Q1 21/22

Jul 30, 2021

Good day, and welcome to the Doctor. Lal Path Labs Q1 FY 'twenty two Earnings Conference Call. As a reminder, all participant lines will be in the listen only mode, and there will be an opportunity for you to ask questions after the presentation concludes. Please note that this conference is being recorded. I now hand the conference over to Mr. Nishith Solanki from CDR India. Thank you, and over to you, sir. Thank you. Good afternoon, everyone, and welcome to Doctor. Lal Satlab's Q1 FY 'twenty two earnings conference call. Today, we are joined by senior members of the management team, including honorary brigadier Doctor. Arvind Lal, Executive Chairman Doctor. Om Prakash Manchanda, Managing Director Mr. Bharat, CEO Mr. Vip Prakash Gohl, CFO and Mr. Rajat Khadra, Company's Secretary and Head of Investor Relations. Let me share our disclaimer here. Some of the statements made on today's call could be forward looking in nature, and the actual results could vary from these forward looking statements. A detailed statement in this regard is available in the results presentation, which has been circulated to you and is also available on the Stock Exchange website. I would now like to request Doctor. Arvind Lal to share his perspectives with you. Thank you, and over to you, sir. Thank you, Ritish. Good afternoon, everyone, and welcome to Doctor. Lal's PathLab's Q1 FY 'twenty two earnings conference call. Q1 of fiscal 2022 was a challenging period due to impact of 2nd wave of COVID-nineteen pandemic, which was more reserved in this time with steep rise in case loans in a very short span of time. However, increased pace of India's vaccination drive, paired with the entry of top vaccines manufactured by other countries, is helping India making headway against this virus, I should say, by all the countries, including India. The country is seeing strong demand for health care and related services. Diagnostics, as an important cog in the overall health care system, is also seeing this demand, and Doctor. Lal Trapsraps has been a crucial player to appreciate this. Our accurate, affordable and accessible diagnostic services, along with efficient hub and spoke model, sets us apart from the competition, and we are emerging as a frontrunner to fulfill the growing diagnostic needs of India. A major part of almost twothree of Q1 FY 'twenty two was severely impacted by the 2nd wave of the pandemic, and many states were forced into lockdown to contain the spread of this deadly virus. Having learned many lessons on the 1st wave, we were better prepared this time on crisis management. Fortunately, we are past that hurdle, but a new challenge is expected to emerge in the form of the 3rd wave. We hope it doesn't come, but we have to be ready for it. That said, Doctor. Lalprax Labs will always be there at the forefront to fulfill the demand in the country for quality diagnostics. We continue to maintain our services with high level of efficiency without compromising on quality. We have made several efforts to ensure that neither COVID nor COVID segments get affected and people receive top quality services at affordable prices. The pandemic has been boosting the penetration of organized players in a highly fragmented diagnostic space across the country. We have remained focused on adding more and more quality connection centers and PSCs to enhance the reach of our hub and spoke model. We are spreading rapidly across India and are establishing a firm presence in the Western and Southern India, where we lack substantial presence earlier. Aided by the technologies employed with sharp focus on online channels, we have continued home collection of samples and have been adapting to patients' needs effectively. Offering our support and assistance to both patients as well as our employees remains of paramount importance to us, and all necessary measures have been taken to ensure their safety and well-being. We are rigorously driving vaccination for all our employees at companies' costs to provide a safe and healthy environment to our patients and customers. Our expertise and dedication and scale have helped us navigate through this crisis and provide best health care services to patients in most difficult times. I would like to extend my gratitude to our entire workforce for the relentless efforts on assisting all our patients. The COVID-nineteen pandemic is sure to change the health care industry's dynamics in India, and we will play a pivotal role in this transformation. With that, I would like to hand over the floor to Doctor. Om Manchanda to share his thoughts. Thank you, and over to you, Om. Thank you, Doctor. Lal. Good afternoon, and thank you to everyone for joining on our call today. I would like to discuss the industry and how we are positioned within that and the way forward for us. Operationally, Q1 FY 'twenty two was a salami quarter for us. These were indeed difficult times for our employees physically, mentally and emotionally. I would like to take a moment here to sincerely thank them for their efforts. During this period, Doctor. Lal Paz Labs leaned on accumulated learning from the previous quarters to manage operations and customer service. Lab testing operations and home connection services were made available seamlessly during this quarter. Our revenue figures in this quarter are strictly not comparable to the corresponding quarter of the previous year. The quarterly growth in Q1 FY 2022 has a combined favorable impact of lower base and significantly higher contribution from COVID and COVID Alive base. These were there were wide fluctuations in revenue figures, primarily driven by COVID and COVID Alight Test demand pattern that varied week to week. We also noticed an unusual spike in a few new tests unlike earlier quarters, and these tests were actually related to COVID illness. In order to provide a better understanding of these movements, we have not only provided monthly trends in sales, but also provided a split in terms of 4 groups in earnings presentations. These groups are: number 1, non COVID group number 2 is COVID consisting of RT PCR and antibody tests group number 3 is Allied 1, which is consisting of IL-six and B dimer. And the group 4, which has been added for the first time in this presentation, is COVID Allied 2 that consists of 3 tests, CRP, ferritin and LDH. 4th group is carved out for the first time since these tests experienced unusual spike in Q1 FY 2022. RT PCR testing remains the gold standard for testing for COVID-nineteen, and we have been able to keep up with the demand by increasing its availability across the country. As on date, we have 19 labs offering this test. Despite restricted movements, our non COVID segment has also seen an upside with the trends that were being formed in the second half of the previous fiscal year. On strategic front, we continue to focus on widening our footprint, especially in South and West regions, both through organic and inorganic trade. This quarter, we have seen an interesting change in the dynamics of the diagnostic industry in India. We believe this is a very positive development for the sector since our understanding suggests that this could further accelerate penetration of diagnostics, especially down the post data. These developments will not only lead to a faster pace of conversion from unorganized business to organized business in our opinion. The patient behavior is also undergoing a rapid change where the sample collection is shifting from completely offline to onlineoffline model. The franchisee collection centers will play an important role in providing unique and differentiated Lalpaz Labs brand experience. DLPL has been a company that has relied on both technology as well as physical infrastructure. The tech enabled processes that are embedded into our operations will continue to support this franchisee network that will form the basis for our growth aspirations going forward. With that, I conclude my opening remarks and would request Bharat to take you through all the operational performance of our company. Over to you, Bharat. Thank you, Om. Good afternoon, everyone, and thanks for joining us on this call today. I will take you all through the operational highlights of our company. In the Q1, the company bore the brunt of an unprecedented surge in COVID cases, and in this context, is that one should look at the performance of this quarter. During the quarter, we were able to achieve the highest ever quarterly revenue of INR607 crores, serving 7,100,000 patients and 36% of the revenue contribution came from COVID portfolio compared to 23% in previous quarter. The overall revenue growth stood at 128% led by a low base of Q1 last year and a high COVID contribution in this quarter. 