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Edited Transcript of APOLLOHOSP.NSE earnings conference call or presentation 14-Feb-20 7:00am GMT

Q3 2020 Apollo Hospitals Enterprise Ltd Earnings Call

Chennai, Tamil Nadu Feb 14, 2020 (Thomson StreetEvents) -- Edited Transcript of Apollo Hospitals Enterprise Ltd earnings conference call or presentation Friday, February 14, 2020 at 7:00:00am GMT

TEXT version of Transcript

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Corporate Participants

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* Chandra Sekhar Chivukula

Apollo Hospitals Enterprise Limited - President of Corporate and International

* K. Hariprasad

Apollo Hospitals Enterprise Limited - President of Hospitals Division

* Krishnan Akhileswaran

Apollo Hospitals Enterprise Limited - CFO

* Obul Reddy

Apollo Hospitals Enterprise Limited - CEO of Apollo Pharmacy

* Suneeta Reddy

Apollo Hospitals Enterprise Limited - MD & Executive Director

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Conference Call Participants

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* Anubhav Aggarwal

Crédit Suisse AG, Research Division - Associate

* Damayanti Kerai

HSBC, Research Division - Analyst, Healthcare and Hospitals

* Harith Ahamed Mohammed

Spark Capital Advisors (India) Private Limited, Research Division - VP

* Neha Manpuria

JP Morgan Chase & Co, Research Division - Analyst

* Prakash Agarwal

Axis Capital Limited, Research Division - Executive Director of Pharmaceuticals

* Prashant Nair

Citigroup Inc, Research Division - Associate Director of India Equity Research

* Sameer Baisiwala

Morgan Stanley, Research Division - Executive Director

* Shyam Srinivasan

Goldman Sachs Group Inc., Research Division - Equity Analyst

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Presentation

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Operator [1]

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Thank you, Ron. Good afternoon, everyone, and thank you for joining us on this call to discuss the financial results of Apollo Hospitals for Q3 and 9 months of FY '20, which was announced yesterday.

We have with us on the call today, the senior management team comprising Mrs. Suneeta Reddy, Managing Director; Dr. Hariprasad President of the Hospitals Division Mr. A. Krishnan, Chief Financial Officer; Mr. C. Chandra Sekhar, CEO of AHLL; and Mr. Obul Reddy, CFO of the Pharmacy Business.

Before we begin, I would like to mention that some of the statements made in today's discussions may be forward-looking in nature and may involve risks and uncertainties. For a complete listing of such risks and uncertainties, please refer to the investor presentation circulated yesterday. Documents relating to our financial performance have been shared with all of you earlier, these have also been posted on the corporate website.

I would now like to turn the call over to Mr. Suneeta Reddy for her opening remarks.

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Suneeta Reddy, Apollo Hospitals Enterprise Limited - MD & Executive Director [2]

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Good afternoon, everyone, and thank you for taking time out to join our call. I trust that all of you have received our earnings document. I'm glad to report that this quarter, we have continued to demonstrate the momentum of earlier quarters.

Firstly, our new hospitals achieved an EBITDA, an occupancy of 68% with a volume growth of 16%. EBITDA margins in the new hospitals crossed the double-digit mark for the first time, with margins improving from 6.6% in quarter 3 FY '19 to 10.1% this quarter. This is in line with our guidance, that would our [tie-in] our 2,300 plus core investment in new facilities, excluding Proton, will deliver mid- to high-teen EBITDA margins.

Secondly, our margins in mature hospitals continued to improve, moving from 21.8% in quarter 3 FY '19 to 22.3% this year. This margin performance was possible even if the mature hospitals recorded an occupancy of over 70%. The 50 basis points improvement in the traditionally low quarter indicates that these units are on track to deliver 23% to 24% margins over the next 18 to 24 months.

Thirdly, AHLL continued on its profitable path and achieved positive EBITDA INR 5.7 crores for this quarter against INR 16.1 crores loss in the same quarter last year. The business has demonstrated healthy growth in top line at 22%, while delivering positive EBITDA in all its business segments, further solidifying its trajectory.

SAP also recorded a good quarter with organic revenue growth of 22% year-on-year and EBITDA higher by 37% against the same quarter last year at INR 75 crores. Sales from private labels are now at 8.1%. On profitability, network-wide EBITDA margins added 6.1% and mature stores at 8.5%. SAP ROCE is now at 26.5%. In a seasonally low quarter, we must acknowledge that there were effects of seasonality of festivals, Northeast traffic, dipping due to geopolitical uncertainties and theater closures. Despite these, we have achieved an overall Healthcare Services revenue growth of 12%.

Against that backdrop, I'm pleased to share the results of quarter 3 FY '20. Quarter 3 revenues grew by 17% year-on-year to INR 2,530 crores, aided by Healthcare Services growth of 12% to INR 1,297 crores and to SAP growth of 22%. New hospitals reported revenues of INR 297 crores, representing 16% growth year-on-year and mature hospital revenues grew at 9%.

Quarter 3 total inpatient volumes grew by 8% on a year-on-year basis, supported by 16% IP volume growth in new units. Overall, for the 3 FY '20, occupancy across the group was at 5,298 beds or 71% compared to 5,017 beds or 70% in quarter 3 FY '19.

The occupancy in mature hospitals was at 3,929 beds or 72%. And new hospitals had an occupancy of 1,369 beds or 68%. What is the overall EBITDA post Ind AS 116 was INR 377 crores, pre Ind AS 116 for quarter 3 FY '20 was at INR 319 crores compared to INR 268 crores in quarter 3 FY '19, a growth of 19% year-on-year basis. With this, Healthcare Services EBITDA grew by 15% to INR 244 crores. Healthcare Services margins were higher by 40 basis points, on a year-on-year basis at 18.8 in quarter 3 FY '20. New hospitals registered an EBITDA of INR 30 crores in quarter 3 FY '20 versus an EBITDA of INR 17 crore in quarter 3 FY '19.

In SAP, revenues grew 22% year-on-year on the back of a strong same-store sales and increasing offtake of private label products. We added 93 stores on a net basis during the quarter, taking the total to 3,700 stores. SAP EBITDA pre Ind AS grew 37% to INR 35 crores. The EBITDA margin was at 6.1% and with the higher asset turn in the business. SAP ROCE is now at 26.5%.

Net debt, as of December 31 '19, is at INR 3,184 crores -- as of January '20, is at INR 3,184 crores. We have a debt-to-equity ratio of 0.82, and the net debt-to-EBITDA of 2.6x. We have, in January, repaid debt worth INR 340 crores which came from the proceeds of the Munich transaction. We are on track with our plan to reduce net debt to around INR 2,500 crores to INR 2,600 crores post for the pharmacy restructuring.

