Metropolis Healthcare Limited — Q1 FY26 earnings call

Call held 14 Aug 2025

Management summary

Metropolis Healthcare reported a robust Q1 FY26, with group revenue up 23.2% and organic revenue growing 13.2%. Profitability saw an uptrend, with organic EBITDA margin at 24.7% and PAT up 21.2%. The company successfully integrated recent acquisitions and announced a new one, while expanding its network and piloting new service lines like basic radiology, positioning for continued growth and margin improvement.

Highlights

  • Group revenue grew 23.2% YoY, with organic revenue growth at 13.2%, reflecting strong volumes and improved realizations.

  • Organic EBITDA margin expanded 40 bps sequentially to 24.7%, with PAT growing 21.2% YoY to ₹46.2 crores.

  • Core Diagnostics, despite initial low margins, turned positive in Q1 FY26, improving from break-even levels in Q4 FY25.

  • Acquisition of Ambika Diagnostics (₹8 crores revenue, ₹1.8 crores EBITDA in FY25) is expected to be highly accretive from day one, with post-synergy EBITDA projected at ₹3.4 crores.

  • Basic radiology pilot showing encouraging traction, with 20 locations offering full radiology services and 240 offering ECG services, enhancing customer frequency and NPS.

Concerns

  • Core Diagnostics' low single-digit EBITDA margin profile marginally impacted the consolidated group EBITDA margin, which stood at 23.1%.

  • PAT for Core was negative in Q1, largely due to high depreciation and high-cost interest on a ₹12 crore loan, though this has been refinanced for Q2 improvement.

Key financials

  1. Group Revenue — +23.2%YoY
  2. Organic Revenue — +13.2%YoY
  3. Organic EBITDA ₹87.5 Cr +11.9%YoY
  4. Organic EBITDA Margin 24.7% +0.4%QoQ
  5. Group EBITDA Margin 23.1%
  6. Organic PAT ₹46.2 Cr +21.2%YoY
  7. Organic PAT Margin 13% +0.8%YoY
  8. Group PAT ₹45.2 Cr
  9. Group PAT Margin 11.7%
  10. Organic Patient Volume 3.2 Mn +7%YoY
  11. Organic Test Volume — +8%YoY
  12. Group Patient Volume 3.4 Mn +11%YoY
  13. Group Test Volume 7.1 Mn +12%YoY

What they filed

Q1 FY27: revenue up 14.8%, net profit up 41.7% against the same quarter last year.

₹ Cr · quarterly
Line itemQ2 FY25Q3 FY25Q4 FY25Q1 FY26Q2 FY26Q3 FY26Q4 FY26Q1 FY27
Revenue322 297 312 324 356 +11%335 +13%352 +13%372 +15%
EBITDA82 65 53 77 91 +11%80 +23%90 +70%94 +22%
Net profit42 27 24 36 47 +12%32 +19%43 +79%51 +42%
How to read this

₹ crore, as filed. The percentage beside a figure is the change against the same quarter a year earlier — never the quarter before, which would make every seasonal business look like it collapses and booms each year.

Segment breakdown

  • Organic B2C
    ₹209 Cr Revenue59% Contribution to Total Revenue₹37.9 lakh Patient Volume
  • Organic B2B
    10% Revenue Growth14% Contribution to Total Revenue₹32.8 lakh Patient Volume
  • Group B2C
    19% Revenue Growth56% Contribution to Total Revenue
  • Group B2B
    29% Revenue Growth
  • North Region (Group)
    17% Contribution to Total Revenue
  • Tier-1 Towns (Group)
    27% Revenue Growth
  • Tier-3 Towns (Group)
    17% Revenue Growth17% Contribution to Total Revenue
  • TruHealth Segment (Organic)
    22% Revenue Growth18% Contribution to Overall Revenue
  • Specialty Segment (Organic)
    16% Revenue Growth

Capital allocation

high confidence
  • Debt Debt disclosed
    • Refinance Refinanced Core Diagnostics' ₹12 crore loan in July at a much better rate. ₹12 Cr
    PAT for Q1 is negative, largely due to high depreciation and high-cost interest for Core, and it has a Rs 12 crores loan in the books, which has been now refinanced in July at a much better rate, and hence Q2 PAT for Core should be much better.
  • M&A Core Diagnostics Acquisition · Integrated

    Centralize expertise in genomics, histopathology, cytogenetics, molecular oncology, and precision testing, positioning Metropolis as a leader in onco-diagnostics.