7,100,000 patients were possible due to a growing San India network of labs and collection centers, including in Tier II, III and IV cities. We performed COVID RT PCR tests at 19 labs across the country with Allied tests in more than 50 labs in the country. Last quarter, we performed 11.4 lakh RT PCR tests, which is more than double the number we did in Q4 FY 2021. Revenue per patient increased from $7.60 in Q1 last year to $8.60 in Q1 current year, mainly due to higher contribution from COVID-nineteen Allied tests along with intuitive tests per patient in non COVID segments as well as some channel mix. SoftFit, our bundled test offering, super specialty portfolio, including Genomics division, continued strong growth momentum. Revenues from DSP generated home collection leads led to a revenue contribution of 13%, almost half of the revenue came from COVID and Allied tests. Home collection services were the need of the art and our initiatives on digital technology partner and people in leasing programs really came to the fore. We continue expansion into South and West market and are pleased to share that we have commenced pilot operations at our Bangalore Referenced plant during the quarter. In addition, we have also commenced operations at 6 satellite labs in southern region, in cities mainly Madurai, Pondicherry, Kobli, Kurnool, Karim Nagar and Kakinada. In the Western region, we have started operations of the satellite labs in Borivali and Vashi, and the Mumbai Reference Lab work is also in progress. On the digital front, we have revamped and relaunched a feature rich patient app, and more such initiatives are in the pipeline. I would also like to take a moment and thank the entire DNVL team who have tirelessly delivered human service during these times in spite of personal challenges. With that, I would like to invite Veth to take you all through the financial highlights for the quarter end review. Thank you. And over to you, Veth. Thank you, Bharat. Good afternoon, everyone, and thanks for being on this call today. Before sharing financial highlights of Q1 FY 'twenty two, I would like you to note that Q1 FY 2022 is not strictly comparable to Q1 FY 2021 due to nationwide lockdown in Q1 last year and significant contribution of COVID and COVID light tests in this quarter. I am now sharing some of the important financial highlights. Revenue for Q1 FY 2022 is INR607 crores as compared to INR266 crores in last year same quarter, a growth of 128%. Before going further, I take a moment to explain the COVID portfolio. Revenue from COVID RT PCR and antibody tests in Q1 FY 'twenty two is INR105 crores, which contributes to 17% of total revenue. As mentioned by Doctor. Ohm earlier, we had seen unprecedented demand in some other tests that is ERP, Hurricane and LDH, and COVID-nineteen Allied-two is INR42 crores, a contribution of 19% and 7% of total revenue, respectively. Therefore, total COVID portfolio revenue in this quarter is INR 2.21 crores, which is 36 percent of total revenue. Revenue realization per patient for Q1 FY22 is INR 8.60 as against INR 760 for Q1 FY21. The higher realization is aided by COVID, COVID allied test geographic mix, channel mix and higher sample per patient for non COVID business. Normalized EBITDA after eliminating the impact of stock based compensation and CSR expense in Q1 FY22 is INR199 crores as compared to INR54 crores reported in Q1 FY21. PBC for Q1 FY22 is INR 179 crores as against INR 38 crores in Q1 FY2021. Add for Q1 FY2022 is INR 134 crores as against INR 28 crores in Q1 FY2021. Basic EPS for Q1 FY22 is INR15.87 per share versus INR3.45 in the same quarter last year. Cash and cash equivalents at the end of June 30, 2021 is INR1153 crores. We are pleased to share with you that Board of Directors of the company have approved an interim dividend of INR 60 percent, that is INR 6 per share of INR 10 each. In spite of COVID-nineteen wave challenges, we have continuously serviced our patients through improved availability, test menu expansion, automation and digitization of our processes. This enabled us to improve overall efficiency and productivity and provide superior experience to our customers. That brings me to the conclusion of my opening remarks, and I would now request the moderator to open the forum for Q and A. Thank you. Thank you very much. We will now begin the question and answer session. The first question is from the line of Sriram Rathi from ICICI Securities. Please go ahead. Yes. Thank you for the opportunity and congratulations on great set of numbers. As of firstly, I mean, is it possible to share the number of patients and number of pets for the long COVID business? I mean, that will be very helpful. So, non COVID, right? Yes, non COVID. So, Oliver, I can share some numbers, but I must qualify this that we don't have something called non COVID patient and the COVID patient because at times, they all get mixed up after a patient is diagnosed with COVID because a lot of tests are also coming from non COVID portfolio as well. But having said that, we our numbers are for non COVID. Yes. So COVID is about 2,340,000 and non COVID is 5,910,000,000 adding up to 7,050,000. Okay, got it. That's helpful. Right. And secondly, I mean, I just wanted to understand, I mean, like Q1 FY 'twenty two for non COVID business, is it certain that it was quite normal or would there have been some impact? Because if I look at, let's say, in 2 years, we are like Q1 FY 'twenty, which is a normal quarter. So the non COVID revenue has grown at around 7%, 7.5% in Q1 FY 'twenty two. So I mean, would there still be some impact because of the lockdown and all this happened during Q1 FY 'twenty two? Yes. I think so. Non COVID in Q1, my sense is it's a little subdued because especially later half of April and first half of May, certainly there's a lot of restrictions or movements, etcetera. If you notice the month wise split that we have given, if you see our earnings presentation, so 133, 116 and then 137, right? You see these three numbers? Yes, yes. Usually, if you if I notice earlier trends and I see last 15, 16 years, May has never been lower than April. 1st May actually has 31 days, so you had one day extra sale as well. And June actually is one of the lowest months of all the 3 months. So technically speaking, I think I see a huge sort of a softness in non COVID number in May. That primarily happened because we were at its peak in terms of COVID days at that time. So I would say that overall, on balance, non COVID business, though it's doing well from our perspective, it could have been higher if it was a normal quarter. Okay. That's really helpful, sir. And so lastly, in your opening remarks, you mentioned that, I mean, you see that there could be possibility of faster shift of unorganized market to organized market. I mean, will that can that lead to, I mean, the higher growth for companies like us? We generally look at 14% to 15% growth on annual basis. I mean, can it actually go up from this kind of level for the non core business? So I think the reason I say unorganized to organized shift being higher, I think there are 3, 4 variables that are operating right now. And let's just wait it out as to how it pans out in the future. One is a lot of technology, especially consumer, is trying to consume these diagnostics nowadays online. I think some of these smaller players may find it really difficult to operate in that format. So they may want to align with us. So that is one level of shift which may happen. 