I'm happy to say that the Board has approved an interim dividend of INR 3.25 per share. This quarter, we have stayed true to our mandate of consolidation and have shown improved performance in both our mature and our new assets. Our assertion that focusing on asset utilization in the coming few quarters will show results with respect to occupancy and margin was validated by our performance this quarter.

Within this theme of consolidation, we continue to prioritize delivering a superior margin profile to our focus on centers of excellence. We are confident that all these measures, including our efforts to cut some -- to cut costs will put us on the path to profitable growth that we have seen in the past few quarters.

I now have Dr. Hariprasad, Krishnan and Chandra Sekhar with me to answer your questions. Thank you. Are we ready for questions?

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Questions and Answers

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Operator [1]

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(Operator Instructions) The first question is from the line of Prakash Agarwal from Axis Capital.

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Prakash Agarwal, Axis Capital Limited, Research Division - Executive Director of Pharmaceuticals [2]

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Yes. And congratulations on good set of numbers, also great traction in the sales growth and I think improving operating metrics also. My question is actually more on the operating metrics. So we have seen some cost optimization, percentage of sales to staff costs and other expenses have come down quite a bit even on pre index levels. So how much of -- we just started the journey, but how much percentage of, say, a total of 100, we are able to achieve currently? And how much is pending in terms of cost optimization?

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Krishnan Akhileswaran, Apollo Hospitals Enterprise Limited - CFO [3]

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So you're right, we have started these cost optimization across 3 areas. One is the productivity on the manpower, especially in some of the mature hospitals, where we, over time, we believe that with some of this automation that we have introduced, we think we can bring down the manpower. And there is a team which is focused on productivity and manpower cost. There is also a focus around savings around energy costs, et cetera, where we believe that there is an opportunity to shave some costs. And the third area has been consumables and utilization around that.

So we have a focus there. We believe there is overall opportunity of INR 80 crores to INR 100 crores that we would want to focus on over the next 12 months, which is what we are focusing on. We have got some benefit of that in this quarter. You'll see more benefit out of this in the next 1 year.

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Prakash Agarwal, Axis Capital Limited, Research Division - Executive Director of Pharmaceuticals [4]

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Okay. And secondly, you spoke about consumables, but if I see the gross margins per se, those are particularly flat. Is it something that I'm missing? Or it has just started and we will see on the ongoing quarters?

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Krishnan Akhileswaran, Apollo Hospitals Enterprise Limited - CFO [5]

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So you would not be -- you would probably not see that the overall consolidated level because at the consolidated level, what happens is you are looking at the new units as well. Whereas in existing units and mature units as well some of the focus is. So you will see that in the mature units margins as opposed to seeing it at the consolidated level. So that is the point there.

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Prakash Agarwal, Axis Capital Limited, Research Division - Executive Director of Pharmaceuticals [6]

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Got it. And lastly, on the time lines for this pharmacy restructuring where we expect that net debt would further net debt reduction will happen. What is the aprox time lines for that?

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Obul Reddy, Apollo Hospitals Enterprise Limited - CEO of Apollo Pharmacy [7]

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We would assume that by March end.

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Prakash Agarwal, Axis Capital Limited, Research Division - Executive Director of Pharmaceuticals [8]

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Is it on track?

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Obul Reddy, Apollo Hospitals Enterprise Limited - CEO of Apollo Pharmacy [9]

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The NCLT approval is expected in the next 2 months, and then we will ensure that the actions are taken within 30 days, and the debt will come down.

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Krishnan Akhileswaran, Apollo Hospitals Enterprise Limited - CFO [10]

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So we are hoping it should be happening by March end.

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Operator [11]

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The next question is from the line of Damayanti Kerai from HSBC.

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Damayanti Kerai, HSBC, Research Division - Analyst, Healthcare and Hospitals [12]

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My question is regarding the margin pickup, which we have seen for new hospitals. So can you please elaborate more on which hospitals are mainly contributing towards this? And which are the hospitals where you need to put more efforts?

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Suneeta Reddy, Apollo Hospitals Enterprise Limited - MD & Executive Director [13]

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I think you could -- of all the new hospitals that we started, they're -- all of them are contributing significantly to margins. We have -- we do have a little less traction in Nashik. And we hope that in the next quarter, we're able to improve margins coming -- volumes and margins coming out of Nashik. But I think all of them are on track with budgets.

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Damayanti Kerai, HSBC, Research Division - Analyst, Healthcare and Hospitals [14]

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Sure, ma'am. But which is the most [controversial], say like Navi Mumbai is the -- what you say -- most prominent among these hospitals?

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Suneeta Reddy, Apollo Hospitals Enterprise Limited - MD & Executive Director [15]

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I think, surprisingly, when we started the Tier 2 hospitals, people were a little -- let me say, that they were not fully confident about this strategy, but it is our Tier 2 that has significantly turned around this quarter, including hospitals like Nellore, Trichy. So I think it's a validation of our investment strategy.

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Krishnan Akhileswaran, Apollo Hospitals Enterprise Limited - CFO [16]

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Navi Mumbai independently is doing well, and we would hope that -- we are hoping that it gives a good set of numbers into the next year, in particular.

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Damayanti Kerai, HSBC, Research Division - Analyst, Healthcare and Hospitals [17]

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Sure. My next question is regarding your center of excellence offering. So ma'am, in a highly competitive market, say, Bangalore or Chennai. So how you are in advantageous position compared to some of the competitors who have a larger focus on a particular therapy, say Narayana in cardiac care, or HCG in oncology. So how do you think like you are in an advantageous position?

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Suneeta Reddy, Apollo Hospitals Enterprise Limited - MD & Executive Director [18]

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So there are 2 things that we look at. One is creating clinical differentiation, and second, look at how -- because of the clinical differentiation, we're able to attract -- increase our market share and that thereby improve pricing. So if you look at Chennai, we are doing laparoscopic heart surgery. We have a 23% market share in cardiac. And even in oncology, we're among the largest in terms of market share. So I think -- with the -- it takes a little time for this strategy to play out and convert into numbers that we can share with you, but it is happening across the group. And if you look at Bangalore, for example, we have a surgeon called Sathyaki , again, who does minimally invasive heart surgery. He is among the best in India.

And even our orthopedic, the volumes are really high. We do about 900 knee replacements, and just going into the different segments, together, our orthopedic numbers are high, our cardiac numbers are high. And we do look at market share. We not only look at market share of Apollo Hospitals within each of the segments, but we look at the market share of each of the CoEs. And with that, onco, now that we've got Proton, it is actually growing at about 17%.

