Ladies and gentlemen, good day and welcome to the Metropolis Healthcare Limited Q4 FY25 earnings conference call hosted by Philip Capital India Pvt Ltd. This conference call may contain forward-looking statements about the company, which are based on the beliefs, opinions, and expectations of the company as of the date of this call. These statements do not guarantee the future performance of the company, and it may involve risks and uncertainties that are difficult to predict. As a reminder, all participant lines will remain in the listen-only mode, and there will be an opportunity for you to ask questions after the presentation concludes. Should you need assistance during the conference call, please signal the operator by pressing star, then zero on your [touch screen] telephone. Please note that this conference is being recorded. I now hand the conference over to Mr. Surya Patra from Philip Capital India Pvt Ltd.
Thank you, and over to you.
Yes, thanks, sir. Good morning, everyone. I, on behalf of Philip Capital India, welcome you all to the Q4 and FY25 earnings conference call of Metropolis Health. From Metropolis, we have with us today Ms. Ameera Shah, Chairperson and Whole-Time Director, Mr. Surendran , Chief Executive Officer, and Mr. Sameer Patel, Chief Financial Officer. Now I will hand over the line to you, ma'am, for your opening remarks. Over to you.
Hi, good morning, everyone. Is it on hold?
It's fine.
Good morning, everyone, and thank you for joining us today for this Q4 FY25 earnings call. I'm joined by our CEO, Surendran , [our growth] Chief Development Business Officer, as well as Sameer Patel, CFO, and SGL IR Advisor. We've uploaded our updated results documents on the exchanges and the company's site, and I hope everyone's had a chance to go through the same. Let me begin with a few key updates for this quarter. As highlighted earlier, we have accelerated our inorganic growth strategy and successfully signed three acquisitions. Number one is Core Diagnostics, the leader in pan-India oncology testing, which we closed also end of March. The other two we have signed and not closed yet: Scientific Pathology, which is the leading chain in Agra, positioning us as the second-largest player in Western Uttar Pradesh, and Dr.
Ahuja's Pathology & Imaging Centre, DAPIC, which is Dehradun's premier diagnostic provider, giving us leadership in Dehradun and entry into Uttarakhand. These strategic additions significantly strengthen our presence in North India. With this, the region's contribution to overall revenue is expected to grow from 8% to approximately 14%-15% in FY26. Aligned with our broader vision, DAPIC and Scientific Pathology Agra support our goal of expanding geographic reach by acquiring clean B2C-focused labs known for scientific rigor and high-quality diagnostics. With these, we will go deeper into these two new markets that we have not had the chance to really be strong in before, which is U.P. and Uttarakhand. Furthermore, Core Diagnostics supports our goals of building leadership through deep technical expertise on the back end and direct doctor connect on the front end, along with the other goal of deepening presence and connect in North India.
Core Diagnostics, also being the premier oncology platform in India, gives us a great opportunity to become a platform for genomics across the country. While we will start with oncogenomics, we will then expand into all other kinds of genomics through the Core platform. This string of pearls approach across North will enable us to enter underserved markets and further enhance brand equity and market share amongst the medical community and the consumers across this region. Our immediate priority is the seamless integration of these three newly acquired entities into the Metropolis ecosystem. This includes onboarding them under the Metropolis brand, aligning their operational systems and processes and our standardized protocols, and ensuring cultural alignment amongst the team. We will also be conducting a comprehensive review to identify synergies in areas such as technology, logistics, procurement, talent, and identify cross-selling opportunities to expand our market share.
These efforts will be instrumental in unlocking efficiencies, driving cost optimization, and ultimately scaling revenue and profit margins in the quarters ahead. While we deeply evaluated six to seven good inorganic opportunities, we selected three, which are the ones I mentioned, to go ahead with as they fit our top three criteria. Number one, the criteria was deeply scientific and ethical businesses known for their quality and expertise that fit our culture. Number two criteria was profitable businesses valued at fair financial terms that can be EPS accretive immediately and enhance ROSI in three years. Number three, in markets or segments which are strategic to us, we looked and evaluated the buy versus build arithmetic. Only when it made sense to us where the high gestation of building made sense to buy is when we actually went ahead.
That's how we chose these three out of the six that we evaluated. When COVID happened, we had a choice to remain steady state and declare good profit or to take a bold stand of investment and change ourselves with the changing landscape of the industry. We chose to be bold and started a journey over the past four years, a period marked by significant challenges, transformation, and resilience. Among the many events that shaped this time, the COVID pandemic was undoubtedly the most impactful. During this crisis, we rapidly enhanced our testing capabilities, trained our teams, and adapted our systems and processes to operate in an environment where the world had come to a standstill due to lockdowns. While revenues went up for two years, we also had to deal with the non-COVID revenues taking its time to come back to normalcy.
The pandemic also brought a wave of new entrants into the industry, many of whom aimed to bridge technological gaps by offering tech-driven wellness services. This helped expand the wellness market, a trend from which incumbent players like Metropolis ultimately benefited. However, as we move forward, many of these new competitors are either pivoting to traditional brick-and-mortar models, which require significant time and investment for them, or they are shifting focus to low-margin segments in the B2B business. While the competition brought some turbulence in the last few years in terms of talent poaching and pricing, the biggest change we had to adapt to was what the consumer desired in terms of technology and consumer connect, which required large investments from the incumbents, which has now been done.
Over these past three to four years, we also experienced shifts in the business mix where we increased focus on B2C and B2B businesses and reduced the contribution of our institutional business, which largely included government contracts. We faced other internal and external challenges as well, including brand infringement for high-tech by a competitor, some unplanned engagements with the tax authorities, and the need to rebuild a stronger management team, all of which we did while investing time and money into expanding our infrastructure. We have added almost 90 labs and 2,000 centers in the last four years.