    Initially low single-digit EBITDA margin, negative PAT in Q1 FY26, but turned positive in Q1. Expected to reach high single-digit EBITDA margin by year-end FY26 through cost synergies.

    The acquisition of Core and putting together skills and expertise Metropolis already had in oncology, along with the new relationships acquired by Core. We will create a platform for Metropolis to not only be the largest oncology testing player in the country, but keep innovating and investing for growth for the next several years to come.
  • M&A DAPIC, Dehradun Acquisition · Integrated

    Well-established brand in local market, expand into adjacent regions by increasing collection centers and offering broader Metropolis test menu.

    Delivered revenue growth in line with company average, margins slightly above company average. Consolidated from May 23, 2025.

    DAPIC, Dehradun has been consolidated only from 23rd May 2025, and Scientific Pathology Agra only from 16th June 2025, and hence only proportionate revenue and margins have been consolidated in Q1.
  • M&A Scientific Pathology, Agra Acquisition · Integrated

    Well-established brand in local market, expand into adjacent regions by increasing collection centers and offering broader Metropolis test menu.

    Delivered revenue growth in line with company average, margins slightly above company average. Consolidated from June 16, 2025.

    DAPIC, Dehradun has been consolidated only from 23rd May 2025, and Scientific Pathology Agra only from 16th June 2025, and hence only proportionate revenue and margins have been consolidated in Q1.
  • M&A Ambika Diagnostics, Kolhapur Acquisition · Announced · Consideration ₹[object Object] (cash)

    Acquire a lab previously managed under a lease model, which grew 60% in two years, to merge with existing Metropolis Kolhapur Lab, creating the largest lab in the region and strengthening footprint.

    FY25 EBITDA was ₹1.8 crores, but post-acquisition with synergies, EBITDA is projected to be ₹3.4 crores, making the effective multiple 5x. Expected to be highly accretive from day one. Funded by internal accruals and closed within 30 days.

    Just yesterday, we have announced our acquisition of Ambika Diagnostics in Kolhapur, founded and run by Dr. Patil, and considered the most credible lab in Kolhapur. We have been in a management contract with Ambika for the past two years, where Metropolis runs the business, with employees on our payroll and all processes and technology under the Metropolis guidelines. This lab on lease model has done very well in the last two years and has grown 60% since we started managing it. We believe this growth will continue to be strong in the future, and we thought it made sense to acquire this business and merge it with the Metropolis Kolhapur Lab that runs independently in the city. While the revenue of the business was Rs.8 crores in FY25, with Rs.1.8 crores EBITDA, when we look at the valuation of Rs.17 crores for 100% of this business, while it looks like a 9.4 multiple of FY25 EBITDA, in reality, the EBITDA will be Rs.3.4 crores once we acquire it, because it will include the synergies between the labs, and fully show the profit on its own, which would actually effectively be a 5x multiple of EBITDA.
  • Liquidity Liquidity disclosed Ambika Diagnostics acquisition will be done from internal accruals.
    The acquisition would be done from internal accruals and closed within 30 days from signing, which was yesterday.

Guidance & targets

Margin

  • Core Diagnostics EBITDA Margin Margin · by end of financial year · High confidence high single-digit

    From low single-digit (Q1 FY26) today

    While it is an improvement from the break-even levels of Q4 last year, before we acquired the business, we remain hopeful of bringing the Core's margin profile to high single-digit by the end of the financial year, as integration progresses and synergies begin to reflect the financials.

    — Surendran C

Network Expansion

  • New Collection Centers Network Expansion · this year · High confidence 400+
    In Q1, we have added 80 new collection centers, and we are on track to add approximately 400-plus collection centers across various regions this year, with a strong focus on tier-2 and tier-3 towns.

    — Surendran C

Market Reach

  • Towns Served Market Reach · soon · Medium confidence 1,000

    From 750 today

    As of now, we are serving customers in about 750 towns across India, and we aim to expand our footprint to 1,000 towns soon, further deepening access and enhancing our presence in high-growth, underpenetrated markets.

    — Surendran C

B2C Mix

  • B2C Contribution to Total Revenue B2C Mix · as we go · Medium confidence 60%+

    From 56% (Group Q1 FY26) today

    See, our first target now at a group level to move into the 60% plus levels. We are at a group level and we are at 56% after all the reclassification and keeping the group together. We are at 56%. Our first target is to reach up to 60% as we go.