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Damayanti Kerai, HSBC, Research Division - Analyst, Healthcare and Hospitals [19]

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Hello?

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Suneeta Reddy, Apollo Hospitals Enterprise Limited - MD & Executive Director [20]

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Yes.

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Damayanti Kerai, HSBC, Research Division - Analyst, Healthcare and Hospitals [21]

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So, ma'am, you remain confident that the kind of clinical differentiation, which you mentioned, that should be helping you in continuous growth in the volume side, right? On the crowded metro markets?

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Suneeta Reddy, Apollo Hospitals Enterprise Limited - MD & Executive Director [22]

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Yes, yes.

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Damayanti Kerai, HSBC, Research Division - Analyst, Healthcare and Hospitals [23]

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Okay. My last question is regarding this Viability Gap Funding Scheme, which the government announced during the recent Union Budget, to incentivize private hospital to join Ayushman Bharat scheme. So ma'am, any thought from your end? Are you looking forward to it?

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Suneeta Reddy, Apollo Hospitals Enterprise Limited - MD & Executive Director [24]

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Actually, it's a little bit early because we haven't got all the details of how this will work. And when the details are out, we'll definitely look at it and see what we can do to make sure that the hospitals are eventually viable.

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Operator [25]

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The next question is from the line of Neha Manpuria from JPMorgan.

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Neha Manpuria, JP Morgan Chase & Co, Research Division - Analyst [26]

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Sir, I just wanted to confirm, have all our gantries in Proton being commissioned?

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Krishnan Akhileswaran, Apollo Hospitals Enterprise Limited - CFO [27]

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No, there have been -- there is a second one, which has just got recently commissioned, so it's not fully utilized, and we would see full utilization of the second gantry in this quarter and the third gantry in the next quarter. So it will be by April, when we would see that all the 3 gantries are fully functional.

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Neha Manpuria, JP Morgan Chase & Co, Research Division - Analyst [28]

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Okay. And therefore, sir, the loss number that we'd given for Proton, about INR 25 crores. That number still holds? Or could the loss be a little lower, because we're -- the utilization is being pushed out?

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Krishnan Akhileswaran, Apollo Hospitals Enterprise Limited - CFO [29]

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It could be a bit lower, and we would think that next year, we should get into profitability as well.

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Neha Manpuria, JP Morgan Chase & Co, Research Division - Analyst [30]

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Okay, okay. And my second question is, sir, as we reduce debt and generate cash flow next year, how do we prioritize new investments by the way of M&A versus greenfield expansion? What would be our focus market thoughts there?

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Suneeta Reddy, Apollo Hospitals Enterprise Limited - MD & Executive Director [31]

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So clearly, we want to be dominant players in certain markets, with the free cash flow we'll generate, we will be able to do that. Definitely, Chennai is one of them where we already have a substantial presence. And we will continue to operationalize more beds, and therefore take a dominant market share in Chennai and Tamil Nadu.

The second place is, of course, Hyderabad, Telangana. Then the state of Andhra Pradesh, where we have Vizag and Kakinada...

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Krishnan Akhileswaran, Apollo Hospitals Enterprise Limited - CFO [32]

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And Nellore.

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Suneeta Reddy, Apollo Hospitals Enterprise Limited - MD & Executive Director [33]

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And Nellore. The next one, of course, is Bangalore, Karnataka, where we have 3 hospitals in Bangalore and 1 in Mysore. So we can look at -- the first thing we will look at is operationalizing more beds where we have the opportunity to do so, or constructive beds in places where we have like, for example, Bannerghatta Road. The second would be to look at some bolt-on acquisitions that would enable us to garner market share in these markets. As you know, we have been looking at a property in Bombay so that our presence is significant and we will continue to do so. So like we made bolt-on acquisitions in -- for example, in Guwahati, Indore. We will look at some

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Krishnan Akhileswaran, Apollo Hospitals Enterprise Limited - CFO [34]

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Lucknow.

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Suneeta Reddy, Apollo Hospitals Enterprise Limited - MD & Executive Director [35]

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Lucknow, we will look at some of these markets and see whether it makes sense and whether it's feasible.

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Neha Manpuria, JP Morgan Chase & Co, Research Division - Analyst [36]

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Ma'am based on your -- see -- if you look at our new beds, we can operationalize the new beds that are already being constructed quite significantly over the next 2 years. And then we're talking about potentially looking at adding bolt-on acquisitions or are instructing new beds. Which would be a priority? Would you look at -- I mean, if you're looking from a 5-year perspective, do you think we need to continue to add more hospitals in markets where we think we are under-penetrated, is that the way to look at it?

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Suneeta Reddy, Apollo Hospitals Enterprise Limited - MD & Executive Director [37]

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Yes, yes. And I think on the land that we have we will [build].

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K. Hariprasad, Apollo Hospitals Enterprise Limited - President of Hospitals Division [38]

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So this plan -- most of this bolt-on and some of these plans will obviously will be after -- it will be more for the 3 years and beyond. The next 3 years, you are right, we have capacity, but some of this will start, we'll have to start doing it now, so that we see benefit of that coming by, say, FY '24 or '25.

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Neha Manpuria, JP Morgan Chase & Co, Research Division - Analyst [39]

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And sir, which markets would these preferably be in?

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Krishnan Akhileswaran, Apollo Hospitals Enterprise Limited - CFO [40]

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As Ms. Suneeta said --

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Suneeta Reddy, Apollo Hospitals Enterprise Limited - MD & Executive Director [41]

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Bangalore.

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Krishnan Akhileswaran, Apollo Hospitals Enterprise Limited - CFO [42]

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Bangalore is one area of interest for us. Calcutta is obviously interesting for us. Bombay is an area of interest for us. So we have been looking at markets, and we will keep looking at it.

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Neha Manpuria, JP Morgan Chase & Co, Research Division - Analyst [43]

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Understood. And my last is the JV -- the Kolkata JV, we will buy that out sometime next year, right, because of IHH now acquiring a competitor?

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Suneeta Reddy, Apollo Hospitals Enterprise Limited - MD & Executive Director [44]

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I think that this -- we should discuss it some other time. But we do have an interest in buying out that JV. And like our CFO said, we think Calcutta has potential, and that Apollo's brand name in that market is very strong.

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Operator [45]

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The next question is from the line of Anubhav Aggarwal from Crédit Suisse.