2nd level of shift is which I foresee is that with the growing competition, there could be a lot of pressure on manpower as well. If the salary start going up, it will put further pressure on the profitability of some of these smaller guys. So I find that unorganized player, it's not that they'll actually get they'll get reduced in terms of numbers. I think there's no format of partnership makers emerge between larger players and smaller players is what I see when I make this comment between unorganized to organized. Okay, got it. Thank you, sir. And I'll take care. Thank you. The next question is from the line of Shyam Srinivasan from Goldman Sachs. Please go ahead. Good evening and thank you for taking my question. Doctor. Roman team, you may just wanted your perspective first on the 2 major developments that happened or rather developments that happened, I mean, in many perspective. You don't need to comment specifically on the what's happening there. 1 is the Sandvik's Cyrocare deal was announced, at least the founder's stake. Then you also had HITEC being getting called off. So just from an M and A perspective, what's happening? Are valuation multiples now fitting to another level, especially with more diagnostic IPL results? So just what are your thoughts on the M and A for this space? So I may not have a specific comment on these deals, but broadly in general, I can definitely say that when we speak with one of these unlisted players, they have expectations of listed multiples. When you, at times, sit down across the table, you find that there is a bit of valuation expectation mismatch as to what one is expecting and one actually where we feel it should be. So I think broadly speaking, given this volatility in overall trends in sales, and that's why we have tried to be as clear as possible in our earnings presentation so that everyone has an idea how these numbers are panning out on month on month basis and also split between non COVID and COVID mix up is actually creating a bit of an understanding issue. So I think once this whole thing settles around, my leading is the next few quarters, we should be back to a normal sort of way of function. Vikram, just following up on this, right? I'm not only talking from an OEM perspective, but also from the disruption that, say, some aggregators were entering the space of bringing. Did you foresee I'm just looking at your realization, 860 versus this one, which I even if I do non COVID realizations, I think they are up, right, y o y. So just trying to see could there be heightened pricing competition, aggregators? I know we talked about this in the past from a private equity perspective. But how are you thinking about how you will be pricing your products going forward? I think that's a good question. So first is, is the industry moving in the direction of digital? I don't know whether to use the word disruption or not, but definitely it's becoming tech enabled, I would say. There's no doubt about that. We have been investing in this area aggressively in the past, and our spends further have gone up. And we will continue to invest in this area. So as a team, we are prepared to actually take the whole organization in this direction of being making it tech enabled. And the reason it's becoming technical because the consumer behavior is changing where it was completely offline, now it's a combination of both online and offline. I think it's important to note that the customer journey starts online, but it falls on offline because there is a collection part which you can't substitute with online. And I'll take a little bit of time on explaining this whole home collection or collection as an operational process in the entire value chain. It's not only important from a customer experience perspective, it's also extremely important from a quality perspective. You must have heard from Doctor. Lal Singh in the past that 70% of errors in diagnostics actually happen in pre analytical phase. So this phase is so important, and that's actually one of the reasons why normally we don't scale up that fast because if you scale too fast, you actually compromise on this step, and that actually can affect the core of this brand, which is related to accuracy of results. And to my mind, there are 2 pillars on which this business can get differentiated. 1 is, of course, the service side of it, which at times most of us tend to feel that digital with consumer apps actually provide a better service. So we are equally prepared and we have recently launched our app, which is also as good as anybody else can think of, especially from our digital companies. But the most important part of this business is the medical side of it because at the end of the day, you must know that value wise, diagnostics is about 3% or 5%. But it from a patient perspective, the value is worth 70%. So 70% of the decisions are based on diagnostics. So there won't be any customer who is willing to compromise on the quality. We believe that our brand is actually so strong in terms of medical value compared to anybody else, and I think that will definitely work in our favor. So to sum it up, definitely consumer behavior is moving online and plus offline, and we believe that we are fully safe to take on that. Now coming to these changes, how it will affect the market, I have already said also that I believe this will definitely accelerate the growth because more dollars will be spent on promotions. And as we rightly mentioned, there could be price competition as well, which is perfectly fine because you see the results as the revenue grows. This business has a huge operating leverage, so we should be able to manage it. We haven't taken price increase for last almost 5, 6 years, but we've been delivering the results financially as per the expectation. So on balance, I think higher growth should be able to compensate from whatever competition we see on pricing. Got it. Last question is on the West and the South strategy. So you're largely going to commercialize through the region, the rest and the flats. So just can you give us some outlook in terms of how you're approaching this market? And these are not your strong or home markets, right? So what could be differentiated here? And how could you actually take on some of the income base? So South and West, both organic and organic routes will continue. We have this Pachela's humidifier. We have acquired labs. And on organic front, we are putting these 2 reference labs. 1 is already in the pilot stage in Zanguru, and Mumbai is already work in process. So we'll continue to focus on both organic and inorganic. Inorganic. Thank you, sir. And all the best. Thank you. The next question is from the line of Vishal Bairaya from AVEVA Insurance. Please go ahead. So how much the cost of collections changed in the last few months? Cost of? Collections, from the home collections. Are you sorry, I didn't hear you. Are you asking about revenue or How has the cost of collections changed in the last few quarters? Home collections specifically you are asking? Yes, sir. So we don't track I mean, don't disclose this separately. I mean, there is some bit because the cost, one is pure collection cost, which is logistics and power cost, but there are other light cost also, which is not specifically contributed or mentioned to the I think as Dave rightly said, we normally don't track this way. But since you asked this question, I'm just thinking aloud. I think you gain somewhere, you lose somewhere. I think where you lose is productivity of phlebotomist