Daybreak - Can Apollo Hospitals fix its digital cash burn with Rs 299 from 10M users?

Episode Date: January 6, 2026

Apollo 24/7 has bled money for five years. But its loyalty program, Apollo Circle, might be the cure. For 299 rupees yearly, members get free teleconsultations, priority access, and discounts—locking them into Apollo's ecosystem of hospitals, pharmacies, and diagnostics. The strategy is working: average orders doubled, losses shrank, and Apollo Health Co turned profitable. Now the company wants Circle to drive breakeven next year while funneling customers away from neighborhood clinics into its high-margin private labels and hospital services. It's a playbook borrowed from Amazon—and Apollo's betting everything on it.Tune in.Listen to the latest 90,000 hours episode here. Daybreak is produced from the newsroom of The Ken, India’s first subscriber-only business news platform. Subscribe for more exclusive, deeply-reported, and analytical business stories.

Hi, this is Rohan Dharma Kumar. If you've heard any of the Ken's podcasts, you've probably heard me, my interruptions, my analogies, and my contrarian takes on most topics. And you might rightly be wondering why am I interrupting this episode too. It's for a special announcement. For the last few months, I and Sita Raman Ganeshan, my colleague and the Ken's deputy editor, have been working on an ambitious new podcast. It's called Intermission.

We want to tell the secret sauce stories of India's greatest companies. Stories of how they were born, how they fought to survive, how they build their organizations and culture, how they manage to innovate and thrive over decades, and most importantly, how they're poised today. To do that, Sita and I have been reading books, poring over reports, going through financial statements, digging up archives, and talking to dozens of people. And if that wasn't enough, we also decided to throw in video into the mix. Yes, you heard that right. Intermission has also had to find its footing in the world of multi-camera shoots in professional studios, laborious editing, and extensive post-production.

Sita and I are still reeling from the intensity of our first studio recording. Intermission launches on March 23rd. To get an alert as soon as we release our first episode, please follow intermission on Spotify and Apple Podcasts or subscribe to the Ken's YouTube channel. You can find all of the links at the ken.com slash I am. With that, back to your episode. Since it's launched five years ago, Apollo 24-7, the digital vertical of India's largest hospital chain, has been a money pit.

It's a bit deep enough that it's been steadily driving. down the profitability of its parent. Now though, Apollo 24-7 may have found a pill for its hurting bottom line, a paid customer loyalty program called Apollo Circle. See, in FY25, Apollo 24-7 made 3,000 crore rupees. That's nearly 10% growth over the previous year. The platform now has 8,000 active users and every day it handles 15,000 consultations and 60,000 months.

medicine orders. And a quarter of those 8-lac users now pay an annual fee of $299.99. And in return, they get free teleconsultations, priority doctor access, and discounts on medicines and lab tests. This model has already made Apollo Circle India's largest paid healthcare loyalty program. But for Apollo hospitals, Circle is much, much more than just a revenue stream. It's a threat that connects customers to Apollo's entire network of hospitals, pharmacies, diagnostics, dialysis and even mother and child care. Their strategy is simple enough. Once you pay for membership, you're fully invested. And you know how memberships go. Once you're in, you want your money's worth. A healthcare industry veteran told my colleague at the Ken, Sudezna Ray, that users usually end up

buying medicines and tests from Apollo just so that they can cash in on all those discounts and free delivery. Now, Apollo 24-7 is still losing money. In fact, it lost nearly 500 crore rupees in FY24. But more recently, it's been able to stop the bleeding just a little bit. Enough to allow Apollo Health Co, the subsidiary that oversees both the digital platform and more than 6,000 pharmacies to turn a profit of nearly 50 crore rupees in FY25. That's a pretty dramatic turnaround from a loss of almost 200 crore rupees a year. before. Now, Sudezina also spoke to Sunita Reddy, who's a managing director at Abolo. She said that Apollo 24-7's New Year resolution is to now break even. That's just a part of the bigger picture

though. What the company really wants is to have the loyalty program drive repeat purchases within what it calls the Apollo continuum of care. Which basically means that Apollo doesn't want customers going anywhere else for healthcare. And that's actually more of a priority than making a profit on its digital business. And a Polo Circle is at the center of the strategy. Welcome to Daybreak, a business podcast from the Ken. I'm your host, Rachel Vergis, and every day of the week, my co-host, Nikita Sharma and I will bring you one new story that is worth understanding and worth your time.

Today is Wednesday, the 7th of January. Polo 247 was first launched in 2020. Circle followed just a year later. The industry veteran we mentioned earlier told Sudeshna that by offering Circle, Apollo was basically telling its customers that they can't go anywhere else because Apollo wants all their healthcare spending. In the beginning, Apollo 24-7 focused on three core segments, virtual doctor consultations across 50 plus specialties, medicine delivery and diagnostic test booking with home sample

collection. Now, the company did realize very early on that making Apollo 24-7 completely free wouldn't quite cut it. But it still offered heavy discounts so that it could attract sign-ups. It wasn't exactly free, but it might as well have been. Anuj Saitim is a senior director at the credits rating agency called Chrysill. He told again that the discounting was pretty brutal and marketing costs were high throughout FY23. which ended up causing massive losses and required constant funding support. By FY23, Apollo 24-7 was just hemorrhaging cash. Operating costs hit more than 700 crore rupees and losses were 200 crore rupees.

