I think you can definitely look at a significant improvement in ARPOB. Hopefully we'll be able to show this to you over the next 12-24 months. Okay, great. This is very clear. Thank you so much. Thank you. The next question is from the line of Shantanu Basu from SMIFS Limited. Please go ahead. Most of my questions have been answered, so thanks very much. Just one clarification on the international revenue mix. I just want to know what is the percentage as of now that is being contributed to hospital revenue by international patients? As of now it is very, very less. It is less than, you know, as a percentage of revenue, it is less than 1%. Okay, fine. What's your outlook for international patients going forward, I mean, in the next two quarters? Normalized is 10%. We believe that by the end of the year, I mean, by the end of the financial year, we should get to 10%. So next- For the last two quarters, you can look at the last quarter with 10% of the revenue coming from international patients. Okay. In Q3? Q3 just starting to open up. Maybe 4%-5%. You are seeing traction in international patients? Yes. Definitely. Lots of inquiries coming, and travel has started to open up, but the number of flights is still not normalized. How is this happening then if the number of flights are still not normalized and, No, no, there is a plan. I think, you know, everything is in place that by March everything should be. The last quarter we should have January, February, March, it should be fully back. That's why we're suggesting 5% for this quarter and 10% moving on to 10% in the last quarter. In Q4. Of the quarter revenue. Yes. Right. Okay. Thank you, madam. Thank you. The next question is from the line of Kunal Randeria from Edelweiss. Please go ahead. Good afternoon, everyone. Ma'am, if you were to compare the surgical and hiring procedures versus FY 2020, how would they look now for the quarter? Are they 80%, 85% of what we were in FY 2020? No, no. We are higher than 80% of FY 2020. We're about. Let me say we're about 5%-6% lower than FY 2020. In the one and a half months of this current quarter, we are, I mean, trending at the same rate or are we at just like earlier this month? On this quarter, I think it's, except for the holidays, very difficult to, you know, it's a dull period during Diwali. Again, it's picking up and I think we should be back to FY 2020 levels in Q3. Sure. That's helpful. The second question is, as far as occupancy is concerned, I mean, we are pretty much around your input. Just wondering how we should see that trajectory going forward. No, I think you know when I mentioned this figure of admissions where we were at 1,22,000 admissions compared to 52,000 last year. So clearly, you know, occupancy is a derivative also of ALOS. So if you were to look at ALOS and look at occupancy, I think admissions is a figure that we need to track. This is where we are, where we believe there's an opportunity to grow and it is tracking well for quarter three. Sure. Just last one if it doesn't bother you. Can you share what the hospital-based pharmacy revenue would be? Which two periods are you interested in? Roughly around 18%. 18% of hospital services? Yes. Okay, got it. Thank you. Thank you. The next question is from the line of Abhishek Sharma from Jefferies. Please go ahead. Yeah, thanks for taking my question. My questions are around the online pharmacy. We can see that you started offering discounts recently online in the range of 15%-30%. You know, just wanted to know what is the company's strategy. Are you matching what the market is offering or, you know, would you plan to go higher in order to accelerate your customer acquisition? If you look at it, you know, we're actually very nuanced. We are not giving any blanket discounts because one of the things is that we have to make sure the customer experience is truly omni. I can't do things differently to a large extent. Some I can do. For that we have the Circle membership that is growing in popularity. We feel that the advantage of the Circle membership is that we've been able to get the actual our per customer is much higher than a regular customer every time they transact. They become valuable. Also the stickiness is far greater once they've transacted with us about three times. Those are the customers as we move forward that we'd like to be able to find the ability to pass on discount advantage either directly from the manufacturer cashback or through our private labels. I think that we'll have to do this strategy very well as we go on for some products, maybe price matching, but mostly I think it'll be towards acquiring long-term customers and rewarding them sustained loyalty. Right. In terms of your total revenue share, how much of it is coming from loyalty Circle members versus non-loyalty presently? Online as well as offline. It's about 40%, ma'am. Yeah. Online it's about 40% now. No, Sanjiv Gupta, please correct me. Now it is moved up to 50% now. We have got total 1.2 million CIRCLE members. Right. They contribute about 50% of the GMV. Obul, how about