Release Date: October 23, 2024
For the complete transcript of the earnings call, please refer to the full earnings call transcript.
Positive Points
- Thyrocare Technologies Ltd (BOM:539871, Financial) achieved a record high revenue of INR177.4 crore this quarter, surpassing even their peak during the COVID period.
- The company reported a 20% year-on-year revenue growth, primarily driven by their pathology business.
- Thyrocare Technologies Ltd (BOM:539871) has successfully expanded its franchise network to 8,400 active franchisees, processing 6.7 million samples and serving 4.4 million patients this quarter.
- The company has completed strategic acquisitions, including Polo Labs and Winter Labs, to expand its footprint in North and South India.
- Thyrocare Technologies Ltd (BOM:539871) has been recognized by the College of American Pathologists for maintaining excellence in high-quality laboratory care for over 15 years.
Negative Points
- The partnerships business, while growing, operates at a lower margin compared to the franchise business.
- Employee expenses have increased year-on-year due to annual increments and headcount increases from new business acquisitions.
- The company faces margin pressure from recent acquisitions and geographical expansions.
- There is uncertainty regarding the impact of potential GST changes on the health insurance segment, which could affect pricing and customer costs.
- The company is still in the early stages of integrating recent acquisitions, such as Winter Labs, which are currently close to break-even or slightly negative in EBITDA margins.
Q & A Highlights
Q: What is the revenue contribution from packages to total pathology revenues, and how much can the active franchisees grow from here?
A: Rahul Guha, CEO, stated that more than 30% of revenue comes from packages, with the rest from standalone tests. Thyrocare currently works with 8,500 franchisees, a small fraction of the 1.5 lakh pathology labs in India, indicating significant growth potential. The partnership business, now 33% of total business, is not from a low base but reflects strong traction in enabling healthcare companies to offer diagnostics.
Q: Does the mix change between franchise and partnership affect the overall margin profile of the company?
A: Rahul Guha explained that the partnership business comes at a slightly lower margin than the franchise business. The aspiration is for the franchise business to grow in early double digits, while the partnership business is expected to outperform the franchise business.
Q: Can you provide a breakdown of franchise sales in terms of contributions from mom-and-pop labs, local labs, and hospitals?
A: Nitin Chugh, Chief Commercial Officer, mentioned that 90% of franchisees are pathology labs, which may service hospitals. Direct hospital franchisees are a small proportion of revenue. The company categorizes franchisees as large or small, based on their operations.
Q: What is the plan for adding more labs, and how does the acquisition of Polo Labs fit into this?
A: Rahul Guha stated that Polo Labs comes with three or four labs, which are not yet included in the lab count. Thyrocare plans to add three to four labs a year to cover white spaces in India. The acquisition of Polo Labs will be reflected in future lab counts.
Q: How is the insurance business developing, and what percentage of revenue does it contribute?
A: Nitin Chugh noted that the insurance business is a focus area, with new clients being added regularly. The insurance segment accounts for 30% to 40% of the partnership business, though it is still a small base compared to the market opportunity. The peak period for insurance is expected in the January to March quarter.
For the complete transcript of the earnings call, please refer to the full earnings call transcript.
