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 quarter 3 and the 9 months of FY 2023, which were announced yesterday. We have with us today the senior management team comprising Mrs. Suneeta Reddy, Managing Director, Dr. K. Hariprasad, President, Hospitals Division, Mr. A. Krishnan, Group CFO, Mr. C. Chandra Sekar, CEO, AHLL, Mr. Obul Reddy, CFO, Pharmacy Division, and Mr. Sanjiv Gupta, CFO, 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 2 of the investor presentation shared with all of you earlier. Documents relating to our financial performance have been circulated, and these have also been uploaded on the corporate website and the websites of the respective stock exchanges. 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. Thank you for taking time out for this earnings call. I hope that you have received the earnings documents which we had shared yesterday. We have delivered a steady performance in Q3 FY23, with the healthcare services business growing at 10% year-on-year, excluding vaccines. Growth was driven by an increase in IP volumes, which were 7% higher year-on-year and supported by pricing and case mix gains. ARPOB has increased 12% year-on-year and is currently at INR 51,482 in Q3. It is important to note that we had reported 41% revenue growth last year, Q3 FY22, which was aided by COVID revenues and vaccination revenues, which was ahead of industry growth. In the light of the high base, the 10% year-on-year growth in healthcare revenues is meaningful. Adjusted for non-recurring COVID revenues and vaccine revenues on like-to-like growth in the healthcare services business is at 17% year-on-year. Quarter 3 FY twenty-three occupancy across the group was 65%. The Quarter 3 FY twenty-three occupancy in mature hospitals was 66% and new hospitals at 62%. We witnessed an improvement in the payer mix too, as cash and insurance segments registered a year-on-year improvement of 28% in revenues. Against this backdrop, let me take you through the consolidated financials for the quarter. Consolidated revenues grew 19% on a year-on-year basis to INR 4,264 crores after normalizing for vaccine revenues in Quarter 3 last year. Healthcare services revenue grew 10% to INR 2,194 crores. HealthCo revenues grew by 34% on a year-on-year basis to INR 1,758 crores. Offline pharmacy distribution revenue grew 21% year-on-year to INR 1,581 crores. Online pharmacy distribution and Apollo 24|7 revenue was at INR 178 crores. Combined pharmacy revenue grew by a healthy 31% on a year-on-year basis. AHLL revenues stood at INR 311 crores. Excluding COVID vaccination and testing, it grew by 30% on a year-on-year basis. Diagnostics core revenue grew by 62% on a year-on-year basis to INR 92 crores in Q3 FY23. Healthcare services EBITDA was at INR 543 crores, a year-on-year growth of 9%. This was supported by volume, price, and case mix improvements. Healthcare services EBITDA margin was at 24.7%, a 15 basis points improvement over last year. Margins in mature hospitals were at 27.5 as against 25.6 in Q3 FY22. Margins in new hospitals stood at 18.2% for the quarter. EBITDA for the offline pharmacy distribution business was at INR 124 crores for the quarter, representing a growth of 28%. The online pharmacy distribution and Apollo 24|7 business reported an EBITDA loss of INR 186 crores, resulting in a net loss of INR 53 crores for Apollo HealthCo. AHLL recorded an EBITDA of INR 25 crores for the quarter. Overall consolidated EBITDA was at INR 505 crores, reflecting the investments that we have made in the online business. At a PAT level, healthcare services PAT was at INR 261 crores, a year-on-year growth of 30%. Consolidated PAT, however, was at INR 153 crores. I will now summarize the performance for the 9 months ending December 2022. We closed the 9 months of FY23 with a consolidated revenue of INR 12,310 crores, a growth of 16% over the 9 months of FY22, excluding revenue from vaccination. This includes a revenue growth of 12% year-on-year in the healthcare services business and in AHLL and 23% growth in Apollo HealthCo. EBITDA stood at INR 1,561 crores. Within this, healthcare services EBITDA was at INR 1,598 crores. EBITDA from mature hospitals increased by 25% year-on-year, with an increase in the EBITDA margins to 27.4% from 24.3% in the 9 months of FY22. PAT for the 9 months of FY23 stood at INR 675 crores. In operating terms, the offline pharmacy business added 194 net new stores for the quarter, taking the network to INR 5,196 crores, with private label sales at 11.03%. The online pharmacy distribution in Apollo 24|7 platform recorded a strong GMV growth of 85% quarter-on-quarter to INR 543 crores. The platform added 3 million users this quarter, and its total users as of date is 23 million users. The platform witnessed around 42,000 transactions per day compared to the 25,000 in March 2022. This has been a good quarter for our healthcare services business. Our occupancy and volume levels are robust, and our margins have expanded. There is still room for growth in both the mature and new hospitals as surgical cases increase and international patients return. We continue to focus on centers of excellence, case mix, payer mix as levers for revenue and EBITDA growth. AHLL has demonstrated resilience in a quarter that was muted for the sector. Our penetration and growth plans for primary care and diagnostics will continue, and we will see improvements in EBITDA margin profiles. Apollo HealthCo has done really well on the pharmacy distribution revenue and GMV growth and operating metrics. It is on track to exceed INR 1,500 crores of GMV this fiscal and well ahead of the information memorandum to deliver 2x growth in FY 2024. We believe we are at a peak burn rate this quarter and expect losses to moderate from here on. Margins in Apollo HealthCo will improve, with offline pharmacy distribution margins improving as well as discount rationalization, digital health services revenue improvement, and expansion of private label sales. We expect HealthCo to directionally be PAT neutral by the end of FY24 and become the fastest digital player to achieve segment profitability by FY25. In the larger context, while individual business verticals are all delivering to plan, the largest opportunity for us is the network effect. It's really leveraging the synergies across all the for-formats in both the physical and digital touch points that we have created. We are the only 360-degree integrated healthcare ecosystem, and our clinical proposition remains strong. I believe that we have put a lot of work into our strategy for not just this year, but for the coming 24 months, and we look forward to our next calls to see it play out over the next 24 months. Meanwhile, I have Dr. K. Hariprasad, our CFO, Krishnan, Obul Reddy, Chandrasekar from AHLL, and Sanjeev