Metropolis Healthcare Limited (NSE: METROPOLIS) Q4 2025 Earnings Call dated May. 14, 2025
Corporate Participants:
Ameera Shah — Promoter & Executive Chairperson
Surendran Chemmenkotil — Chief Executive Officer
Sameer Patel — Chief Financial Officer
Analysts:
Raman KV — Analyst
Amey Chalke — Analyst
Shyam Srinivasan — Analyst
Anshul Agarwal — Analyst
Bino Pathiparampil — Analyst
Rishi Mody — Analyst
Surya Patra — Analyst
Gaurav — Analyst
Presentation:
Operator
Please wait while you’re joining the conference. The conference is now being recorded ladies and gentlemen, good day and welcome to the Metropolit Healthcare Limited Q4 FY ’25 Earnings Conference Call hosted by PhillipCapital India Private Limited. This conference call may contain forward-looking statements about the company, which are based on the beliefs, opinions and expectation of the company as on-date of this call. These statements do not guarantee the future performance of the company and it may involve risks and uncertainties that are difficult to predict. Thank you.
As a reminder, all participant lines will remain in the listen-only mode and there will be an opportunity for you to ask questions after the presentation concludes. Should you need assistance during the conference call, please signal the operator by pressing star then zero on your Touchstone telephone. Please note that this conference is being recorded. I now hand the conference over to Mr Surya Patra from PhillipCapital India Private Limited. Thank you, and over to you.
Ameera Shah — Promoter & Executive Chairperson
Yeah. Thanks, Kir. Good morning, everyone. I on behalf of PhillipCapital India, welcome you all to the Q4 and FY ’25 earnings conference call of Metropolit Health. From, we have with us today Ms Amita Shah, Chair Person and Whole-Time Director; Mr Surendra, Chief Executive Officer; and Mr Sameer Patel, Chief Financial Officer. Now, I’ll hand over the line to you, ma’am for your opening remarks. Over to you. Hi, good morning, everyone. Get on-hold. Good morning, everyone, and thank you for joining us today for this Q4 FY ’25 earnings call. I’m joined by our CEO, Agd, Chief Development and Business Officer; as well as Sameer Patel, CFO and SGR IR Advisors. We’ve uploaded our updated results documents on the exchanges on the company’s site, and I hope everyone’s had a chance to go through the same.
Let me begin with a few key updates for this quarter. As highlighted earlier, we have accelerated our inorganic growth strategy and successfully signed three acquisitions. Number-one is Core Diagnostics, the leader in pan-India oncology testing, which we closed also end of March.
The other two we have signed and not closed yet, scientific pathology, which is the leading chain in Agra, positioning us as the second-largest player in Western Uttar Pradesh and Dr Hujar Pathology and Imaging Center Dapik, which is premier diagnostic provider, giving us leadership in and entry into Utra Kat. These strategic additions significantly strengthen our presence in North India.
With this, the region’s contribution to overall revenue is expected to grow from 8% to approximately 14% to 15% in FY ’26. Aligned with our broader vision, and scientific pathology support our goal of expanding reach by acquiring clean D2C-focused labs known for scientific rigor and high-quality diagnostics. With these, we will go deeper into these two new markets that we have not had the chance to really be strong and before, which is UP and Utra.
Furthermore, core diagnostics supports our goals of building leadership through deep technical expertise on the back-end and direct Doctor Connect on the front-end, along with the other goal of deepening presence and Connect in North India. Co-diagnostics also being the premier oncology platform in India gives us a great opportunity to become a platform for genomics across the country.
While we will start with oncogenomics, we will then expand into all other kinds of genomics through the core platform. This string of approach across long will enable us to enter underserved markets and further enhance brand equity and market-share amongst the medical community and the consumers across this region. Our immediate priority is the seamless integration of these three newly-acquired entities into the Metropolis ecosystem.
This includes onboarding them under the Metropolis brand, aligning their operational systems and processes and our standardized protocols and ensuring cultural alignment amongst the teams. We will also be conducting a comprehensive review to identify synergies in areas such as technology, logistics, procurement, talent and identify cross-selling opportunities to expand our market-share.
These efforts will be instrumental in unlocking efficiencies, driving cost optimization and ultimately scaling revenue and profit margins in the quarters ahead. While we deeply evaluated six to seven good inorganic opportunities. We selected three, which are the ones I mentioned to go-ahead with as they fit our top three criteria.
Number-one, the criteria was deeply scientific and ethical businesses known for their quality and expertise that fit our culture. Number two criteria was profitable businesses valued at fair financial terms that can be EPS accretive immediately and enhance ROCE in three years. And number three, in-market for segments which are strategic to us and we looked and evaluated the buy versus build arithmetics. And only when it made sense to us where the high gestation of building made sense to buy is when we actually went ahead. And that’s how we chose these three out-of-the six that we evaluated.
