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, Tanvi. Good afternoon, everyone, and thank you for joining us on this call to discuss the Financial Results of Apollo Hospitals for the Third Quarter and Nine Months of Financial Year 2022, which were announced yesterday. We have with us on the call today the senior management team represented by Mrs. Suneeta Reddy, Managing Director, Dr. Hari Prasad, President of the Hospitals Division, Mr. A. Krishnan, Group CFO, Mr. C. Chandra Sekhar, CEO of Apollo Health and Lifestyle, Mr. Obul Reddy, CFO of the Pharmacy Division, and 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. Good afternoon, everyone, and thank you for taking time to join us on a Saturday afternoon. I trust that you've all received the earnings document that we shared yesterday. The third quarter of FY 2022 witnessed a very strong revival of non-COVID business, with volumes reaching pre-COVID levels despite holiday season seasonality and without significant contribution from international patients. Our efforts on garnering local market share continued, and we saw a healthy uptick in local patients. We saw payer mix shifts on two counts. First, our deep engagement efforts with self-pay and insurance segments as well as a general increase in patients who opt for quality healthcare providers like us helped the cash and insurance segments grow by approximately 10% on volumes and over 25% in revenue compared to pre-COVID quarters. Secondly, we rationalize our lower-paying patients across the network, leading to an improvement in ARPOB. ARPOB INR 46,062 in quarter three FY 2022 versus INR 36,868 in quarter three FY 2020. ARPOB improved on the back of focus on high-end centers of excellence and evolving case mix. We believe that this is a result of our conscious investment and prioritization that is sustainable in the long term and is founded on our specialties that will continue to drive our business going forward. New hospitals continue to ramp up, and we have seen a good traction in volumes, revenues, case mix, and ARPOB in these hospitals. Volumes grew by 17% over quarter three FY 2020. Revenues grew by 46%. Inpatient revenues witnessed a 30% revenue growth in quarter three FY 2022 versus quarter three FY 2020. This included a growth of 31% in cardiac, 44% in onco, 21% in neurosciences, 31% in orthopedic, 27% in gas, gastro. At the same time, we continued to keep a small number of beds allocated for COVID patients with a strong iron curtain between COVID and non-COVID patients in place. However, the percentage of COVID patients treated was much lower than quarter two. The COVID-occupied beds in quarter three was only at 203 beds versus 348 beds in quarter two 2022. Overall, inpatient volume grew 28% over quarter three FY 2021 and 2% over quarter three FY 2020. Vaccination volumes continued but at a much lower scale than quarter three. We inoculated 5.7 lakh people, including AHLL. Quarter three included vaccination revenue of INR 50 crore as compared to INR 246 crore in the previous quarter of FY 2022. Against this backdrop, let me walk you through the financials for the quarter. On a year-on-year basis, standalone healthcare services revenue grew by 24%. Combined pharmacy revenues year- to- date grew 20%, while quarter three revenues grew over 15% year- on- year as compared to a muted previous quarter. Both our new hospitals as well as mature hospitals recorded a revenue growth of 23% on a year-on-year basis. Margins in the mature hospitals are a strong 26.5%, and I am happy to state that our margins in new hospitals continue to witness improvement, moving to 19.5% for the quarter, registering a 367 basis point improvement on a year-on-year basis. The pharmacy business overall is demonstrating good momentum despite the uncertainty of demand in stocking and uneven quarterly patterns that we have had to deal with since the first wave of COVID. Our current focus is on accelerating the overall pharmacy revenues through a combination of both offline and online channels. Standalone post Ind AS 116 EBITDA was at INR 424 crore, registering a year-on-year growth of 13%. Healthcare services EBITDA was at INR 383 crore, a year-on-year growth of 55%. Pharmacy distribution EBITDA stood at INR 96 crore with an EBITDA margin of 7.4%. Apollo 24|7 costs were at INR 55 crore. The pharmacy division also accounted for its annual salary increments from October 2021 onwards, and awarded a one-time incentive payout to staff of INR 10 crore, which is reflected in the financials. Standalone PAT was at INR 175 crore compared to INR 106 crore in Q3 FY 2021. Net debt as of 31st December 2021 was INR 1,030 crore, with a debt equity ratio of 0.04. Our consolidated revenues were at INR 3,639 crore against INR 2,760 crore in quarter three FY 2021. On a year-on-year basis, healthcare services revenue grew 41% to INR 2,018 crore. Mature healthcare grew by 40% to INR 1,412 crore, while new hospitals grew by 40% to INR 559 crore. Group occupancy was at 65%. The consolidated [post Ind AS was 116] for quarter three FY 2022 was at INR 587 crore compared to INR 390 crore in Q3 FY 2021. A growth of 50%. Within this, healthcare services EBITDA was at INR 496 crore compared to INR 288 crore in quarter three FY 2021. A growth of 72%. Our retail business, Apollo Health and Lifestyle, has recorded an impressive revenue growth, 99% compared to quarter three FY 2021. AHLL's EBITDA post Ind AS stood at INR 50 crore as compared to INR 28 crore in quarter three FY 2021. The diagnostic business continued to grow at a pace of 55% over quarter three FY 2021. Our network and phlebotomy expansion plans continue. The consolidated PAT is at INR 228 crore. Over the calendar year 2021, we have strengthened our businesses across all aspects, ranging from infrastructure, medical teams, protocols, processes and of course, the transformation of our healthcare delivery model. About two weeks ago, we shared an update regarding our plans to list our pharmacy products on the Amazon platform in India. This, we believe, will accelerate the momentum that we are witnessing in pharmacies and Apollo 24|7, which has scaled rapidly and has emerged as a distinct offering, enable us to elevate the consumer experience for the Apollo consumer. While our transition into quarter four has been characterized by the emergence of the third wave of COVID, we are confident that the fundamentals of our business continue to remain strong, and we have developed the flexibility to adapt to COVID needs very quickly and have institutionalized our focus on areas that will deliver long-term sustainable value. On that note, I would like to hand it over to the moderator, and then I have Dr. Hari Prasad from the Hospitals Division, our CFO, Krishnan, Obul Reddy from the Pharmacy Division, Chandra from AHLL, and Sanjiv from 24|7 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 withdraw 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. The first question is from the line of Prakash from Axis Capital. Please go ahead. Hi. Thanks for the opportunity. First question