from the offline? It's about the same, ma'am. 48%-52% it is ranging. I think these are the people that are, you know, that we clearly understand what are their preferences, where they stay, and this kind of, you know, how we can build that loyalty and continue to grow those numbers. Understood. Just a last question on discounting, ma'am. The only discounting you'll offer is to your loyalty Circle. There's no blanket discounting like invoice-based discounting et cetera. Yeah, there is. You'll see, you know, I can't say, like even in the pharmacy, if people make a significant purchase, they do get a discount. You know, the discount is less. It doesn't go more than 15% unlike the competitors that do 20%-25%. To the company if we authorize it, obviously, [audio distorted]. Okay. Got it. I think that really what the customers are looking for is that, for repeat purchases they're looking for values. When they need medicines quite urgently, within two hours, medicines that are not really easily available, they come to Apollo Pharmacy and there's a significant market share that we enjoy in that. Okay. Just a follow-up on that. Discount as a percentage of your GMV, you know, do you track that metric and how much could that be? It has gone up. It currently, you know, as it continues to grow up, what is it, Obul? Blended discount is about 14%-15%, around that amount. Around 12% blended right now. 12. Yeah, 12% online, offline blended. 11.8% to be precise in Q2. Perfect. Thank you. Such a tough battle, let me tell you. Mr. Sharma, does that answer your question? Yeah, yeah, I'm good with that. Yes. Thank you. The next question is from the line of Shyam Srinivasan from Goldman Sachs. Please go ahead. Yeah, good afternoon, and thank you for taking my question. Just the first one to Sanjiv. I think you talked about unit economics in the segment. If you can help us understand, like, what is the average ticket size, you know, anything, you know, understand that business better. 1 million users, active users per week. Does it translate to 24 million per month or sorry, per quarter? The run rate that you talked about, 200 million. So if you can help us understand how to disaggregate that, please. I think you talked about the average ticket value. You know, we have about 1,000+ as average ticket value for the pharmacy line of business for the customers who are the CIRCLE member customers. You know, when it comes to the virtual consultations and the diagnostics, obviously we are looking at upwards of 1,500 average ticket value. As far as the unit economics is concerned, I think given the fact that you know, we have omni-channel play, our hyperlocal delivery cost is pretty less. You can appreciate the fact that we've got 2,000+ stores pan India. Pretty much, you know, our logistic cost is much, much lesser than the competition out there. That helps us to bring us faster towards the unit economics. This is one point I would like to talk about. The second thing is that as far as weekly active users, I talked about 2.3 million weekly active users. On any current day, we see about 4-5 lakh active users on the platform. Much of this is coming through the organic and even our cost of acquisition is also pretty low. I think this gives kind of answer to your question or anything specific that you would like me to talk about. Sanjiv, when we mean how did they download the app? Sorry, they download the app and can you explain what is organic? Organic means is that, you know, basically customers are coming of their own to our platform and, you know, they could be figuring out, you know, say suppose a specific medicine, which is not available elsewhere. Those customers, they come to your platform, and they start figuring out that that particular molecule or a medicine is available. And then they start, you know, searching that, they start giving the order. And those are the customers wherein you would not have spent any money, right? Because, organically they have come to you by, searching certain, medicines. And it happened during wave two also, you know, Q1 of FY 2022. And this is a continuous thing. You know, ma'am also talked about that, you know, we are looking at about 95% of availability in our platform, which would be the best in the country, very close to. I mean, she talked about Amazon out there. So, essentially people are searching out various things, and when they are not able to figure it out somewhere else, this is one funnel that comes to us organically. This is what we mean by organic customers to us, where there's no extra cost from our side. Yeah. Lastly- No, I'd just like to add one point to that. I think you have to consider the Apollo brand and the pull that the brand has. I think in the healthcare space, whether it's a teleconsult or selling medicines, and the fact that Apollo Pharmacy has been doing this for 25 years. It's a very strong brand that draws customers. Sure, ma'am, that's helpful. I just want to understand that between the 30 million inpatient and outpatient that visit our network in the pre-COVID world, pre-24/7 