When COVID happened, we had a choice to remain steady-state and declare good profits or to take a bold stand of investment and change ourselves with the changing landscape of the industry. We chose to be bold and And started the journey over the past four years, a period marked by significant challenges, transformation and resilience. Among the many events that shaped this time, the COVID pandemic was undoubtedly the most impactful. During this crisis, we rapidly enhanced our testing capabilities, trained our teams and adapted our systems and processes to operate in an environment where the world had come to a standstill due to lockdowns. While revenues went up for two years, we also had to deal with the non-COVID revenues taking its time to come back to normalcy. The pandemic also brought a wave of new entrants into the industry, many of who aim to bridge technological gaps by offering text-driven wellness services. This helped expand the wellness market, a trend from which incumbent players like Metropolis ultimately benefit. However, as we move forward, many of these new competitors are either pivoting to traditional brick-and-mortar models, which require significant time and investment for them or they are shifting focus to low-margin segments in the B2B business. While the competition brought some turbulence in the last few years in terms of talent poaching and pricing, the biggest change we had to adapt to was what the consumer desired in terms of technology and consumer connect, which required large investments from the incumbents, which have now been done. Over these past way four years, we also experienced shifts in the business mix where we increased focus on B2C and B2B businesses and reduced the contribution of our institutional business, which largely included government contracts. We faced other internal and external challenges as well, including brand infringement for high-tech by a competitor, some unplanned engagement with the tax authorities and the need to rebuild a stronger management team, all of which we did while investing time and money into expanding our infrastructure. We have added almost 90 labs and 2,000 centers in the last four years. While this has added some capex and opex cost to the P&L, we believe the strategy of investing heavily in technology, investing in a better management team, investing in large number of labs and centers across India and exiting the government businesses will now help us to build a more solid business for the future and for the current. Our period of investment — heavy investment is now done and we can move to a phase of reaping the benefits of these investments via accelerated organic and inorganic growth and better margins. From a governance perspective, we have further strengthened our brand, our Board with the appointment of Rehan Khan and Purvi Sateh as Independent Director. Rehan Khan brings deep strategic insights from his extensive experience in the pharmaceutical sector and strong engagement with the clinical ecosystem. Purvi adds critical perspective on organization’s people, strategy, culture and values, foundational elements for any service-driven enterprise. We’ve also strengthened our leadership team and have built talent pool at all levels in the organization. We have promoted to the Managing Director of the business with a clear focus on enhanced organizational performance and improving shareholder returns. We have recently appointed Sameer Patel as CFO and Bia Suri as Chief People Officer. Both come with diverse backgrounds in retail, QSR and have worked with large MNCs and bring fresh retail and service perspective. With continuing to run the business operations over the last two years and the rest of the leadership firmly established in their roles, we are well-positioned to deliver strong performance in the year ahead. In summary, the last four years have been a phase of transformation and consolidation. Today, we stand-on a strong foundation poised to leverage scale, accelerate digital adoption and further enhance our brand, setting the stage for the next phase of growth. Looking ahead, our strategic focus will be anchored on the following key priorities. Number-one, accelerated expansion of collection centers. While we will now slow-down the number of lab expansion we do, the collection center expansion will accelerate. We aim to significantly scale our network of collection centers across the country and this will allow us to broaden our geographical footprint, improve our service, also our lab to our center ratio and drive higher throughput. With the infrastructure largely in-place, our focus now shifts from build-out to execution and optimization. Number two, enhancing productivity. We will initiate a focused productivity drive-to boost sample volume and utilization across both our existing and newly added labs and collection centers. Number three, operational efficiency. We are committed to improving execution through cost rationalization, process automation and tighter operational controls to achieve sustainability. Number four, geographical diversification. Our objective is to transition from being predominantly focused on West and South and to establish ourselves as a truly pan-India diagnostics brand with more revenues coming in from North and East and margin expansion. So disciplined execution of our productivity initiatives, operational efficiencies and lower incremental costs from infrastructure and IT upgrades, we are confident in our ability to expand margins by about 100 basis-points and going-forward. With this, I would like to hand over the call to to speak about the strategies in detail with key operational and financial performance.
Surendran Chemmenkotil — Chief Executive Officer
Thank you, Amira, and good morning, everyone. Let me begin by sharing the key highlights of our quarter-four and full-year ’25 performance. For financial year ’25, we delivered 12 percentage year-on-year revenue growth, driven by a 6% increase in-patient volumes with the remaining 6 percentage coming from combination of micro-market enabled pricing and text mix improvements. Revenue for quarter-four ’25 stood at INR345 crores, reflecting a 10% year-on-year growth.
This includes contribution from core Diagnostics consolidated for 11 days in March following its acquisition. Adjusted EBITDA for quarter-four came in at INR84 crores, while full-year ’25 adjusted EBITDA was at INR325 crores, making a 14% year-on-year increase. Reported EBITDA was impacted by one-time expenses of about INR21 crores on account of three acquisitions completed in-quarter four. These costs include transaction fees and diligence expenses such as legal, financial, banking and tax, etc., as well as provision of a one-time incentive and other allied costs aimed at a seamless integration and synergies.
These also include costs associated for other diligence and legal expenses paid-for multiple targets identified for inorganic expansion, of which we have closed three which fit into Metropolis umbrella and give us the best ROI. Legal and provisional expenses related to ongoing tax cases also came in-quarter four and also a small provision of certain inventories. In terms of quarter-four operating performance, we observed lower-than-usual revenue in February, particularly in our focus markets.
This quarter also witnessed a decline in acute testing volumes due to seasonal weather changes, which impacted hospital footfall and diagnostic demand. Having said that, the positive development is that March saw a healthy recovery and April followed normal trends. Based on current indicators, we anticipate that quarter one revenue buildup will be in-line with expectations. Quarter-four margins were affected by several factors, lower-than-usual revenues in February, like I mentioned, which resulted in temporary de-operating leverage.