While this has added some CapEx and OpEx cost to the P&L, we believe the strategy of investing heavily in technology, investing in a better management team, investing in a large number of labs and centers across India, and exiting the government businesses will now help us to build a more solid business for the future and for the current. Our period of investment, heavy investment, is now done, and we can move to a phase of reaping the benefits of these investments via accelerated organic and inorganic growth and better margins. From a governance perspective, we have further strengthened our board with the appointment of Rehan Khan and Purvi Seth as independent directors. Rehan Khan brings deep strategic insights from his extensive experience in the pharmaceutical sector and strong engagement with the clinical ecosystem.
Purvi Seth adds critical perspective on organizations, people's strategies, culture, and values, foundational elements for any service-driven enterprise. We've also strengthened our leadership team and have built talent pool at all levels in the organization. We have promoted Surendran to the Managing Director of the business with a clear focus on enhanced organizational performance and improving shareholder returns. We have recently appointed Sameer Patel as CFO and Diya Suri as Chief People Officer. Both come with diverse backgrounds in retail, QSR, and have worked with large MNCs and bring fresh retail and service perspectives. With Surendran continuing to run the business operations over the last two years and the rest of the leadership firmly established in their roles, we are well positioned to deliver strong performance in the year ahead. In summary, the last four years have been a phase of transformation and consolidation.
Today, we stand on a strong foundation, poised to leverage scale, accelerate digital adoption, and further enhance our brand, setting the stage for the next phase of growth. Looking ahead, our strategic focus will be anchored on the following key priorities. Number one, accelerated expansion of collection centers. While we will now slow down the number of lab expansions we do, the collection center expansion will accelerate. We aim to significantly scale our network of collection centers across the country, and this will allow us to broaden our geographical footprint, improve our service, also our lab-to-center ratio, and drive higher throughput. With the infrastructure largely in place, our focus now shifts from build-out to execution and optimization. Number two, enhancing productivity. We will initiate a focused productivity drive to boost sample volume and utilization across both our existing and newly added labs and collection centers. Number three, operational efficiency.
We are committed to improving execution through cost rationalization, process automation, and tighter operational controls to achieve sustainability. Number four, geographical diversification. Our objective is to transition from being predominantly focused on Western South to establish ourselves as a truly pan-India diagnostics brand with more revenues coming in from North and East. Margin expansion. Through disciplined execution of our productivity initiatives, operational efficiencies, and lower incremental costs from infrastructure and IT upgrades, we are confident in our ability to expand margins by about 100 basis points going forward. With this, I would like to hand over the call to Surendran to speak about the strategies in detail with key operational and financial performance.
Thank you, Ameera, and good morning, everyone. Let me begin by sharing the key highlights of our quarter four and full year 2025 performance. For financial year 2025, we delivered 12% year-on-year revenue growth driven by 6% increase in patient volumes, with the remaining 6% coming from combination of micro-market-enabled pricing and tech-mixed improvements. Revenue for quarter four 2025 stood at INR 345 crore, reflecting a 10% year-on-year growth. This includes contribution from Core Diagnostics consolidated for 11 days in March following its acquisition. Adjusted EBITDA for quarter four came in at INR 84 crore, while full year 2025 adjusted EBITDA was at INR 325 crore, making a 14% year-on-year increase. Reported EBITDA was impacted by one-time expenses of about INR 21 crore on account of three acquisitions completed in quarter four.
These costs include transaction fees and diligence expenses such as legal, financial, banking, and tax, etc., as well as provisioning of one-time incentives and other allied costs aimed at seamless integration and synergies. These also include costs associated for other diligence and legal expenses paid for multiple targets identified for inorganic expansion, of which we have closed three, which fit into Metropolis umbrella and give us the best ROI. Legal and provisional expenses related to ongoing tax cases also came in in quarter four, and also a small provision of certain inventories. In terms of quarter four operating performance, we observed lower than usual revenue in February, particularly in our focus market. This quarter also witnessed a decline in acute testing volumes due to seasonal weather changes, which impacted hospital footfall and diagnostic demand.
Having said that, the positive development is that March saw a healthy recovery and April followed normal trends. Based on current indicators, we anticipate that quarter one revenue build-up will be in line with expectations. Quarter four margins were affected by several factors: lower than usual revenues in February, like I mentioned, which resulted in temporary de-operating leverage. The rollout of a significant number of labs and centers in S2 of last year. We opened 12 new labs and 84 company-owned centers as the last phase of lab expansions in last year. Zero contribution margin from Core Diagnostics during its brief consolidation window, impacting overall EBITDA margin. Looking ahead, with the planned addition of 90 labs now complete, our focus in financial year 2026 will pivot to selective lab expansion, opening only those necessary to deepen our market presence.
This approach will substantially ease the margin pressure associated with the rapid lab expansion. Simultaneously, we are consolidating overlapping labs between Metropolis and Core Diagnostics across various regions to unlock operational efficiencies. The positive impacts of this initiative are expected to start yielding tangible benefits from the first half of this year. Moving on to highlights of operational KPIs for the year, patient and test volume growth. In financial year 2025, patient volumes increased by 6% year-on-year, while the test volume grows by 7%. This steady growth was supported by our strategic focus on the B2C segment, ongoing geographical expansion, and a more client-focused approach within our B2B operations. However, overall volumes were partially impacted by the discontinuation of certain institutional and government contracts. These engagements contributed to volume but had limited impact on margin.