because if it's a walk in, the same Clobot Mist can collect 20, 30, 40 samples, but through home collection, it comes down to about 8 to 10 per day. So that's where you lose. But where you gain is that you don't have real estate cost Yes, you don't have other maintenance costs. So I think let me add my sense is it will be even feasible actually. I don't think there will be a premium cost. Okay. Thank you very much. Thank you. The next question is from the line of Pooja Bhatia from Morgan Stanley. Please go ahead. Thank you. Greetings, everyone. Just wanted to get your perspective on the cash deployment strategy since we now have a sizable chunk of INRRL 1,000 crores. Any exciting inorganic opportunities, Yawir? So our strategy for cash utilization will continue to be what we have mentioned in the past, which is 3 prongs. We will continue to pay dividend, which we have been doing. We will also continue to invest behind technology, and technology would go both in the areas of medical because we buy a lot of high end instruments, and we are investing behind ID. And also new infrastructure that we normally put about 15 to 20 labs every year. And third is, of course, we will continue to look at inorganic opportunity. So that's our strategic strategy, and we will keep on exploring those options. Doubts. What are the kind of investments that we've already done in the tech initiatives that the company has taken? So Bharat, do you want to take this question? Sure. Thank you, Om. On the tech side, there are 2, 3 sides we look at tech. 1 is, like Om mentioned, on the consumer side and second is on the whole area of medical side. On the consumer side, we just talked about getting the new app in place. There is a lot of other work happening to get a truly physical experience going on because like Don mentioned that there is a physical angle also to this business. So how do you combine the physical how do you get to the new physical experience with some programs we are running to get that shaped up. There is also work happening on the medical side in exploring collaborations on AI and L usage in medical science. So that is the 2nd area where machine technologies can really play a role. And there's also a lot of work which is happening around logistics and so on in terms of how do we get a lot of optimization, prediction, etcetera, going around. So we are actually implanting digital across every single element of our business, be it partner management, be it logistics, be it lab operations or on the consumer side. Can is it possible for you to quantify? Puja, we haven't separately shared this number in the past. So I think directionally, I would want to say that we are significantly upping the investment in this area. We'll probably, going forward, see if it makes sense to separately highlight that. But as a capital allocation, Pujah, it's every year we are spending about INR 40, 50 crores. It may be a little more going forward, but not substantially. So and so, Ari, there are 2 more areas, which in case you want to know a little more. I think there are we have 2 sort of what do you call those softwares, Lynx and ERP. We have these 2 big softwares. So they are also up for renewal or whatever new version. So there's another area where the investment will go. Understood. Very helpful. I will get back in the queue. Thank you. Thank you. The next question is from the line of Nikhil Mathur from Ambit Capital. Please go ahead. Hi. Good evening, everyone. Doctor, my question is building on the tech side of the tech investments that you are currently undertaking. On the tech side, the user experience that was talked about trying to enhance that and that has been done for itself. So can you share some more details what kind of a user experience are you looking forward to that a customer can get from this megapixels for the 3 months online? Can it be like that you get to know of Livoptimism, you can track your sample, where how it is going in the entire system, you get better understanding of what the fact is. And also you can store that data on that app so that there is easy resources of the data increases and some of the repeat tests have to be. So what kind of a user experience are you undergoing from the app, if you can share some details on that? Yes. So I think I'll ask Bharat to talk about this, but I must tell everybody on this call. I know that there are various types of customer base we have. So I think one set of customers are all of us, including me and all of us on this call. But I was doing some analysis. 60% of our customer base is about the age group of 40, 45, And they come from all kinds of socioeconomic classes. So everybody is not sort of an app literate or digital literate. So you must keep that in mind that every customer that is served is not very, very app friendly. So I'll give this to Bharat to talk about what are the features we have on our app. Thank you. So from an app perspective, today we offer the facility. So what is the home collection channel, which we have a lot of features built on the app? For example, today you can book a test completely, pay through multiple payment gateways and get a confirmed slot in the kind of for their home collection operation. And you will also track a flabberg on this, who is going to come to you, etcetera. We're also setting up a real time control tower in the background, which will enable us to track where the platform is reaching and then put up backup plans in case something really isn't working on the count. So there are a lot of initiatives which we can do on this count. Couple of more projects which we are doing, which are, like I mentioned, on the Picatel side, I may not be looking to review them exactly at this stage because they are competitive by nature. Once we launch them, we'll definitely share the details with you. And you can also see all your old reports on that. Okay. Got it. And just another question. So now if you're seeing that many of the health tech guys are getting aggressive on the domestic side of the broader outpatient market in health care, Do you have any thoughts on this perhaps on the pricing, perhaps maybe the suboptimal school is kind of limited in the wider country and that can lead to some sort of a fight for these suboptimal school and the system wide higher employee cost. So any particular risk to see if many of the existing digital players are actually the regulatory in the diagnostic space? Yes. I think it's a good question. I must tell you that it's not that we haven't faced localized competition in the past. We have had players who actually sell these tests at 1 third the price. So and we have also tried on our own also in some markets as pilot. So just because your price is lower doesn't mean customer is going to come to you because there is something lower because people are looking for value. 2nd what was the second part of your question? Whether there is a limited phlebotomist school in the country and if there is a fight for that school, would that give you some limited focus? That's a great question. And I do believe that competition for quality manpower will go up, not only for phlebotomist, but even for management as well. So I think we are going to see some aggressive sort of people trying to approach employees from other companies. So I think that's an important part of it, which let's see how it turns out, but we are acutely aware about that sort of a disruption. At this time, it's a nice question. So in case you are able to build founders, tech sites, whatever the company is envisaging, will you still need to do an M and A? Is M and A really the one of the largest pieces to kind of drive consolidation or growth from a company standpoint over the next 3 to 5 years? I think so because, as I mentioned earlier, the creating this medical brand is not that simple. That's because you are a tech enabled, you are a digital company, doesn't mean that patients will continue. So there is a power of a brand which has been for many years in that city. I think M and A will still continue to make sense. But M and A also a good quality sort of a process in governance And I think more important, the profile of the customer base. The higher B2C component is what is very important. So the short answer is M and A will continue to make sense according to me, especially in those areas where our business is weaker. Sure. Thank you so much, and all the best. Thank you. The next question is from the line of Nitin Agarwal from DAM Capital. Please go ahead. Hi, thanks for taking my question. On the business in the quarter, the non COVID business, I mean, how close to the normalized business were we this quarter or were it meaningfully impacted by or are you impacted by the COVID outbreak this quarter? I think it was impacted by COVID. The number that we've shown here is 380, right? 