from Apollo 24|7 to take questions from all of you. Thank you. Thank you. We will now begin the question and answer session. Anyone who wishes to ask a question may press star and one on their touchtone 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. The first question is from the line of Anuj Suneja from ICICI Prudential. Please go ahead. Thank you for the opportunity and congratulations to the management on the good set of numbers. I have a couple of questions, mostly related to Apollo 24|7 expenses. One I would like to understand, like, what is the breakup of the expense at INR 134 crores that we are doing? Is it just going to discounts or is there any other strategic initiatives that is also being driven by this number? Going forward, like you've given a guidance of INR 200 crores for H1. If we are doing the breakup right now, what would be the breakup like, 6 months down the line? That's the first question. Okay. Sanjeev this side. You know, let me just talk about the breakup of expenses. That was the first question. As we spoke in the last earnings call, you know, we talked about that, you know, the company is investing in the resources and tech and product side for the new line of businesses which it intends to start. As I recall, pharmacy diagnostic and consultation is something which is which are the firing engines as of now. During Q3 we invested into product and tech essentially, and some bit on people resourcing for the new line of businesses. Essentially that is where the most of the incremental expenditure has happened. If I look at, broadly about, 30% of the, expenditure is into product and tech side. We have about, nearly 20%-22% on the operation side. We do have, marketing for acquisition of new customers to the tune of about 15% of expenditure. You know, something to do with the call centers and, sustenance of, you know, communication and SMS and all that stuff, another 15%-20%. The remaining expenditure happens towards the support side. That's the broad, you know, breakup of the expenditure. I think, that accounts for the... Some bit of additional expenditure in Q3 is accounting for only related to the new line of businesses where we are putting money. Okay. Got it. Got it. The second question is, like, we are reporting somewhere around INR 1,500 crores of GMV. What is the GMV to revenue bridge? Going forward, how would the EBITDA look like for the INR 1,500 crores of GMV, if we can have some thoughts on that please. Yeah. If you look at it, you know, for the whole, or the first or the last quarter, we did a GMV about INR 543 crore. The revenue that comes to the, you know, books, which is including of the online pharmacy and the take rate for the other services is about INR 177 crore. That is the ratio that we are looking at it. Yes, INR 1,500 crore, I think, we should be doing more than INR 1,500 crore. Idea or rather the estimate at this stage is to hit around INR 1,500 with another two eight growth for the next year. As far as the overall investment into the project is concerned, I think ma'am suggested this, you know, during her opening remarks also, that we're looking at somewhere the peak of expenses as far as digital side is concerned. Next year as Apollo HealthCo, somewhere in third or fourth quarter, we are looking at coming to near breakeven. Okay, sir. Got it. Any guidance on the EBITDA front? say INR 1,500 crores-INR 177 crores of revenue. beyond that, on EBITDA, any guidance? I think, you know, as we get into the annual operating exercise, you know, for next year and, you know, during this month and, first half of the next month will be detailed exercise done on this. I think, in the next earnings call, probably we can, you know, guide you on the digital side of the EBITDA also for the next year. Fair. Thank you. Thank you. Thanks a lot, sir. Thank you. Participants, if you wish to ask any questions, please enter star and one. The next question is from the line of Shyam Srinivasan from Goldman Sachs. Please go ahead. Yeah. Thank you for taking my question. Just first one on the hospital business. Occupancies on a blended basis have come off 300 basis points. Just want to understand how should we look at the quarter four? I think we had an earlier guidance of reaching higher occupancies. If you could just, you know, reiterate or at least observe what those occupancies are and what are our targets for the next say 12, 18 months? You know, October, December are generally holiday months, and I think the seasonality of the business is something that we have to consider and which is why our occupancies were around 64%. Having said that, they have picked up in February and March, and we expect to see a higher occupancy rate. Our target was 70% for the year. We, you know, we will be close to 70%, especially for the last quarter. Got it. Sanjiv, I think we had a longer term goal also, right? I recollect because- Yes, yes. What we said was that, our intention is to take it up to 75%. We do have a target for the next 18 months where we will do that. In fact, it is waiting to next year's AOP. Hopefully, you know, we'll be able to commit to absolute numbers after the 1st quarter of next year is over. Got it. Helpful. Just second question, just to the previous participant's question on revenue to GMV? While it is 33% conversion on the 24/7 this quarter, last quarter was like 55%, and the quarter before was 56%. Is there any change in how we now get our revenue or the conversion from GMV? Is there any marketplace that makes the take rate lower related to previous quarters? Is it like, are we now starting to recognize revenue from, say, the Amazon platform that is making this take rate lower? Yeah. Yeah. That's a good call out. I think, you know, this quarter, you know, we started to embed IPOP business for, you know, B2C users. Typically, this business, it's a question of a mix, you know. What I would broadly say is that, you know, between 30-35% should be the revenue to GMV ratio. You know, which we see in this quarter should be the percentage that we can index 1 or 2 quarters. As we get into more of digital therapies and insurance distribution side of it, probably this percentage will further go up. For next, for the current quarter, it relates Q4, it relates to Q1, let's assume in the range of about 35%. Got it. Sanjiv, what is the mix of the revenue? Maybe if you could just help us refresh that as well. How much from pharmacy and what is from consult? The commentary seems to suggest that the growth has largely come from IP, OP, at least in the commentary on the presentation. If you could just give us that qualitative color, please. Yeah. That's true. You know, most of the growth has come from the IP, OP, which is a new vertical that we started in Q3. If you know, read Q2 transcript, we said that, you know, we've