As part of a deliberate strategy, we chose to exit this business in order to provide growth in the B2C segment and enhance the quality and profitability of our B2B portfolio. Speaking of our B2B performance, B2C revenues grew by 17% in financial year 2025, driven by the adoption of a more granular approach, leveraging micro-marketing strategies for targeted outreach and engagement. In Maharashtra, including key cities like Mumbai, Pune, B2C revenues grew by 19% year-on-year, reflecting not only our strong brand preference in metro markets where patients and doctors alike, but also deeper penetration into smaller towns across the state and the broader Western region. Encouragingly, we are seeing similar growth trends now coming across from the other cities in India, reinforcing our confidence in further expanding B2C market share.
Geographical expansion, if I have to talk about it, we are now present in 750 towns, up from 350 just a couple of years ago. We have added 29 labs at a gross level in financial year 2025 and have added more than 400 centers. Over 85 labs have been added in the last four years, with 51 of these getting added in the tier two and tier three towns. This rapid expansion is expected to drive further volume and revenue growth, especially as these markets begin to mature. Tier three towns, in particular, have seen 18% year-on-year revenue growth and now contribute 26% of our domestic revenue. Our clinician outreach programs in these towns have been instrumental in strengthening brand presence and accelerating B2C adoption. Let me talk about True Health performance.
Our True Health segment registered a 24% year-on-year revenue increase, now contributing to 19% of total revenue, considering the exit run rate of quarter four. Key drivers include enhancement to the portfolio, such as introduction of Vital Checkups covering about 12 odd parameters, doctor consultations, and ECG services available across the centers and home visits. Additionally, region-specific bundling of wellness and illness tests has differentiated us from the standard offerings in the market, improving customer relevance and engagement. Now, let me come to the specialty segment. Our Specialty Segment delivered a 13% year-on-year growth in financial year 2025. We added 60 new tests across key focus areas, including oncology, women and child health, chronic diseases, nephrology, and molecular genomics.
We introduced an industry-first HPV DNA self-sampling kit for cervical cancer screening and hereditary cancer panels that test for about 25 cancers for those with cancer risk in the family. Additionally, we launched AI-enabled testing solutions for areas such as prostate cancer and karyotyping, significantly reducing the turnaround time. With the added capabilities brought in through Core Diagnostics and emerging cross-selling opportunities, we expect the specialty segment to contribute even more meaningfully to revenue growth in the coming period. We also remain steadfast in our commitment to technology advancement and digital transformation, consistently investing to enhance both operational efficiency and the customer experience. We revamped our mobile app, offering users advanced features such as smart test analysis, real-time sample tracking, and personalized health recommendations. An AI-powered recommendation engine has been introduced to deliver personalized test suggestion across multiple customer touchpoints.
We have implemented significant enhancements to our laboratory information management system to improve lab workflows, data accuracy, etc. Our continued focus on leveraging cutting-edge digital tools is driving deeper patient engagement, improved decision-making, and greater scalability, positioning us to deliver a truly differentiated diagnostic experience. In summary, our strategic initiatives are starting to yield measurable outcomes, and we remain committed to executing a Metropolis three point strategy, which includes: one, a focused and balanced B2C and B2B approach driven with micro-market lens; two, focus on further inorganic opportunities and seamless integration of the acquired assets; three, expanding into untapped regions and deepening our presence within key cities; four, accelerated growth in tier three towns through stronger engagement with doctors and patients; five, ongoing engagement of our specialty testing portfolio; and continued tailoring of health packages and integration of basic radiology and vital checks.
These efforts are reinforcing the momentum in our B2C segment. We are firmly committed to achieving our goal of increasing B2C revenue contribution in the days to come. I now hand over the call to Sameer Patel, who will take you through the financial numbers in detail. Thank you.
Thank you, Suren. Good morning, everyone. First, I would like to express my gratitude to the Metropolis Board and management team for welcoming me into Metropolis Health . I am truly excited to join the organization at such a [precious time]. With a strong foundation and clear vision for growth, I look forward to working closely with the leadership team to strengthen financial discipline and transparency, support strategic initiatives that will drive long-term value for our shareholders. Let me now share some of the key financial performance for quarter four and full year FY25. Revenue for quarter four stood at INR 345 crore, a growth of 10% year-on-year, with a 6% growth in patient and test volume on a year-on-year basis. Revenue for FY25 grew at 12%, with a patient volume growth of 6% and test growth of 7% on a year-on-year basis.
Our B2C revenue stood at INR 193 crore in quarter four, an increase of 14% year-on-year. Our B2C revenue stood at INR 735 crore in FY25, an increase of 17% year-on-year. Our B2B revenue stood at INR 120 crore for the quarter, an increase of 10% year-on-year. B2B revenue stood at INR 477 crore in FY25, an increase of 12% year-on-year. The revenue share for True Health segment stands at 17% for FY25, indicating a growth of 24% year-on-year. Our specialty segment revenue contribution stood at 37% for FY25, with a growth of 13% year-on-year. Our adjusted EBITDA for the quarter stood at INR 84 crore, an increase of 5% year-on-year. Adjusted EBITDA for FY25 stood at INR 325 crore, an increase of 14% year-on-year.
Adjusted EBITDA margin for the quarter was 24.3%, and for the full year, it stood at 24.4%. Reported EBITDA for the quarter stood at INR 63 crore. Reported EBITDA for FY25 stood at INR 304 crore, a growth of 7% year-on-year. That excluding one-time cost for the quarter stood at INR 45 crore, a growth of 24% year-on-year, and for FY25, it stood at INR 161 crore, indicating a growth of 26%. Please note that in the previous year, Q4 2024 and FY24 full year, the company had transitioned the accounting year of its four overseas subsidiaries to align with the Indian financial year.