386. Yes. As I mentioned earlier, the May was quite soft, and I would have expected at least some more number there. So if I add normalized on that, I think it's more or less in line with what I would have expected for the quarter. And hopefully, in Q2, it should actually improve as we go along. But to answer your question, we did see a bit of softness on non COVID this quarter, primarily in the month of May. June would be a reference date sort of a reasonable normal month for the business from a revenue run rate perspective? No, no, no. Normally, actually, June is not a very high month. I know for different reasons, I some last 2 years, everything has gone upside down. But generally, June is a vacation month. Most medical professionals tend to go on leave. And prescriptions come down. I know you guys, at pharma, probably you will see that as well. So June generally is not a very high month. It's actually it starts picking up from July onwards. Okay. And secondly, on the non COVID realization, we saw a spike which came through in the initial few quarters. And has it I think realization on non COVID business now stabilized or is still at the very limited levels? There is still a lot of volatility on non COVID realization, and it's primarily happening because of as infection is very high in the system, you tend to see higher number of tests being prescribed because you're visiting doctors frequently and you have a lot of complications, etcetera. So I think we are still not able to see a stable trend. There's a very high volatility on revenue per patient, primarily due to higher tests being ordered per patient. So I think it's not giving us very clear trend. And this morning, we were doing this exercise as varying from 5% to 12%. This is wild fluctuations that are happening. So I really won't like to comment right now on this because of this factor. And one number which you gave in the one of your earlier questions was the number of non COVID patients you have said was at 5,900,000 for this quarter. Yes, something like that. $5,900,000 $5,900,000 $5,900,000 Okay. And lastly, on a more broader level, you talked about setting up your reference labs in Bangalore and Mumbai and starting work around that. InGen, for the last several years, organized diagnostic companies have been very strong in their own specific regions. And I guess that's the way it has really played out so far. With some of the moves that some of you guys are making in terms of trying to enter into territories where the incumbents are more strong in, and how do you what's your own sense on how does the incumbent respond to some of to these initiatives? I think if you look at 1 quarter or 1 year, it sounds like that. But if you look at our journey of last 15 years, as we were in 2,005, nearly 90% was daily NCR. Today, daily NCR is just about 37%, 28%. So we have actually gone out of daily NCR and expanded our sales in rest of India. But the trick here is that you don't spread yourself too thin. There is a cluster of growth that one needs to follow, and that's what we do. Thank you. Thank you. The next question is from the line of Sion Mukherjee from Nomura. Please go ahead. Thanks for taking my questions, sir. So just one question on the financials. Now since there is an impact of COVID, so if you look at from a quarter 1 FY 2020 perspective, I mean, what is your assessment for the long COVID business as things normalize? How would be the EBITDA margin looking? Because we were doing margin, let's say, around lower than the current levels. So let's say 27%, 28%, now we are at 30% plus, 31%. So how should we think about margin as COVID volumes subside in the subsequent quarters? I think it's an excellent question. And all the time, we just keep looking at answers for this question in our data. And we keep separating the effect of COVID out of it because we believe that it's an event which is coming, and it's also been the baseline and there are spikes in this. But the thing is that because of COVID restrictions, movements, etcetera, long COVID is also a little soft. My gut says that we should come back to a trajectory which used to be in pre COVID times on the revenue side. On the margin side, maybe Dave can comment on that. What do you think? Yes. I mean, we are getting operating leverage through Kanshi because whatever coming additional, say, very high operating leverage which we are getting because of nature of our fixed overheads. And as we are now focusing rest of India, which is growing faster, so we also looking non COVID where pre COVID level, which was and it's a trajectory of 25%, 26% annualized EBITDA margin. So I think we are able to maintain that going forward also. But this is something unusual. It is not something these kind of high margins is sufficient. I think the point is mainly that there is still some leverage in this business because as the business is shifting through franchisee collection centers, I think our real estate costs are going to come down. Scale is going to give us little more benefit on cost per test. So I think we should be able to manage the margins going forward. Okay. Thanks. So just on a business perspective, I mean just to understand the mix, so let's say quarterly you're doing INR 400 crores of revenues. I mean how much one by segmentation I was looking at how much you're generating online through your platform or maybe through your other platforms, online platforms? And second, like, is there any like the top 10 tests are disproportionately high proportion of your revenues? If you can give some color on the test concentration and onlineoffline mix of the non COVID portfolio? Yes. So earlier, we used to track business in 3 distinct segments. 1 was walk in, second was through our franchisee and third used to be our pickup points, which are direct pickup points where we go and pick up the samples. From last sort of a couple of years, we have now started tracking home collections separately. Since you are asking about online sales, this online actually has different component because one could be that somebody who has booked online, who has paid online or asked for a home collection and the report is also delivered online. So that's I think the ultimate online experience. But we also believe that there is a segment that somebody can book the test online but may not pay. But the patient may prefer to come to our lab, give the sample and pay there. So that is also another online component. 