Shares of Apollo Hospitals Enterprises (AHEL) rose nearly 5% in the opening trade on Tuesday after the the country's largest healthcare chain decided to demerge its omni-channel pharma and digital health businesses into a new entity. AHEL has proposed a strategic reorganisation, enabling direct listing of its pharmacy and digital health businesses on the domestic bourses within 18 to 21 months, it said in an exchange filing.

The omni-channel pharmacy and digital health operations, including its telehealth vertical and investment in Apollo HealthCo Ltd (AHL), will be demerged into a new entity—NewCo. Under the scheme of arrangement, AHEL shareholders will receive 195.2 shares of the new entity for every 100 shares they own.

Cheering the news, Apollo Hospitals shares rose by as much as 4.7% to hit a fresh 52-week high of ₹7,583.30 on the BSE, while its market capitalisation rose to ₹1.08 lakh crore. The large-cap stock has risen 26% against its 52-week low of ₹6,002.15 touched on February 28, 2025.  

Apollo Hospitals shares opened higher at ₹7,499.95, up 3.5% against the previous closing price of ₹7,242.75 apiece. The healthcare heavyweight has risen 23% in a year; nearly 3% in six months; and over 9% in a month.

Meanwhile, the BSE benchmark Sensex was trading 137 points higher at 83,743 and the NSE Nifty50 was up 59 points at 25,576, at the time of reporting.

In an exchange filing last evening, Apollo Hospitals said that the company proposes to unlock value through strategic re-organisation. AHEL shareholders to have direct shareholding in a combined entity, enabling full value discovery and eliminating any hold co discount in valuation, it said.

“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.

“We have the opportunity to make a positive difference to their lives and partner in their wellness pursuits. I wish both the teams all the best as they enter uncharted territory with infinite potential,” he said.

The proposed transaction will result in the creation of the largest, integrated omnichannel healthcare ecosystem with ₹16,300 crore ($1.9bn) of revenue in FY25. The entity plans to achieve revenues of ₹25,000 crore ($2.9 bn) by FY27, with a 7% Ebitda margin.

The business will comprise: Apollo 24/7, the digital health platform; the offline pharma distribution business of AHL; third-party pharma distribution of Keimed; and telehealth services of AHEL. The combination of businesses is anticipated to generate substantial synergies, and NewCo is expected to achieve its revenue run rate target in FY27.

Upon the effectiveness of the plan, NewCo will become an Indian Owned and Controlled Company (IOCC) and will apply for listing on the stock exchanges. The listing is expected within 18 to 21 months.

After becoming an IOCC, NewCo also proposes to consolidate the front-end pharmacy business by acquiring the remaining 74.5% stake in Apollo Medicals Pvt. Ltd. (AMPL), which owns 100% of APL. This will enable NewCo to participate fully in the business economics of retail pharmacies.

“AHEL will continue its focus on outstanding healthcare delivery, while the New Entity will accelerate its efforts on deepening customer engagement and penetration, with clear capital allocation outlays, growth plans and management teams driving both. Together, we will generate unparalleled value for the consumer, while making sure that all synergies and network effects stay intact, rooted in the Apollo ethos of quality and trust,” said Suneeta Reddy, Managing Director, Apollo Hospitals Enterprise.

AHEL will retain 15% stake in NewCo to ensure an integrated, seamless, and comprehensive healthcare offering across the patient lifecycle. It will have one nominee director on the Board of NewCo.

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