been investing into the customer journeys for the user to then come from Apollo 24|7 and then get the physical bookings as well as get the IP and the other things done. For Q3, little distortion because a new vertical whenever it comes, you know, starts firing, you know, the percentage mix changes. For Q3, if I talk about pharma is about 50%, consultation is about, with consultation together with IP, OP is about 45%. Rest is diagnostic and VG. What's the contribution? This mix for 1H was what? Sorry. That I just know what. Mix of one. Yeah. mix of H1 was about 80% is pharma. we had about 10% of consultation and about similar 10% is for diagnostic and the subscription and pay model. Got it. That's helpful. My last question is on the pharmacy business, both in terms of network addition. I think just a simple observation. We used to add 350 stores annually in the past years. We have now added 757 in 9 months. The number of closures are also equal to the, like one third of how much we were adding earlier. Is there any change in the philosophy? Why are we closing more stores? Maybe it's a percentage of new stores added, but I just want to get the philosophy there. Also a data point on what is the combined pharmacy EBITDA margins. I think you were disclosing it until last quarter. I can't see it in the presentation for this quarter. Thank you. Yeah. The number of store addition, you know, we continue. I mean, this year we embarked on additional stores and expect to open for the full year about 950 stores. We close around 100 stores, which is more, you know, on the basis of identifying them non-performing, not that it is a, as a percentage to the store addition. On the EBITDA, it is about 7.38% on the pharmacy business. Slightly about, say 50, 60 basis points lesser than last quarter, and largely because of the establishment costs and the addition of stores. Got it. With the growth coming from these new stores, you know, in the next 2 quarters that will considerably change. Got it, sir. Thank you and all the best. Thank you. The next question is from the line of Damayanti Kerai from HSBC. Please go ahead. Hi, thank you for the opportunity. My first question is on your hospital business. How much is international patient contribution during the quarter, and how do you see this piece moving, say, in next few quarters? We've moved from 5% last quarter to 7%, and we, you know, our focus that it will be 10% in the last quarter. 10% by end of this fiscal. End of this fiscal, yes. Okay. ma'am, my second question is on hospitals again. We have seen improvement in AP Telangana cluster, which has seen good pick up in the third quarter. Among your all cluster hospitals, which are the segments where you see like enough headroom to improve on the payer mix, et cetera? I think last quarter you talked about AP Telangana. Apart from this, which are the segments where you see you have not yet your targeted payer mix level? We are looking at, you know, at, some of the new hospitals which are now ready to ramp up. I think, you know, we had moved the whole strategy from being primary and secondary care to tertiary care. With this offering of tertiary care, we should be clinically differentiated in these markets. You will see improvement in Vizag, you will see improvement in Madurai and Trichy and Navi Mumbai coming, each coming through in the last quarter. Okay. Okay. Ma'am, my next question is on your cost improvement plan for your business. You earlier mentioned some 100-150 basis points improvement over your creative license. You can provide an update on that. Which are the key driver for this cost improvement? I think we're pretty consistent with what we hope to achieve. you'll most probably see it at the end of 2023, 2024. What are the drivers for this? Clearly, we are looking at, you know, we are looking at creating packages, surgical packages, keeping it out. We're also looking at admin costs. We're looking at HR costs as well. More importantly, I think the whole initiative is about improving the overall efficiencies within the system, so conversions happen at a better rate. It's also about growing revenues as well as cutting costs. I think, it's a very crucial program for Apollo, and will deliver on both revenues, volumes, and EBITDA margins. Okay, ma'am. My last question is, can you specify, at your network level what is, contribution from cash, TPA, as of like third quarter in terms of your payer mix? If you can call out a number. Almost around 80% is from cash and insurance. 80%. Within that, I assume around 50% is cash and another 50% PP, like equal contribution or how is the split there? Yes, yes. Equal contribution. Okay. Thank you. I'll get back if need be. Thank you. The next question is from the line of Shaleen Kumar from UBS Securities. Please go ahead. Yeah. Thanks for the opportunity. Since I think, on 24|7, the nature of GMV has changed a bit. Is it possible to get like-to-like comparison of GMV? How, you know, if I have to see my previous, Q2 GMV versus Q3 GMV, how the growth has been. Yeah. Q2 GMV was INR 295 crore, like-to-like comparison would be about INR 340 crore. That will be up by about 15%. That is like-to-like. Like-to-like here means pharmacy consultation and diagnosis. Understood. Basically the new GMV contribution to revenue is quite less, because if I look at the revenue growth is also somewhere around that, right? 12%-15% kind of a revenue growth is there sequentially. Yeah. Observation is right. That was one of the questions asked previously also. I guess, you know, whenever a new, you know, engine files, you know, the entire mix, growth change and, that will bring in the change in the mix. Okay. I think so, I think it is all temp from that sense. You know, as we see another one or two quarters, we are coming out with new line of businesses, this will continue to be classic expense. We could start maturing on one percentages. Okay. We intend to increase our contribution margin from that. There's a scope for that. Yeah. Absolutely. That's the constant endeavor to, you know, reduce expenses and increase our top line as in some margin. Sure. Sure. Got it. Got it. Just one bookkeeping question. There is a cost related to JV and associate. Just trying to understand what does it pertain to and, like, is it like one-off or there is... It will be INR 15 or something like that around INR 21 crores? That is the consolidation of the front-end pharmacy business. There is this establishment costs also We will say as part of those costs, which is getting consolidated. Okay, sir. Sir, will it be with this level or how should I? It comes down. It'll come down. Okay. Okay. Okay. Some of that starts maturing. All right. All right. Okay. Yeah. That's it from my side. All right. Thank you. Thank you. The next question is from the line of