The rollout of significant number of labs and centers in H2 of last year, we opened 12 new lands and 84 company-owned centers as a last phase of lab expansions in last year. Zero contribution margin from core diagnostic during its brief consolidation window impacting overall EBITDA margin. Looking ahead, with the planned addition of 90 labs now complete, our focus in financial year ’26 will be — will to selective lab expansion, opening only those necessary to deepen our market presence.
This approach will substantially ease the margin pressure associated with the rapid lab expansion. Simultaneously, we are consolidating overlapping lap between Metropolis and core diagnostics across various regions to unlock operational efficiencies. The positive impact of these initiatives are expected to start yielding tangible benefit from the first-half of this year.
Moving on to highlights of operational KPIs for the year. Our patient and test volume growth. In financial year ’25, patient volumes increased by 6% year-on-year, while the test volume growth by 7 percentage. The steady growth was supported by our strategic focus on B2C segment, ongoing geographical expansion and a more client-focused approach within our B2B operations. However, overall volumes were partially impacted by the discontinuation of certain institutional and government contracts.
These engagements contributed to volume, but impact — limited impact on margin. As part of a deliberate strategy, we chose to exceed this business in order to provide growth in the B2C segment and enhance the quality and profitability of our B2B portfolio. Speaking of our B2B performance, B2C revenues grew by 17 percentage in financial year ’25, driven by the adoption of a more granular approach, leveraging macro marketing strategies for targeted outreach and engagement.
In Maharashtra, including key cities like Mumbai, Pune, B2C revenues grew by 19% year-on-year, reflecting not only our strong brand preference in metro markets where patients and doctors alike, but also deeper penetration into smaller towns across the state and the broader western region. Encouragingly, we are seeing similar growth trends now coming across from the other cities in India, , reinforcing our confidence in further expanding B2C market-share. Geographical expansion, if I were to talk about it, we are now present in 750 towns, up from 350 just a couple of years ago. We have added 29 labs at a gross level in financial year ’25 and have added more than 400 centers. Over 85 lakhs have been added in the last four years with 51 of these getting added in the Tier-2 and Tier-3 towns. This rapid expansion is expected to drive further volume and revenue growth, especially as these markets begin to mature. Tier-3 towns, in particular have seen 18% year-on-year revenue growth and now contribute 26 percentage of our domestic revenues. Our clinician outage programs in these towns have been instrumental in strengthening brand presence and accelerating B2C adoption. Let me talk about True Health performance. Our True Health segment registered a 24% year-on-year revenues increase, now contributing to 19% of the total revenues considering the exit run-rate of quarter-four. Key drivers include enhancement to the portfolio such as introduction of vital checkups covering about 12 odd parameters, doctor consultations and ECG services available across the centers and home visits. Additionally, region-specific bundling of wellness and illness test has differentiated us from the standard offerings in the market, improving customer relevance and engagement. Now let me come to the Specialty segment. Our specialty segment delivered a 13% year-on-year growth in financial year ’25. We added 60 new tests across key focus areas, including oncology, women and child health, chronic diseases, nephrology and molecular genomics. We introduced an industry-first HPV DNA self-sampling kit for cervical cancer screening and hereditary cancer panel that tests for about 25 cancers for those with cancer risk in the family. Additionally, we launched AI-enabled testing solutions for areas such as prostate cancer and karyotyping, significantly reducing the turnaround time. With added capabilities brought in through core diagnostics and emerging cross-selling opportunities, we expect the Specialty segment to contribute even more meaningfully to revenue growth in the coming period. We’ve also remained steadfast in our commitment to technology advancement and digital transformation, consistently investing to enhance both operational efficiency and the customer experience. We revamped our mobile app offering users advanced features such as smart test analysis, real-time sample tracking and personalized health recommendations. An AI power recommendation engine has been introduced to deliver personalized test suggestion across multiple customer touch points. We have implemented significant enhancement to our laboratory information management system to improve lab workflows, data accuracy, etc. Our continued focus on leveraging cutting-edge-edge digital tool is driving deeper patient engagement, improved decision-making and greater scalability, positioning us to deliver a truly differentiated diagnostic experience. In summary, our strategic initiatives are starting to yield measurable outcomes and we remain committed to executing a Metapoli three-point strategy, which includes, one, a focused and balanced B2C and B2B approach given with micro-market lens; two, focus on further inorganic opportunities and seamless integration of the acquired assets; three, expanding into untapped regions and deepening our presence within key cities; four, accelerated growth in Tier-3 towns through stronger engagement with doctors and patients; Five, ongoing engagement of our specialty testing portfolio and continued tailoring of health packages and integration of basic radiology and vital checks. These efforts are reinforcing the momentum in our B2C segment. We are firmly committed to achieve our goal of increasing B2C revenue contribution in the days to come. I now hand over to the call to Sameer, who will take you through the financial numbers in detail. Thank you.
Sameer Patel — Chief Financial Officer
Thank you,. First, I would like to express my gratitude to Board and management team for welcoming me into the family. I am truly excited to join the organization at such a stack with a strong foundation and clear vision for growth, I look-forward to working closely with the leadership team to strengthen financial discipline, enhance transparency, support strategic initiatives that will drive long-term value for our shareholders. Let me now share some of the key financial performance for the quarter-four and full-year FY ’25.