is, while we've seen good improvement in hospital business margins, I wanted to understand the pharmacy margins are a tad lower versus last quarter. Is there a particular reason? Have the private label sales gone down, or what has led to some EBITDA margin decline in the pharmacies? The private label sales remain at about 11.8% in Q3 current year against last year, 9.8%. We are growing on that front. There is no issue on that. As explained in the, you know, in the preamble, there is one time cost because our increments on the employee cost falls in Q3, and we have considered a one time incentive to employees because of the challenging, hard work they have done in the challenging COVID time. If you look at it, the INR 10 crore cost, then the EBITDA difference between the two quarters is about INR 7 crore. We adjust that, and then we are in line with other quarters on the EBITDA numbers, and we are confident we will continue the same coming quarter. There is no margin erosion at all at gross profit level because of the private label growth. Okay. This is, you are saying one time or this is an annual event? This is one time. The one time incentive is one time. Our annual increments get absorbed in the normal system. One time effect is about INR 10 crore. Oh, understood. Just for understanding this 24|7, you still not given the numbers, but where is the service fee and the related cost sitting, currently? We have disclosed that, you know, at the bottom of the back end in the last three quarters, the expenses relating to the product development. Last quarter it was about INR 48 crore. This year is about INR 55 crore. There is a separate line in the presentation. The revenues is at the entire health, digital health platform, which, separately Sanjiv will explain when the numbers required. Where is it captured? Is it in hospital line? Is it in pharmacy line, or is it like distributed over? It is in the hospital line partly, but it is not in AHLL, it is in the AHEL and the pharmacy side. That will get segregated and get reported from this quarter as we are expecting soon to effect the back-end slump sale, and then have separate numbers disclosed from next quarter. From Q4? From Q1. Okay. Cost wise you said there is a separate cost item you are giving. In the overall P&L it is sitting where, in other expenses? It is in the back end. Other expenses, yes. We made a disclosure of what that amount is quarter- on- quarter from for the last three quarters. INR 55 crore is for the third quarter. Entire platform. Yeah, it is for the third quarter. Yes. Third quarter. Okay. Just last one. The outpatient number seems to have come down dramatically. Is it due to lower vaccinations run rate or we have seen what is the other reason? Yes, Prakash. Vaccinations. Okay. This is the normal run rate that we will see going forward if there is no major COVID outbreak. There is still vaccines in this quarter as well. You know, as I see, there is still 70,000-80,000 numbers of vaccine in this quarter as well. Okay. Understood. Fair enough. Okay, I have no question. I'll join back. Thank you. Thank you. The next question is from the line of Anubhav Agarwal from Credit Suisse. Please go ahead. Yeah. Hi, good afternoon, everyone. First, just taking from Prakash's question further. If you, the bulk of Apollo 24|7 revenues is coming from the medicines, and if you adjust that from the pharmacy segment, would you say that the, against the 16% growth which is reported, just the growth will be less than 10%? No. It's about, you know, 13%-14%. Why would that be? Because I'm assuming that you will be doing at least INR 60 crore-INR 70 crore or thereabout in Apollo 24|7, at least, right, revenues. Bulk of that coming from pharmacy. The INR 60 crore translate to 3% on INR 1,600 crore, 4% on INR 600 crore. If you adjust, it is about 12%-13%. Exactly it is not 16%, slightly a different number. Sure. If you adjust that, yeah. Do you want to talk about what ma'am talked about initially, what is the problem which is happening in the pharmacy segment because you have added about 10% additional stores, so the same store sales growth is turning out to be much lower. After the first wave, why are your retail partners not, let's say, what is the exact issue that why pharmacy segment is not doing well? What we are seeing last six quarters is uneven quarterly growth. If you look nine months YTD, we have last nine months about 21% and this nine months it is about same 20% growth. At an overall level, growth is maintained. Now you have a Q1 where a quarter-on-quarter growth of 30% over last quarter and then followed by a 16% de-growth in Q2 over Q1. There is some COVID procedures. There is some hard rush of the COVID item then followed by we have to adjust to the normal items. These are all happening even if you see last year. You have a quarter where quarter-on-quarter growth of 16% versus 3% in Q3. COVID, followed by the COVID, there is one or two quarters this adjustment is happening. If you see Q1, we have de-grown 16% and again come back strongly quarter-on-quarter growth of about 8.5%. Q2 you think? Yeah. Okay. Hopefully this is happening in the system across. Okay, sure. Just a second set of question was on the Amazon deal. Just a clarity, when you refer also a $1 billion revenue number, in year three, was this a cumulative number that you plan to do over year one, two and three, or were you referring to this number as a year three potential revenue from year three onwards as annual revenue? Sanjiv? Hi, Sanjiv this side. I think this is a little futuristic and forward-looking statement, but you know, for sure what we are looking at is that you know, third to fourth year you know, we should have a total cumulative you know, $1 billion. I think the guidance should be that cumulative three to four years should be $1 billion. Cumulative. Okay. It's part of the overall target that we have given. Yeah, that's the cumulative as he said. Sure, sure. That is clear. The second question is on the Amazon deal, is that, is there any minimum commitment from Amazon on in terms of promotion spend, et cetera? Or can you talk about a little bit of the length of the contract with them, et cetera? I appreciate last time you mentioned this is not exclusive. I think at this point of time, what we can say is that it's a 10-year contract and specific questions that you asked, so I think that at this point, you know, we would like to defer it for a subsequent period. No, Sanjiv, I'm not asking for that amount, but I'm just trying to say when you have a 10-year contract, so that, you know, both the parties benefit. Is there a minimum commitment? Because the commitment may not be on the business front that whether you reach a $1 billion cumulative or not, but is there minimum commitment on what each party needs to do? There are Commercial arrangements. Sanjiv, I'm not sure whether we can give the commercial arrangements here, right? No, I think there are roles and responsibilities, you know, which, you know, both the parties have it. Depending upon the roles and responsibilities, I