However, for the purpose of performance comparison, the impact of this one-time adjustment, amounting to an increase of INR 18.25 crore in revenue, INR 5 crore in EBITDA, and INR 0.4 crore in PAT, has been excluded from Q4 FY24 and full year FY24 base. Accordingly, all financial comparisons for FY25 are on like-to-like normalized base. Moving on the balance sheet, we have a net cash surplus of INR 118 crore as of 31st March 2025. That's all from my side. With this, I open the floor for question and answers. Thank you.
Thank you. Ladies and gentlemen, we will now begin the question and answer session. Anyone who wishes to ask a question may press star and one on the touchstone telephone. If you wish to remove yourself from the question queue, you may press star and two. Participants are requested to use their handsets while asking a question. Ladies and gentlemen, we will wait for a moment while the question queue assembles. The first question comes from the line of Raman KV from Sequent Investment. Please go ahead.
You hear me?
It's a little weak. Can you speak a little loudly?
Can you hear me now?
Yeah.
Yeah. Sir, I have only two questions. One is, what is your volume guidance for the coming year? Can we expect the 150 basis points margin expansion in FY26, or will it be a gradual increase?
Yeah. If you have mentioned it in this call and the previous calls also, this year we did 6% patient volume growth. Primarily, the defocusing of the institutional business has a little bit of impact on the overall patient volume growth. Coming to this current year, we are confident of getting back to the 7% range on patient volume growth. Your second question on the margin expansion. This year, financial year, the adjusted EBITDA, we are at 24.4%. We expect the EBITDA to expand by about a percentage point in this financial year.
My second question is with respect to, sir, what is your how much of the revenue, current revenue in FY25, is from B2C segment? And how much are you expecting it to be in FY26?
In FY25, the B2C revenue is 55% of our total revenue. The B2C revenue grew by about 17%. In the previous financial year, we have improved by about 2% in terms of contribution from B2C. I think with a similar growth, we expect the expansion to be in the range of 1%-2% more in this financial year.
Thank you, sir. Thank you so much.
Thank you. Ladies and gentlemen, if you wish to ask a question, please press star and one. The next question comes from the line of Amey Chalke from JN Financial. Please go ahead.
Thank you for taking my question. I have one question on True Diagnostics. Is it possible to give some breakup, like how much revenue for this entity would be coming from genomics? What are the reasons for having a low margin for this entity? What steps can we take, basically, to increase margins?
Sure. I mean, if you look at industry-wide, you'll find that even at INR 100 crore, the new entities which have built businesses over the last 7/ 8/ 10 years have not really managed to make profits because it's either subscale. In core scale, it's also completely driven by specialty revenues, right? With specialty revenues, your gross margins tend to be a little bit lower because your cost of goods is a little higher. But then usually, it offsets when you are able to get different kinds of test mix from the same customer. When you're getting only specialty mix from the customer, which is what Core does, it's difficult to actually make profit at the bottom line. When this is merged into Metropolis , there will be two, three benefits, right?
One is there will obviously be some synergy of cost because you do not need to have so much overlapping infrastructure as currently Metropolis and Core have across the country. There will be some synergies that will come through there. There will be some synergies that will come through corporate costs and other kinds of synergies, etc. There will be an ability to sell the Core test menu through Metropolis's large distribution network all across the country, which will hopefully enhance the volume. I think with the combination of these things, we believe that we can take this to similar to a Metropolis profitability in three years, as we mentioned. The first year, we are hoping for a high single-digit EBITDA, and then that will sort of keep expanding over the next three years.
To your question around the genomics as part of Core, Core has got obviously I do not remember the exact number, but I think it is about 20%-30% of the revenue is genomics, and this is all specifically oncogenomics. What we believe is that this can become now the platform for really scaling up not only across the oncogenomics but other kinds of genomics across the country. Obviously, the main reason we acquired Core was because of the doctor connect that Core has with the 1,700 oncologists across the country, not so much for the machines or the back-end testing, but really for the front-end connect. The idea will be how do we leverage that in the best way possible. As we start to integrate the central, we will be exploring all these different opportunities.
This INR 100 crore revenue needs to go to what level to come to the margins of Metropolis?
Actually, within the Metropolis group, even at this INR 110 crore level, it will start to make profit. It's already a break-even business. Really, we've already started putting some of the cost synergies at play, which are the procurement costs, the overlapping of lab infrastructure, etc. In our hands, this will already be profitable in the next few months. We don't have to wait for it to really scale. We can get it to, like I said, a single-digit profitability on our own. Obviously, some of it will come through revenue growth as well over the next three years.
Second question I have is, since we've become very aggressive in expanding ourselves in North India, however, adding so many assets together, are you looking to bring them under Metropolis umbrella as a brand, or you will keep them as a separate center with generating some cost synergies from labs, etc., other IT? How does it work going ahead? Because we intend to add more or do more M&A in North India as well.
I'll tell you, if you look at the gap we have in the Scientific acquisitions we announced there, Dehradun and Agra, this is a playbook Metropolis has done many times before, right, which is to go in and partner with the leading player in a particular location, in this case, Agra and Dehradun, use that as a base to then grow across the city, across different channels, B2C, B2B, institutional, corporate, etc., and then also start building a network across the region that they are in and keep expanding the presence, right? This is something we've done before. It's not new to us, and I think therefore we have a reasonable sense on how to go about it. Obviously, there are always integration challenges. Any acquisition you do requires a lot of love and care, and we will be doing that.
