Release Date: August 07, 2024
For the complete transcript of the earnings call, please refer to the full earnings call transcript.
Positive Points
- Achieved an 11.3% year-on-year revenue growth, reaching INR 602 crores.
- Patient volume increased by 10.4% compared to the previous quarter.
- EBITDA margin improved to 28.2%, reflecting operational efficiency.
- Strategic investments in digital infrastructure and data analytics are enhancing service outcomes.
- Integration of Suburban Diagnostics is progressing well, contributing to volume expansion.
Negative Points
- Suburban Diagnostics' growth was only 8%, lower than the overall company growth.
- Revenue per patient remained flat at INR 833, indicating no significant price increase.
- Margins for Suburban Diagnostics decreased to 14% from 17% in the previous quarter.
- Intense competition from hospitals and other organized players continues to be a challenge.
- Significant investments in new labs and marketing are required, which may impact short-term profitability.
Q & A Highlights
Q: Firstly, on under Tier three Tier four markets of either expanding infra, just wanted to go and learning from patient behavior, like how are these patients different from metros and Tier one, what are they seeking for from a branded reps?
A: In terms of unit expansion into Tier three, Tier four primarily, it's about competing with local unorganized players. Our offering there is quite similar to what we offer in Tier two and Tier one cities, leading with quality and service. We are finding quite a lot of patients and clinicians embracing us in these cities.
Q: On the Medical Center of Excellence, could you elaborate what is this exactly? Are we putting up a different infrastructure here?
A: We are trying to segment the market and look at broad segments, especially on the high end. We have identified certain segments like onco autoimmunity and reproductive diagnostics, focusing on introducing newer tests and enhancing communication with the medical fraternity. Operationally, we have some people on the ground, but we are not creating different themes for today.
Q: On the specialized portfolio, what kind of scale or total mix do you visualize over the next three years?
A: The specialized portfolio is primarily aimed toward initiation. We are still working on it and it hasn't reached a level of scale for us to differentiate and start reporting those numbers separately. However, we expect it to grow over the next three years.
Q: Could you give us some perspective on geography-wise volume growth? Which geographies are driving double-digit growth and which are lagging?
A: Geographies like North and East are performing well and doing better than our company average. We are going much deeper, especially in UP where we are now going into Tier three and Tier four towns, which are showing higher growth compared to the company average.
Q: What would be the like-for-like price increase that we have taken on a year-on-year basis across tests?
A: We took the last price increase in February 2023 and completed one full year of that cycle in February 2024. We have not taken any price increase since then and do not intend to take one as of now.
Q: Would you be able to share the revenue and EBITDA margin for suburban this quarter?
A: Suburban growth this quarter is about 8% and EBITDA is about 14%.
Q: Could you talk a little bit about term margins? Given revenue leverage, margins tend to be highest in Q2. Would you expect a similar trajectory this year?
A: Q2 is always higher year-on-year. Most of the spike happens around September. As revenue tends to be higher in Q2, everything flows into the margin. We presume Q2 will always remain higher margin compared to any other quarter.
Q: Could you give us some sense of specialized tests as a percentage of overall revenues? Do we see that as a differentiator going forward?
A: The specialized portfolio currently contributes about 23% of our revenue, growing by about 1-1.5 percentage points over a similar period last year. It is a differentiator in terms of our ability to get into larger institutional businesses and get key opinion leaders to endorse the brand.
Q: What will it take to get suburban to grow faster than the company average?
A: There is a core geography focus on Bombay, Pune, and Goa, which are responding positively. It may take a few more quarters for suburban to start seeing overall growth rates move to double digits and early teens.
Q: On the awareness campaign, are there any discounts offered to drive bundled testing volumes?
A: Bundled testing by definition is discounted. There are awareness campaigns built on promoting bundled tests, which are inherently discounted. Visible campaigns are more about building awareness of the brand and service, independent of specific package promotions.
For the complete transcript of the earnings call, please refer to the full earnings call transcript.