    — Surendran C

Volume Growth

  • Organic MHL Volume Growth Volume Growth · ongoing · High confidence 7-8%
    The volume growth for the MHL organic business, our guidance were always 7% to 8%. We have already reached the 7% level. So, we expect to continue at 7% level, keep bettering it going forward.

    — Surendran C

Revenue Per Patient (RPP)

  • RPP Increase Revenue Per Patient (RPP) · annually · High confidence 3-5%
    See, I think if you look at history, I think the last few years, we have been seeing a 3-5% increase in RPP every year. And that is coming from a combination of moving up the value chain and therefore selling more specialized tests to patients who need them.

    — Ameera Shah

What to watch in Q2 FY26

Core Diagnostics EBITDA Margin Improvement

by end of FY26
Current low single-digit positive
Target high single-digit

Why it matters

Core's margin improvement is key to overall group profitability and successful integration of the largest recent acquisition.

While it is an improvement from the break-even levels of Q4 last year, before we acquired the business, we remain hopeful of bringing the Core's margin profile to high single-digit by the end of the financial year, as integration progresses and synergies begin to reflect the financials.

Risks & concerns

  • Initial low margin profile of acquired entities

    medium

    Core Diagnostics' low single-digit EBITDA margin and negative PAT in Q1 FY26 marginally impacted the group's overall profitability, though it is expected to improve.

    The reported group EBITDA has been marginally impacted by the consolidation of Core Diagnostics, which is currently operating at low single-digit margins. While it is an improvement from the break-even levels of Q4 last year, before we acquired the business, we remain hopeful of bringing the Core's margin profile to high single-digit by the end of the financial year, as integration progresses and synergies begin to reflect the financials.

    Management acknowledged

Q&A highlights

7 direct
Integrated offerings and radiology expansion strategy Direct
I think on the basic radiology, we will continue to spread it across our centers. And these equipments are not very expensive. These are smaller equipments. A lot of them are on asset-light basis. We are not procuring all of them. It is a combination, I would say. We are evaluating whether higher-end radiology is something worth getting into or not. We do not have a clear answer at this point of time.

Analyst sought clarity on the company's long-term strategy for radiology, particularly regarding asset intensity and potential for advanced services, which management indicated is still under evaluation.

Asked by Anshul Agrawal

Impact of GLP-1 medications on diagnostics demand Direct
So, our sense is that while it has a potential to manage maybe diabetes better because of obesity coming down, but things like cardiovascular risk and other risk, which could be caused because of these GLP-1 medications, will continue to have to be monitored. And it is not just the heart, but also watching the liver, the kidney, and to see if there is any impact there.

Analyst questioned if GLP-1s could reduce diagnostic demand, but management explained they would likely increase demand for monitoring related to side effects and overall wellness.

Asked by Anshul Agrawal

Timeline for organic margin expansion benefits from hub investments Direct
So, you will start seeing benefits on EBITDA margins coming this year to start with, and by the end of next year, we will get the full benefit of the lab expansion, which has been halted. So, I think it is a couple of years' time where you fully get that 1% plus benefit, which otherwise we used to talk about.

Analyst pressed on when the benefits of prior hub expansions would translate into significant margin improvement for the organic business, with management providing a clear timeline.

Asked by Anshul Agrawal

Core Diagnostics patient volume and revenue growth post-acquisition Partial
So, at this point, we are not providing the separate information for each of these. But like we mentioned broadly, in year one, what we traditionally see when you acquire any organization, whether it is unorganized or organized, is that sometimes the practices in it may not be exactly the same as Metropolis.

Analyst sought specific growth metrics for Core Diagnostics, but management deferred providing separate figures, emphasizing initial focus on integration and margin improvement over immediate revenue acceleration.

Asked by Tauseef Sheikh

Rationale and future growth for Ambika Diagnostics acquisition Direct
So, like Ameera mentioned, this lab, which is Ambika Diagnostics, used to be on lease-owned lab with us in the past for the last two years. And where it has been run by our people, right. Now we have decided to acquire this lab. And we also have a Metropolis separate lab in that area. So, now with this acquisition, we need to have only one of the two labs in that place because it will be fully owned by us. And this will also help us to expand into the entire Kolhapur region, right.

Analyst questioned the strategic fit and growth potential of the Ambika acquisition, leading to management explaining the synergy with existing operations and regional expansion.