Revenue for quarter-four stood at INR345 crore, a growth of 10% year-on-year with a 6% growth in-patient and test volume on year-on-year basis. Revenue for FY ’25 grew at 12% with a patient volume growth of 6% and test growth of 7% on year-on-year basis. Our B2C revenue stood at INR193 crores in-quarter four, an increase of 14% year-on-year.
Our B2C revenue stood at INR735 crore in FY ’25, an increase of 17% year-on-year. Our B2B revenue stood at INR120 crores for the quarter, an increase of 10% year-on-year and B2B revenue stood for INR477 crore in FY ’25, an increase of 12% year-on-year. The revenue-share for two health segments stand at 17% for FY ’25, indicating a growth of 24% year-on-year.
Our Specialty segment revenue contribution stood at 37% for FY ’25 with a growth of 13% year-over-year. Our adjusted EBITDA for the quarter stood at INR84 crores, an increase of 5% year-on-year. Adjusted EBITDA for FY ’25 stood at INR325 crores, an increase of 14% year-on-year. Adjusted EBIT margin for the quarter was 24.3% and for the full-year, it stood at 24.4 crores.
Reported EBITDA for the quarter stood at INR63 crores and reported EBITDA for FY ’25 stood at INR304 crores, a growth of 7% year-on-year. PAT excluding one-time cost for the quarter stood at INR45 crores, a growth of 24% year-on-year and for FY ’25 it stood at INR161 crores, indicating a growth of 26%. Please note that in the previous year, Q4 ’24 and FY ’24 full-year, the company had transition — transitioned the accounting year of its four overseas subsidiary to align with the Indian financial year.
However, for the perform — for the purpose of performance comparison, the impact of this one-time adjustment amounting to an increase of INR18.25 crore in revenue, INR5 crores in EBITDA and INR40 lakhs in PAT has been exported from Q4 FY ’24 and full-year FY ’24 base according to all financial comparison for FY ’25 are on like-to-like normalized base. Moving on the balance sheet, we have a net cash surplus of INR118 crores as at 31st March 2025.
That’s all from my side. With this, I open the floor for question-and-answers. Thank you.
Questions and Answers:
Operator
Thank you. Ladies and gentlemen, we will now begin the question-and-answer session. Anyone who wishes to ask a question may press star and one on the touchstone telephone. If you wish to remove yourself from the question queue, you may press star and 2. Participants are requested to use your handsets while asking a question.
Ladies and gentlemen, we will wait for a moment while the question queue assembles. The first question comes from the line of Raman KV from Sequent Investments. Please go-ahead.
Ameera Shah
It’s a little weak. Can you speak a little loudly?
Raman KV
Can you hear me now?
Ameera Shah
Yeah. Yeah.
Raman KV
Sir, I have only two seconds. One is what is your volume guidance for the coming years? And can we expect the net EPS margin expansion in FY ’26 or will it be a gradual increase?
Ameera Shah
Yeah. So if you have — we have mentioned it in this call and the previous calls also, this year we did six percentage patient volume growth and primarily the defocusing of the institutional business has a little bit of impact on the — on the overall patient volume growth. So the coming — this current year, we — we are confident of getting back to the 7 percentage range on patient volume growth. And your second question on the margin expansion.
Surendran Chemmenkotil
So this year, financial year, the adjusted EBITDA we are at 24.4 percentage. We expect the EBITDA to expand by about a percentage in this financial year.
Raman KV
So okay. My second question is with respect to — sir, what is your — how much of the revenue — current revenue in FY ’25 is from B2C segment? And how much are you expanding — expecting it to be in FY ’26?
Surendran Chemmenkotil
So in FY ’25, the B2C revenue is 55 percentage of our total revenue and the B2C revenues grew by about 17 percentage. And the previous financial year, we have improved by about 2 percentage in terms of contribution from B2C. And I think with a similar growth, we expect the expansion to be in the range of 1% to 2% more in this financial year.
Raman KV
So thank you, sir. Thank you so much.
Operator
Thank you. Ladies and gentlemen, if you wish to ask a question, please press star and 1 one. The next question comes from the line of Ame Shalke from JM Financial. Please go-ahead.
Amey Chalke
Yeah, thank you for taking my question. I have one question on co-diagnostics side. So is it possible to give some breakup like how much revenue for this this entity will be coming from? And what are the reasons for having a low-margin for this entity and what steps we can take these to improve margins?
Ameera Shah
Sure. So I mean, if you look at — if you look at industry-wide, you will find that even at sort of INR100 crores, the new entities which have built businesses over the last seven, eight, 10 years have not really managed to make profits because you know, it’s either subscale. In score scales, it’s also completely driven by specialty rest revenues, right?
With specialty revenues, your gross margins tend to be a little bit lower because your cost of goods is a little higher. But then usually it offsets when you are able to get different kinds of test mix from the same customer. But when you’re getting only specialty mix from the customer, which is what core does, it’s difficult to actually make profit at the bottom-line.
So when this is merged into Metropolis, there will be two, three benefits, right? One is, there will obviously be some synergy of cost because we don’t need to have so much overlapping infrastructure as currently Metropolis and have across the country. So there will be some synergies that will come through there. There will be some synergies that will come through corporate costs and other kinds of synergies, etc.