world, do they also qualify as organic to get onto the platform? Yes, they do qualify as organic, yes. It could be possible that when they visit the store, you would encourage them to download the app, right? Yes. Okay, perfect. That's helpful. As a little follow-up question on about INR 60,000 in tier one and metro. You know, is there a limit to how to grow? Because if you remember early- Sorry to interrupt you, Mr. Srinivasan. Sir, your audio is breaking, sir, from your end. Please check. Should I repeat my question? Yes, sir. Yeah, yeah. Just in ARPOB, it's been a big growth driver this quarter and maybe for several quarters. INR 60,000 is what you said is the ARPOB in tier one cities. From an affordability standpoint, are we okay as a country in terms of what about the top five, 10% of the population? Do you think they can potentially continue to afford this? Because I was just looking at your own historical numbers. You were at INR 30,000 like three years back. It's doubled. I don't think income levels have doubled like that. Just wanna understand, from an affordability standpoint, and it's not only you, right? I think it's an industry point as well. RPOPs have gone up, may not be only related to price increases. If you can help us understand what is the pricing environment like? Is there no competition at all? Everybody seems to be taking prices up. Will at some point of time the regulators get- You know, there's the right person to say why are people raising prices or doing, the ARPOB is going up. Just a philosophical question. No, I think two things are very important, two perspectives. One is that, you know, our ARPOB has gone up because the focus on centers of excellence, high-end work like, you know, transplants, TAVI, TAVR, high-end cardiac work, minimally invasive. The second very important perspective is that if you think of the reason why Apollo started, it was to provide quality health care to almost every Indian. If you look at our hospital configuration, it reflects the demographics of the city. We have one-third general wards, where the pricing is lower. We have about 20% premium rooms, where the pricing is at a premium, and the average comes out to around INR 60,000. That is the second perspective that you need to look at. The third perspective is the reduction in ALOS. with this, you know, so the ticket size remains the same. The only thing is that we reduce the ALOS and patients are there for a lesser period of time, and therefore, the revenue intensity. You know, ALOS also is something that is a deliberate strategy, you know, so it's something that we continue to work on across our hospitals now. You know, be it for robotic surgeries, minimally invasive surgeries, et cetera. There is a lot of medical advancements that we are seeing across. You know, even minimally invasive cardiac, you know, CABG that we are doing now, a bypass in both Chennai and Bangalore, et cetera, is going to go across. You know, there is some multiple aspects. Doctor, I think you want to add something on that. Yeah. Many procedures which the patient would occupy the hospital bed for a longer time have now been done with greater skill. The number of days the patient stays in the hospital has come down significantly. A. Krishnan has talked about the heart surgery. Now we are doing daycare knee replacement surgeries also. Normally, a patient used to be there in the hospital for seven-10 days after a replacement. Now we're doing plenty of daycare knee replacement. The same intensity of surgery at the same cost with a lesser number of days hospital stay is actually a good factor which is adding to the ARPOB. Got it. Yeah. Thank you, and all the best. Thank you. Thank you. The next question is from the line of Shaleen Kumar from UBS. Please go ahead. Hi. Good afternoon, everyone, and thank you for the opportunity. One question on AHLL. Like, the margin improvement has been pretty interesting over here. Just trying to understand, like, can you look at unit economics level, what are the margins a clinic generally makes? You know, what could be the upside from the current margin? Chandra Sekhar? Yes, ma'am. The H1 margin on the clinics is about now 15%. It has a little tailwind of COVID, but on a steady state, it's still delivering around 9%-10% at this point of time. I believe that as we enhance our services and ensure continuum of care, this is the parameters clinics itself will start delivering anywhere between 12%-14%. All right. Just to understand, like, let's say if it is a mature center where it is a reasonable footfall or occupancy, what is the margin at a clinic level? It's 17%, is our mature number. The peak we have reached is 17%. 