Asked by Sumit Gupta

Competitive intensity and pricing rationality in the diagnostics market Direct
So, generally, we are seeing that there is a little bit more rationality on the pricing. And we are seeing the kind of intensity we saw between 2020 and '23 has certainly come down. The players have not gone anywhere, they are still in the market, they continue to compete. But we are not seeing irrationality, which is a good thing for the industry.

Analyst inquired about the competitive landscape, and management confirmed an easing of irrational pricing and intensity compared to the COVID-driven boom, indicating a more stable market.

Asked by Kunal Thanvi

Drivers for Core Diagnostics' margin improvement Direct
See, Core margin to Company level will be driven more by cost synergies. Core was a good business on its own, but the chances of it making money on its own profitably was low because it was subscale, and the kind of corporate costs that were involved and the kind of lab costs that were involved would never have allowed it to make money on its own.

Analyst asked about the primary drivers for improving Core's margins, and management clearly stated that cost synergies from integration, particularly merging overlapping labs and shared infrastructure, are the key factor.

Asked by Girish Bakhru

Sustainability of RPP growth trends Direct
I do not think we have seen a double over the last five years. So, I think that would be requiring a 15%, 20% kind of an increase every year. So, unlikely. But I do think that the kind of trends that we have seen in the past five years, I think can sustain as we go into the future.

Analyst probed on the potential for RPP to double, and management clarified that while the historical 3-5% annual growth is sustainable, a doubling is unlikely given the required growth rate.

Asked by Girish Bakhru

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Detailed narrative

Q1 FY26 Performance Overview

Metropolis Healthcare reported a strong Q1 FY26, with group revenue growing 23.2% year-on-year. Organic revenue growth stood at 13.2%, driven by robust volumes and improved realizations. The company's organic EBITDA margin reached 24.7%, a 40 basis points sequential increase, while organic PAT grew 21.2% year-on-year to ₹46.2 crores, achieving a 13% PAT margin. Group EBITDA margin was 23.1%, impacted by the initial low margins of recent acquisitions.

Strategic Acquisitions and Integration Progress

The company is actively integrating three recent acquisitions: Core Diagnostics, DAPIC (Dehradun), and Scientific Pathology (Agra). Core Diagnostics, despite being negative in PAT in Q1 due to high depreciation and interest on a ₹12 crore loan (now refinanced), turned positive with low single-digit EBITDA margins, improving from break-even in Q4 FY25. Management aims to achieve high single-digit EBITDA margins for Core by year-end FY26 through cost synergies. Additionally, Metropolis announced the acquisition of Ambika Diagnostics in Kolhapur for ₹17 crores, which generated ₹8 crores revenue and ₹1.8 crores EBITDA in FY25, with post-synergy EBITDA projected at ₹3.4 crores.

Network Expansion and B2C/B2B Dynamics

Metropolis continues its network expansion, adding 80 new collection centers in Q1 FY26 and targeting over 400 additions for the full year, focusing on Tier-2 and Tier-3 towns. The organic B2C business grew 16% year-on-year, driven by 9% patient volume growth and 6% improved test mix and pricing, contributing 59% to organic revenue. The group's B2C contribution was 56%, lower than organic due to Core Diagnostics' B2B focus. Organic B2B revenue grew 10% with 4% patient volume growth and 6% RPP increase.

New Service Lines and Digital Initiatives

The company's basic radiology pilot is gaining traction, with 20 locations offering full radiology services (X-ray, sonography, ECG), 36 offering X-ray, and 240 offering ECG. This integrated approach, combining blood diagnostics with non-blood vitals and basic radiology under the TruHealth brand, is enhancing customer engagement and improving RPP. TruHealth contributed 18% to overall revenue in Q1 FY26. Metropolis is also leveraging AI in diagnostics and digital platforms to streamline operations, improve customer experience, and enhance productivity.

Competitive Landscape and Market Rationality

Management observed a return to rationality in pricing and a decrease in competitive intensity in the diagnostics market compared to the 2020-2023 period. This shift is attributed to new players realizing the challenges of the industry and a slowdown in funding for companies without proven unit economics. The company believes this increased rationality, combined with operational efficiencies and scale benefits, contributes to improved gross margins across the sector.

Future Outlook and Strategic Focus

Metropolis is optimistic about FY25-26, expecting it to be a significant year for organic growth and margin improvement. The company anticipates Q2 to be stronger than Q1, with Q2 and Q4 typically being the best quarters. The strategic focus remains on integrating acquisitions, driving cost synergies, expanding the collection center network, and leveraging scientific depth and innovation to differentiate itself in a market where pricing gaps are narrowing.

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