Core, of course, is a different kind of acquisition for us. For all three, the goal is very much to put it under Metropolis brand, not necessarily immediately, but in a phased manner. For example, the Scientific and Dehradun will immediately come under Metropolis brand as soon as we find the deals and we close them and we integrate them in the few months. Core will take about 12 months for it to come under the Metropolis brand.
This last question, if I have to leave it, going ahead like in FY26, what will be our plan in terms of the lab addition, etc.? Because we are giving guidance for the margin improvement. If the plan is we are not going to add that many labs, like.
Yeah. I think we have mentioned in this call as well in the previous call that the rapid lab expansion is almost over, right? To serve almost 800 towns in this country, we have now enough number of labs. Like last year, we added about 29 labs. That level of lab addition will not be happening or will not be required going forward. We may add some single-digit number of labs based on just filling in some of the markets to improve the turnaround time, etc. Otherwise, we do not have plans to increase the number of labs in this coming year.
Sure. Thank you so much. I will try my best.
Thank you. The next question comes from the line of Shyam Srinivasan from Goldman Sachs. Please go ahead.
Good morning. Thank you for the opportunity. Just the first one on the revenue guidance, I was not sure whether we have articulated anything. I heard 7% patient volume growth. If you could also help us understand how you are looking at overall top-line development in FY26.
Yeah. We expect the realization to continue to be at around 5% levels. With the 7% patient volume growth and a 5% realization improvement, I think we expect the revenue growth to be in the similar range of 12% as we did during the previous year. Of course, the acquired entities will also grow about 13%-14% in this year.
Yeah. Just dialing back a couple of years where we had aspirations to go mid-teens until 2026, if I recollect right. Maybe we have fallen a little bit short of that. Is there a plan to accelerate? Is this the inorganic moves that they are doing? Is that the way to kind of bridge the gap? I'm just trying to ask a philosophical question. Yeah.
No, you're absolutely right. I think the combination of organic and inorganic will certainly take Metropolis to obviously a much higher growth. I mean, if you put the two together, we'll be closer to a 26%-27% growth overall in the year 2025-2026. As Suren mentioned, the idea is to grow organically about 12% and then to grow the acquired assets also at about 13%-14%. Together, that will definitely take us a leap forward in the year of FY25-26. We'll continue to keep trying to accelerate the organic growth, either through product mix, either through volume, and obviously the same thing with the acquired assets.
Very helpful. Ameera, last question just on some of the revenue segments, right? Maybe I do not think we have full disclosure, but happy to. The routine and semi-special seem to be showing slowdown versus, and you articulated about specialty and True Health, which they are doing much better. So anything on, is it competitive dynamics, or is there something else that is making the slower growth, or is it just a Q4 phenomena? Sorry. Yeah.
It's largely a quarter four phenomenon. You will see that getting into the quarter one and quarter two, you will see the routine semi-specialists still coming back close to the two-digit number.
Also, Sam, we have to remember that the routine and wellness, there is an overlap, right? Because what usually happens is patients are walking into centers, maybe for three, four routine tests. And then in some cases where they are choosing to actually upsell to a higher package, that gets moved into wellness, right? Sometimes it may appear optically that the routine is falling, but actually it is just that it is moving from one segment to another, actually for a higher ticket price.
Fair enough. Thank you. Thank you, another.
Thank you. The next question comes from the line of Anshul Agrawal from Emkay Global. Please go ahead.
Hi. Thank you for the opportunity. Hope I'm audible.
Yes you are, Anshul.
Question one is on the breakup of one-off cost. Could you kindly provide me with the breakup of the one-off cost of INR 21 crore, the three things that you mentioned?
I don't have the exact breakup right now, but as we mentioned, the majority of that is coming from M&A-linked costs. We have to remember that we evaluated about six opportunities. We went into diligence and contracting, etc., etc., on six opportunities, and we finally only decided to be very disciplined and choose three out of those. The M&A costs are linked, I would say, largely to a larger number of assets. Plus, like we said, we had some costs which came for the tax cases. You have to obviously hire professionals, etc., to manage it, to sort of get that moving. The last one was a small provisioning for inventories at the end of the year, which we believed were slow-moving or close to expiry, etc.
Got it. So these costs incurred for M&A transactions, once the other two assets get closed, would they recur? Any part of it would recur, or is this the entire cost that we have booked, controlled, and booked?
This is the entire cost we have booked because we signed all three deals in March. So all the costs have been booked in this quarter. You will not see any more costs from the M&A translating into Q1 of FY26.
it similar for the tax cases, or are they ongoing?
We did get a very positive thing on the appeal. On the appeal side, everything has been sort of disallowed, and we've actually got a tax refund. As we know, after the appeal, there is usually one or two more stages in the tax situation. It is very difficult at this point to say that it is completely done with. We do not know at this point of time if the tax authorities will choose to pursue it.
Thanks for that clarification. Second question is on the margin trajectory. I think we guided for 100 basis point expansion on normalized margins. Now, this, I believe, is after accounting for dilution of margins from Core as well. At single-digit margin guidance for Core, probably we'll dilute about 150 basis points at a consolidated level. Would we be expanding?
Yeah. Anshul, the 100 basis points is on the organic business that we talked about, okay? Core, from a breakeven, they'll get into a single-digit EBITDA during this year. That's the plan that we stated as before as well. The other two acquisitions that we have done are in the same range of the company margins. There is no dilution or anything from that side. Core will be a single-digit, high single-digit EBITDA by the time we close this year.
Got it. Just to summarize this point, so Core will be at single digits, and organically, ex-Core, our margins will expand by 100 basis points is what our guidance is, correct?
That's right.
