Apollo Hospitals Plans To List New Digital Health Arm On NSE, BSE

Apollo Hospitals Enterprise Ltd. will list its new arm Apollo Healthtech Ltd., which will be created from the amalgamation of two subisidiares to be demerged from the parent company, according to an exchange filing from the company on Monday.

The new entity is expected to list within 18 to 21 months on the National Stock Exchange of India Ltd. and BSE Ltd.

Apollo Hospitals said it will demerge its two subsidiaries Apollo Healthco Ltd. and Keimed Pvt. and merge them with the new entity -- Apollo Healthtech, which will focus on pharmacy and digital health business.

Apollo Healthtech is expected to focus on wholesale distribution of pharmaceutical, healthcare and wellness products, and manage the development, operation and management of the Apollo 24/7 online platform and the telehealth business.

The company anticipates this new arm to have a revenue run rate of Rs 25,000 crore.

The exchange filing said that the new arm will enable "exclusive focus on sector specific opportunities, operational efficiency, cost rationalisation, streamlining statutory compliances, and optimal allocation and utilization of resources for all stakeholders".

Apollo Healthco is engaged in the business of wholesale trading of pharmaceutical and other products and operating the Apollo 24/7 digital platform, the filing said.

Keimed is also similarly in the business of distributing wholesale pharmaceutical, healthcare and wellness products, according to the filing.

"This proposal enables AHEL shareholders to gain direct shareholding to India's largest Omni-Channel Pharmacy and Digital Health Platform, enabling full value discovery and eliminating any hold co discount in valuation," Suneetha Reddy, managing director of Apollo Hospitals Enterprise Ltd. said.

The firm also entered a definitive agreement to acquire shares of Apollo Medicals Private Ltd. from other shareholders after which it will hold a 100% of the shares.

Upon listing the parent company plans to consolidate its customer facing side of the business, by acquiring the remaining 74.5% stake in Apollo Medicals which owns 100% of Apollo Pharmacies Ltd. This will enable Apollo Healthtech to "participate fully in the business economics of retail pharmacies," the filing said.

AHEL will retain 15% stake in Apollo Healthtech.

"The new entity, once integrated, will be a truly customer-focused healthcare leader, with capabilities across the value chain. Delivering medicines seamlessly from 7000+ physical stores, online delivery platform serving over 19,000 pincodes, with Keimed ensuring supply chain integrity, our aspiration is that we will serve over 100 million Indians with trusted quality and availability," Shobana Kamineni, executive chairperson, Apollo HealthCo Ltd. said.

Shares of Apollo Hospitals on Tuesday closed 0.91% lower at Rs 7,242 apiece on the NSE, compared to a 0.47% fall in the benchmark Nifty.

Out of 29 analysts tracking the company, 26 have a 'buy' rating on the stock, two recommend 'hold' and one suggests 'sell', according to Bloomberg data. The average of 12-month analysts' price target implies a potential upside of 9.2%.