think those are the committed to-do items or activities performed by each one of us. Which is Apollo and Amazon. And yes, there is a commercial arrangement. At this stage, I think this is all what we can share. Sure. I appreciate that. If I can ask one just clarity on the hospital business. This quarter, Tamil Nadu segment had a very strong utilization of 66%, maybe one of the highest you guys have ever done, whereas Karnataka was really low. Can you just talk about what happened in the two geographies? The ARPOB were pretty decent in both the geographies, but utilizations were very, very sharp. Tamil Nadu was a very sharp increase and Karnataka was a sharp decline. In Karnataka and AP, Telangana, there was more vaccine revenues in Q2 than any of the other regions. The highest, you know, incidentally, the highest vaccine usage was in Bombay, followed by Karnataka and then AP, Telangana. This is the reason that the lumpiness was there in the overall revenues. But the Karnataka numbers from an overall revenue and EBITDA perspective remains intact. They've done well. The insurance benefit that we spoke of when we said that versus last year, you know, pre-COVID levels, we are seeing 25% growth in insurance, which, you know, Bangalore has also got the benefit of that. You know, the numbers that you're seeing for Q3 are because of the lumpiness in volumes because of vaccines. Tamil Nadu? Tamil Nadu, we didn't have so much of vaccine revenue in Q2. Q3 has been good because, you know, we saw some of the patients coming from out of station, et cetera, coming back slowly. You know, Tamil Nadu, as you know, has the highest dependency on out-of-station patients because of the fact that it is one of the best hospitals in our system. People from east and northeast, et cetera, have started coming back. Medical value tourism has not yet seen any uplift in this quarter versus last quarter. Hopefully, going forward we will get that benefit as well. Thank you very much. I asked too many questions, but the clarity on this Karnataka one. Vaccine revenues should not be doing Q2 a high utilization, right? The utilization has dropped for us. That was a question. No, I'm just saying, first I'm saying of the revenues. Okay. You're saying the utilization, bed occupancy rate is what you're saying, correct? Yes. Significantly declined in Karnataka. For example, your data shows that it was 70%+ utilization in second quarter. Now it's about 55% utilization. No, it is 60. It is actually- Occupancy. It is 64% for this quarter. I don't know why the data, how you arrived at the data. You can take it offline with Krishnakumar. That 70 that you are seeing is 64% for the quarter as we have the numbers with us. Sure. I'll check that. You can take it offline. Sure. Thanks. Yeah, bye. Thanks. Thank you. The next question is from the line of Shaleen Kumar from UBS. Please go ahead. Hi. Thanks for the opportunity and congrats to the management on a good set of numbers. If management can provide a timeline for the fundraise, you know, because that could be a key trigger to accelerate our 24|7 growth. Any timeline possible to share that when we are expecting it to close? I'll take this, Sanjiv. I think the important thing to remember is that for 24|7, we had three phases that we envisaged. The first was doing this construct with Amazon so that the volumes on the digital grow. The second part of it is the slump sale of Apollo HealthCo, which we hope to complete by March. When that happens, you know, I think the investments will fall in place, so we'll be able to announce the investor. We're close to completing second phase, and soon after that, you know, we will quickly come to you with the names of the investors. Ma'am, is it right to assume maybe in the next two to three months, all the three phases should be done? Yes, you're right. Yes. Okay. Thank you. I have another question on AHLL. Very impressive growth happening over here on the top line basis, and obviously the margin also improved. Just want to understand what exactly is happening. Is it the pricing are going up or driven by footfall? Because I believe vaccination revenue would be lower. What exactly is happening here? If management can provide a picture over here. Yeah. Ma'am, I'll take that. Yes. I think it is considered that there are two things that have changed from quarter two to quarter three. We continue to grow our stated strategy on diagnostics. We have added lot many more collection centers which are, w hich are starting to contribute. We also have deepened our home collection capabilities, and they're contributing significantly more than in the past. Similarly, primary care and secondary care both saw the revival and bounce back of elective and footfall, and significant among them. You are right. Actually, this is net of actually a lower vaccine number in Q3, far lower than Q2. However, shows impressive growth because of systemic improvements in diagnostics and elective, as well as primary care footfall. Right. Just one question on the hospital segment. Again, there is a remarkable improvement in margin, both in mature and new hospital. Now, obviously there is a pent-up demand and, you know, there's a change in payer mix. It's difficult for me at least to, you know, ascertain how much of it is sustainable in terms of margin. If let's say there's a lot of pent-up demand of critical high-end surgery which may moderate and then margins can come down. What kind of margin should we assume, you know, once this pent-up demand comes down a bit in both the segments? I think that this is a sustainable margin trajectory. We've showed that even quarter-on-quarter we've improved our margins in mature hospitals by 1.3%. I think this is a sustainable trajectory. We are looking at 25% and on a blended basis over a period of time to bring it to that level. All right. This is done because of case mix, payer mix. And- Focus on, you know, I think we're all the focus on cutting costs. Okay. A part of this margin improvement is led by cost cutting, and that you think is sustainable. We can say- It's going through this quarter also. We started last year. Mm-hmm. So. Yes. Yeah. T hank you. That's it from my side, and I'll join back the queue. Thank you so much. Thank you. The next question is from the line of Sameer Baisiwala from Morgan Stanley. Please go ahead. Hi. Good afternoon, everyone, and thanks for this. Just for your core, you know, hospital business, from 64%-65% occupancy, I mean, how much room do you think you have to grow this? Second, also on ARPOB, where we are INR 46,000-INR 47,000, do you think you can grow this by whatever, 8%-10% per annum for next 2-3 years? Sameer, with regard to occupancy, we have new hospitals trending at about 68%, you know, 67%-68% occupancy. New hospitals is 61% occupancy. If you look at both, you know, there's headroom of at least 15%, which will be our focus for the next 24 months to improve occupancy moving to 75% occupancy blended. That is one part of it. The second part of it is that as we reduce ALOS, like for example, our occupancy was