In a strategic reorganisation, Apollo Hospitals Enterprise (AHEL) on Monday announced plans to spin off its digital health and pharmacy distribution businesses into a separate entity, with plans to list the new entity within 18–21 months.
In a regulatory filing, the country’s largest healthcare chain said its board of directors has given an in-principle approval for a composite scheme of arrangement with three components. As part of the scheme, the omnichannel pharma and digital health business (Apollo HealthCo) will first be demerged from AHEL into a newly-formed entity. This new entity will then merge with Keimed Private Ltd, AHEL’s wholesale pharma distribution arm.
The transaction will create what Apollo described as the largest integrated omnichannel healthcare ecosystem in the country, with an estimated revenue of over ₹16,300 crore.
The new company will house Apollo 24/7 (the digital health platform), the offline pharmacy business of Apollo HealthCo, Keimed’s third-party pharma distribution operations, and AHEL’s telehealth services. The merged businesses are expected to generate significant synergies and are projected to reach a revenue run rate of ₹25,000 crore by FY27, the company said.
“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,” said Suneeta Reddy, Managing Director, Apollo Hospitals Enterprise.
Under the terms of the arrangement, AHEL shareholders will receive 195.2 shares of the new entity for every 100 shares held. Following shareholder and regulatory approvals, the new entity also plans to consolidate its front-end pharmacy operations by acquiring a 74.5% stake in Apollo Medicals (AMPL), which owns 100% in Apollo Pharmacies.
“The omnichannel pharmacy business and integrated digital healthcare ecosystem will be a unique model to enable access to high-quality healthcare for millions of Indians. What Apollo Hospitals achieved for the creation of the private healthcare industry in India, this new entity will create for the digitally forward generation of tomorrow,” said Prathap C Reddy, Chairman, Apollo Hospitals Group.
AHEL will have one nominee director on the Board of the new company. Shares of AHEL closed flat at ₹7,238 on the NSE.