Apollo’s Digital, Retail Health units post strong Q1 as group eyes standalone listing

Apollo Hospitals’ consumer-facing businesses—digital health and pharmacy platform Apollo HealthCo and diagnostics and retail chain Apollo Health & Lifestyle Ltd. (AHLL)—delivered double-digit growth in the June quarter, underscoring the group’s push to spin off and list its non-hospital assets.

Apollo HealthCo, which combines the group’s offline pharmacy distribution, online platform Apollo 24|7 and telehealth services, reported revenue of Rs 2,472 crore in the first quarter of fiscal 2026, up 19% from a year earlier. Adjusted for stock-based compensation and Apollo 24|7’s operating costs, EBITDA stood at Rs 93.8 crore, translating into a margin of 3.8%. Net profit came in at Rs 57.1 crore, marking a reversal from a Rs 12.9 crore loss a year ago.

Offline pharmacy operations, contributing the bulk of HealthCo’s revenue, maintained margins of 7.7%, while the online arm logged a 29% jump in daily medicine orders and a 15.4% pre-cost margin. Gross merchandise value on Apollo 24|7 rose 23% to Rs 682.5 crore, with the platform averaging 57,000 daily orders and 13,000 consultations.

AHLL, which runs diagnostics labs, primary care clinics, and specialty centers under the Spectra, Cradle, and fertility brands, posted revenue of Rs 435 crore, a 19% year-on-year increase. EBITDA climbed to Rs 40.3 crore, with margins improving to 9.3%. Diagnostics revenue surged 31% on the back of expanded test menus and new lab capacity, while primary care volumes rose 46% in preventive health checks.

The results come as Apollo advances a composite restructuring that will demerge HealthCo into a separate listed company, merge it with distributor Keimed Pvt. Ltd., and reclassify it as Indian-owned. The group has targeted a listing of the new entity—expected to be called Apollo Healthtech—by the March quarter of fiscal 2027.

HealthCo annual revenue rose 14.7% to Rs 8,503 crore from Rs 7,410 crore a year earlier, according to the company’s annual report. Profitability improved at a faster clip, with EBITDA before Ind AS 116 growing 60.5% to Rs 252 crore. The gains came from scale benefits, tighter control over delivery costs and procurement, and technology-led efficiencies.

Management attributed the growth to the integration of Apollo’s 5,739 physical pharmacies with its Apollo 24|7 digital platform, which the company says allows it to offer wider reach and faster service than pure-play e-pharmacies.

Digital channels now drive a growing share of transactions, but most orders are still fulfilled through the brick-and-mortar network.

The company said repeat customers formed the majority of orders, crediting loyalty programmes, subscription-based deliveries, and bundled services such as online consultations and lab tests. Non-pharmacy categories—particularly diagnostics, teleconsultations and wellness—saw accelerated growth during the year, increasing the lifetime value of each customer.

Cost discipline played a role in the profit surge. Apollo cited artificial intelligence tools for inventory planning and route optimization, alongside improved vendor terms, as helping reduce wastage and improve on-time deliveries.

The annual report said the company plans to focus in FY26 on scaling digital consultations as the primary entry point into its healthcare network, expanding chronic care programs for conditions such as diabetes and hypertension, and deepening its reach in Tier-II and Tier-III cities through hybrid delivery models.

While FY25’s numbers show Apollo HealthCo tightening its operations and lifting margins, sustaining that pace may prove harder as it pushes deeper into smaller towns, where logistics costs rise and competition from standalone e-pharmacies remains strong.

Apollo has projected that the combined digital and pharmacy business could scale annual revenues to Rs 25,000 crore by fiscal 2027 with margins of around 7%, positioning it as one of India’s largest omnichannel healthcare platforms.