Harit Shah from Avendus Capital. Please go ahead. Good afternoon. Thanks for the opportunity. I'm looking at AHLL and within AHLL, the diagnostic segment. We've seen a sequential decline in margins, this quarter year around 5%. With the sharp decline, this is the second quarter. Are there any one-offs and what's the number that we should expect for this segment going forward? Yeah, I'll answer that. The, I think, on a even basis, I think this YTD number stacks to the range of 8%-8.5%. These are turnover discounts and some such other one-offs that have spiked the Q2, but they pertain to both the Q1, Q2 overall. So we sequentially record them as and when the such credits come our way. The overall outlook this quarter has been muted in line with the overall industry trends. There's a INR 10 crore approximate drop between quarters, and that contributes to about INR 6 crore-INR 6.5 crore of the EBITDA for us, considering that the fixed costs are covered. On a even basis on a steady state, we are hoping to be in the 8.5-10 mark, this year. We are continuously growing. Our move from 10 onwards, is something that we are planning to achieve next year as we start realizing the front-loaded costs and thereof the revenues from areas such as specialized testing and such. That's the broad view of that. Okay. To our previous participant's question, you mentioned that the like-to-like GMV for the quarter was around 350 crores, while what is disclosed was around 550 crores. What exactly accounts for the difference between these two numbers? Yeah. Okay. Yeah. Sanjeev, go ahead. I think this continues to prevail in there. Do you want to check on the increase in the? No, go ahead, Sanjeev. Yeah. During Q3, you know, we started building up the customer journeys, for hospitals, across the whole ecosystem, as well as helping the customers to get the radiology, pathology and the other IP related items. Happy to share some broad numbers. You know, monthly we have on an average INR 2 lakh, you know, leads that we, you know, get for the OP IP business. About 22% is the current conversion leading to OPD side of it, and about 6%-10% conversion from there, towards the IP side of it. That is the line of business that we started. Q2, we spent some money into it, building up the tech side of it, second product side of it, including the MVP, you know, realizing the entire GMV, put together about INR 200 crore worth of GMV is what we got for the Q3. That's incremental versus Q2. Okay, got it. For the combined pharmacy revenue that you disclosed for the quarter, around INR 2,175 crores, is there an offline/online breakup for this number that you can share, like we have for the pharmacy distribution? Yeah. It's about 9% of the revenue is coming from online, the rest is offline. As a number, it is INR 1,963 crores from offline, INR 204 crores from online. Together it is INR 2,167 crores. Okay. Thank you. And last one with the permission. The, can you help us with the timelines around some of our bed additions expected over the next two or three years? How should we think about the number of beds from the current 7,855, looking at for FY25 and FY26? In terms of bed addition, I think that, you know, our short-term challenge is on the current bed addition, let's go to 70% occupancy. Over a 24-month period, we are looking at adding beds. There will be two brownfields in Bangalore, which will give us another 400 beds. Adding on to this, which is more of from 2025 onwards, you will see beds added in both Chennai OMR, a large hospital, as well as Gurgaon, which will come in the year 2025. With that, we will have an additional 1,000 beds in that year. Our plan is really to go to 2,000 beds in the next 3-4 years, with a capital outlay of INR 3,000 crores. Thank you, ma'am. That's all from my side. Thanks for taking the questions. Thank you. The next question is from the line of Prashant Mandle from Motilal Oswal Financial Services. Please go ahead. Thanks for the opportunity. Again, on the GMV, while the rate has been quite exponential, for past year or so, and you have given the guidance for FY 23 as well, if you can take this forward for next 12 to 15 months, FY 24, how do you see this GMV move? I think, see INR 1,600 crores, roughly that we are going to take this year, truly 28% growth, we will have it the next year. That would be anything over and above INR 3,200-INR 3,300 crores. However, as I said previously that our annual operating plan exercise just initiated, and from now till 15th of March, we have in it detail and workings around it. Probably a bit more color on the next year, we'll have it in the next earnings call. For now you can take as a 28% growth, for the next year. Understood. On the offline pharmacy side, while the store addition has been quite aggressive over 9 months, but particularly in 3Q, the offline pharmacy, sales growth has been much higher at 22%. It was just 8% for first half of FY twenty-three. Anything in particular in this quarter to highlight? You know, we have also added similar number of stores in the Q1 and Q2, which have started contributing to the sales, and the growth is there. Oh, okay. Like, so on a current base, you know, even to grow by 15%-18%, almost INR 1,000 crore, 1,000 stores at least to be added every year. Is that the number to go by in the coming years? No, no, no. With the 1,000 stores, we are growing at 24%, you know. At 21%-22% we'll have normal 500 stores addition. The growth coming from this will be sustained for us for the next 2 years. Okay. Just lastly, the private label as a portion still remains, you know, relatively low. Any efforts out there to improve that? The stores are increasing, the new stores it will be slightly less for some period, number 1. Number 2, if you go back to the earlier period, there was lot of COVID portfolio which is not there currently. We are seeing like to like on these SKUs volume growth. Maybe it will take another 2 quarters for us to show the growth on these from here on. Understood. Okay. Yeah. Thank you. Thank you. Next question is from the line of Kunal Randeria from Nomura. Please go ahead. Hi. Hi. Good afternoon. Sir, my first question is on the 24|7 business. Now, if I was to look at your revenues, it has grown from around INR 120 odd crores in Q1 to around INR 177 crores in Q3. At the same time, the OpEx that you are doing has grown in almost exactly the same proportion, which is at 100% of your revenues there. I'm just wondering, going forward, assuming the revenues will more than double in a year and a half's time, which cost items can be controlled so that, as ma'am mentioned, you know, you can also turn profitable? I think what we need to actually look at, is that, you know, now we are in the fourth year. Since our beginning we step into, fourth year. I think, you know, there's