Correct. Last one question from my end. On the revenue trajectory, I think we have guided for almost 12% organic growth. Now, this is in line with what we have done in the last couple of years. Despite this accelerated lab expansion, are we being conservative in this guidance? Do we see upside to this?
Difficult to answer that question, Sam. It's a no-win, it's a lose-lose question. Look, I mean, I think we are just guiding in terms of historic data points and what we feel comfortable with. Obviously, as a group, we are aspiring for higher. At this point of time, the only thing we can go with is what we have shown that we have delivered. Obviously, hope for better numbers.
Thank you. That's it from my end, All the very best.
Thank you.
Thank you. The next question comes from the line of Bino Pathiparampil from Elara Capital. Please go ahead.
Good morning, all. A couple of quick things again on getting the math right with the guidance. The revenue growth again is 12%, and the acquisitions can add more keys. The purpose of revenue growth could be 25%-26% in FY26. Am I getting it right?
Sorry, your voice is a little muffled. We can't hear you clearly. If you could just repeat that.
Sure, sure. So just on the revenue guidance, the organic growth would be 12%, and the acquisitions will add on to it. The reported revenue growth in FY26 should be around 25%-26%. Is that right?
That's right.
That's right.
Okay. Second, on margins, the 100 basis point expansion will be on the adjusted EBITDA margin. So 24.4 + 100, 25.4 should be the organic margin we should look at for FY26, correct?
You're right.
Okay. There could be some dilution because of Core impact. The reported may be 50-100 basis points below that.
Yeah. The Core will be at a single digit, 8-9% by the time we close this year.
Understood. Last question, the number of labs you have given, which is 210 right now, does that include the labs of Core Diagnostics?
No, it doesn't include the labs of Core Diagnostics. From this quarter onwards, we will include the number of Core Diagnostics. In fact, we are in a rationalization phase as we speak, like just looking at which lab is required and which lab we can consolidate. By the end of this quarter, we will have that clear number. Hence, we'll start reporting from quarter one onwards.
Okay. Tentatively, all three acquisitions put together, how many labs will we be adding? We will be adding. If you can give a range also, that will be fine.
Correct?
10 labs.
Less than 10 at a consolidated level.
Okay. Thank you.
Thank you. The next question comes from the line of Rishi Mody from Marcellus Investment Managers. Please go ahead.
Yeah. Hi guys. Am I audible?
Yeah.
Yeah. Could I get the FY25 numbers for Core, Scientific Pathology, and Dr. Ahuja on the revenue and EBITDA margin levels? If you all have those ready.
Yeah, we do. So Core is approximately 108. This is for FY25 you're asking, right?
Yes, FY25.
Yeah. So I think Core is approximately INR 105-110 crore of revenue with more take-even sort of a, I mean, it had a loss in 2025, but currently in Q4, it's at a breakeven level. For Scientific, I think it's about INR 25-26 crore for the whole year in FY25. Dehradun is approximately INR 10-11 crore of revenue. Scientific and DAPIC both are at company-level margins, Metropolis company-level margins. Therefore, there is a zero dilution from those.
Okay. When you say Core is Q4 FY25 breakeven, is there something which normally what I've seen in acquisitions of relatively larger size, people tend to hive off some of the businesses which don't fall in line with the existing company's policies? Do you see any of that happening? Hence, Core would be either a revenue decline and profitability increase or flattish revenue. I'm just trying to understand, is there anything that you want to solve in Core before you ramp it up?
No, I mean, certainly there will be some synergies and some dyssynergies, and we have sort of netted those off. Overall, despite the synergies and dyssynergies, we will have a positive revenue growth. We certainly do not see it flatlining. We see it in a positive revenue growth situation. Like we mentioned, we hope to take the margin up to a high single-digit number this year.
Okay. So if I'm getting and when do you expect the Scientific, Dr. Ahuja kind of consolidating into your numbers?
You have the seven days.
Yeah. The final stages of the acquisition. Maybe not later than by the end of this year. End of this month, sorry.
Okay. So one month will be in Q1 FY26 in consolidation terms, correct?
That's right.
Okay. So one should expect somewhere close to INR 10 and INR 15 crore -INR 25 crore of addition in EBITDA from these three acquisitions in the upcoming year. Is that correct in absolute terms?
Give us a moment to confirm that to you.
Yeah.
Twenty-five.
Yeah. So it should be between INR 20 crore-INR 25 crore.
Okay. Got it. Second, on the INR 21 crore one-time expense, could you just split it between the three purposes: acquisition, legal, and inventory write-off? Because from what I understand, legal and inventory write-off seem to be regular day-to-day business. Just wanted to get some clarity.
The normal legal, we would also put it as part of the normal bill. This is related to the tax matters. Therefore, we are.
It is not yet over, right? So it could be an ongoing expense going forward as well.
I mean, as of now, it's over till we know the tax authorities are picking it up, which we are not sure of. So it's difficult to know whether it's an ongoing expense or not at this point of time. At this point, it's come in our favor, and we don't know the next step, really. The majority, as I mentioned, are on the M&A costs, which are all one-off along with the tax expenses. The inventory part of it is much smaller, which is mostly connected to sort of expired goods, which therefore doesn't happen sort of on a monthly or a quarterly basis, but more of an accounting entry that happens at the end of the year, more from a provisioning perspective.
Right. What is the inventory write-off amount? Is it like INR 1 crore, INR 2 crore, INR 30 crore?
It's close to INR 1 crore -INR 2 crore .
Okay. INR 1 crore-INR 2 crore is the inventory write-off. Third, I wanted to ask, Surendran, since Q3, you were doing a B2B client rationalization exercise. Is that over in Q4? Q4 is a normal B2B business on a like-to-like basis, or Q1 would be a more?