very high during COVID because the ALOS was five. Now we've come back to less than four at about 3.9. Again, you know, there's headroom to grow. While we are focusing on asset utilization, I think you can see that without investing too much, we can really grow 15% in terms of occupancy. Your second question on ARPOB being at INR 48,000, I think this is a really good ARPOB, because what we've done is, you know, we've rationalized some of the schemes. It's something that, you know, in tier one where we're in excess of...W e're close to INR 60,000. If you take the fact that, you know, we have to blend it with tier two, where we cannot expect to reach anything more than INR 40,000, I think that around INR 50,000 is a good ARPOB, and we will continue to focus on the quality of revenue. Let me just add this, that this is without international patients. Hopeful that when the international patients open up next year, we could see some improvement in ARPOB. Yeah, that's great. Suneeta, I'm just trying to understand whether the whole hospital network has sort of, you know, reached some sort of upper threshold, and so the growth can be challenging, overall growth, you know. All these points put together, do you think you can grow at, you know, early teens, mid-teens per annum for next couple of years for the hospital business? Of course. I think, you know, inbuilt in the system we can operationalize another 500 beds. The fact is that, you know, we're at an asset utilization of 65% where beds are concerned. So just looking at that, yes. Beyond that, we are focusing on the surgical work, which actually improves ARPOB. You know, apart from medical discharges which we saw in the first quarter and whole of last year, I think this improvement in surgical is really going to lead to superior ARPOBs. Yeah. Thanks for that, Suneeta. The second question I have is with regard to balance sheet. I think it's a great job done on, you know, cutting down leverage. After the slump sale proceeds, my guess is you'll be net cash company or net debt zero company, you know, after INR 1,200 crore comes in. Plus you'll be generating a good, I don't know, INR 1,000, INR 1,200 crore of free cash flow or if not more. How do you see this deployment of capital over the next two to three years? Absolutely right. Yes, please go ahead. You're absolutely right. The way that we see deployment of this is that we, you know, we're expanding our presence in Bangalore, where we're coming up with a new facility. In terms of brownfield, because we have the land, we're adding around 400-500 beds in the next two years, plus a greenfield of 300 beds. That is capital deployment for Karnataka itself, which will be about INR 600 crore-INR 700 crore. We believe that region has high potential. The second area is that we're looking at, you know, we will very quickly close out Mumbai, where we're working with the trust, and we hope to put up 400 beds in, should I say, the center of Mumbai. It's about 15 beds in Byculla. That we should close out at a cost of INR 600 crore, + 2%, you know, maybe say 2% revenue share. That will happen within, you know, the facility will come up within the next three years. The third area that we're looking at very closely is the northern area, where we're looking at Gurgaon. There's a potential for a brownfield in Gurgaon. We're looking at North Delhi, where we are looking at both land and a brownfield, and we're looking at Noida. Once we consolidate our presence in these markets, and if you look at Delhi and Bombay, they're like INR 50,000 crore markets and still a shortage of beds. 5,000 beds short in Delhi and, you know, about 15,000 bed shortage in Bombay. Bangalore continue to grow. I think these are the three markets where we want to consolidate our presence. By doing so, you know, I think, you know, by improving market share, we're quite sure we'll attract the best clinical talent and also move to better ARPOBs. Yeah, thanks. Just to conclude on this point. In three years' time in these three markets, you think you can add what, 2,000 beds here? Yes. Okay. That's excellent. Thank you so much. Thank you. Thank you. The next question is from the line of Lavanya Tottala from UBS. Please go ahead. Hi. Good morning, everyone. Thanks for the opportunity. I just want to understand if there is any disruption in non-COVID business in the current quarter, as in the Q4, because of third wave. In Q4. You said for Q4? Yeah, yeah, Q4. I think, there is a slight, because January was, you know, I think the peak of the Omicron wave. Things are looking better now. Okay. Okay, got it. In hospital business, in Q3, is it fair to assume the whole domestic medical tourism, everything is normal, everything is back except the international patients? Yeah, I think that, you know, the medical value travel has not happened, and that was 10% of our business. Clearly, quarter three is reflecting a strong India growth story. Okay, got it. In Apollo Diagnostics, so more or less, in Q3, everything is from the non-COVID business, and we can expect it to grow from here, right? So there is no COVID business in Q3. Q3, very low COVID business. Majority of the business in Q3 is non-COVID. Yes, we expect to grow on the current base of non-COVID. I mean, any broad estimate like with teams that we expect to grow and mostly largely through organic, inorganic opportunities that we are looking in this space. We'll be focused on organic with market saturation, efficiency and productivity increase, home collection by a larger ability to, you know, expand our lab network besides the collection network, and saturating existing markets in South and East where we are strong. We also want to look at an overall mix of getting into some new markets. Inorganic is opportunistic, and it is something that we are mindful about, the price we pay for inorganic as well. We are watching it closely, and at the right time such opportunities we will grab, opportunistically. We would like to target upward of 50% growth on the diagnostics business on a non-COVID and a mix which could keep altering based on the revival of COVID or any future waves. Definitely overall 50% + private growth. Got it. Thank you. That's it from my side. Thank you. The next question is from the line of Tushar Manudhane from Motilal Oswal Financial Services. Please go ahead. Thanks for the opportunity. Just on a quarter-on-quarter basis for the new hospitals, the revenues are down while the occupancy is more or less intact, which does imply that ARPOB has fallen at least to INR 40,000, if my calculation is right. Can you explain this? No. Again, because the vaccine revenues. As I said, when we said Bangalore, the highest revenues from Bangalore came from Jayanagar, Malleshwaram, you know, et cetera, in the new hospitals. Again, you know, Indore, there was vaccination. Kolkata. You know, there was vaccination in Navi Mumbai, as I said, across the company. It all is due to significant vaccine revenues. You know, almost INR 50 crore-INR 60 crore of higher revenues which was actually coming from the new hospitals