And there will be an ability to sell the core test menu through the Metropolis’ large distribution network all across the country, which will hopefully enhance the volumes. And so I think with combination of these things, we believe that we can take this to a similar to a metropolis profitability in three years, as we mentioned.
The first year we are hoping for a high single-digit EBITDA and then that will sort of keep expanding over the next three years. To your question around the genomics as part of core, core has got obviously, I don’t remember the exact number, but I think it’s about 20% 30% of the revenue is genomics and which is all specifically oncogenomics.
But what we believe is that this can become now the platform for really scaling up not only across Genomics but other kinds of genomics across the country and obviously the main reason we acquired Core was because of the Doctor Connect that Core has with the 1,700 oncologists across the country, not so much for the machines or the back-end testing, but really for the front-end connect and the idea will be how do we leverage that in the best way possible.
So as we start to integrate this venture, we’ll be exploring all these different opportunities.
Amey Chalke
So this INR100 crore revenue needs to go to what level to come to the margins of?
Ameera Shah
So actually within the Metropolis growth, even at this INR110 crore level, it will start to make profit. It’s already a breakeven business. So really it just we’ve already started putting some of the cost synergies at play, which are the procurement cost, the overlapping of lab infrastructure, etc. So in our hands, this will already be profitable in the next few months.
We don’t have to wait for it to really scale. We can get it to, like I said, a single-digit profitability on our own. And then obviously, some of it will come through revenue growth as well over the next three years.
Amey Chalke
So second question I have, it seems to become very aggressive in expanding ourselves in North India or however, adding so many assets together, are you looking to bring them under Metropolis umbrella as a brand or you will keep with them as a separate centers with generating some cause synergies from, large etc., other IP is how does it work going ahead?
Because we intend to add more or do more M&A in North India as well.
Ameera Shah
So I’ll tell you if you look at the and the scientific acquisitions we announced and Agra. This is a playbook Metropolis has done many times before, right, which is to go in and partner with the leading player in a particular location, in this case, Agra and Herabun, use that as a base to then grow across the city, across different channels, B2C, B2B, institutional, corporate, et-cetera and then also start building a network across the region that they are in and keep expanding the presence, right?
So this is something we’ve done before. It’s not new to us and I think therefore, we have a reasonable sense on how to go about it. Obviously, there is always integration challenges. Any acquisition you do requires a lot of love and care and we will be doing that.
Coal, of course, is a different kind of acquisition for us. But for all three, we — the goal is very much to put it under Metropolis brand, not necessarily immediately, but in a phased manner. So for example, the scientific and there are loan will immediately come under Metropolis brands as soon as we sign the deals and we close them and we integrate them in the few months.
A core will take about 12 months for it to come under the Metropolis front.
Amey Chalke
So just last question if I squeeze in. So going ahead of like in FY ’26, what would be our plan in terms of the lab addition, etc? Because giving guidance for the margin improvement, so we plan mix is like we are not going to add that many labs, like…
Surendran Chemmenkotil
Yeah. So well, I think we have mentioned in this call as well in the previous call that the rapid lab expansion is almost over, right? To serve almost 800 towns in this country, we have now enough number of labs. So like last year, we added about 29 labs. That levels of lab addition will not be happening or will not be required going-forward.
So we may add some single-digit number of labs based on just pilling in some of the markets to improve the turnaround time, etc. But otherwise, we don’t have plans to increase the number of labs in this coming year.
Amey Chalke
Sure. Thank you so much. I will look.
Operator
Thank you. The next question comes from the line of Shyam Srinivasan from Goldman Sachs. Please go-ahead.
Shyam Srinivasan
Good morning. Thank you for the opportunity. Just the first one on the revenue guidance. Mitab, I was not sure whether we have articulated anything. I heard 7% patient volume growth.
So if you could also help us understand how we are looking at overall top-line development in fiscal ’26.
Surendran Chemmenkotil
Yeah. So we expect the realization to be — continue to be at around 5 percentage levels. So with the 7% patient volume growth and a 5 percentage realization improvement, I think we expect the revenue growth to be in the similar range of 12 percentage as we did during this — the previous year. And of course, the acquired entities will also grow about, 13% 14 percentage in this year.
Shyam Srinivasan
Yeah. Just dialing back a couple of years where we had aspirations to grow mid-teens until ’26, if I recollect, right? So maybe we have fallen a little bit short of that, but is there a plan to accelerate? And is this the inorganic moves that we are doing? Is that the way to kind of bridge the gap? I’m just trying to ask a philosophical question?
Ameera Shah
No, you’re absolutely right. I think the combination of organic and inorganic will certainly take Metropolis to obviously a much higher-growth. And if you put the two together, we’d be closer to a, 26% 27% growth overall in the year ’25, ’26. As mentioned, the idea is to grow organically about 12% and then to grow the acquired assets also at about, 13% 14%.
So together, that will definitely take us a leap forward in the year of FY ’25, ’26. And we’ll continue to keep trying to accelerate the organic growth either through product mix, either through volume and obviously the same thing with the acquired assets.
Shyam Srinivasan
Okay. Very helpful, Amira. Last question just on some of the revenue segments, right, and maybe I’m — I don’t think we have full disclosure, but happy to the routine and semi-special seem to be showing like slowdown versus — and you articulated about specialty and true health are doing much better.
