Metropolis Healthcare Q3: Key highlights of analyst concall

Diagnostic chain Metropolis Healthcare registered a healthy 34.8 percent YoY rise in Q3FY20 profit at Rs 42 crore.

EBITDA margin rose by 270bps to 28.5 percent in quarter ended December 2019 YoY.

Patient visits increased 14 percent YoY in Q3 to 2.42 million and revenue per patient was up 2.7 percent YoY to Rs 923 in Q3FY20.

Here are key highlights from Metropolis Healthcare’s conference call by Narnolia Financial Advisors:

Management Participants: Ameera Shah – MD, Vijendra Singh – CEO, Rakesh Agarwal – CFO

Increase in revenue per patient has been contributed by the price increase taken on October 2019 and wellness growth of 8 percent on a YoY basis.

The EBITDA margin excluding the lab on lease would have been 0.6 percent higher as the new labs on lease diluted the total lab on lease EBIDTA. Certain leasehold assets upto the tune of Rs 0.5 crore were written off during the shifting of Delhi Lab. This impacted the EBIDTA to the tune of 1 percent.

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In terms of volumes, Tier 2 and 3 cities are growing faster than Tier 1 cities; however, the margins profiles are higher better in Tier 1 cities. ARC networks also contributing towards volume growth.

B2C now contributes 54 percent of the revenue from Focus cities versus 52 percent in Q3FY19. This segment saw a revenue growth of 16.3 percent YoY in the focus cities. The focus going ahead would be to increase this share to 65 percent.

A total of 19 new tests (7 in chemistry, 11 in molecular pathology and 1 in infectious molecular) have been validated and new tests added to the test menu in Q3FY20.

23 acquisitions have been done so far by the company, the major strategy for acquisitions being strengthening its leadership position in the existing market and entering new geographies.

The company is in process of acquiring 51 percent shareholding of Shraddha Dingnostic Centre Pvt Ltd for providing diagnostic and pathological testing services in Ahmedabad, Gujarat.

The major growth drivers going ahead:

1) Since the 82 percent of the franchise network are young, the continued efforts to grow this throughput will lead to medium term growth leading to operating leverage and improved profitability.

2) Increasing market share in the focus cities through network expansion and improving productivity.

3) Focus on growing business in North and East aggressively using the additional new capacities created in Delhi lab and by expanding networks in the smaller towns of North and East India.

4) Focus on Preventive and wellness segment to drive volumes.

5) Leverage vast capabilities in molecular diagnostics, Oncology and Cytogenetics where the margins are high and competition is lower.Exclusive offer: Use code “BUDGET2020” and get Moneycontrol Pro’s Subscription for as little as Rs 333/- for the first year.