3rd, online could be that somebody just called up on phone because as I mentioned to you, everybody is not comfortable with the app, but they just call up and book a test and ask for a home collection. That could also be considered as online. So I think all there are various types of groups here, but we are all putting it in one group called home collection. So that is what we've now started tracking. From now onwards, we'll have 4 groups: home collection, walk ins, franchisee and pickup parts. Okay. And let me also tell you that franchisee also do their own collections, right? So at times, it's difficult to know what their number is, but there is a LPL led leads. LPL generated leads are also forwarded to our franchise. So that we put in Home Collections also. And for the breakup, if you can give, do you have numbers like the breakup across these four segments? Broadly, I think we have already indicated that close 12%, 13% of our business is coming from home collection. For the split, I think at this stage, we are not in the position to provide. But as we refine these numbers, we'll share with you going forward. Okay. Thanks. Sir, just one last question. I think this was asked earlier about competition and the transactions that we have seen buying out ThyroCare, for instance. Now we had seen competition before. Now the issue is the players who are coming in and there are other online players, as you know, who are also getting aggressive. So they are first they have deep pockets with lot of funding and they are really trying to acquire customers and trying to give a very holistic outpatient experience, which includes consulting, diagnostics and pharmacy. So that's the value proposition with a lot of funding and a decent brand as well. So don't you think this environment is very different from the kind of competition that we have played we have seen in the past? And to that extent, it's a new challenge we are facing at this point. B. Balaji:] I think so. I think we agree. Yes, we can't write it off. It's a new challenge. It's a challenge, as you rightly said, horizontally, we are actually full stack in terms of medicine, in terms of consulting, in terms of diagnostics. Then there is also within diagnostics, I think there are 2 very important. It's offline and online. So that also is there. So what we are response right now is that we actually increase our online capability so that this stack is taken care of. This is vertical stack in terms of offline capabilities we already have. Online, we believe we have made significant progress, and we'll continue to move with times. So in terms of horizontal part, which is medicine, etcetera, right now, that is not on the card. But as you rightly said, it's a new landscape. We have to be aware about it. We'll keep watching the whole thing as it goes. Sir, is it also possible that, let's say, any of the other online players like Thyrocare was brought out or partnered with? Is it possible for Doctor. Lal, given the ground presence and infrastructure that Doctor. Lal already has, is that something which you think is a decent possibility? We have franchisee, so we have close to about 3,000 6,000. We have 3,500 plus franchisees. We have close to nearly 10,000 pickup points. I don't know exact number. So we work with partners. So we believe that partners really add a lot of value, and I think that's how this whole fragmented market one can scale out, and that has been the formula. But I think what we have also ensured that we track end to end customer experience. As Bharat mentioned that we are developing an oversight where the customer experience is being tracked through our control towers. So we also work with partners as anybody else. Okay, sir. Thank you. Thank you. The next question is from the line of Prakash Kapadia from Unimate Portfolio Managers. Please go ahead. Yes. Thanks for the opportunity. Thanks for all the support given these testing times and breakup of revenues has helped in getting a better picture of understanding what is happening. So that is helpful. Thanks for that. If I look at the COVID revenues, we've seen a 3.5% increase almost on a sequential as well as on a year on year basis. What we understand is 2nd wave was far more urban centric rather than rural. So have these revenues come from major of the metro cities? Is that correct understanding? First of all, thank you, Pritaj. We try to do the best we could in these times. Number 2 is that like we mentioned in the opening comment, Delhi and Sierra did really well for us this quarter because of concentrated geography. But we also got a lot of samples from the interiors of India across, let us say, UP, Punjab, etcetera. So it was fairly wide and we also started to do testing in 19 laps of RT PCR and about 50 laps for a live test. So it was a broad based kind of numbers which came through on the COVID as well as on the non COVID side. Guess not the city to urban or rural India, but a very broad based source of revenue for us. And maybe because you're saying NORTH did well, so NORTH contribution would have increased as compared to what it was before? Marginally because the rest of India, this has become really resilient now. They have their own labs, infrastructure, etcetera. So they also did really well this time. Okay. And if I look at the presentation this time around, D dimer, IL-six were much higher. So is that because of the severity of the COVID which we saw in the 2nd wave as compared to 1st wave? Is that right understanding? This is Doctor. Lal. Yes. Yes. Pradaksh, it's a good question. It is now fairly well accepted that the 2nd wave was much more severe than the 1st wave because it was the data virus was at play. And many reports you would have also read that the the infectivity cycle or the rate severity was almost 50% more than the 1st wave. So when you suffer more or the patient suffers more, so the body also inside is showing different changes. And if you know and you obviously heard this term known as cytokine storm, etcetera. So more and more the body reacts to do inflammatory changes. And those tests are the ones which went up. It was 1st phase. By the nature of the 1st phase, which was basically the Wuhan virus, the original virus. 2nd phase was the British virus. And the 3rd phase is this Indian virus in the delta, which is a severe response. So we don't know. The only thing that I can say for the future is that because the vaccination now is picking up, it is quite possible that the severity of infection may become less. So we keep our fingers crossed. Okay. Okay. And assuming, Kuktolal, that kind of a scenario, obviously, some of these tests will subside in terms of what kind of trajectory we had seen because of the mutant and the higher variant of the virus. Yes, of course. In fact, keeping that in mind, we gave a month's click. So it gives you an idea how these will be collected. Yes, that really helps. That really helps us achieve that. And sequentially, if I look at the margin trajectory, there have been a 2 80 bps kind of improvement in the EBITDA margin. So is it fair to say COVID and non COVID business both have seen a margin improvement due to the operating scale which we've seen? Because earlier, the COVID kind of business was much lower in terms of margins. Is that also right to think? COVID has Actually, COVID is much more centralized in nature. So related overheads are less. So as the revenue grows, you certainly see a huge operating leverage giving us a benefit. I think that is what has happened in this because proportionally, our overhead has not grown the way revenue grew in these 2 months. And we were all overstretched, right? Every one of us was working 20 fourseven, which is on a longer term basis not sustainable, right? Just that since stress was there in the system. Right, right. And lastly, for increased patient volume, and I'm guessing because last part of the quarter was pretty severe, so home collections would have been pretty buoyant. So have you scaled up the team or the work which we were doing on the franchisee, Flabot integration and training, did that help scale us volumes? Did we outsource some of these collections? How did we manage? Because if you think of it, there has been quite a rapid scale in terms of the patients and the number of tests. Yes. I think Bharat will be right, so I can speak on this one. Yes, Prakash, you're right. 2, 3 things happened. 