Next phase of growth is about improving utilisation: Chemmenkotil

In a video-interview with Sohini Das, Surendran Chemmenkotil, Managing Director of Metropolis Healthcare, speaks about the company's FY27 network expansion strategy

Metropolis Healthcare is entering a phase of consolidation after a rapid expansion over the past three years that saw the diagnostics major more than double its geographic footprint. Surendran Chemmenkotil, managing director of Metropolis Healthcare, in a video interview with Sohini Das, speaks about the company’s FY27 network expansion strategy, and the growing contribution of acquisitions to the revenue. Edited excerpts:

 

What is your network expansion strategy for FY27— going deeper in existing cities or expanding into new geographies?

 

Over the last three years, we have expanded from operations in about 300 cities to nearly 750 cities and set up close to 80–90 labs during this period. This network is adequate to service these geographies.

 

By choice, over the next couple of years, we do not plan to expand beyond 750 cities. Our focus will be on going deeper within these existing cities by strengthening the network through additional collection centres and customer service units, across both B2C and B2B segments.

 

Currently, we operate with around 220 labs and about 4,800 collection centres, translating to roughly 21–22 collection centres per lab. One of our key objectives over the next three years is to increase this ratio to at least 30 collection centres per lab. This would take our total collection centre count to around 6,500, while improving capacity utilisation and realisations from the existing lab infrastructure.

 

The strategy is to deepen presence, drive higher throughput from each lab, and accelerate the shift from unorganised to organised diagnostics in the 750 towns where we are already present.

 

How much are acquired businesses contributing to revenue and profitability?

 

For the current quarter, overall revenue growth is around 26 per cent. Of this, approximately 15 per cent has come from organic growth, while about 10–11 per cent has been contributed by acquired businesses. For the full year, acquisitions are expected to account for roughly 10 per cent of total revenue.

 

At the profitability level, most of the profit after tax contribution is still coming from the organic business. This is largely because Core Diagnostics and other recently acquired entities are in the early phase of integration and margin normalisation, and are currently operating at early single-digit margins.

 

Since January 2025, we have completed four acquisitions. Of these, three were in North India. This was a deliberate strategy, as Metropolis has traditionally been stronger in the western and southern regions, and the acquisitions help us strengthen and balance our geographic presence in the North. Importantly, we were able to find good-quality assets in the region that fit our B2C-focused strategy and met our quality and diligence thresholds.

 

As these acquisitions get fully integrated over the next four to six quarters, we expect their contribution to margins and profitability to improve steadily and converge towards company-level performance over time.

 

There have been concerns around operating deleverage in Core Diagnostics. What is your view on this?

 

We have consistently said that Core Diagnostics will take about three years to reach company-level margins. It is not appropriate to judge performance on a quarter-to-quarter basis, especially given seasonality.

 

Core Diagnostics is largely oncology-focused, and Q3 is typically softer due to festive holidays when procedures slow down. As we move into Q4, volumes generally rebound. We remain confident that by the end of this year, Core Diagnostics will exit at high single-digit margins, and over the next three years, margins will converge with company levels.

 

Will acquisitions remain a key part of your strategy in FY27?

 

Absolutely. We now have a dedicated acquisition machinery led by a CXO-level executive. The team continuously evaluates opportunities, conducts due diligence, and works through commercial structures.

 

At present, we are focused on integrating the three to four assets we have already acquired, which typically takes four to six quarters. As we move into the latter part of the next financial year, we will continue to look at bolt-on acquisitions as part of our inorganic growth strategy.

 

There is a growing policy focus on non-communicable diseases (NCDs) and preventive testing. How is this trend shaping up across metros and beyond?

 

If you look at our portfolio, whether it is oncology or cardiology-related diagnostics, normal growth is in the range of about 16–18 per cent year-on-year. With the acquisition of Core Diagnostics, we have significantly enhanced our oncology portfolio, especially high-end oncology testing. As a result, oncology has seen much stronger traction.

 

Preventive healthcare is also becoming a major growth driver. Many lipid and related tests are now part of preventive health check-ups. Preventive healthcare testing is growing at around 25 per cent year-on-year, and this trend is clearly reflected in our testing patterns and performance.

 

Is this trend city-specific? Are you seeing differences across Tier-I, II and III cities?

 

Currently, oncology and other specialty tests are largely concentrated in Tier-I and Tier-II cities. However, we are seeing steady progression in Tier-III cities as well. Many specialty doctors are now moving to Tier-III locations, and once consultations increase there, diagnostic volumes will follow.

 

The shift is happening, but it is not as fast as we initially anticipated. Over time, as specialist presence increases, we expect specialty diagnostics to gain momentum in Tier-III cities as well.

 

How do you see the B2C and B2B mix evolving?

 

B2C currently accounts for about 60 per cent of our revenue and will remain our primary growth engine. Most new centres and productivity initiatives are focused on B2C.

 

That said, B2B is still a meaningful 40 per cent of the business. We have cleaned up low-quality institutional business and are now building a stronger, higher-quality B2B portfolio. Our ability to deliver high-end specialty testing is attracting B2B labs and hospitals. While B2C remains the top priority, we will continue to grow both segments.

 

What changes do you see shaping the diagnostic industry over the next two to three years?

 

Routine and semi-specialty tests will continue to grow steadily. A major structural shift underway is the movement from unorganised to organised diagnostic players, especially in Tier-II, III and IV towns. Quality, reliability and trust are driving this transition.

 

Preventive healthcare is becoming a much larger opportunity. At Metropolis, preventive health check-ups account for about 19 per cent of total revenue today, up from around 13–14 per cent two years ago. Preventive testing is growing at about 25 per cent annually, significantly faster than overall company growth.

 

Specialty diagnostics will remain a core focus. We continue to expand our test menu, improve turnaround times, and support clinicians in interpreting reports. Genomics will emerge as a key growth driver—we recently inaugurated our genomics centre in Gurugram.

 

Finally, consolidation will continue. More regional and smaller players will look to partner with or be acquired by national chains, creating sustained acquisition opportunities across the sector.