METROPOLIS - Metropolis Healthcare Limited Share Price

Management Outlook and Major Points:

1. Growth Strategy:

• Inorganic Expansion: Actively pursuing acquisitions, including Core Diagnostics (closing February 2025), to strengthen specialty diagnostics (oncology, genomics) and expand in North India. Core is expected to be EPS-accretive from Year 1, with margins aligning with Metropolis' levels in 2"“3 years.
• Network Expansion: Added 125 centers and 7 labs in Q3, targeting Tier 3/4 cities. Lab expansion phase concludes in FY25; focus shifts to collection centers for margin accretion.

2. Financial Guidance:

• Q4 FY25 Guidance: ~13% revenue growth and EBITDA margins of 25%+. Full-year FY25 revenue growth at ~12.5%.
• B2C Momentum: Contributed 55% of revenue (up 200 bps YoY), led by TruHealth (+25%) and Specialty Testing (+20%).

3. Operational Initiatives:

• Specialty Diagnostics Leadership: Expanding high-end oncology/genomics testing via Core integration and R&D.
• Micro-Marketing: Region-specific pricing, test menus, and logistics optimizations to drive 2% revenue uplift from Q4.
• Tech Upgrades: Launched AI-driven app for personalized health insights, real-time tracking, and clinician engagement.

4. Margins:

• Q3 Margin Dip (22.2%): Attributed to seasonal weakness in acute testing and lab expansion costs. Recovery expected in Q4.
• Long-Term Margin Target: Core's integration and reduced lab capex to drive gradual margin improvement.

5. Market Opportunities:

• Focus on Tier 3/4 cities (untapped demand) and entry into radiology/consultations to diversify offerings.
• B2B Growth: Streamlined client engagement via a partner portal, prioritizing high-value clients.

6. Leadership Strengthening: New CFO appointment to bolster financial strategy.

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Question 1: "You were contemplating price increases. Could you give us some color? Is it across the board? Is it specific geographies, routine tests, specialized tests? And if you could also highlight some pricing discount competition, what is happening in the industry? How are smaller players doing? And from here on, what kind of volume growth we expect?"
Answer: Market-specific pricing adjustments (some up, some down) yielded a ~2% net revenue boost. B2B discount pressures persist, but Metropolis avoids participation. Core Diagnostics merger completion is expected in 4"“6 weeks.

Question 2: "Since we are actively looking at multiple acquisition opportunities, could you please let us know how much importance you pay to the acquisition being EPS and ROCE accretive to our overall financials?"
Answer: Core Diagnostics will be EPS accretive from Year 1, with ROI optimization via synergies. Other bolt-on acquisitions target high-margin, high-ROCE B2C labs in underserved regions. Margin normalization for Core to Metropolis levels will take 2"“3 years.

Question 3: "Could you help me understand this micro market strategy that you spoke of in the presentation? Whether it's a one-off growth bump or you expect it to continue?"
Answer: Micro-marketing tailors pricing, test menus, logistics, and partner autonomy per region. Customized wellness packages and competitive pricing adjustments drive ~2% revenue uplift, with sustained growth expected.

Question 4: "How much of TruHealth revenue is coming from B2C vs. B2B? How would realization differ across channels?"
Answer: TruHealth is ~80% B2C (digital + physical centers), with B2B contributing ~20%. B2B realization is ~3"“4% lower due to discounts. Mumbai grew 16% YoY in Q3, with expansion targeting peripheral areas and 30"“40 annual collection center additions.

Question 5: "What is the collection center-to-lab ratio trajectory, and how will it impact margins?"
Answer: Post-FY25 lab expansion slowdown will raise the ratio from ~22 to ~30 centers per lab, improving operating leverage. New labs initially dent margins but achieve double-digit EBITDA by Year 2 and company-level margins by Year 3.

Question 6: "Why did Q3 EBITDA margins decline to 22.2%? What is the test-per-patient growth outlook?"
Answer: Q3 margin pressure stemmed from accelerated lab expansions (13"“14 new labs) and lower acute-test volumes. Test-per-patient growth will be driven by AI-driven recommendations and expanded collection centers.

Question 7: "How will Core Diagnostics and lab expansions affect FY26 margins? Why did employee costs rise 17% YoY?"
Answer: Core's margin dilution will offset organic margin gains from slower lab additions. Employee costs rose ~9% YoY (in line with inflation), not 17%, with productivity curbing escalation despite network growth.

Question 8: "Is institutional business at risk? How many labs were added in 9M FY25?"
Answer: Institutional business remains selective, focusing on profitable contracts. No near-term revenue risks. 23 labs added in 9M FY25, with FY26 emphasizing collection centers over labs for margin accretion.