What we mentioned to you earlier was defocusing on the institutional business. That is one full year we have ran with that, and that part is over. From quarter one onwards, you will start seeing the institutional business which you want to keep and which you want to grow. That will happen. B2B overall improvement plans are continuous, and we should start only getting better on the B2B revenues going forward.
B2B, I'm assuming the growth now should converge to B2C growth, or is there some gap that you still think will be there?
No, B2B growth levels will be like 10-12% levels of growth.
Okay. B2C, you said 12% plus is company level. I'm assuming 14-15% is B2C that you're targeting.
That's right. That's right. We need to start building the institutional business into much healthy ones going forward. Whatever we don't want to keep, it has already been exited as we close the year. We'll now start building a good quality institutional business as well into the portfolio, which is good in terms of margin and getting the money, etc., won't be difficult. That's the process that we will now start focusing upon.
Okay. Finally, the 100 basis points margin expansion that you've guided for on the organic business, which is, I mean, the entire FY24 numbers, if I take, excluding the one-time expense of INR 20 crore, is this, I'm just trying to understand, because we've done with the lab expansion. Is this on a conservative side from your end, or is this something that you?
See, what happens, we always maintain a lab. When we expand the lab, it takes a couple of years for us to get into marginal company levels of margin. Sometimes it will be more than two years. The last two years, we've done a very high number of labs. A little bit of impact will be there in this financial year also and maybe in some part of the next financial year. By the time it will completely vanish, it will take two more financial years. We have factored a part of it in this financial year's projection, and the rest we will put into the next financial year.
Okay. Finally, Ameera, on the competitive scenario, just wanted your comment. Are you seeing the market share recoup by your firm done in Mumbai and the core markets of yours, or do you think there's still some market share gains that you can do from the unsustainable e-commerce-led players that had started out?
To be honest with you, we do not hear so much around the health tech players much anymore. We do not see the aggression either on the ground or from a funding perspective either at this point of time. We are finding that the omnichannel approach that we are taking, which is the brick-and-mortar as well as online digital engagement, is actually working quite well with customers. As you have seen, our growth continues to do very well in our core markets on the B2C side as well. Frankly, we believe the opportunity continues to be there for us. It is really for us and for our taking. It is up to our execution to be able to really keep growing. With PPC, we feel quite confident about.
So you still think there's some juice left to take out from the unsustainable players or it's normal industry setting? I'm just trying to understand out of the existing B2C growth in FY25, is there a non-recurring part that might happen?
There's nothing non-recurring in the B2C revenues that we are posting at this point of time. Really, it's coming from a combination of three things. It's coming from an expansion of our collection center networks in our core markets, which we will continue to do. Second, it's coming from the product mix and being able to really customers wanting to do sort of larger packages and therefore having a higher revenue per patient. And it's also coming thirdly from the additional services that we are providing in our centers, which Surendran mentioned around the basic radiology, the vital checks, and really expanding some of the services to make the consumer experience more complete and wholesome, where you're not just giving pathology, but you're giving two, three other services as well.
I think it's a combination of these three, and we believe all of them are sustainable and therefore can keep growing in that direction. Like you said, along with the core markets that we've been growing well in B2C, we've also picked up another few cities that we believe that now we can make headway in B2C in. One of them also happens to be in North, besides obviously some being in West and South. We would like to now go deeper into these markets to grow the B2C there. We're not mentioning the names only from a competitive reason, but we have picked up about four markets more that we can go deeper on the B2C side.
All right. Got it. Thank you. Thank you for taking my questions. All the best.
Thank you.
The next question comes from the line of Surya Patra from Philip Capital India Pvt Ltd. Please go ahead.
You can't hear anything. It's been.
Hello. Sorry. Am I audible right now?
Yes.
Yes, you are.
My first question is about the new test additions that we are now seeing backed by the AI and next-gen sequencing and technologies. By these, what is the kind of target market that we are likely to add for us?
If you see, the new tests are across different spaces. A lot of them are coming from the genomics segment. We are really doing a lot across not only oncogenomics but also across neuro and women and childcare as well. As we continue to grow this area, it will allow us to offer even more advanced and specialty testing to doctors for their patients across the country, which means you then have everything from start to finish under your umbrella, which means a doctor can have access to anything required for that patient's treatment in one place. That obviously increases the engagement between the doctor and the patient and between the doctor and us. That is how we see the new tests really play out and really help us to grow.
This market is basically, if you see whether it's on geographies or on tests, as the cities are getting busier with more competition on the B2B side, you move into newer cities, and therefore you'll see our THC growth getting stronger and bigger. The same way on the test menu, as certain things become more common and more people start them, Metropolis has to keep innovating and starting more specialized and more advanced tests to sort of keep them going. We're also doing something on the allergy side, which is quite interesting, and also something on prenatal, which is basically sort of pre-pregnancy and also post-pregnancy. We have a bunch of tests for women and childcare and as well as allergy as well, which are quite interesting and helping to take care of patients.
Okay. Okay. Is it possible to have a sense that, okay, like wellness, which is like 10% of the current industry size, so these markets will have a similar 10%, 5% of the industry going ahead or something like that? Is there a sense that one can have?
See, wellness is slightly right now, it's a broad definition, right? If you see, most of us, when we say wellness, we are actually including bundling packages to it as well. Like I mentioned, if a patient walks in for three or four tests, sometimes they are preferring to do a larger package because they are saying, "Look, I'm anyway coming to give my blood, so I might as well do more tests at one time." It may not be necessarily a well patient. It may not be somebody who's doing it from a preventive care basis. It might be somebody who's already unwell with a fever or somebody who's coming to check their thyroid but may land up doing other tests as well.