17%. In fact, in some of the centers in Q2, we have reached that 17%. High-teens kind of a margin is possible at the clinic level or maybe a bit more. Yeah. That I think should be the range. Understood. On our digital platform, while we have a very strong physical presence in terms of the pharmacies, what are our thought process in terms of doctor enrollment? Like 6,000 medical professionals is a good number, but given we would like to go aggressive in this space, how are we thinking of enrolling non-Apollo doctors over here? Similarly for like diagnostics as a facility, and we do have a presence, but still it may not match up to our such customer base. How are we thinking of working with different diagnostics or are we thinking of rolling out diagnostic centers at accelerated pace? Chandra Sekhar. Sanjiv? Yeah, I think a good question. I think it talks about that, you know, how are we going to increase our capacities towards the doctor side of it as well as on the diagnostic services side of it. Let me just take the doctor side of it first. Yes, we've got 6,000 doctors in 158 specialties as of now listed on platform. We are open for, you know, third-party doctors also to come onto the basically the non-Apollo doctors also to come onto the platform. This is where we are now working towards two things. You know, one is to enroll more doctors from non-Apollo side because these doctors are showing interest to get listed onto the platform. Plus, we would also get into, you know, our payroll doctors, you know, so that continuum of care where we say that, you know, at any point of time within 15 minutes you can get in touch with a doctor, that is possible. So we will increase our capacities, you know, with respect to the payroll doctors as well as, you know, doctors, non-affiliate doctors coming into our platform. These are the two things that we are working on to increase 6,000 numbers to a five-digit number, you know, sooner. That is on this. Secondly, on the diagnostic side, you know, Mr. Chandra mentioned about, you know, 500 phlebotomists, you know, being enrolled and, you know, those phlebotomists are actually taking care of the Apollo 24|7 volumes as well as, you know, other volumes. I think we'll continue to expand the capacities of phlebotomists as well as, you know, other infrastructure as, required, by territory. In fact, we also have started moving into radiology. That is the service we have started, you know, last month. I think on the diagnostic and radiology as, the demand picks up, you know, we would actually increase our capacities also. I think, both the things are in mind and, you know, there is specific team which are working to strengthen and expand, capacities on both the verticals. Just to add, Sanjiv, since that's on diagnostics. We are doing this on a three-pronged basis. Mm-hmm. where we are present, and where we want to saturate pin codes in alignment with the digital requirements that we're driving, we are adding phlebo. So our phlebo count is now hovering closer to 900+ in the cities of our choice. So our ability to saturate pin codes is consistent, and we'll continue to work on that. Second, in terms of lab capacity, we have a combination that we are working on. One is a satellite third-party lab management that we are going to do, besides some of our own that we will also add. So that will help us saturate markets where we are not available and where there's a digital consumer demand. The third is that we also have the benefit which we have now begun to be able to use the unused or slightly underused capacity utilization wherever possible within the Apollo large hospital network as well. These are three-pronged to be able to leverage and enhance our capacity utilization and to be able to serve customers. A lot of it will be done very cost-effectively. Any plan for an organic growth in this segment, diagnostics? Opportunistically, yes. We are looking, we are conscious of buying the right value. Our targets are not going to be large. We will look at filling in some of our markets that we have earmarked for growth where we have the right asset at the right price. Definitely that is something that we are considering. It is not a strategy of significant aggression. It will be a very well-calibrated strategy for opportunistic inorganic expansion. Understood. That's it from my side. Thank you so much. I'm out of questions. Thank you. The next question is from the line of Nitin Agarwal from DAM Capital. Please go ahead. Hi. Thank you for taking my question. I just wanted to follow up on the AHLL bit. I mean, you talked about the diagnostic business. Two things. One is, A, over a three-year period, how do you visualize this business scaling up to? And where do you think, you know, we would be as a business, in comparison to some of the larger peers, in size and profitability? I think, again, a forward-looking point, so I'll just be a little more directional to try and answer your question to the best extent possible. I think our growth rates will definitely be upward 25% CAGR, growing faster than industry. That is a very clear message for that. With some investments and some opportunistic inorganic, this could be larger. We are hoping to touch the INR 1,000 crore kind of a revenue mark in about a three-year, if not a four-year period. In at least a three-year period. There could be acceleration to this plan based on how effectively we execute. How is it only for