itself. This 40,000 is what the base ARPOB to consider going forward, at least in the new hospitals? Yes. This current quarter, yes. 40,000, right? Yes, that's correct. Also, if you could just help me with the patient mix, as in the percentage contribution from the different class of patients for the quarter or for the nine months, whichever is convenient. I think we can take that offline. Broadly, we have self-pay and insurance itself is over 75% of our overall revenue, between self-pay and insurance. Okay. Which is our main focus. Sure. Just lastly, while you know, just taking as a trajectory from Q3 to Q4, given that January had relatively less occupancy. I mean, if you could just throw some light on how the occupancy was in January and accordingly how the hospital business would be. While you know, February onwards things are getting a bit normalized, but particularly January would have impacted our hospital business. I think it's just closing the COVID. I think some of this will be forward-looking. We didn't want to take that now. I guess, January was a bit low, but we are seeing the bounce back again instead. You know, let's see. All right. Thanks. Thanks Thanks a lot. Thank you. The next question is from the line of Prakash from Axis Capital. Please go ahead. My questions have been answered. Thank you. Thank you. The next question is from the line of Anubhav Agarwal from Credit Suisse. Please go ahead. Hi. Thanks. A couple of questions. One is, right now, as you mentioned the last call, right, on the Apollo 24|7, on the customer acquisition cost, you guys are spending roughly about INR 150. Post the capital raise, where do you think this number can be? And I'm just trying to understand this because I see some of your peers are spending north of INR 600, INR 700 customer acquisition cost. Do you think you will gradually reach there or 150 is a very low number. For you it will be 300, 500. Can you give some idea, talk about? Sanjiv? Yeah. I think it is a mix of many things, you know, that you need to think about, you know, because, you know, we've got couple of strengths, you know, within the Apollo ecosystem. One is that we've got the Apollo brand, which is a 40-year-old brand, trusted, and that is one pole. The second pole is that we also have, you know, organic groups coming into the platform and there the acquisition is at no cost. Third, we've got relationships with, you know, some of the big corporates for their employees and for their customers. All these three buckets actually give you the customers at almost nil cost. As far as the other areas are concerned which are paid, you know, marketing areas to get the customers, obviously their cost is little on the higher side. We strongly believe that, you know, we are looking for chronic customers, and those are the customers which give you a good LTV. I think at this stage, your INR 150, I think for the next six months to nine months, it should be in the range of INR 150-INR 200. It shouldn't go beyond that. Maybe after two quarters or three quarters, we'll be in a better position to talk about maybe after two years, three years, you know, where would that be maybe. Sanjiv, the idea of the question was that, today you guys, it's for example, in terms of, print ads or on the TV ads, et cetera, I am not sure whether you guys are very aggressive today. Post the fundraise, let's say once the money comes in, what will change in terms of, promotion to the, let's say, I'm just looking at a flavor in the sense, would the discounts grow more aggressive or would the marketing and the promotion efforts, let's say the advertisement portion goes up dramatically. What changes in the system so that you can significantly reach closer your, to your target of 100 million users, which you have over till next three, four years? Yeah. I think directionally what we're looking at is post infusion of capital, I think there would be a bit of more marketing and advertisement and those activities to acquire customers. I think that is something which is given, we'll do it. Obviously, there will be some inorganic stuff also happening into the system. I think less. As far as the discount side is concerned, you know, I think a couple of calls, you know, this has been answered that we are not in the race of, you know, giving high discounts. At the end of the day, we want what we've understood is that users are expecting a continuum of care. What they expect is that a quality, a trusted brand and wherein, you know, the entire offerings of an omni-channel could be given to them. There are a set of users, there are a set of patients who are looking for that side of offering versus, you know, just a discount play. Obviously, you know, we are not going to be a discount play. We will not be that game for sure. No, I think just to add to Sanjiv's remarks, the important thing to realize, and I think that everyone who spoke to us about Apollo going online is really that we need to build momentum. Amazon is part of our play to build that momentum and we're quite confident it will happen. Meanwhile, we're strengthened by an omni-channel presence, which is the stores that we've opened, and we've added 200 stores this quarter. We continue to play in that space with a very strong pharmacy presence, added to which we have, you know, the teleconsults, we have the diagnostics, and very soon we're adding the condition management. My one question over there to both of you, when you, Sanjiv, talked about some inorganic acquisition. Are you talking about this on the capability side, adding to the 24|7, or are you talking more on the logistics side of fulfilling services there? And what capabilities if the answer is on the capability side. I think it is too early to talk about this. Give us some time and once we have earmarked, you know, those set of companies, then probably we'll talk about this. Little too early in the game to talk about this. Sure. Thanks, Sanjiv. Just- Just to add to Sanjiv, I think, you know, when we talked about 24|7, we said that it will add a whole suite of services. This was not just a transactional business for online pharmacy. As part of that, we will be looking at adding additional services through inorganic growth. Okay. Sure. Just a clarity from the presentation. There was two different numbers, so I got confused. When you mentioned about online consultations in the quarter, the slide seven mentions that on the Apollo 24|7 platform, there were more than INR 1 lakh consultations in the quarter. The slide 22, where we talk about all the metrics of Apollo 24|7, that mentions that the cumulative number changed by INR 3.5 lakh in this quarter. Which is the correct number? On the Apollo 24|7 platform, how many consults you had in this quarter? Yeah. We had about 100,000, you know, consultations during the quarter, so that's the right number. It's 30,000 Roughly we are doing about 1000-1200 consultations a day right now. I mean, the way to look at this is that, you know, the omni side of it. You know, one is that the way we look at it is that, you know, customer has got