something like, you know, one of the fitness centers, you know, have a traditional line, you know, that today's change, tomorrow's change. I think more or less, you know, we have, we were off the mark of, you know, putting a full investment into the tech and the product side. I think our app, website, our usual customer journey within, and the entire integration with the service providers, all that is more or less done. That means, you know, going forward, as we scale up, as we get more and more EBITDA, my cost with respect to product and tech will not be in that situation, number one. I think, on the number two side, on the resources side also, we are adequately staffed, so does the office infrastructure and the other things. I think what we can clearly pay further on existing costs will be discretionary expenditure on the marketing side also, which is related to branding. I will just, you know, recall this point. A couple of earnings call back, you know, I had talked about this, is that, we users were also to be talked about various, you know, benefits that they can get from the Apollo 24|7 app. To that extent, we had to do a lot of campaigns and marketing to make them aware about the fact that you can now easily put your, you know, medicines on the app. You can get the diagnostics done through the app. You can get the consultations, physical working through and through this. All that is something which is now past, and all that expenditure is kind of a discretionary expenditure today. In short, I think, you know, going forward, we would get more scale on a very low incremental cost, and we would have higher margins, so we should be able to do a better job as far as the EBITDA side is concerned. Possibility is very high to do a pretty good job in the next fiscal year for the EBITDA line for medical side. I need to understand this, maybe a bit more. Would it be sort of fair to assume that you are now at a tipping point where, let's say for next INR 100 crore in revenue, quarterly revenue, you need not spend INR 100 crore, but maybe spend maybe INR 40 crore or INR 50 crore, to achieve a INR 100 crore revenue? Absolutely. I mean, I don't know about 40 or 50, but absolutely. You know, now at the scale that we have it, we don't need to spend a lot of dollars to get, you know, quickly, you know, upside on the revenue. I think, the system itself, the engine itself will take care of, the additional revenue without any additional cost. This we should see from the coming quarter or it will be next fiscal? No, I think some benefit we start seeing it from Q1 itself. Those benefits will start coming down as we move forward beyond Q1. Got it. Just one quick question on hospital side. Your ARPOBs are close to INR 60,000 in metros. I'm just wondering what the headroom over here is, especially considering that, you know, you already have 80% kind of patients from cash TPA, which is almost, you know, at an optimum level. What kind of, you know, maybe ARPOB growth we should assume in the coming years? We will continue to go with what we have been doing in the past. I think a combination of case mix and price increase is what you should factor in. You are right, we have not been guiding you towards anything specific around change in payer mix. We will continue to work on the payer mix. As Suneeta said, the payer mix opportunity still exists in non-metros, which is what we are focusing on. In the metro cities, we would not have much of payer mix opportunities. You should look at the ARPOB growth of around 8% CAGR, which is a combination of 4%-5% on pricing and the balance on case mix. Perfect. Thank you very much, and all the best. Thank you. Thank you. The next question is on the line of Rishabh Tiwari from Allegro Capital. Please go ahead. Yeah, hi. What was the combined pharmacy EBITDA numbers for this quarter? I think it was not mentioned in the presentation system. Yeah, that was a miss in the presentation. We'll put up the presentation with the number. 7.4% is the number. Okay. I'm not sure if this is a the number in hospitals has been brought down to 14, from earlier 15. There was one hospital which got transferred. There was a Karapakkam center in Chennai which got transferred to Apollo Health and Lifestyle. This was a hospital which was within the AHCN books which got transferred to Apollo Health and Lifestyle. That's a cradle business that we had within Apollo, which got transferred to Apollo Health and Lifestyle. That's why it's gone lower by one. Understood. Thank you. Since you mentioned AHCN, does the management see any specific guidelines or regarding the margins going down in AHCN? Yes. I think the quarter 3 margins, at a console level, we are at about 10% at this point of time. The quarter 3, on a YTD basis. On the quarter 3, I think we are lower, essentially because of a aberration on account of October, which actually dragged us into a negative EBITDA zone. November was a muted recovery. It is not very representative of where we stand in terms of how the businesses are performing. Having said that, despite these seasonal fluctuations, I think the revenue buildups have been, especially in the core businesses, minus the vaccines and the COVID testing, which were one-offs, continues to be a robust growth. We are hoping to have a sequential improvement quarter-on-quarter on our margin profile going forward because we are also controlling some of our costs as we are on growth path both in primary care and diagnostic. These are likely to remain a little muted for some of us in comparison to the industry. Okay, understood. Thank you. Thank you. The next question is from the line of Nitin Agarwal from DAM Capital. Please go ahead. Hi. Thanks for taking my question. Two questions. One is on the pharmacy business. On the offline pharmacy piece, what kind of growth rate can be assumed for the next, say, 2-3 years? You know, do you see incremental operating leverage on the margins on this revenue growth? it's very difficult to guide you for next two to three years. At least next 12 months we expect to be in the range of 20%-24%, given that, we have invested in the growth during the current year. Sir, on the margins, you know, we've been kind of flattish to a little muted on the margins for the business. What is our trend that you've been consistently increasing these margins in the past? Margins, as we have last guided you, we expected that, you know, customer discounts will be in the range of about 13-13.5%. You know, we could see on the ground it is moving to 14.5%. We are largely muted on the margin. Whatever increase in the customer discounts we were now able to manage through the additional procurement margin. Still there is about 30-40 basis points impact on the EBITDA. We will be managing that at this level. Now we are at about 14.5% on the customer