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Anubhav Aggarwal, Crédit Suisse AG, Research Division - Associate [46]

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My question was on the utilization that we have in the Hospitals segment. Our system-wide utilizations utilities are about 65%, 70% right now. Just a simple question that, we in the last call, we said that we need to have just a low CapEx next year, lets say INR 250 crores, INR 300 crores kind of CapEx. But for how many years can we have it (inaudible) way. We are at 65% or 70% utilization we don't spend, we may just be good for another 2, 3 years, right? So after that we may start becoming capacity constrained?

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K. Hariprasad, Apollo Hospitals Enterprise Limited - President of Hospitals Division [47]

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So 2 things, right? One is, from an overall perspective, we still have not operationalized all our beds. There is still capacity within our existing hospitals, especially the new ones, where we can add more beds. So while you look at the overall percentage, there at least around 1,000-odd beds can still be added in -- across these. For example, Bombay, we can add in the existing facility, another 200 beds. We have Vizag. We have -- so many of these new hospitals, Trichy, Chennai, we still have capacity, which we just -- which just can be added. It's already there. The structure is there, just beds needs to be added. So to that extent, so the 68% when you look at it, it's not -- the operational beds, and it's not of the full capacity. So you should give us the benefit of that for the next couple of years.

And beyond that, too, you would see that even as we grow now, you would realize that the free cash flow that we're going to be able to generate will be sufficient enough for us to look at some of these acquisitions. And we will be -- we know that the debt-EBITDA and the debt equity, et cetera, will be at comfortable 2, 2.5 levels, and it wouldn't go above that.

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Anubhav Aggarwal, Crédit Suisse AG, Research Division - Associate [48]

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Okay. That's and what's the CapEx that you have done for 9 months?

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Krishnan Akhileswaran, Apollo Hospitals Enterprise Limited - CFO [49]

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For the 9 months? Any other question, we'll come back to you on that in the next 2 minutes, we'll give you the project and the non-project CapEx.

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Anubhav Aggarwal, Crédit Suisse AG, Research Division - Associate [50]

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Yes, my question was -- next question was on AHLL.

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Krishnan Akhileswaran, Apollo Hospitals Enterprise Limited - CFO [51]

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So the project CapEx -- sorry, the project CapEx for the 9-month period has been around INR 250 crores. This includes the Proton facility and the -- we have also showed up the oncology and neurosciences facilities in Hyderabad, where we have added some CapEx around that. The Vizag also we have started oncology, which is around INR 20 crores, INR 30 crores, which we have added there. All of this included the project CapEx was around INR 250 crores in this year. The non project CapEx up to now has been around INR 150 crores. So this would be the non-project CapEx is in line. This is what we've been guiding, saying that the routine and recurring CapEx going forward from the next year would be more around the INR 200 crores to INR 225 crores, INR 250 crores at best. It wouldn't -- even if we added some of this new capacity, et cetera, you can at best look at INR 200 crores to INR 250 crores of overall CapEx from next year.

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Anubhav Aggarwal, Crédit Suisse AG, Research Division - Associate [52]

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And just to understand the debt increase that we've seen in 9 months. We have seen almost a INR 250 crores debt increase. So you also paid a dividend of INR 100 crores in 9 months. So INR 400 crore of CapEx, INR 100 crore dividend, INR 500 crores, we would have generated cash flows of about INR 600 crores roughly?

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Krishnan Akhileswaran, Apollo Hospitals Enterprise Limited - CFO [53]

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So yes, you will have to consider the interest also, you have considered the interest, you should consider tax as well because we are on the full tax regime. And in this year, you would have seen that some of the -- we would expect in the next 6 months, some of our working capital to also get released because you would have seen that there has been a slowdown in the payment from some of the governments like ECHS, CGHS, et cetera. Though we don't have significant focus there, but still, we know that around INR 100 crores of cash is locked in there incrementally because of -- in the next -- last 1 year. Some of that should start getting unlocked over the next 6 months. So there has been some working capital lock up also in this year, which is more than what we have seen in the past.

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Anubhav Aggarwal, Crédit Suisse AG, Research Division - Associate [54]

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Okay, and that's what I was missing. Just one clarity on AHLL, sequentially, our revenue increase is not as much as our EBITDA increases. So we're just wondering that have you cut down a lot of cost in the Specialty Care segment?

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Krishnan Akhileswaran, Apollo Hospitals Enterprise Limited - CFO [55]

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Chandra Sekhar?

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Chandra Sekhar Chivukula, Apollo Hospitals Enterprise Limited - President of Corporate and International [56]

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Yes. So we have over 4% gross margin. Some of the businesses have had a 7% to 8% gross margin, which is on account of our focus on costs on direct expenses. Besides that, our fixed costs also, we have managed to keep it at a low level. We are year-on-year with the new shops. Also, we are at 6% over previous year on fixed costs. So that's, I think, a combination of that.

Our growth rate, though, is still being maintained at 21% in Specialty Care and diagnostics at 34-odd percent; primary care, which saw previous years degrowth has actually started delivering 18% year-on-year growth.

The 9-month was 9-month comparison. It's a combination of top line growth, steady, profitable top line growth. And focus on both items above gross margin as well as fixed costs.

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Anubhav Aggarwal, Crédit Suisse AG, Research Division - Associate [57]

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Can you talk about a little bit what kind of fixed cost reduction? I mean, what are the nature of items that you've been able to contain over the fixed cost?

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Chandra Sekhar Chivukula, Apollo Hospitals Enterprise Limited - President of Corporate and International [58]

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Consumables -- major may area is on consumables. And we have also rationalized and optimized our doctor payout structures. And we have had good oversight on our manpower cost.

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Operator [59]

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Thank you.

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Chandra Sekhar Chivukula, Apollo Hospitals Enterprise Limited - President of Corporate and International [60]

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In a sense, the manpower costs are similar. We have been using -- appreciating the utilization. So in that context, the manpower cost on a count basis doesn't change, but on a cost basis as a percentage to revenue changes.

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Operator [61]

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(Operator Instructions)

We think the next question from the line of Shyam Srinivasan from Goldman Sachs.

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Shyam Srinivasan, Goldman Sachs Group Inc., Research Division - Equity Analyst [62]

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Just first one on ARPOB trends. I recollect last quarter, you said that some of the growth -- most of the growth is coming because you are moving to surgical versus medical procedures. The trend again this quarter has been good. So I just wanted to understand what's happening there.

And Karnataka, I noticed is like very high, 15% ARPOB growth. So is there some like base effect or some change last year versus this year?