the convenience to do, you know, take any offerings, you know, either through the platform or through platform, you know, can get the offline also. I think this is the way we look at it. If you look at it pure 24|7 app related consultations, you would come to that number. Then if you look at the customers of 24|7 might as well would have gone to the offline and then got the consultations done. That is another angle that we always look at it. We look at it from the omni point of view. Just a clarification there. Those two numbers we should read like this. INR 1 lakh consultations happen only on Apollo 24|7 platform. The INR 3.5 lakh number that you have, those INR 2.5 lakh were basically customers went to the app but took offline appointment in the hospital. No, INR 3.5, INR 3.5 would be the cumulative since inception. Okay. I'll take that number. Actually, the cumulative is INR 11 lakh, what you mentioned in the presentation, but I will take it as that. Thank you very much. Thank you. The next question is from the line of Nitin Agarwal from DAM Capital. Please go ahead. Hi. Thanks for taking my question. You talked about your plans for North and West India for the hospital business, for Bombay and Delhi, to be precise. Now, in Bombay, you know, barring putting up this new hospital in, you know, in northern Bombay, is there any other plan to beef up our presence, any barring hospital in this location? Yes. Suneeta told you about South Bombay. What we are focusing on is, I don't think we've still announced it because, you know, we're still working on getting it closed. You know, the Byculla facility is something that we had earlier, as you know, with the Masina Hospital, and we are quite hopeful now that in the next six months we should be able to conclude this deal and take it forward. I think, you know, added to that is the fact that Apollo Health and Diagnostics, we will continue to look at growing day care centers, clinics, diagnostic centers and, as well as working centers in Bombay. Okay. Now, is it fair to say that, you know, so you talk about next two, three-year plan, but even when you take a slightly long-term view, given the size of Mumbai and Delhi are probably the most premium markets from a property perspective in the country, there is gonna be a lot more focus on these two markets from an investment perspective on the hospital side as you go along? Yes, a lot more focus on these two markets and, through both AHLL, a combination of both, the hospital division, AHLL, as well as 24|7. Okay. Secondly, on the AHLL business, you know the diagnostics piece, currently at about 20% EBITDA margins, and you talk about a 50% growth, organic growth in this business. I mean, two things. One is A, where do we see peak profitability for this business? And two, given there has been a very sharp increase in competitive pressures in this business with lot many new players entering, does that in any way change our own outlook on how we're looking at this business from a profitability and growth perspective on a three-year period? Chandra? Yes, ma'am. I'll answer that. I think we have still a lot of headroom in terms of the fact that we have relatively no more newer entrant into the market. This opportunity comes on the back of the fact that we have an extremely strong brand salience in many markets, and most of, if not all of India. Our market saturation journey is something that we have begun robustly, and this will continue. Opportunity is not just from competing with organized, but actually the shift of customer preference from unorganized to organized is auguring well for the entire bucket of organized itself. That shift is going to happen more rapidly. I think COVID is a clear pointer as to where people are preferring that shift more so than in the past. We believe that a combination of our own market saturation and the shift of unorganized to organized in one bucket. The second area in our own journey and why we believe our growth rates can be faster, margins are an outcome of the fact that we are also not in full steady state. We will continue to grow, there'll be new shops, new CapEx, new investment, new markets. There will be. What you're seeing is a cumulative. We would continue to add some bit of losses in the early stages of expansion of our network. The journey on moving from higher component on B2C, deeper component on higher end, super specialized and semi-specialized testing is another headroom that we are hoping and we are concentrating on, not just hoping. We are dedicated to increasing our capabilities there. That is going to only help us improve our ticket size, our overall network and our gross margin and profitability. Now what is the share of B2C versus B2B in the diagnostic business today? At this point of time, we are nearly equal on, actually slightly higher, 55-odd% of B2C. Where do you see these numbers trending in three years? Sorry? Where do you see these numbers, the B2C number ending up in three years from now? We are growing both B2C and B2B, as you know. I think from an industry average and amongst the top players, the numbers are more like 60/40. I do not see us to be very different. 60 on B2C. Chandra, when you are saying B2B, you mean franchise, right? Sorry, B2B when I mean to say third-party labs. Yes. It's not any multi-hospital revenue. A pickup point from our core offices. Sorry? Yeah. It's not multi-hospital revenues is what we are. I would like to say term it as. Yes. Okay. Third-party labs are in third-party hospitals. Smaller ones. Yeah, smaller ones in our case. Yes. Okay. Just fair to say, given the growth rates you sort of you've highlighted, we can probably look like INR 1,000 crore revenue for this business at 20%+ EBITDA margin in three years. That's a fair number to go with? We are approaching this with the same intent, but as I have consistently committed to, rapidly grow our diagnostics, I am inclined to mention that we have had conversations in the past calls on when are we going to do the 300, when are we going to do the 500. I think 500 looks more easily possible and definitely within our reach in the coming year itself. We'll definitely breach that. We want to maintain that CAGR of growth consistently for the three years. That should evolve to a number which should be directionally very what you're suggesting. Right. Second question, last one. On the AHLL business, so there's a new platform which you introduced around the nephrology, the dialysis business and the IVF. What is the thought process behind these businesses, and what kind of opportunities do you see in these spaces? Dialysis, barring one organized player who again has a very early start, a pure play dialysis player, I think the rest of the next rung of players are not as systematic as what we approached. I believe that nephro and chronic kidney disease market is something that is definitely going to continuously grow and our abilities to offer the standalone. The second focus is on shop-in-shop within hospitals. That's something which we are focused on as a major area. The third