discounts, which we consider very decent for the off market to sustain the growth. Secondly, on the online business. You know, we've talked about the HealthCo being flat, positive or EBITDA neutral by second half next year. When does the online piece on its own start to become EBITDA neutral in your assessment? That would take a little bit of time. I don't see that to happen, you know, in the calendar year of 2025, but somewhere in the first quarter of FY25, maybe the last quarter, that should be the time when we should see this segment as, you know, coming profitable. There are a couple of engines that we need to fire. We're working on them. Potential is huge, and if we are able to execute well, which we believe that the current set of team members should be able to do well. Once we do that, I think, we should be able to, you know, give you better guidance on the timelines. FY 25 should be the year where, you know, we should we should think that Digital would also be as a segment EBITDA neutral. This is towards the end of say FY 25. That's right. In app, we talked about the doubling of revenues on this business next year. I think earlier we talked about $1 billion in revenues in this business in next, I think 2 years or 3 years. Sir, can you give an expression or discussion on the revenue targets for the online business? By when do you get to the $1 billion number or thereabout? I think, FY 2025 should be the year when, you know, we should look at numbers, you know, closer to $800 million to $1 billion. That is the scale which is required to ensure that you have a high repeat rate, you have a high net margins, and you are able to leverage on your fixed expenses and so able to do a justice to the entire economy. I guess, if we, I mean, as I said that, you know, next year the numbers are still to be worked upon, but, we're looking at roughly 2x growth. Another similar growth for year thereafter. I think FY 2025 should be the year to do, you know, get into a $1 billion mark, near $1 billion mark. At that size, in your, I guess, just, what could, what kind of margin the business you should be ideally making, at that size? I think, you know, anything around 20% should be the margin that we should get it as a blended margin. I mean, it all depends upon the mix that comes, you know. It is difficult for me to give you 1 number, but, yes, anything between 20%-25% should be the mark. Our operating costs, you say, is probably getting to a point where they'll start to plateau out beyond a point. I mean, after some time versus the current base that you've built in. Yeah, absolutely. I mean, pretty much it's a fixed expenditure. You know, once you have a tech product done, then it is just a maintenance cost. Digital platforms help you to get to the scale faster. Yes, in initial years, you know, there is a pain with respect to putting up expenses and putting up lot of infrastructure there. At that scale of, you know, from next year onwards, I don't see that, you know, expenses going up substantially. They'll start, you know, getting plateau and we would also do certain bit of, you know, rationalization. You know, given the fact that, you know, we understand the external environment and, you know, what are the right decisions to be taken for the business. I think those decisions would also be implemented, executed. I think we'll mix up everything. Yes, expenses will start getting better. Sir, last one. On the diagnostic business, I think we've had some, you know, from an industry participant perspective, a lot of the mixed commentary around the outlook for the organized business, in the near term and in near to medium term. How are you looking at the dynamics of the business? I mean, is there some challenges on the organized sector volume growth, that's sort of come up over the last few quarters? I think there has been more than you know normal competitive intensity on the from the digital aggregators. The way I see it is this is on the top 20, 25, if not 30 frequently used tests which form the bucket of routine. I guess the competition is intense there. I believe that it's gonna remain that way for a while. I think the focus of the more organized larger players, and the right research shift to more specialized and more high-end testing and also to specialist with an emphasis on quality. Because at the end of the day, I think these are 95% of all clinical decisions are taken on the basis of these diagnostic tests. It's important to bring up the topic of quality. There is a cost to it. I think pricing for organized players in terms of, you know, responding to such competitive pricing from these aggregators is not likely. There could be some short-term dips in volumes in the routine basket. The endeavors the government sector will be able to make up for that through other semi-specialized, specialized, and super specialized buckets. That's I think the outlook that I think we will see. But this will settle down. Yeah. Yeah. Last thing on this. There's been a lot of emphasis on selling bundled packages versus specific illness tests for. Is this a strategy that we are also following in terms of trying to increase our share of bundled tests? We are following that. In another business which is not reported under diagnostics, actually it's a clinics business, which is in the primary care. I think we do a lot of health checks. I think, 60% of the business there comes out of health checks, which essentially also has a radiology component, but essentially a lot of pathology. Including the diagnostic business like to like, in comparison to other larger organized players, our wellness packages are now around 78%, 8% of our mix. We are hoping to make this go to 20%, and that will offset these, you know, very stark comparison in terms of à la carte testing. Okay. Thank you, sir. Best of luck. Thank you. The next question is from the line of Shantan Majhi from Credit Suisse. Please go ahead. Thanks for the opportunity. My first question is on, you know, discounting levels. You mentioned the discounting level has increased from 13% - 14.5%. Can you give a split of your discounting level in offline and online pharmacy? You know, if this increase is happening in online pharmacy, do you see an increasing, you know, discounting pressure again in this segment, which is causing the higher discounting level? Also, can you update on the Amazon partnership? The online discounts are at about 18%- 18.5% like last quarter. It is only offline which moved slightly. On the Amazon, Mr. Sanjiv will comment. Yeah. On before Amazon, I think, you know, we guided on the online discounts, that, you know, we would retain our 18% mark. Last year December had been 17.6%, although for the last quarter was 17.8%. I think, we'll continue to maintain discounts, you know, near 18%. We'll also