Apollo Hospitals targeting occupancy level of 70%, says Suneeta Reddy

The Apollo Hospitals stock has risen nearly 25 percent in the last six months, though it has fallen 10 percent during the past year.

In November, broking firm UBS said that it believed that the market will be surprised by Apollo Hospitals’ success on multiple fronts. Therefore, it upgraded the shares of the hospital chain to a ‘buy’ from ‘neutral’ earlier. The firm also raised its price target on Apollo Hospitals to Rs 5,600.

Speaking to CNBC-TV18, Managing Director of the company Suneeta Reddy said that they expect hospital occupancies to move up to 70 percent.

“Last quarter our occupancies were at 68 percent. This year we are targeting occupancy of 70 percent. We also have a nine percent increase in operational beds and you have to keep that in mind when you look at occupancy. Secondly, our average length of stay (ALOS) has moved from 3.78 to 3.4 and therefore our asset utilisation and the absolute number of patients have grown by 19 percent. So with this level of ALOS and the current case mix that we have, it will generate a lot of free cash flow,” Reddy said.

She added that they expect revenues of about Rs 1,700 crore from the oncology business this year.

Reddy said, “When we started our investment cycle in the oncology business, we were at Rs 800 crore of revenue. Then we invested in Proton. So hopefully we should close the year with Rs 1,700 crore of revenue in oncology.”

Reddy also highlighted that medical tourism has been rising and they expect to be a big player in that space.

“The absolute revenue coming from international patients has grown 19 percent over 2020 when it peaked. So in absolute terms, there has been an increase in medical tourism and I think the potential is to go 20 percent of revenue. We believe that Apollo Hospitals will be the biggest player in international patient traffic,” Reddy said.