element of growth is on the fact that National Health Mission has pledged a significant support to state governments for PPPs that they are wanting to do in dialysis. We are cognizant of the fact that PPP will be an area of you know outlook for us, but we are wanting to at least be a 60% private third-party shop-in-shop hospital. That's the area of growth. In terms of our growth, we are hoping to add significant volumes in FY 2023, and we have shops lined up for starting activity. We are going to add beds and sessions there. Dialysis market we are bullish about and hence that's an endeavor. There is clear space from the fact that the leader to the next rung is a wide gap, and we want to creep up and bridge the gap onto the leader in the dialysis play. On IVF, I think we have two things that are happening. One is a very clear indicator of the fact that IVF as a play is going to be far more regulated than ever before with the introduction of the ART and the Surrogacy Bill. Very clearly, the requirements on infra quality as well as the fact that we will have a national agency which is going to monitor outcomes and quality indicators, and it will become mandatory for players to participate in the repository. The fertility play is going to become extremely good and tailwinds for organized players like us. We are focused on growing that network. Yeah. These two segments are by what given the size of AHLL business today, by when do you- Sorry, there's a lot of echo. I'm unable to hear the question clearly. I think someone else's phone is on. Hello. Can I go now? Please go ahead. Yeah. In all these two pieces, you know, given the size of where AHLL piece today is, diagnostics is growing very rapidly. Already you've got Spectra and all these are visible. By when these two businesses on their own independent right starts to become meaningful businesses? Is it a three-year journey? Is it a five-year journey for you? Yeah, I think it's a three to five-year journey, and it both these have the potential to become meaningful businesses within our portfolio. As you're aware, the intent of AHLL is to serve customers closer to communities and also provide them a continuum of care to the large format AHEL Hospitals. That is a remarkably different value offering that we will give while we play similar to individual players within each of the sub formats within AHLL. We also are cognizant of the fact that we are best placed to offer the continuum of care. Hence, IVF, for example, leads up to the Cradles and the large hospitals for deliveries. This is a journey that I think we can uniquely offer. This is something that hence we are focused on. Similar on dialysis. The onward journey of a CKD play into nephro and transplant play is something which is very close to us. These are likely to become meaningful. Yes, it does take time because these have been more recent entries for us. If you are very interested in the cheap possibility, best of luck and thank you. Yeah. Thank you. The next question is on the line of Shyam Srinivasan from Goldman Sachs. Please go ahead. Good afternoon. Thank you for taking my question. Apologize for the background noise. I'm outside. First question is on the key metrics for Apollo 24|7. I see the presentation slide, but you also share stuff like online deliveries per day, total omnichannel deliveries per day. So have you seen a QoQ improvement in that number? Sanjiv? Yeah. We are seeing good traction. There's a growth quarter- by- quarter. Obviously Q4 a bit more momentum because of Omicron and all those things. Yes, Q3 versus Q2, numbers are increasing. Q3 was also a period wherein, you know, we focus more on ensuring that the operational part or the capacities, you know, that we have across the phlebo network through AHLL as well as the pharmacy shops, as well as the doctors, Apollo doctors on the platform. There was a high focus, management focus on ensuring that, you know, all that operational part gets stitched up well before we enter into Q4, because, you know, we all knew it and we all had some information, right, that Omicron is also partly coming, you know, to the country. I think Q3 focus more was on the operations side. Yes, on the financial metrics, we were still better off versus Q2. Sanjiv, is it 10,000? Now, if you can share the numbers, please, because we've shared that in the last call. This is why I'm asking to continue. I think as far as the pharmacy side of it is concerned, I think if you look at the omnichannel play, you know, we continue to do in the range of about 45,000 deliveries a day. As far as the other two segments are concerned, it should be the range of about 5,000 a day. Okay. Got it. Very helpful. Second question is on the start-up losses in 24|7. They had gone up. I missed the comments on why it had gone from INR 40 crore per quarter to now INR 55 crore. What is driving it? No, it's not INR 40 crore-INR 55 crore. It's from INR 48 crore-INR 55 crore. We have some added employees and the system is, you know, increasing on the manpower. There is no significant other changes. Slight increase in the marketing spend. It is from INR 48-INR 55 crore in the quarter. Yeah. Got it. Can you share what is the discounting level that you are now giving for on a blended basis? I remember it was 12% or 13%. We are in the range of 12%-13% as of now. Okay. Very helpful. Second question is on the economics for this. Just sorry to add that is for a particular value of the bill and above INR 200 we don't give any discount. We manage below INR 200 value of the bill, no discount. We have some averages coming in different. As a range we are between 12%-13%. Very helpful. Second question is on the economics for SAP. When we did the announcement, we were talking about an 80% back-end to front-end profit share. I can see that number in revenue for sure, there is no doubt. But in EBITDA, you now give for the platform business EBITDA post Ind AS, you also give us what you assume in your numbers, and that number is 63%. Why is there that discrepancy between revenue recognition versus EBITDA? You're probably looking at the post Ind AS numbers. If you look at the pre Ind AS numbers, it is aligned to that because that is. We're looking at it post or after the lease rent. Look at the pre Ind AS numbers, which includes the lease rent also, which is the cost for the front-end. If you consider it basis that, you would realize that it is the entire economics is captured in the[pre Ind AS]. We are in the range of 78%-82% in the last three quarters. Since you don't share that other number, which is where I'm trying to compare with the number on the platform, pharmacy which you give us. But you- Maybe we can send you offline. Sure. Okay. Perfect. Yeah. Thank you so much, Shyam. Thank you. Thank you. The next question is from the line of Krishnendu Saha from Quantum AMC. Please go ahead. Yeah. Can you hear me? Yes, we can. Hello. Yeah, yeah. It's just a simple question. For the 24|7, what will be the GMV number for the quarter? Sorry, can you repeat that question? What would be the GMV number for the