So anything on — is it competitive dynamics or is there something else that is making the slower-growth or is it just a Q4 phenomenon, sorry?
Surendran Chemmenkotil
Yeah. It’s largely a quarter-four phenomenon. You will see that getting into the quarter one and quarter two, you will get — you will see the routine semi-specialists coming back close to the two-digit number.
Ameera Shah
But also, Shyam, we have to remember that the routine and wellness, there is an overlap, right, because what usually happens is patients are walking into centers maybe for three, four routine tests and then in some cases where they are choosing to actually upsell to a higher package, that gets moved into wellness, right?
So sometimes it may appear optically that the routine is falling, but actually it’s just that it’s moving from one segment to another, actually for a higher-ticket price.
Shyam Srinivasan
Fair enough. Thank you. Thank you and all the best.
Operator
Thank you. The next question comes from the line of Anshul Agarwal from Emkay Global. Please go-ahead.
Anshul Agarwal
Hi, thank you for the opportunity. Hope I’m audible. Great. Question one is on the breakup of one-off cost. Could you kindly provide me with the breakup of the one-off cost of INR21 Crores, the three things that you mentioned?
Ameera Shah
Yes. I don’t have the exact pickup right now, but as we mentioned, the majority of that is coming from M&A linked costs. You have to remember that we evaluated about six opportunities. We went into diligence and contracting, etc, etc., on six opportunities and we finally only decided to be very disciplined and choose three out of those.
So the M&A costs are linked, I would say, largely to a larger number of assets. And plus like we said that we had some costs which came for the tax cases, you have to obviously hire professionals, etc., to manage it to sort of get that moving. And the last one was a small provisioning for inventories at the end-of-the year, which we believe were slow-moving or close to expiry, etc.
Anshul Agarwal
Got it. So these costs incurred for M&A transactions once the other two assets get closed, would they recur, any part of it would recur or are these the entire cost that we have booked — COVID and booked?
Ameera Shah
This is the entire cost we have booked because we signed all three deals in March. So all the costs have been booked in this quarter. So you won’t see any more cost from the M&A translating into Q1 of FY ’26. Okay. And similar for the tax cases or are they ongoing? Well, we did — we did get a very positive thing on the appeal.
So on the appeal side, everything has been sort of disallowed and we’ve actually got a tax refund. So — but as we know after appeal, there is usually one or two more stages in the tax situation. So it’s very difficult at this point to say that it’s completely done with, but we don’t know at this point of time if the tax authorities will choose to pursue it.
Anshul Agarwal
Yeah, thanks for that clarification. Second question is on the margin trajectory. I think we guided for 100 basis-point expansion on normalized margins. Now this I believe is after accounting for dilution of margins from core as well at single-digit margin guidance for core, probably will dilute about 150 basis-points at a consol level. So would we be expanding right?
Surendran Chemmenkotil
Yeah. So Anshul, sir, the 100 basis-points is on the organic business that we talked about it, okay. And core from a breakeven, they’ll get into a single-digit EBITDA during this year. That’s the plan that we stated as before as well. And the other two acquisitions that we have done is under in the same range of the company margins.
Then there is no dilution or anything from that side, but core will be a single digital high single-digit EBITDA by the time we close this year.
Anshul Agarwal
Got it. Just to summarize this point, so core will be at single-digits and organically ex-core our margins will expand by 100 bps. Is that our guidance is correct?
Surendran Chemmenkotil
That’s right.
Anshul Agarwal
Last one question from my end. On the revenue trajectory, I think you’ve guided for almost 12% organic growth. Now this is in-line with what we have done in the last couple of years. Despite this accelerated lab expansion, are we being conservative in this guidance?
Do we see upside to this?
Ameera Shah
Difficult to answer that question, Shyam, it’s a no-win. It’s a lose-lose question.
So look, I mean, I think we are just guiding in terms of historic data points and what we feel comfortable with. Obviously, as a group, we are aspiring for IR. But at this point of time, the only thing we can go with is what we have shown that we have delivered and then obviously you know hope for better number.
Anshul Agarwal
Thank you. That’s it from my end. All the very best.
Ameera Shah
Thank you.
Operator
Thank you. The next question comes from the line of Bino from Elara Capital. Please go-ahead.
Bino Pathiparampil
Hi, good morning all. Just a couple of questions. Again, picking the map right with the guidance. So the revenue growth again is 12% and the acquisitions can add more fruits for the reported revenue growth could be 25% 26% in FY ’26. Am I getting it right?
Ameera Shah
Sorry, your voice is a little muffled. We can’t hear you clearly. If you could just repeat that?
Bino Pathiparampil
Sure, sir. So just on the revenue guidance, the organic growth would be 12% and the and the acquisitions will add-on to it and the reported revenue growth in FY ’26 should be around, 25% 26%. Is that right?
Ameera Shah
That’s right.
Surendran Chemmenkotil
That’s right.
Bino Pathiparampil
Okay. And second on margins, the 100 basis-point expansion will be on the adjusted EBITDA margin. So 24.4% plus 125.4% should be the organic margin we should look at FY ’26, right?
Surendran Chemmenkotil
You’re right. You’re right.
Bino Pathiparampil
Okay. And maybe there could be some dilution because of core in that. So the reported maybe 50 to 100 basis-points below that.