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Krishnan Akhileswaran, Apollo Hospitals Enterprise Limited - CFO [63]

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No, there has not been any. So it has been the specialty mix, which has enabled in the Karnataka region. There has not been any base effect, which we have seen, particularly in Karnataka, it is Bangalore -- and we have seen a good increase, specifically in neuro cases, et cetera, and Malleshwaram and as Mrs. Suneeta said, we have a very strong orthopedic demand in Jayanagar and Jayanagar is also performing well and that are high ARPOB units. So that is one specific reason in Karnataka, why we have seen increase in the ARPOB.

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Shyam Srinivasan, Goldman Sachs Group Inc., Research Division - Equity Analyst [64]

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Krishnan, I noticed -- I just looked at the 3Q '19 presentation. That time, ARPOB has grown only 1% in Bangalore versus the year before. So if I do 2-year CAGR seems okay, 7%, 8% whatever, so that is why my question on the base was, but do you think nothing else is there, right?

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Krishnan Akhileswaran, Apollo Hospitals Enterprise Limited - CFO [65]

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Nothing -- no, no, nothing else.

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Shyam Srinivasan, Goldman Sachs Group Inc., Research Division - Equity Analyst [66]

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Got it. And on the overall, we still -- are we like confident? And is there a visibility that we can do this kind of ARPOB increase next year? Also, I'm just seeing the pricing power seems to be -- is it a function of pricing power or mix...I am...

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Krishnan Akhileswaran, Apollo Hospitals Enterprise Limited - CFO [67]

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Combination of both. We still think, see, we are still looking at a 4% to -- 4% to 5% price increases, which is happening every year. We will definitely think the case mix will still -- we are focusing across our CoEs, oncology is a specific area of focus. So all of this should enable the other 3%. So we would still continue to think a 7% to 8% ARPOB is possible.

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Shyam Srinivasan, Goldman Sachs Group Inc., Research Division - Equity Analyst [68]

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Got it. And linking to one question earlier on oncology. I think the numbers mentioned, was it 17% growth -- sorry I didn't get the...

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Krishnan Akhileswaran, Apollo Hospitals Enterprise Limited - CFO [69]

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17%, yes, that's correct. 17%.

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Shyam Srinivasan, Goldman Sachs Group Inc., Research Division - Equity Analyst [70]

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So absolute number for oncology. What is it for the network now?

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Krishnan Akhileswaran, Apollo Hospitals Enterprise Limited - CFO [71]

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Should we -- you have the number? We'll get that to you later. I think we should be the shy of INR 1,000 crores this year, but we will -- for overall, but we will get back to you later.

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Shyam Srinivasan, Goldman Sachs Group Inc., Research Division - Equity Analyst [72]

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Got it. Last question on Proton. I think revenue seems to be inching up nicely. How many patients did we do this quarter? Are we on track for the 400 next year and losses like, I think Neha's question also, seems to...

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Krishnan Akhileswaran, Apollo Hospitals Enterprise Limited - CFO [73]

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That is true. In fact, next year, Proton should turn profitable as we said on the EBITDA -- at the EBITDA level, and it should give us a good INR 25-plus crores of profits, EBITDA -- and yes, we would -- let the third gantry get operationalized in April, and we are hoping that from then on, we are able to -- because the availability of the gantry is also only for 8 hours. So only from April, we are going to be seeing it being available for 16 hours. So it is then that we can take more patients and we should be -- then be able to take a -- start of at 20, 25 patients and then accelerate with time.

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Shyam Srinivasan, Goldman Sachs Group Inc., Research Division - Equity Analyst [74]

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But Krishnan, data point, so number of patients we saw in...

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Krishnan Akhileswaran, Apollo Hospitals Enterprise Limited - CFO [75]

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400 is what you said, and...

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Shyam Srinivasan, Goldman Sachs Group Inc., Research Division - Equity Analyst [76]

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No, this quarter?

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Krishnan Akhileswaran, Apollo Hospitals Enterprise Limited - CFO [77]

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For this quarter would be not -- how much was it this quarter? Around say 40 -- 40 patients, 40 patients.

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Shyam Srinivasan, Goldman Sachs Group Inc., Research Division - Equity Analyst [78]

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Versus 53 last quarter, I thought -- I may be wrong.

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Krishnan Akhileswaran, Apollo Hospitals Enterprise Limited - CFO [79]

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So it should be around the same number. So I don't have the exact number.

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Operator [80]

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The next question is from the line of Sameer Baisiwala from Morgan Stanley.

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Sameer Baisiwala, Morgan Stanley, Research Division - Executive Director [81]

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How do you think about the top line growth for matured hospitals over the next couple of years?

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Suneeta Reddy, Apollo Hospitals Enterprise Limited - MD & Executive Director [82]

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So top line growth for mature hospitals will come from 2 things. One is that as we reduce our ALOS, our ARPOB is going up significantly. And we will, therefore, have more capacity utilization.

The second that we spoke about is our CoE strategy, which, again, is increasing ARPOB. And we are seeing significant growth because of that.

The third initiative that we are looking at is to increase our OP volumes because we are focusing now on preventive health. And we are creating space to take in more volumes in the OP space and then and also [track] conversions from OP to IP. So I believe that these 3 significant initiatives will help grow both top line and the EBITDA in our mature hospitals. And we've shown that, if you look at Tamil Nadu, we grew by 13%. A lot of that growth came from the Chennai cluster, even the Chennai cluster, which is quite a mature cluster, showed about 9% growth.

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Sameer Baisiwala, Morgan Stanley, Research Division - Executive Director [83]

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So all of these efforts put together, Suneeta, you should get us to double-digit growth over the next couple of years for top line matured hospitals?

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Suneeta Reddy, Apollo Hospitals Enterprise Limited - MD & Executive Director [84]

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Yes, it should. I think that we are working towards that. Also, like I said earlier, if you look at the mix of medical and surgical, we are focusing on the surgical work, and that will get us into double digit growth.

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Sameer Baisiwala, Morgan Stanley, Research Division - Executive Director [85]

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Okay, excellent. And just on the ALOS reduction, I'm just looking last 3, 4 quarter trends, we have pretty much stuck at 3.9 to 4, or actually 5, 6 quarters on an overall basis, isn't it? So what's going to help us? What's going to accelerate this journey down 2 or 3 that [you once] mentioned?

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Suneeta Reddy, Apollo Hospitals Enterprise Limited - MD & Executive Director [86]

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So if you look at the new hospitals, average length of stay is -- in some of them is about 5 and 6. And in some of the old ones where we've -- PPP with the government, we have almost 8. So this is -- so the average is looking a bit high. But if you look at the mature hospitals like Chennai, it's only 3. So even post open heart surgery, we're able to discharge a patient in the third day.