time our discounts in such a way that, you know, wherever opportunities are there to reduce it, we'll continue to do that or sustain at this level. On Amazon, we are now live in 30, with 15 stores and current sales is around 3,000 orders per day. We couldn't increase the bandwidth in the middle of the year due to tech integrations, you know, issues which we had between us and Amazon, but now those have been resolved. There will be a little bit of network expansion also to take care of Amazon operations. In the next 4 weeks, you know, we will see that Amazon customers will be able to see breadth and depth of inventory, you know, across the top 6 cities to start with. There's a little bit of marketing activity also in Amazon app that has started over last 3 to 4 weeks. What we, you know, believe that we should be able to hit a 10,000 orders per day somewhere in July, August of current year. Got it. What is, you know, so are we doing a revenue sharing arrangement here or is it on, you know, profit sharing basis? It's a revenue share. Okay. Got it. My second question is on, you know, little clarification on the new GMV. This hospital IPOP segment, so is it, you know, the same customers who are coming, you know, they are basically being converted online, or is this, you know, new set of customers that you're targeting here? Can you explain a bit about this IPOP segment? Yeah, yeah. This is a new set of customers, and obviously, you know, there is no point in having the same customers both sides. It is a new set of customers. The way the entire, you know, operational side of it works is that, one is that, you know, we have integrated our 24|7 app with the entire Apollo ecosystem. We have over 105 participating hospitals like this, which in the current quarter we do 70. For second, there is an engine that works behind all this. You know, people who search out, you know, surgery, say suppose you know knee surgeries or, you know, some kind of surgeries online, Googling and all that stuff. Those are the data points that we collect. Then those are the curated leads, you know, that we use to further engage with them. As I said, you know, the monthly average for Q3 was about 2 lakh leads that we got from various, I would say, you know, websites or the places where digital customers were trying to find out about those surgeries. Those 2 lakh leads were then, you know, kind of, we engaged with them through telecalling and through various, you know, nudges that we do it from Apollo 24|7. Finally we converted about 22%, 22.54% to be very precise for last quarter. About 45,000 customers went on during the month of December to the hospitals, and they got the OB consultations done. From there, about 2,500 people got the surgeries done. This is all, this is a well-managed and curated engine. Then you've got many apps out there in the market who does this kind of work wherein they identify people who are digitally looking out solutions around surgery. Those are the leads that we get. Those are leads we further cure, and then we further kind of engage with them to get into the this. Okay. That's. I mean, I can discuss a lot more, but in interest of time, I'll not speak much about this. Happy to engage with you one-on-one whenever you want to get more information about this. Sure. No, no, that's very clear. That, that explains. Finally, just wanted to check what will be the loss runway for Apollo 24|7 going ahead now that we have peaked? Yeah. I think, you know, first of all, we are committed to the fact that, you know, somewhere we need to convert the entire to, you know, EBITDA positive. We are also looking at how we build our plan for the next year, which are the segments we need to hire more, and where exactly we need to do incremental investments. All this will result into a detailed exercise of, you know, building a budget for the next financial year. Accordingly, we get to know about the expenses that we feel appropriate for the business. Accordingly, we'll have little more color on this. Maybe next earnings call will be the right time to discuss about, you know, this by quarter. In between the entire year, we can talk a lot more in the next earnings call. I would just request you to wait for some more time before we dialogue on this. Sure. Thank you so much for answering the questions. That's all from my side. Thank you. The next question is from the line of Bhagwan Chaudhary from Sunidhi Securities. Please go ahead. Yeah. Thanks for the opportunity. One question on the healthcare side that, can you comment something on the future CapEx side? How we are going to do this and, as, we are going to generate a lot of cash, INR 1,500 crore to INR 2,000 crore kind of sales. Can you comment something on that? Clearly, you know, the plan as Preetha already articulated is to get to a, you know, additional 2,000 beds over the next 3 years. We have a clear plan on roadmap on where we are adding that. The free cash flow, as you already know, is around INR 800+ crores that we have in this segment, across, we will deploy this into some of this. We don't think we are going to be requiring significant incremental debt. You know, whatever is required, we'll take some debt. Debt EBITDA is also very comfortable, as you've seen. This will be organic or inorganic? How it is going to be? Most of this, there will be some inorganic, some bolt-on acquisitions that we are looking at, and also, a greenfield. Okay. Secondly, can you talk about this performance of Proton, how that is doing? Proton is doing much better than now. You know, I think it's now doing. This year we are in track to get to INR 50 crore of EBITDA in this year. You know, we would expect it to. We would like it to double in the next year. That's our plan. Just finally, just an observation, from the slide number 19, where you have detailed those pharmacies across India and all the states. There's no pharmacies in Madhya Pradesh. Any particular reason for that or? We don't have logistics support we're planning in the next year. We need to set up a back-end, you know, support system before we open the retail pharmacies. Just working on that. You could see next year some pharmacies there. Got it. Thank you. Thank you. The next question is from the line of Neha Manpuria from Bank of America. Please go ahead. Thanks for taking my question. Sir, you know, just on the GMV increase that we have seen, I understand that, you know, obviously part of this, a lot of this gets monetized in other parts in, of the Apollo value chain. For Apollo Digital itself, is it fair to assume that, you know, these would just be leads which help the, you know, hospital business and diagnostic business and not so much, the Apollo 24|7, and therefore the take rate would remain in the mid 30 levels? No, no, no. I mean, there's no free lunch. See, there