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After a strong Q1 that was driven by extraordinary gains due to covid-19 and allied testing, Metropolis Healthcare Ltd’s Q2 was bound to be softer. However, rising non-covid revenues helped the company put up a decent show in the September quarter.

The firm’s non-covid revenue grew 38% year-on-year (y-o-y) to 260 crore in Q2, thanks to higher patient visits. Visits jumped 25% from a year ago while the number of tests increased 29%, boosting overall revenues by about 5% to 302.6 crore.

Robust uptick
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Robust uptick

The growth outlook remains healthy as Metropolis continues to gain market share. The share of revenue from business-to-consumer (B2C) business from cities that are Metropolis’s key focus areas is also rising. The overall B2C share improved to 60%, from around 55-56% a year earlier, which the firm is targeting to grow to 65%. Metropolis is working on increasing specialized testing and penetration as well as digital initiatives. While competition in the organized segment is intense, firms such as Metropolis have benefited by grabbing market share from the large unorganized space.

The company is undertaking large expansions too. It has added seven laboratories and 451 collection centres in the first half of the current fiscal and plans to add 15-20 labs and 250-300 collection centres in the second half of FY22. The firm has also completed the acquisition of Hitech Diagnostics in southern India. This will improve its presence in southern India, helping improve its B2C share as well.

The flip side of expansion is higher costs. The completion of acquisition could also increase the firm’s debt levels. What is also worrying is that Metropolis reported a drop in Ebitda, both on a y-o-y and sequential basis in Q2. To be sure, part of this was due to a high base. Ebitda is earnings before interest, taxes, depreciation and amortization.

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