diagnostics? That's right. I thought the question was only for diagnostics. Am I right? Yes. Just following up, you know, the other pieces in the AHLL business, I mean, have they started reaching a tipping point in terms of you probably stepping up investments in them? Is it the primary clinics, the daycare clinics? I mean, how are you seeing that piece of the business? I think we've provided a little view on that. On the clinics front, essentially we are growing and closer to communities. We are setting up where we have large community bases that are available. We continue to grow that. We have traditionally mastered and we have further improved our abilities to deal with the only format that we do this is in the clinics, the franchisee expansion. That continues rapidly now with more integration into the larger ecosystem. I see that continuously growing and clinics will continue to grow and also create a clear pipeline of the continuum of care to all of our other Apollo ecosystem, the pharmacies, the hospitals, and some of the other AHLL formats. On the Cradles, we have reached an EBITDA perspective of about 14%, and we believe that we could stretch that to about 18%. On the Cradles there is clear opportunity. We are still at 60% in terms of utilization. We would like to be above 80%. On Spectra, we are looking at asset-light managed growth network, and our bed utilization after a little lag has now moved on beyond the 50% mark. But we believe that there is still some headroom there. But we're looking at an expansion of our asset-light managed network in the Apollo Spectra, which is the format. The other facet of opportunity, both as a need in the market, is for a clinical leadership in the space of fertility, which is extremely unorganized. While there are a couple of players who are organized, we still believe that there is a space which actually justifies Apollo's clinical leadership and the brand. That is a space that we are closely watching, and we are looking at bringing in international standard protocols and to be able to look at unique engagement models by associating with top doctors and look at that as a growth opportunity. In terms of inorganic growth, diagnostics, we need to continue bringing healthcare closer to communities, closer to large catchments, fertility in the fashion I mentioned. Cradle opportunistically, but largely saturating probably our metro play and some sub-markets within metros. Apollo Spectra largely going asset-light and improve existing utilization. Okay, thank you. Thank you. The next question is from the line of Ritesh Rathod from Nippon India Mutual Fund. Please go ahead. First, hi, everyone. Need a clarification. 48% in online pharmacy you have revenues coming from membership. When you point to that, will you talk about your silver membership or platinum and gold? Because silver membership is by default given free to everyone. It's the loyalty program as a whole, which has a combination of categories, and that accounts for it. Okay. We have silver, gold, platinum. You know, it's a combination of all the three categories that gives us the business for it. Okay. Second, we are now offering discount of blended level of 12.5%, what 12% you mentioned. Few quarters back you were not offering, and maybe once you get a funding partner in coming months, the discount will intensify. I presume that way. When you see that this whole thing at the industry level, that people are not making gross profit at a unit level and the discount being passed on, what would be the end game eventually for the online pharmacy? Where do you think things will settle down? Maybe your thoughts, your view on the industry would be helpful. Over to you, Obul Reddy, the answer. I know. I think Shobana madam answered the question already. We are at present, you know, offering differential ratings for the platinum members, not in general. Going forward, we will see what we can do based on the market conditions. I think we're at 4% to begin with. I think we have answered already. Okay. Maybe third one, on the ARPOB side, given for the hospitals, given the cost inflation which will be there and cost normalization, both will happen on the clinical side as well as on the expenses side. Will you be willing to take a price hike on a like-to-like basis in your in the hospital treatment? Is that a possibility? Like we have seen even on the pharma, generic products on the regulated NLEM side, government has allowed exceptional cases where they have taken price hike because of the cost inflation. Is there a possibility in next six-12 months? Yes. Yes, that's what we do. We pass on the price. You know, the inflation costs are reflected in the prices. What will be that price hike on an annual basis? Nothing like 3%-4%. At a blended level. Yeah. Okay. Yes. Okay. Thank you. That's all nice. Thank you. Ladies and gentlemen, we will take the last question from the line of Anubhav Aggarwal from Credit Suisse. Please go ahead. Yeah, thanks. Just two to three questions on pharmacy segment. One, just a clarity. You mentioned four to five