is a highest mode governance and things, you know, at, you know, various entities of Apollo, and we've got Deloitte auditors, and we've got PwC rating on us on the arms and pricing. As I said, there are no free lunches. You know, as we start ramping up our business, so does the take rates will also go up and classic example is diagnostics. We've got a, you know, we started at the beginning with about less than 10% discount. Today we are at about near 17%-18% discount. As we grow business, you know, more discounts or sorry, more commission will come to us. Everything is dependent upon how much business and what is the commensurate around it. It's not like this that, you know, our take rates are not going to go up. Our take rates will be dependent upon, you know, the kind of efforts that we're putting and the costs that we are taking. We and then make better than the other participant, you know, group companies are, you know, getting out of it. They have- One second. One moment. They have just to be on the same page. These are only for new customers, so it's not for the existing customers, point number one. Point number two, these are only for customers which are coming to us through the Apollo 24|7 platform. Digital leads which come directly through our marketing efforts into the Apollo website and us, comes directly to us, and also the call centers come directly to us. It's only the Apollo 24|7, whereas as Sanjeev said, there are significant efforts which are happening, into the customers of Apollo 24|7. Which is where if you remember, you know, a couple of years back, we did say that even if you look at the pharmacy customers of Apollo, and look at the number of customers that they have and look at the number of those customers who come into Apollo, it is less than 1%. You know, that is one of the big opportunities which are there because he's already Apollo customer in some sense. To really work on getting them into Apollo is what Apollo 24|7 is working on. We should see benefit of that with time. I get that, you know, from an Apollo, you know, consolidated perspective. I was just trying to understand how will Apollo 24|7 monetize this incremental GMV that we are getting over time. Yeah. This is what Ajit said. You know, he will get a% of the revenue for the incremental numbers that he has. Fair enough. Yeah. Fair enough. You know, Suneeta ma'am or Krishnan, any update on the Apollo 24|7, you know, stake sale, strategic sale, you know, that we have? You know, I think we've seen, you know, pre-losses that 24|7 has incurred. We've also seen an 84% growth over last year. We believe that in this current environment where we, well, as a company are looking for growth, but we're also looking at profitability. We understand that this is a very difficult environment to get the valuation that we deserve because 24|7 is differentiated in many ways. It's just not pharmacy online. It connects all of Apollo's physical offerings and creates the digital offering. Keeping in mind the value proposition of 24|7, you know, we believe that there is investor interest which will take a little bit more time to convert. I wouldn't really like to put time horizons here. I would like to say that at Apollo we believe that this is the future. It is necessary to invest in the business. Fortunately, we have capital to enable it to grow in the next six months. By which time, you know, we're quite sure that we will have an investor there. Understood. That's fine. Thank you so much. Thank you. Due to time constraint, we'll take one last question from the line of Shaleen Kumar from UBS Securities. Please go ahead. Yeah. Thanks. Thanks for the opportunity again. Just one thing, if I heard correctly, you said the discount in offline pharmacy has increased a bit? That's right. That's right. You know, since, you know, keeping in the market in the view and you know what is happening and consistency between the two offerings, we have, you know, definitely introduced some schemes which increase the loyalty cost to the customers. As I said, you know, largely we are able to get that compensated through the procurement improvement margin. Mm-hmm. Net-net we are about 30, 40 basis points impacted, and with the growth coming in, we will be able to take that in the, you know, in the cost. Right. It's more of an initiative from our side. Is it to, kind of parallel the scheme and not driven by It's an initiative from our side. Say that we don't want to lose our offline customers. We have introduced some scheme, something like the Circle Membership, where they get some extra benefits, thereby there is a cost increase. Understood. Understood. Just last one observation. You know, in diagnostics, when I was looking at while the revenue has understandably grown only by 2%. You know, profitability has come down significantly. Any specific reason over there? You are comparing Q3 FY22, and that had a very significant component of COVID and COVID-related testing, which I think you have mentioned. The non-COVID revenues are to be seen, and the margin profile there is definitely lower revenue, not the ones that we got in the COVID testing margins. That's the reason. Okay. You're comparing Q3 FY22- Q3 FY23. Yes. Yeah, yeah. Yes, I was looking at that only. Yeah. Yeah. Okay. Okay. Understood, sir. Understood. All right, that's it, sir. Thank you so much. Thank you. I now hand the conference over to the management for closing comments. Thank you, ladies and gentlemen, for taking time out today. As you can see, at Apollo we firmly believe that we have established three strong engines of growth. Of course, the core hospital business continues to grow, and we believe that the fourth quarter will be a really good quarter for us. The pharmacy business, again, the offline pharmacy business, continues to grow, and we're seeing about over 20% growth in revenues, and we will see an improvement in margins in the future. Our primary healthcare business, which is diagnostics and clinics, is an area that we are focusing at. Again, we are seeing strong growth in these three verticals while keeping our core clinical proposition as our core differentiator. More importantly, I think the network effect of having these verticals and bringing it together through 24|7 is something that has not been attempted so far in this part of the world. We believe that investing in the future and making us digital is very important for us to retain our position as the number one healthcare provider in this part of the world. Thank you, ladies and gentlemen, for supporting us on this journey, and we hope to hear most of you in the fourth quarter. Thank you once again. Thank you very much. On behalf of Apollo Hospitals Limited, that concludes this conference. Thank you for joining us, and you may now disconnect your lines.