So I think that with technology and with our clinicians being so good, we're able to do so much in 3 days. And that gives us the ability, frees up our assets where we can actually improve asset utilization as well. So as new hospitals mature, the same thing will happen in new hospitals as well.

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Krishnan Akhileswaran, Apollo Hospitals Enterprise Limited - CFO [87]

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So this is a gradual change. You will see, it wouldn't be a sudden change in the next year, but you will definitely see directionally, the next couple of years that we should be able to bring down the overall ALOS.

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Sameer Baisiwala, Morgan Stanley, Research Division - Executive Director [88]

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Okay. And one final question. This is on AHLL. The revenues -- what can accelerate the revenue growth? I think last couple of quarters, we are at gross INR 185 crores or at net INR 135 crores. Which format is going to help us? And can this move up dramatically 20%, 30% growth, is that possible?

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Chandra Sekhar Chivukula, Apollo Hospitals Enterprise Limited - President of Corporate and International [89]

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Yes. I'll answer that. The diagnostics division, we have got plans and the growth rate in the diagnostics division will continue to grow at the high -- mid- 30s level. Even we are targeting new market entries, which will help us accelerate the growth further. So that's a division which will continue to grow.

Primary care, in other segments, the clinic segment, we are hoping to cross the 20-odd percent. Similar focus on preventive health, which Mrs. Suneeta mentioned, applies to the primary care outpatient centers. They're opening to -- continue to keep the growth rates beyond 20%. Our growth rates in the [birthing] space -- and will be continuing to be around 25%. And the IVF space, the fertility space is where we are planning for an accelerated growth. The growth rates there will be a combination of better utilization on existing centers, plus a small expansion opportunities that we are considering.

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Operator [90]

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(Operator Instructions)

The next question is from the line of Prashant Nair from Citi.

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Prashant Nair, Citigroup Inc, Research Division - Associate Director of India Equity Research [91]

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Please go ahead. So one follow-up question on the average length of stay. So in new hospitals, the current level is more a function of us not putting much pressure on the on this lever? Or has it got to do with case mix or any other factors?

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Suneeta Reddy, Apollo Hospitals Enterprise Limited - MD & Executive Director [92]

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So no, I think in new hospitals, clearly, what you want to do is to drive volume growth and cover fixed cost. But as we've -- for example, in Trichy and Nellore and all we really started to focus on CoE, where you will start to see improvement in margin and reduction in our loss. But the key is to start by covering fixed costs and make sure that in that city, they have significant market share.

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Prashant Nair, Citigroup Inc, Research Division - Associate Director of India Equity Research [93]

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Yes, got it. And second question is on Proton. Are we still thinking of some kind of structure for this? Or do we now intend to keep it as a regular part of our own business?

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Krishnan Akhileswaran, Apollo Hospitals Enterprise Limited - CFO [94]

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So that's still something that we are looking at and we will get back to you as we get closer to it.

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Operator [95]

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The next question is from the line of Prakash Agarwal from Axis Capital.

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Prakash Agarwal, Axis Capital Limited, Research Division - Executive Director of Pharmaceuticals [96]

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Did I hear correct on the CapEx, so around INR 300 crores for next year and Lucknow, Guwahati, and if at all Kolkata happens, those are separate. Would that be correct to assume?

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Krishnan Akhileswaran, Apollo Hospitals Enterprise Limited - CFO [97]

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Calcutta was already done, right. Lucknow is part of our overall -- we have already completed the CapEx. So Calcutta would be outside, so the routine CapEx would be INR 250 crores. Some bit of Proton overflow, if it goes beyond March, I'll be there, which should probably end -- take it from INR 250 crores to INR 300 crores, otherwise, INR 250 crores as the routine CapEx. And Calcutta alone we'll have to see how it works. So this is where we'll also come back on Proton, if there is an opportunity, we will do that.

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Prakash Agarwal, Axis Capital Limited, Research Division - Executive Director of Pharmaceuticals [98]

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Okay. And anything on Guwahati.

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Krishnan Akhileswaran, Apollo Hospitals Enterprise Limited - CFO [99]

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Guwahati not much, nothing specific now.

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Prakash Agarwal, Axis Capital Limited, Research Division - Executive Director of Pharmaceuticals [100]

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Okay, okay. And one more thing on the pledges. So what is the target that we are eying, I mean, since the big event has happened, so we would probably see in the March update, but what is the target we are looking at by March of this year? And what is the ultimate target going ahead?

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Suneeta Reddy, Apollo Hospitals Enterprise Limited - MD & Executive Director [101]

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I think, we're currently at 29%, where we think that we could do around 25%. March, April, we should be able to bring it down.

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Operator [102]

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The next question is from the line of Harith Ahamed from Spark Capital.

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Harith Ahamed Mohammed, Spark Capital Advisors (India) Private Limited, Research Division - VP [103]

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My question is on the pharmacy business. We've added around 100 stores this quarter. And we've been tracking a similar number for quite a few quarters now. So I'm trying to understand which geography or state most of these stores are getting added? And whether these are Tier 1 or Tier 2 locations? And then do we expect to maintain this level of additions going forward?

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Obul Reddy, Apollo Hospitals Enterprise Limited - CEO of Apollo Pharmacy [104]

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Yes. As informed earlier, we have been adding about 300, 325 net stores every year. Primarily South, Orissa, West Bengal and NCR -- the Delhi, we'll continue our expense in this range in the same geographies.

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Harith Ahamed Mohammed, Spark Capital Advisors (India) Private Limited, Research Division - VP [105]

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Okay. And then could you give us a sense of the geographic breakup of the current 3,700-odd stores? I mean, what percentage of it looks -- would be in the south.

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Obul Reddy, Apollo Hospitals Enterprise Limited - CEO of Apollo Pharmacy [106]

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We think about 65% of the stores is in the south and the balance is in -- spread it -- balance states, including, NCR, Orissa, or West Bengal, Gujrat, Maharashtra, and the 4 states combined, Andhra, Karnataka, Tamil Nadu gives us something like 65% of the stores.

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Harith Ahamed Mohammed, Spark Capital Advisors (India) Private Limited, Research Division - VP [107]

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Okay. And the second one is on the front-end pharmacy deals, which you said will close sometime in March. So when I look at the numbers for the pharmacy business, when you announced the deal around 18 months back. And from then to now, we've had quite a significant ramp-up in this business from around INR 30-odd -- INR 40 crore quarterly EBITDA to now over INR 70 crores. So does this require a relook at the valuations for the deal, the consideration of INR 530 crores for what is roughly 20% of the economics of the business, does it still hold? Any thoughts around that?