Surendran Chemmenkotil
Yeah. The core will be at a single-digit, 8%, 9 percentage by the time we close this year.
Operator
Understood. And last question, the number of labs you have given, which is 210 now right now. Does that include the labs of core diagnostics?
Surendran Chemmenkotil
So it doesn’t include the labs of core diagnostics from this quarter onwards, we will include the number of core diagnostics. In fact, we are in the — we are in a rationalization phase as we speak, like just looking at which lab is required and which lab we can consolidate. So by the end of this quarter, we will have a clear number hand since we’ll start reporting from quarter one onwards.
Bino Pathiparampil
Okay. And, all the acquisitions put together, how many labs you will be roughly adding, we will be adding, if you can give in so that would be fine.
Surendran Chemmenkotil
Less than 10 in a consolidated level.
Bino Pathiparampil
Thank you.
Operator
Thank you. The next question comes from the line of Rishi Modi from Marcellus Investment Managers. Please go-ahead.
Rishi Mody
Yeah, hi guys, am I audible book?
Surendran Chemmenkotil
Yes. Yes. Yeah.
Rishi Mody
So could I get the FY ’25 numbers for core scientific pathology and Dr Abuja on the revenue and EBITDA margin levels, if you all have those ready?
Ameera Shah
Yeah, we do. So core is approximately 108%. This is for FY ’25, you’re asking, right?
Rishi Mody
Yes, FY ’24.
Ameera Shah
Yeah. So I think coal is approximately 100 — between INR105 crores and INR110 crores of revenue within sort of — I mean it had a loss in ’25, but currently in Q4, it’s at a breakeven level. And then for scientific, I think it’s about INR25 crores to INR26 crores for the whole year in FY ’25 and there are those approximately INR10 crores to INR11 crores of revenue.
And scientistic and both are at company-level margins, metropolis company-level margins. So therefore, there should be no dilution from those.
Rishi Mody
Okay. And when you say core is Q4 FY ’25 breakeven, is there something which you know, like normally, what I’ve seen in acquisitions of a relatively larger size, people tend to hive off some of the businesses which don’t fall in-line with the existing company’s policies. So do you see any of that happening and hence core would be a either a revenue decline and profitability increase or flattish revenue, like I’m just trying to understand, is there anything that you want to solve in coal before you ramp it up?
Ameera Shah
No, sir. Certainly, there will be some synergies and some dis-synergies and we have sort of netted those off. But overall, despite the synergies and dissynergies, we will have a positive revenue growth. And so we certainly don’t see it flatlining. We see it in a positive revenue growth situation.
And like we mentioned, we hope to take the margin up to a high single-digit number this year.
Rishi Mody
Okay. So if I’m getting — and when do you expect the scientific doctor who you are kind of consolidating into your numbers?
Ameera Shah
The seven days
Surendran Chemmenkotil
Yeah, in the final stages of the — in the acquisition. So maybe not later than by the end of this year, later this month, sorry.
Rishi Mody
Okay. So one month will be in Q1 FY ’26 in consolidation terms, correct?
Ameera Shah
That’s.
Rishi Mody
Okay. So one should expect somewhere close to 10 and 15 25 cro of addition in EBITDA from these three acquisitions in the upcoming year. Is that correct?
Ameera Shah
Give us a moment to confirm that to you. Yeah, sorry acquired yeah, so should be between INR20 crore INR25 crores.
Rishi Mody
Okay, got it. Second, on the or one-time expense, could you just split it between the three purposes, acquisition, legal and inventory write-off because from what I understand, legal and inventory write-offs seem to be like the regular day-to-day business.
So just wanted to get some clarity.
Ameera Shah
So the normal legal, we would also put it as part of the normal thing, this is related to the tax matters. Therefore,
Rishi Mody
It’s not yet over, right? So So like it could be an ongoing expense going-forward as well.
Ameera Shah
Well, I mean, as of now, it’s over till we know the tax authorities are picking it up, which we are not sure of. So difficult to know whether it’s an ongoing expense or not at this point of time. At this point, the — it’s come in our favor and we don’t know the next step really. The majority, as I mentioned, are on the M&A costs, which are all one-off along with the tax expenses.
The inventory part of it is much smaller, which is mostly connected to sort of expired goods, which therefore doesn’t happen sort of on a monthly or a quarterly basis, but more of an accounting entry that happens at the end-of-the year, more from a provisioning perspective.
Rishi Mody
Right. What is the inventory write-off amount? Is it like 1 CR, two CR,? Cash.
Ameera Shah
So it’s close to one to two CR.
Rishi Mody
Okay, one inventory. Second, third, I wanted to ask,, Q3, you were doing a B2B client rationalization exercise. Is that over in Q4 like Q4 is a normal B2B business on a like-for-like basis or the Q1 would be a more —
Surendran Chemmenkotil
So what we mentioned to you earlier was defocusing on the institutional business, you know. So that is one full-year, we have ran with that and that part is over. From quarter one onwards, you will start — you will start seeing the institutional business which you want to keep and which you want to grow.
That should happen in B2B overall improvement plans are continuous and we should start only getting better on the B2B revenues going-forward? And B2B, I’m assuming the growth now should convert to B2C growth or is there some gap that you still think will be there? No, B2B growth levels will be like 10% to 12% levels of growth.