1 is that given the intensity of the wave, which stuck out, the productivity per se also increased. So there's one factor of the number of collections, the days stretched for a longer period of time that Doctor. Roh mentioned that people are really literally working 24 hours, so the collections went late in the evening, etcetera. Number 2 is that we had opened up COVID dedicated centers. And by the way, this COVID testing is non fasting. So you there's no time pressure, I think, right? Yes. Okay. Yes. So that is really what drives productivity because we can keep taking samples in late in the evening, in the night also. It doesn't really matter. Number 2 is that we have opened a lot of COVID dedicated centers wherein we are able to take care of lot of patients going through, not necessarily through home collection, from an overall volume perspective. And we have opened the sales centers all across the country so that we are able to get lot of samples, get the efficiency of operations going on and serve as many people as possible. The third part is that our franchisee partners really stood up along with us in serving the nation at this point of time. A lot of tech enablement was done for them to kind of get the leads from us and go to the patient's house and collect samples or even manage their day to day business via the integrated portals we have now in place. Yes. Okay. So some of the base work also was a critical factor in terms of the integration and managing the scale? Yes, yes. This was not a single day affair that we should have pointed down this. Yes, April, May, April was so high. Yes, yes. That's what I was trying to understand. Great. I think this is helpful. Thanks and all the best guys. Thank you so much. Thank you, Prakash. Thank you. The next question is from the line of Shailene Kumar from UBS. Please go ahead. Yes. Thank you so much. Thank you so much for the opportunity. So, a bunch of questions, like if I look at the ICMR data, my COVID test is not coming off. They are hovering around same level of 1,800,000 a day. So is it like so are they more in a Tier 2, Tier 3 cities where we have a limited presence or we have targets with the clockwise, which are reflecting our number? And second, just want to understand from you on the psyche of the patient as well as doctor, given we are in the flu season, right? So how the psyche is working now, right? Are doctor able to identify that this is a normal flu and not a COVID? Or is it like because of what we have gone through such a brutal second wave, nobody wants to take a chance? And then it means that COVID is there with us or at least in our memory is going to stay with us for some time? So I think on the first question, I really won't have too much of color on ICMR data, but clearly we are seeing a declining trend. And there are 2, 3 reasons where the tests are coming. 1 is the travel related testing, which to me, it is still happening. The other is EMS related testing that actually has sharply come down. 3rd is geographically where are your presence is stronger if the incidence is lower than the test is down. I think right now if I recollect maybe some states in South Carolina it's showing higher. P. Vijay Kumar:] Maybe those states will have a little bit of higher testing. So in general, we have seen it's completely related to incidence of COVID. Now your second question on flu where the doctors are able to differentiate. I don't think flu has yet started to that extent which normally happens. Maybe the trial would go through. Yes. See, right now, any fever which is even flu, but the doctor would first say that let me first rule out COVID because what is obvious in front of you and people now when you remember when we said that it is not gone, I mean, the 3rd stage is coming, etcetera, not the 3rd wave, that now you can't differentiate from where you got it. So at that point of time, the first thing which has to be ruled out is a COVID infection. So irrespective of the fact whether you are having flu, after all, COVID virus is also influenza virus. So the doctors are very, very sharp on this. And especially when there is tele consultation, the doctor will definitely say that, please get your COVID test done. And for the patient, it's very good because he just picks up the phone or whatever, computer, and he calls the person home. COVID testing, by and large, more than 90% has been done with home connection. So this is the first thing. And people have been pleasantly or unpleasantly surprised, I should say, that they never thought it would be COVID, but turned out to be COVID. So that's the way the disease is. Right. So Doctor. Lal, do you think at least for some time this trend is likely to sustain, like people just want to rule out COVID? It become a part of the normal diagnostic? It's a daughter and it has become like an endemic. You must have heard this word from pandemic to an endemic. Singapore has already announced this, that they no longer think it's worldwide and pandemic, that's kind of a big thing. But it will become like the other viruses, which you yourself have mentioned, like an influenza virus, like the HIV, the HCV, HPV. So they'll keep on simmering in the background. And whenever the patient has to be I mean, for a few years, this will definitely happen that the first test which will be asked for will be the RT PCR. And I must also inform you at the same time that there are expert groups all over the world, T. H. Chan, public health school in Harvard. So they have gone even they are predicting that now the testing will move to the home. It will be self testing on a rapid antigen test, which has now become very common. And moreover, it will also happen every week. Imagine that we don't need until the virus is going to stay with you, so people are also getting used to it. So every week they are saying you should get or you yourself should do the test. So we don't know when it is going to end. In my opinion, it's very much like the S curve or like the assigned curve in trigonometry. It goes up and goes down. The moment it goes down, people relax, the unlocking happens, and it comes back again. So it is a seesaw kind of a battle. So I think, Shalini, the way to look at it is that there will certainly be a baseline sale. It will keep happening over every month, and then there will be spikes. So this is what we have seen in this. So I think that's the way to look at it. And it seems like a safety sand. So sometime RT PCR, antigen and your home diagnostics, new technology will keep coming. I think one will have to keep an eye on this as to how it's moving. But in terms of testing, there will be some baseline testing which will happen monthly basis, both driven by ILS and also maybe a travel related. That's the way I would look at it. Understood. Thank you. Thank you, sir. Thank you so much, sir. That's it from my side. Thank you. Thank you. The next question is from the line of Pinar Vandarya from Edelweiss. Please go ahead. Good evening, sir. My first question is also on prospect. So do you expect as the world normalizes, India normalizes to grow faster than what it used to grow fast? And if you can give us some sense on how much the realization would be higher on Swastfit versus the rest of your revenue? Srustfit will be about, let's say, 20% -or percent higher than the rest of the business. That is a normal trend we have seen in the past. Right. And growth expecting, do you expect it to grow much faster than what you're building and growing at? Storefit portfolio has been actually been growing faster in the portfolio overall numbers since the time we launched it. And we continue to expect that we continue to go at a very healthy pace even in the times to come for 2, 3 reasons. 