active users per day. Is that including the offline pharmacy network as well, or are you talking only online? No. That was only for the online. You know, we talked about 4 lakh active users every day. That is only online business. Okay. Just trying to understand. If you look at the transactions that we're doing, I don't think we are transacting more than 12,000-15,000 orders total on all three services. If 4-5 lakh users coming and total transactions are only, let's say less than 15,000, how do you explain that? No, I think you know there could be many factors to it. You know as we said that you know we are building up our entire capacities. You know we are opening up more and more pin codes. We are stocking up. There are bits and pieces going on in the technology side. I think from the you know there are always users you know who try to find out certain things. You know they just come over to experience. I think it's a matter of another 60-90 days. We'll have an even better you know throughput you know with respect to the transactions being you know orders being given versus the you know active users. I think at this stage it is more of capacity building, trying to get the right traction, trying to get the right set of users. As I told you, and ma'am also told that, you know, there are many users who are, you know. We don't want to play on to the discount route and, you know. That could be one of the reasons that, you know, why people do not give as many orders, although their, you know, activity on the platform is pretty high. Okay. I'm just really surprised that 95% users are coming to the platform and not transacting. That number seems very high from my experience of tracking any app. That's the number I mentioned that, I'm very- No, that's okay. It's a good question, and I think it's a matter of one or two more quarters you would see a better traction, better you know, throughput from the active users versus the transactions on the platform for any given day. Sure. Second question was on how do you plan to converge the discount between offline and online? Offline you are giving 10% discount right now. Online, your discount varies from 15% to 20%. If I am CIRCLE member and giving bill of more than 1,500, I get more than 20% discount. What will be the eventual gain? Would offline continue to be 10% and large part of those users shift to online and that will cannibalize large part of the revenues? How would that two segments be different in the future? In the offline we continue to be 10% for the walk-in customers. For the Circle customers and loyal customers we have some plans which we recently introduced that may go up and, you know, blended discount we have some around 12%. That's the plan. Why won't a user simply go into app and get a higher discount? Why would he be satisfied with 11%-10% only on the offline network? Yeah. They are, you know, based on the valued customers we are, you know, offering a differential percentage. I don't think you have that competition. Recently we introduced even CIRCLE membership, I mean, scheme for the offline customers which you will see going forward how it goes. Sure. The last question for Krishnan. The receivables went up by almost INR 550 crore in first half. Is there a particular segment? Is it simply because the accountable insurance percentage has gone up significantly that such a large increase in receivables has happened? That's not because of Healthcare Services. Primarily there is this, you know, receivables coming when some shift. Like earlier if you look at the backend, you know, all the inventory was held at the AAP level. Now if you look at it, the inventory moved to the AAP, but there is a receivable from Apollo Pharmacies Limited, which is the front-end pharmacy. This is the, you know, reason for the increase. This will actually come down a bit by INR 100 crore, but it will remain at these levels as we go forward. Once this gets shifted to Apollo Healthco, you will not see this in our books. Out of the total receivables, how much will be the, this pharmacy receivables that you're talking about? How much INR 700 crore. INR 700 crore is from pharmacy? That is correct. That is represented by the stock in the front-end, the pharmacy stores as well. Okay. Sure. Thank you. Thank you, guys. Thank you. Ladies and gentlemen, that was the last question. I now hand the conference over to the management for closing comments. Thank you all for spending time on a Saturday afternoon. As you can see, Apollo has been, not only have we been resilient, but I think we've been very agile in our ability to adapt to new technology, to circumstances in the environment around us. I can assure you of this, at this time that we will continue to focus on improvement in clinical excellence, clinical outcomes, and thereby look at increased volumes and therefore better revenues and EBITDA. Thank you all for joining us. Thank you. Ladies and gentlemen, on behalf of Apollo Hospitals Limited, that concludes this conference. Thank you for joining us, and you may now disconnect your lines.