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Obul Reddy, Apollo Hospitals Enterprise Limited - CEO of Apollo Pharmacy [108]

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It's -- the economic interest for Apollo is structured in the business plan that we have taken at the time of the transaction. And if the transaction is effective from April 1 '19. And this is -- the going forward, we'll maintain the same economic interest for the Apollo.

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Krishnan Akhileswaran, Apollo Hospitals Enterprise Limited - CFO [109]

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And this was as per the plan. Whatever has been generated now, as you are seeing, is as per the plan that we had. Of course, you wouldn't have visibility to that, but this was in line with our plans as well. So the back end would still capture the bulk of the economic value.

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Operator [110]

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The next question is from the line of [Shantanu from S&M].

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Unidentified Analyst, [111]

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Yes, congratulations on the good set of numbers. My question is, do you track metrics like readmission rates, success ratio and death ratio?

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Suneeta Reddy, Apollo Hospitals Enterprise Limited - MD & Executive Director [112]

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Oh, sorry, readmission and success -- I think the readmission is -- yes, we do track readmission. And this is done on a monthly basis for every specialty, every surgery and every inpatient admission. So that -- and what is -- was the second part of your question?

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Unidentified Analyst, [113]

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Success ratio, how much of success -- operation success ratio and death ratio?

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Suneeta Reddy, Apollo Hospitals Enterprise Limited - MD & Executive Director [114]

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Yes, yes -- we track -- we track success ratio for each of our surgeries, for example, in heart surgery, our success rate is 99.6%, about the best in the world. And what was the last one?

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Unidentified Analyst, [115]

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Death ratio? What's that number?

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Suneeta Reddy, Apollo Hospitals Enterprise Limited - MD & Executive Director [116]

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Yes, yes, we do that, too. In a high, high acuity hospital, our's is pretty low, it's about 0.02.

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Unidentified Analyst, [117]

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Sorry, I missed the figure, point?

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Suneeta Reddy, Apollo Hospitals Enterprise Limited - MD & Executive Director [118]

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0.02.

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Unidentified Analyst, [119]

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0.02. Okay.

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Suneeta Reddy, Apollo Hospitals Enterprise Limited - MD & Executive Director [120]

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So we have something called (inaudible) parameter, which are tracked by the Audit Committee and the Board periodically. But beyond that, we have access to that information, which we look at monthly. So there is a dashboard and this comes from all our hospitals. So it's a little different for each of our hospitals. But let me tell you that we benchmark with the best in the world. We benchmark with Cleveland Clinic, if it's heart. And this is -- you've can -- every quarter, we watch this.

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Unidentified Analyst, [121]

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So on a consolidated basis, can you share 3 final numbers for this, readmission, success and death?

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Suneeta Reddy, Apollo Hospitals Enterprise Limited - MD & Executive Director [122]

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At this time, I think we can take it off-line and share it with you.

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Operator [123]

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The next question is from the line Sameer Baisiwala from Morgan Stanley.

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Sameer Baisiwala, Morgan Stanley, Research Division - Executive Director [124]

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Any update on the profit capping for in-house pharmacies?

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Krishnan Akhileswaran, Apollo Hospitals Enterprise Limited - CFO [125]

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Nothing specific than we have so far...

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K. Hariprasad, Apollo Hospitals Enterprise Limited - President of Hospitals Division [126]

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We keep hearing those things in the news. We don't have any specific thing on table.

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Krishnan Akhileswaran, Apollo Hospitals Enterprise Limited - CFO [127]

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But as we have said, Sameer, we have already moved to the service pricing in across, and we have procedure pricing for almost 100-plus procedures. So -- and even if there was any changes around the capping, we don't think we should -- we think we should be able to overcome the same.

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Sameer Baisiwala, Morgan Stanley, Research Division - Executive Director [128]

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Okay, that's great. And second, can you just update us on the payer profile, cash patients, insurance, scheme patients, et cetera?

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K. Hariprasad, Apollo Hospitals Enterprise Limited - President of Hospitals Division [129]

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So the cash would be something of 50% now. The insurance is around 25%.

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Krishnan Akhileswaran, Apollo Hospitals Enterprise Limited - CFO [130]

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And the balance would be PSU, CGHS, ECHS.

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Sameer Baisiwala, Morgan Stanley, Research Division - Executive Director [131]

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Okay. And how do you see this going forward next 3 years or so?

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Krishnan Akhileswaran, Apollo Hospitals Enterprise Limited - CFO [132]

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Insurance is growing, and we think the insurance could probably move up from the 25% to maybe 30%, 35% in the next couple of years. That's what we think should move up, and that should probably also help us because we also believe that as insurance penetration in India is increasing, there is also a general tendency for the patients to opt for quality hospitals such as us. And clearly, because they are otherwise worried about the cost, et cetera, which sometimes with the insurance pay, making the payment, they are more comfortable getting to hospitals like us. So which is where we believe that, that should actually do well for us. We have seen that it is helping us in markets like Bangalore and Bombay already. And I think other markets should also see that benefit coming over time.

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Sameer Baisiwala, Morgan Stanley, Research Division - Executive Director [133]

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Okay. And what goes down if insurance goes up?

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Krishnan Akhileswaran, Apollo Hospitals Enterprise Limited - CFO [134]

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Walk-ins can go down. But of course, we have not been -- that's okay. That doesn't change the overall revenue intensity for us. In fact, in insurance, we have seen that we typically get higher ARPOB cases also because it's more the complex cases, et cetera, that people opt for us. So, yes, as that should typically help us.

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Sameer Baisiwala, Morgan Stanley, Research Division - Executive Director [135]

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Okay. And the margins on an average would be higher for cash versus the other 2?

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Krishnan Akhileswaran, Apollo Hospitals Enterprise Limited - CFO [136]

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Cash and insurance are typically the same.

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Sameer Baisiwala, Morgan Stanley, Research Division - Executive Director [137]

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Okay, excellent. And one final question for Proton, what's the revenues, what's the split between the international versus domestic patients?

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Suneeta Reddy, Apollo Hospitals Enterprise Limited - MD & Executive Director [138]

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It is 70%-30% [kind of].

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Krishnan Akhileswaran, Apollo Hospitals Enterprise Limited - CFO [139]

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70% domestic, 30% international.

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Sameer Baisiwala, Morgan Stanley, Research Division - Executive Director [140]

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Okay. And for next year, et cetera, you expect this to change or to remain same?

