Metropolis’ Unique Business strategy has helped it report a systematic growth in revenue: Ameera Shah

The company’s revenue has registered a growth of 18.1 per cent for FY19 and EBITDA went up by 16 per cent to Rs207.8 crore, says Ameera Shah, Managing Director, Metropolis Healthcare. During an interview with Pooja Tripathi, Zee Business, Ameera Shah said we are probably the only company in the industry (Pathology & Diagnostic industry) where revenue per patient and revenue per test has seen a systematic increase. Edited excerpts: 

Q: The company has reported its first ever financial results after its initial public offering (IPO). How did your company grow in the fourth quarter of fiscal 2019 against industrial growth?
A: We are very happy with the results as it is in line with our expectations with revenue growth of 18.1 per cent for the group at a consolidated basis in the fiscal. The EBITDA stands approximately at Rs207.8 crores, almost 16 per cent growth. When it comes to PAT than we have reached Rs130 crores before CSR and one-time expenses, which is a growth of approximately 17 per cent on PAT. So, I think the numbers have turned out to be good. As I was saying that the revenue growth for the group stood at 18.1 per cent in the fiscal 18-19 while the domestic revenue growth was 18.7 per cent. So, we have been in fact then the industry in general. 

Q: How was the revenue per test/patient growth was?
A: If you have a look at our peers then you will find that their revenue per test and revenue per sample per patient is falling. We are probably the only company in the industry where revenue per patient and revenue per test has seen a systematic increase and this is because of the unique business strategy of Metropolis, where we have a focus on specialised tests. So, we are seeing a very robust revenue per patient and revenue per test.
 
Q: What is your outlook for the company and do you see more improvement or the number will remain sustainable at the same levels?
A: If you see into the numbers than we have grown 18.1 per cent in fiscal 2018-19 and in the corresponding year also we grew approximately 18 per cent. So, we are quite comfortable with these numbers. But, quarter to quarter certain fluctuations are seen in these numbers due to seasonality but we are quite comfortable with these growth numbers. 

Q: Earlier, at the time of IPO, you said that you will focus on geographical expansion. So, update us on the expansion numbers of the fourth quarter? 
A: The network expansion has been at a quite blistering pace and the lab network has grown only from 106 to 119. We have Hub and Spoke model and our goal is to grow hubs and the labs as little as possible but to grow the Spokes, which is a centre, as much as possible. And, this is being down on asset-light third-party model and that is why our capital investment is almost negligible and this is keeping the company very asset-light and scalable and will also help us to derive more operating leverage from the business. As we scale the network expansion that is one piece and the second strategy is also adding new tests to the portfolio. If you have a look than in this 18-19 years we have added about 25 new tests in specialized, routine and semi-specialized bracket and these all are unique tests at Metropolis. In fact, about 4000 tests are conducted at metropolis while other labs across the road conduct some 100 tests. We do everything from Cancer to Neurology to Gastroenterology. So, our specialized tests help us in increasing our average realisation per patient. 

Q: But you face challenges in domestic business from the unorganised sector. Do you have any price-hike plans in the recent future?
A: If the tests of the pathology industry are segmented than we are functional in three segments and they are routine, semi-specialized and specialized. The routine segment comes from the B2C business. So, if your brand is strong then you should have possibilities of price hikes. When it comes to specialized samples are quite unique and that is why we don’t face challenges in taking price hike decisions. But, we face intense competition related to price-hike in the semi-specialised segment. But, Metropolis strategy is focused more on B2C for routine test and specialized tests and that is why competition is not having any impact on us and we are growing at 18+ per cent and are confident to grow at the same pace. 

Q: Provide margin outlook of metropolis?
A: If you see, then EBITDA margin is about 27.3 per cent before one-time expenses and the PAT margin is approximately 16.8 to 17 per cent before one-time expenses.