quarter? Sanjiv, GMV for 24|7 for Apollo as a whole? I think, at this stage, you know, we would like to, you know, start putting up the numbers from the next quarter. I would request you know, just to, you know, bear with us for some more time. From next quarter onwards, we should be able to provide you the GMV and the related numbers also. Yeah. Understood. Another clarification, a gentleman asked before if the stakes does the expansion in Delhi, Gurgaon and Noida depend on the stake sale? Or is it that we are going ahead even if the fact that we don't get the full amount or we get part of the amount or part of the stake still goes through for Apollo 24|7? No, I think we have a very strong balance sheet that will support this expansion. I see. Could you just, Yeah. That is definitely happening. The Apollo 24|7 will also happen. It is not subject to the 24|7 deal. It is not. We are saying it will also happen. That's all. Oh, sure. Just could you just run me through the CapEx plan then for the hospital business for the next two years, when we're gonna add around 2,000 beds for the next two to three years? Could you just give me that, please? Can we get back to you on that? If you look at it. Yeah. You know, as Ms. Suneeta said, we have a plan for Bangalore that will be almost around, you know, in the range of INR 700 crore-INR 800 crore overall. Yeah. between the expansion and the new hospital which will be there in Hennur. We have to look at, you know, we're still closing some of this in North Bangalore. I guess- Mm-hmm. Once we have those. The other thing in South Bombay also, it'll be a project which is a INR 400 crore project, which will include between INR 600 crore-INR 700 crore of CapEx. That is the second which will be there. Sure. You know, the other one which we are looking at between the two sides of Delhi, clearly those are again potentially another, you know, INR 1,500 crore at least between the two hospitals. We will come back to you with more details as we are. We have Yeah. At this time, you know, we have about INR 700 crore in mutual funds. Mm-hmm. Combined with free cash flows and the fact that the 24|7 money will come, I think we will be adequately enabled to fund this growth. Sure. The last clarification, did I hear correctly because of the COVID footfalls, or vaccination footfalls being low, the outpatient was low? That's correct. Yeah. Thank you. Thank you for your time. Thank you. Have a good weekend. Bye. Thank you. The next question is from the line of Sameer Baisiwala from Morgan Stanley. Please go ahead. Thank you for the repeat. My question has been asked. Just a couple of things. When I think about 24|7, you know, Apollo has been traditionally very strong in offline, you know, capabilities. Online is something that's pretty new, both from the tech side and last mile delivery side. When you think about building this platform out, next one year, 1.5 years, which are the main capability gaps and what are the areas that you want to focus on? I think, you know, first of all, from the infrastructure point of view, I think we are well sorted out given the fact that, you know, we've got 4,400 stores to light up onto the platform, plus we've got a large network of doctors as well as we've got the phlebo and the lab network, plus various other things that we are doing on the, you know, condition management. On the clinical side, we've got the, you know, again, a good knowledge in all those fronts. I think, you know, if I'm honest to this question, I think from the technology side, we, you know, the challenge that I see is that, you know, this is an ever-evolving kind of a thing, you know, customer or the patient, you know, requirements keep changing and the dynamics keep changing. I think, from the technology side, we continue to see that there is a lot more to do all the time, in spite of, you know, what we thought initially that this is how the entire tech platform has to look like. I think and that is continually evolving. I guess, the challenge is, you know, with respect to where you kind of push the boundaries with respect to, the expectations, you know, comes from the customers or the patients versus what, we as a company would like to deliver. I think, that is what I would see is one of the challenge, could be in the next, you know, six to 12 months that we need to kind of overpass. Okay. That's very helpful. Is there a milestone or is there a proof of a pudding sort of a thing that when you get to that you say, "Okay, fine, you know, now our tech build-out is satisfactory? Yeah. I think everything is, you know, outside in approach, you know, once we start. It's all customer-driven, you know. Once we voice of the customer suggest or, you know, we've got our own internal milestones that these are the things, these are the developments that are required for the condition management for the CDSS and so many things. I think one is that we'll get more assurance, you know, once we reach to those milestones. Second, I think voice of the customer continuously help us understand that what more is needed to be done. I think, one year from here, we should be in a much better position to say that from the technology side, you know, we have developed what we wanted to develop. Thanks, Sanjiv. Are you doing this in-house or you're getting this done outsourced? Yeah. We have a set of engineers, you know, based out of Gurgaon, as well as based out of Bangalore. Pretty much this entire development team and engineers, they're all in-house and this is all done internally, sir. Okay, great. Thanks. Just final, you mentioned about J&K MoU for 250 beds. Can you talk a bit more about this? It's still an MoU for now because we are working with the government. The government has to identify the land and give it to us. We are working with them. We are committed for the hospital there because it is something that the government wanted to do, and we are happy to put something there. Okay, great. Thank you so much. That it's a huge underserved population. I think even you know the business case for it is a very strong business. Yeah, we did that. That's correct. A lot of people from Jammu come to Delhi today for care. Okay, great. Thank you so much. Thank you. That was the last question. I now hand the conference over to management for closing comments. Thank you, ladies and gentlemen, for taking time off on a Sunday, on a Saturday afternoon. As you have seen, Apollo has demonstrated not only resilience, which was, you know, remarkable during COVID and the pandemic, but more importantly, we have been very agile in creating an institution that moves closer to the customer without losing focus on our clinical DNA. I believe that each one of the verticals, Apollo Hospitals, Apollo Health and Lifestyle, and Apollo HealthCo, have demonstrated not only agility, but value creation for all of Apollo and for all of its stakeholders. Thank you, ladies and gentlemen. Thank you very much. On behalf of Apollo Hospitals, that concludes this conference. Thank you for joining us, and you may now disconnect your lines.