Metropolis Healthcare unperturbed by Amazon's diagnostics segment foray

Metropolis Healthcare has made four acquisitions in recent months, and is charting out a strategy to grow its geographic presence. Speaking to Sohini Das over a video interview, Ameera Shah, promoter and executive chairperson of the company, and its MD, Surendran Chemmenkotil, outline their business plans. Edited excerpts:

 

 You have made a string of acquisitions recently, what is your M&A strategy going forward?

 

Ameera Shah: There is a funnel and we obviously keep evaluating and keep building for the future. But I don’t expect anything significant for this year; I think whatever we do now will be more towards next year. We are always evaluating deals and a lot of deals are available in the industry – some of them are integrated diagnostics, some are pure pathology. At this point we are not clear on where we stand on high-end radiology.

 

With Amazon entering the segment as a tech-driven, deep-pocket competitor, what kind of dynamic changes do you see?

 

Ameera: Amazon’s entry is through a partnership with Orange Health. It is more of a distribution through Amazon. From the pricing perspective, they have been fairly rational and priced individual tests very similar to larger players like us. On the wellness side they have got some profiles which are low-priced and this is on expected lines. It is going to be more about selling to their own customer base and I am not expecting this to make a huge change in the industry in any way.

 

We are adding 60-70 tests every year to our test menu based on market feedback. We are also adding more centres in the top 750 towns where we are already operating and going deeper. We keep adding 100-125 centres every quarter. We are making tech investments like in AI. We get 20 per cent of our revenue through digital engines that we have. We have experimented with a few tests using AI, but it has not become a significant force yet.

 

What is the share of revenue coming from acquired businesses as of Q1?

 

Surendran: I can say that out of the 23.2 per cent growth in Q1FY26, around 13.2 per cent is coming from the organic business and remaining 10 per cent is from the acquired business. Of the acquired businesses, we had a full quarter for Core Diagnostic and half a quarter for Dr. Ahujas’ Pathology and Imaging Centre (DAPIC). For Agra-based Scientific Pathology, we had only 15 days during the quarter. So, while the contribution from acquired business stood at 10 per cent in Q1, this could go up by another percentage or so in Q2.

 

What kind of operational or cultural challenges are you facing while integrating these assets?

 

Surendran: Of course one will definitely face cultural and operational challenges. Core Diagnostic is a national operator and in operation for almost 10 years, so there is a larger workforce. They have their own culture, ways of working, and systems. The other two acquisitions are relatively smaller regional players, but running for decades. So they too have deep-rooted cultural values and ways of working. When it comes to people integration in terms of culture, it takes time. Operational alignment work is around software, pricing, platforms, equipment etc. That's why we have put a steering committee and three teams looking at all the three integrations.

 

 What is the revenue and Ebitda outlook for FY26?

 

Surendran: We estimate the organic business should be growing at over 12 per cent and another 10-11 per cent growth will come from the acquired assets. Overall, it will be 20-23 per cent growth on a full year basis. We had 24.4 per cent margins last year and there can be a 70-100 bps rise over that. At a group level, it will be 25 per cent (on organic) and then 1 per cent dilution due to acquired assets.