You can call it wellness and bundling, right, as a combination, which for us constitutes about, like we said, close to about 17-18% of our contribution today. As we include more illness packages in it, it will continue.
Yeah. My second question is about the capital allocation priorities, one. While we have said that now we want to go slow a bit on the center addition front, just trying to understand whether on the M&A front we will remain as focused as we were, or we are likely to prioritize there also, targeting, like, let's say, North, may not be thinking right now about east on that front. What is the kind of investment that you're targeting for 2026?
See, from a CapEx basis, certainly the CapEx numbers will come down. While we have spent probably between INR 60-70 crore in the last couple of years, we believe that the CapEx numbers will be closer to INR 50 crore for the organic business for this year. You can say INR 50 crore-INR 55 crore. In terms of acquisitions, look, I mean, I think it's I don't think we are at this point looking to go out and do another three deals in the first quarter of this year. I don't think we are in that place. Having said that, there are always multiple discussions going on in terms of funnel that we keep building.
If and when we find something that meets our priorities, only mentioned on the financial priorities, on the strategic priorities, on the good quality business, then it would be difficult to either wait or to delay because these opportunities do not always come exactly at the time we want. I would say broadly, we are not actively looking to close any deals in the next three- six months. If any of the discussions conclude into something, we may look at something. Yes, the idea would be to continue to build more in the North, but opportunities can come from across the country. There are still markets even in west and south in which we do not have a strong B2C connect. Where if something interesting came, we would be open to it as long as it met our criteria.
Thank you, ma'am. That's all I'm sure of.
This is only organic.
The next question comes from the line of Gaurav from Antique Stock Broking. Please go ahead.
That's okay.
Yeah. Hi.
Please unmute.
Hi. Good morning. Just on the growth, to understand better for the organic business, did we take any price action in FY25, and do we intend to take any price hikes in FY26?
In the quarter four of 2025, we did do a price increase in select markets, like I said, as a part of the micro-marketing strategy. About four/ five markets, we took the prices up. In a few markets, we also kind of rationalized the prices. The net impact of that is about close to 2%. As far as quarter four of last financial year is concerned, for the next two to three quarters, definitely there is no plan to do any price changes. As we get into the next calendar year, we will see, looking at the market dynamics and the related stuff, we will take a call.
We've maintained the growth on the 50% level for around eight quarters now. Going forward, do you see some pressure on the gross margin point for the organic business with input cost, etc.?
Yeah. We're not anticipating any further pressure on the gross margin level.
Okay. That's helpful. Sorry, continuing on Core. You've been asked a lot of questions. So revenue seems to be flat FY24- 25, what you referred to December 2024 and now. Any reason why they're not able to scale up despite the doctor connects? Is there a capacity too? Is there just less BD marketing focus? And what is the Core revenue? What is the peak revenue that Core can achieve with the current capacity? If you can.
Revenue.
Revenues were not planned. I don't know where you picked that up from. The revenue is growing at yeah. We said last year, we ended with about INR 110 crore. We came at a 15%-16% growth. We are also saying this year, we will be growing in excess of 13%, right? Financial 2025 was INR 116 crore, right? It is on growing. It is not a steady state. What is the best revenue that you can hit? I don't want to make a comment on that first, but I think we are looking at 13%-14% year-on-year revenue growth for the financial year 2026.
Okay. Looking at it differently, do we envisage any CapEx one year after integration?
Yeah. There could be some CapEx. We really want to strengthen the genomics portfolio there using the Core as a platform. So there will be some CapEx we will be incurring in Core.
Just last clarification. You mentioned gross margins are lower. Assessment of other specialty players, will gross margins for the Core business be in the 55-60% range or in that ballpark?
One second. What is the gross margin for Core? The gross margins for Core is at 60% level. Like we said, getting the procurement benefits coming on the back of Metropolis procurement process, I think we should only be able to get some benefits, some improvements on the gross margin level for Core.
One more thing is to remember on Core that while we had signed the deal at about INR 247 crore of acquisition value, finally, what we booked in our books is INR 218 crore of acquisition value on closing. So that's just information for you.
The equity cash, let's remain the same, right?
That's INR 130 crore was cash, and the rest was equity.
Does the co-founder continue to be a part of operations?
Yes. The CEO who was running the business before we acquired continues to be the CEO of the business, and the team is growing.
Thank you. All the best with the integration.
Thank you.
Thank you. Ladies and gentlemen, due to time constraint, that was the last question. I now hand the conference over to the management for their closing comments.
Thank you, everybody, for joining us today. As we mentioned, it has been four years of many opportunities, challenges, and great transformation at Metropolis. While we have stayed bold and taken some big actions on expansion, acceleration, and lots of changes along the way, we do believe these were all very fundamental in the growth phase for the next step. Going into this next year, we are looking forward to continue to accelerate the centers, increase our volumes, and really fill our labs even more, and really focus on productivity and efficiency in this next circle. We are very excited about the direction that we are headed in and certainly believe that the industry continues to offer the right opportunity to credible incumbents like us who have always stood tall around the science and expertise being the driving force of this business.
While technology, while distribution, while commercials, all of them are important, the core of the business still remains the scientific expertise that is linked to the people. With the acquisitions, we are looking forward to a big leap forward in FY 25-26 with strong organic growth, good margins, and the acquisitions totally adding to a 25%-26% revenue growth for Metropolis Healthcare in this next year. I look forward to chatting with all of you at the end of quarter one. Thank you, and have a good weekend.
Thank you. On behalf of Philip Capital India Pvt Ltd, that concludes this conference. Thank you for joining us, and you may now disconnect your line.