So the company had no choice but to cut discounts. Over time, Apollo Health Corps reduced its spending on the platform. Chrysler said that the subsidiary had been spending over 650 crore rupees yearly on the digital platform since FY23. In a recent investor presentation, Apollo acknowledged that it was optimizing operating costs. By the last quarter of FY24, the digital arms spending dropped by nearly 30%. But cutting costs only solves half the problem. You need users who place high value orders and return frequently.

And that requires a well-designed subscription plan. The industry veteran told Sudezhena that it had to be a paid subscription. But it also had to cost just enough that people wouldn't forget to use it. And so, Circle settled on $2.99 a year. Any higher and wouldn't be easy to get people to sign up. Any lower and they wouldn't bother coming back. It was a plan that hit the sweet spot. Average order value more than doubled from $6.50 to $1,000 in just three years.

An investor presentation credited this improvement to leveraging the Apollo ecosystem for acquiring high quality and high frequency users. Now, Apollo 24-7 still offers discounts. But there's a catch. Most are cashbacks. Which means whatever you save, you have to spend it on other Apollo services. And the company claims that the result for Circle members is that they save a ton through higher value offerings and free deliveries. In fact, much more than the 299 membership fee. Stay tuned.

Hi, daybreak listeners. This is Vidathri over from 90,000 hours. I am pausing this episode to tell you all about a new role that AI startups are obsessing over. It's the forward deployed engineer. An FDE, as they call them, is the talk of the town. Open AI to Anthropic, everyone is doubling down on hiring for this specialized engineer who can not just code but deal with clients. An FDE is the bridge who is fast becoming the route through which these companies and startups want to deploy their AI products.

Job search platform indeed says the demand for this role has gone up 800% just last year. And guess what? Indian startups are joining the race to. Tune into our latest episode to hear from founders on why they're adopting the FTE model and we ask FDEs what they actually do. As always,

The link for the episode is in the show notes. Loyalty schemes like these have worked wonders for healthcare businesses abroad. They've increased customer stickiness and brought people back for more services. Take Amazon's healthcare service called Amazon One Medical, for example. Its primary care membership costs $199 annually for a range of virtual and clinic services similar to that of Circle. It's actually achieved a 90% user retention rate. and has converted random patient visits into recurring revenue. Circle is designed to drive impact at similar entry points,

teleconsultation, online pharmacy and test bookings. Then it funnels some customers back to Apollo's hospital chain. By offering low-cost tests, loyalty programs like Circle help providers sell more consultations, diagnostics and sometimes high-cost procedures. Let me give you a quick example. Most loyalty programs provide a free ECG or electrocardiogram test.

An ECG in India costs only about $12. But 3% of ECGs can result in angioplasty. And that angioplasty can cost between 1 lakh and $4,000. This lets Apollo prioritize the outpatient market, which is where 50% of healthcare spending happens. Basically, it has to overcome the limitations of this asset-heavy hospital business. For healthcare businesses, a loyalty program with pharmacy kills two birds with one stone. Volume increases through pharmacy purchases, then private label products deliver bigger margins.

Apollo HealthCo's take rate, which means its cut of the gross merchandise value of Apollo 24-7, is 45 to 46%. That means, for every 100 rupees made through Apollo 24-7, HealthCope books 45 rupees as revenue. This impressive take rate is driven by high margin private labels and fast-growing diagnostics. The healthcare industry veterans said that by bringing customers into circle, Apollo can guide them through its verticals while increasing the uptake of high-margin products. Now, Apollo's drivers are trying to find similar stickiness. But they lack the pan-India infrastructure and range of services that seems necessary for this kind of success. Take photos. It offers a privileged card with similar services. But it's invite only, unlike Apollo's mass market program. And it's not just healthcare majors that Apollo needs to compete with.

Its competitors are also neighbourhood clinics, pharmacies and diagnostic centers. A doctor from NCR said that in India, it's more common for people to walk into consultations all the time. You can see any doctor whenever you want. A 15% medicine, in discount and free delivery isn't all that different from what your local pharmacy is coordinating on WhatsApp. And if patients consult their friendly neighborhood doctor, that means Apollo loses a customer. But Circle keeps them in the ecosystem by assuring them that it will always have a doctor who is ready to talk to them.

There's also something else that's adding to Health Corps urgency. It's the fact that it raised nearly 2,500 crore rupees from Advent International in April 2024. This deal merges Healthco with Apollo's wholesale distributor KMED, with a new entity valued at 22,000 crore rupees. That's a pretty hefty valuation health co now has to justify. And that's exactly what Circle is working towards. A healthcare analyst spelled out the problem for us, which is basically this. Once a customer gets used to the doctor, that is where they'll go. So circle generates outpatient revenue by offering free teleconsultation. Then later, when patients eventually visit the hospital,

they pay to both see the doctor and for diagnostics and medication, which is all the more reason for Apollo to double down on customer loyalty. Because if they don't do it, the neighborhood doctors certainly will. Daybreak is produced from the newsroom of the Ken, India's first subscriber-focused business news platform. What you're listening to is just a small sample of our subscriber-only offerings. A full subscription offers daily long-form feature stories, newsletters and a whole bunch of premium podcasts. To subscribe, head to the ken.com and click on the red subscribe button on the top of the Ken website. Today's episode was hosted and produced by my colleague Rachel Vargis and edited by Rajiv Sien.