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Suneeta Reddy, Apollo Hospitals Enterprise Limited - MD & Executive Director [141]

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Yes, I think we expect it to remain the same.

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Sameer Baisiwala, Morgan Stanley, Research Division - Executive Director [142]

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Are you surprised that such a big take up from domestic at this high price point or...

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Suneeta Reddy, Apollo Hospitals Enterprise Limited - MD & Executive Director [143]

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No, I think that if you look at the way that oncology is developing, it has become the gold standard for treating tumors in certain areas, except the brain -- which include the brain, the lungs, the heart and for all pediatric cancers. So clearly, it's -- it is the gold standard, so the demand will continue to grow.

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Krishnan Akhileswaran, Apollo Hospitals Enterprise Limited - CFO [144]

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And recently, there has been a study, which was done in the JAMA -- around oncology, which specifically said that where they had compared the Proton to the Photon...

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Sameer Baisiwala, Morgan Stanley, Research Division - Executive Director [145]

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Hello, hello?

(technical difficulty)

Hello, this is Sameer here.

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K. Hariprasad, Apollo Hospitals Enterprise Limited - President of Hospitals Division [146]

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I think Chennai got disconnected.

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Operator [147]

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Yes. The line has dropped I'm just reconnecting them, one moment.

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K. Hariprasad, Apollo Hospitals Enterprise Limited - President of Hospitals Division [148]

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Oh.

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Operator [149]

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Participants please stay connected while we reconnect the management line. (Operator Instructions). We have the lines of the management reconnected. Over to you, sir.

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Krishnan Akhileswaran, Apollo Hospitals Enterprise Limited - CFO [150]

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So as I was saying, they had done this recent study in the JAMA Journal where they said that overall, they found that there was -- when there was a tumor -- this cancer, which was more localized, which is where there is a specific use of Proton. They realize that there was a reduced acute adverse events. Also reduced unplanned hospitalizations and disease and overall survival rates were also higher. So because of all that was a very recent study, which was done. There is a very good offtake of Protons as we see in the west and specifically in places like MD Anderson, where the last year, they have treated 800 patients. So we are quite hopeful that the offtake should be good over the next couple of years.

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Operator [151]

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We have one last question in queue. The last question is from the line of [Raj Mohan] who's an individual investor.

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Unidentified Participant, [152]

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Yes, and congratulations on a good set of numbers. You have previously indicated to margins for new hospitals heading towards 15% in 2, 3 years. We have seen impressive improvements in the last few quarters, do you think as you accentuate further on this execution, the resulting operating leverage could be higher than the 15%. With such execution on mix and its resulting benefits, by when would you head towards the current mature hospital margins of around 21%, 23% in the new hospitals.

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Krishnan Akhileswaran, Apollo Hospitals Enterprise Limited - CFO [153]

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So I think the first step for us is to get to the mid- to high teens, which is what we have said that we should get to by. We are hoping that we get there by the next 12 to 18 months, the first -- that's the first hurdle that we need to get. And then we will get to the 22% after that. So let's first get to that 15%, 18% over the next 12 to 18 months.

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Unidentified Participant, [154]

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But as you see the trends that are currently showing, you feel you would be able to achieve your targets of mid-teens before what you had previously anticipated?

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Krishnan Akhileswaran, Apollo Hospitals Enterprise Limited - CFO [155]

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So yes -- if you -- yes, we could. So that is what -- so that would -- so definitely, there would be an acceleration to the mid-teens, from the mid-teens to the 20%-plus is also a factor of how we are able to get our doctor mix right, the specialty mix, right, how the business of the hospital, et cetera. There's a lot of the utilization of the hospitals and the case mix will also come -- play a big role to get it higher from the 15% -- from 15% to 18%, we can still get from 18% to 20%, we can get. So get to the 22%, 23% will take a couple of years.

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Unidentified Participant, [156]

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Understood. Next is the growth in pharmacy as well as the operating leverage at play have been pretty impressive over the last few quarters. In this context, have operating margins in old established pharmacies settled at 8%, 9% peak? Or are they moving further up? Apart from say the private label share improving, are we also seeing a core structural growth with better visibility for all pharmacies, better logistics control, et cetera?

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Obul Reddy, Apollo Hospitals Enterprise Limited - CEO of Apollo Pharmacy [157]

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I mean, you are right, and all the statements that you've made. It's the largest state. Then store level focus on achieving the sales as targeted. Then as you see that private label has increased in the last 3 quarters from some 6.5% to 8% -- 8% plus so all this contributed, we continue to focus on that and see how it works. And our mature stores, as you said rightly, it is at 8% plus margin at this point in time.

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Unidentified Participant, [158]

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But for the scope for improvement possible?

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K. Hariprasad, Apollo Hospitals Enterprise Limited - President of Hospitals Division [159]

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We should improve further because we have some plans to increase the private label ratio, which will have all these things coming together.

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Unidentified Participant, [160]

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Okay. Final question. Based on the impressive trends in the operating cash flows and basic [running] CapEx for immediate future also being low. What are your thought process on reduction of debt annually post this fiscal?

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Krishnan Akhileswaran, Apollo Hospitals Enterprise Limited - CFO [161]

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So as we said, we would anyway see that our debt EBITDA level should be comfortable. So we can have -- we can do a combination of debt reduction and planned expansion. So we would be guided by opportunities that we have around the strategic interest that Mrs. Suneeta guided and the overall debt-to-EBITDA. We would keep the debt-EBITDA, as we said, below 2.5 for sure. That is the plan that we have. And basis that we will see what is the opportunities? And if there are not much opportunities, we'll pay down the debt.

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Operator [162]

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We'll be able to take one more question. We take the last question from the line of Damayanti Kerai from HSBC.

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Damayanti Kerai, HSBC, Research Division - Analyst, Healthcare and Hospitals [163]

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Ma'am, can you broadly indicate in our hospital network what is the ratio of doctors on fixed pay compared to the visiting doctors or visiting consultants?

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Krishnan Akhileswaran, Apollo Hospitals Enterprise Limited - CFO [164]

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You'll have to come on offline for this, please.

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Operator [165]

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That was the last question. I would now like to hand the conference back to the management team for closing comments.

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Suneeta Reddy, Apollo Hospitals Enterprise Limited - MD & Executive Director [166]

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So thank you for taking time out to attend our call. As always, the Apollo is committed to excellence in everything that we do. Our investments in technology, clinical talent and our management has resulted in the great outcomes -- great clinical outcomes and our strong financial performance. Thank you for being part of this journey. And we look forward to continued interaction with you next quarter.

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Operator [167]

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Thank you very much.