1 is that there is growing awareness of health and preventive testing is will pick up. Number 2 is that it offers a very good value for people who do routine testing for either a specific condition or whatever prescription says for. And it's just a combination of tests which they can use for better information. So yes, we will see we'll continue to see a good trajectory in source fit. Sure. Sure. So I'm just one more question on recovery of your business. So is it fair to understand if fraud based, I mean, are you growing for recurring faster in the situation in areas like North brand is especially strong, is it going to grow faster over there? Or is it not only the country you're probably growing at the same rate? I think it's going faster in Rest of India as well. So not only just North alone. So I think the first response will be broad based. Given the base is slightly lower in the other parts of the country, I think we have seen higher growth rates in Rest of India. Right. And so just trying to get your opinion on one more thing. So after this farm, we kind of acquisition of Aeropayas. You think going forward there could be another business model where, let's say, MC Pharmacy is tied exclusively with the diagnostic company. Is that something which you believe is profitable when acquiring it outright? Yes, of course. I think that's the way I look at it. Any all the e commerce players, they generate leads, right? They are aggregators. To my mind, they have to partner with people like us. That's all needs to be done. So if they are into they are aggregating the manufacturers of pharmaceutical company at the back end, I think the same way they should aggregate diagnostic companies also because in the front end, they own the custody line. I think it will definitely be a great help to us in those markets where our physical infrastructure is less. So to my mind, it's a combination of both offline and online has to go together. It's a partnership model, to my mind, that works best for everyone. Sure. And then am I to understand that you'll be open to a partnership where you are sort of the exclusive partner? I mean, if I go to an aggregator, it's not like I'll probably only find Doctor. Lal over the next couple of years. Yes. We don't say more than that. We work with them. We work with many of them today also. They work with us today because on their side, they won't ask for Otonal because if they don't have Otonal, they don't request us. They also want their traffic. So I think it's we have to coexist. Sure. And how much of the business will be coming from them currently? It's not that significant. Right now, we probably are not in the position to share as well. But in my mind, we are very clear that going forward, we will partner with them. Basically, it should the commercial should suit our arrangement. I think everything else should work. Got it. Got it. Thank you very much. Thank you. The next question is from the line of Shivam R. From Westbridge Capital. Please go ahead. Yes. First of all, congratulations on a great set of numbers. My question was, could you just give us a realization on both the non COVID and COVID side of things? And is there continued pricing pressure on the COVID set still or is that now stable? So on this COVID, we have given the realization. So it was, if you remember, it was started from 3,500 or so. Nowadays, it's hovering around 7 50 or so. So continuously, I mean, this is the average of COVID RT PCR antibody. But if you see going forward, there are states, some states even have lower price, which is as low as RMB450 or RMB500. So on a standalone basis, I don't think realization of this RT PCR is going to stay here. But along with the RT PCR, what we have seen and what we are doing is getting all other tests also, and that is where the leverage is coming. Along with this COVID testing, there are few other tests which are coming, and that's where might be this realization on an overall basis is where we have hovering around 700 or 750. So I think broad question, which is there on everybody's mind that COVID pricing trend actually has seen a sharp downward curve, right? But I also must say that the costs also correspondingly actually have seen a downward curve as well. So it's not that prices have come down and then you've lost out on profitability. So prices are also coming down, so are costs. Now as it's stabilized, I think we are nearing that zone. It's little bit on a decline side, but last couple of months, we have seen a stable trend in terms of realization on COVID side. The point which Wave is trying to make is that when we get a request for a COVID or COVID related test, along with that, there are a few more tests which are ordered. That's how our leverage sets in, and we are able to steer through. Got it. No, that is super helpful. And just one last question from my side. Is there any guidance on the COVID related tests going forward? Like how is July trending? Is it more in line with June? Or has it declined further from June levels? If you could give any guidance for the next quarter in terms of COVID related tests? So I don't think we would want to give any guidance on the COVID test because it's highly unpredictable. I don't know really what happens. But precisely keeping that in mind, we gave you a split between April, May, June, so you can clearly make out as to how the trend would be. Thank you. Those are my questions. Thank you. The next question is from the line of Rahul Agarwal from INGRED Capital. Please go ahead. Yes. Hi, good evening. Thank you so much for the opportunity. I missed most of the call, but so sorry if I'm repeated repeating any question. But I just had one question, Doctor. Rom. So essentially given the way this COVID is moving, obviously, the earlier thought was that it might taper off earlier, but it's not happening. And obviously, that's been that's bringing a lot of cash flow and a lot of higher volumes and good numbers across all diagnostic chains. Just wanted to pick your brain as we enter into next 12 months fiscal 'twenty three, 'twenty four, obviously, the base is getting heavy, right, because of COVID. Would you agree that non COVID volumes, as the feeling is that the health care spends and overall awareness is going to be much higher because of this COVID pandemic in India and globally, Will non COVID be able to offset the higher base and still grow on those numbers into 2022, 2023, 2024 going ahead? That's the only question I had. Thank you. So that we will have to so it's a great question. So that we'll have to probably watch and see how it goes. But our efforts are continuing in terms of widening our footprint. So we are not letting that effort go down. For South and West is a big gap area, and I'm actually I'm doing some analysis and I first time I see the West has contributed interval digit for us this quarter. So we will continue to widen our footprint, and we believe that will definitely help us build non COVID base. And COVID actually has been helpful as well in for us entering into new markets. So we will continue to expand our footprint because market is fairly large. Got it. Got it. And one booking question I had, so the new regional reference lab is supposed to come in Bombay, is it already done? Is it open? No. We have started our Bangalore, Bangalore operations. Mumbai work is in process because I think there are certain lessons and requirements. One that is best in place when we will start our work. May I know the location, please, Nupam? That's what I'm saying. Right now, since I have those licenses in place, because I think with this what do you call it, commercial? P. Vijay Kumar:] Age of used license, Unless that is in our hand, we can't say this is the location. Okay, okay. Awesome. Thank you so much for answering. All the best. Thank you. Thank you very much. That was the last question. I would now like to hand the conference back to the management team for closing comments. Thank you, everyone, for being on this call today, and I wish all the best and you and your family, safe and healthy. Thank you. Thank you. Thank you very much. On behalf of Doctor. Lalpat Labs Limited, that concludes the conference. Thank you for joining us. You may now disconnect your lines.