Rishi Mody
Okay. And B2C, you said 12% plus is company-level. So I’m assuming, 14% 15% is B2C that you’re talking about.
Surendran Chemmenkotil
That’s right. That’s right. We need to start building the institutional business into much healthy ones going-forward. Whatever we don’t want to keep it has already been exited as we close the year. We will now start building a good-quality institutional business as well into the portfolio, which is good in terms of margin and cutting the monies, etc., won’t be difficult.
That’s a process that we will now start focusing upon.
Rishi Mody
Okay. And finally, the 100 bps margin expansion that you’ve guided for on the organic business, which is the entire FY ’24 numbers if I take, excluding the one-time expense of 20cr. So is this — like I’m just trying to understand because we’ve done with the lab expansion, should — is this on a conservative side from your end or is this something that you
Surendran Chemmenkotil
See, see what happens like we always maintain a lab when we expand the labs, it takes a couple of years for us to get into margin — the company levels of margin, or in sometimes little more than two years. So the last two years, we have done a very-high number of labs. So a little bit of a impact will be there in this financial year also and maybe on some part of the next financial year.
By the time it will completely vanish, it will take two more financial years. So we have factored a part of it in this financial year’s projections and the rest we will put into the next financial year.
Rishi Mody
Okay. Finally, Amera, on the competitive scenario, I just wanted your comment, are you seeing the market-share recoup by your firm done in Mumbai and the core markets of yours or you think there’s still some market-share gains that you can do from the unsustainable e-commerce led players that have started out?
Ameera Shah
To be honest with you, we don’t hear so much around the health tech players much anymore. We don’t see the aggression either on-the-ground or, you know from a funding perspective either at this point of time. We are finding that the omnichannel approach that we are taking, which is the brick-and-mortar as well as online digital engagement is actually working quite well with customers.
And as you’ve seen, our growth continues to do very well in our core markets on the B2C side as well. So frankly, we believe the opportunity continues to be there for us. It’s really for us and for our taking. And it’s up to our execution to be able to really, you know keep growing and which we see quite confident about.
Rishi Mody
So you still think there’s some juice left to take-out from the unsustainable players like or its normal industry setting? I’m just trying to understand out-of-the existing B2C growth in FY ’25 or is there a non-recurring part that might happen?
Ameera Shah
There’s nothing non-recurring in the B2C revenues that we are posting at this point of time. Really, it’s coming from a combination of three things. It’s coming from an expansion of our collection center networks in our core markets, which we will continue to do.
And second, it’s coming from the product mix and being able to really customers wanting to do sort of larger packages and therefore having a higher revenue per patient.
And it’s also coming thirdly from the additional services that we are providing in our centers, which mentioned around the basic radiology, the vital checks and really expanding some of the services to make the consumer experience more complete and wholesome, where you’re not just giving pathology, but you’re giving two or three other services as well.
So I think it’s a combination of these three and we don’t believe — we believe all of them are sustainable and therefore can keep growing in that direction. And like we said is along with the core markets that we’ve been doing well in B2C, we’ve also picked-up another few cities that we believe that now we can make headway in B2C in.
And one of them also happens to be in North besides obviously some being in West and South and we would like to now go deeper into these markets to grow the B2C debt. We’re not mentioning the names only from a competitive reason, but we have picked-up about four markets more that we can go deeper on a B2C side.
Rishi Mody
Got it. Got it. Thank you. Thank you for taking the questions. All the best.
Operator
Thank you. Thank you. Thank you. The next question comes from the line of Patha from PhillipCapital India Private Limited. Please go-ahead.
Surendran Chemmenkotil
You can’t hear anything.
Surya Patra
Hello, sorry. Am I audible right now?
Surendran Chemmenkotil
Yes.
Surya Patra
So my first question is about the new test additions that we are now seeing built back by the AI and next-gen sequencing and technologies. So by these, what is the kind of a target market that we are likely to add for us?
Ameera Shah
Yeah. So if you see the new tests are across different spaces, a lot of them are coming from the genomics segment and we are really doing a lot across not only oncogenomics, but also across Neuro and women and childcare as well. And as we continue to grow this area, it will allow us to offer even more advanced and specialty testing to doctors for their patients across the country, which means you then have everything from start to finish under your umbrella, which means a doctor can have access to anything required for that patient’s treatment in one place.
And that obviously increases the engagement between the doctor and the patient and between the doctor and us. And that’s how we see the new test really play-out and really help us to grow. You know, this market is basically, if you see whether it’s on geographies or on tests, as the cities are getting busier with more competition on the B2B side, you move into newer cities and therefore, you’ll see our Tier-3 growth getting stronger and bigger.
The same way on the test menu as certain things become more common and more people start them, a metropolis has to keep innovating and starting more specialized and more advanced tests to sort of keep them going. We are also doing something on the allergy side and which is quite interesting and also something on prenatal pre-natal which is basically pre sort of pre-pregnancy and also post pregnancy.
So we’ve got a bunch of scares for women and childcare and as well as allergy as well which are quite interesting and helping to take care of patients.
Surya Patra
Okay. Okay. But is it possible to have a sense that, okay, like a wellness, which is like 10% of the current industry size, so these markets will have a similar 10%, 5% of the industry going ahead or something like — is there a sense that one can have?
Ameera Shah
See, wellness is slightly — right now is a broad definition, right? If you see most of us, when we say wellness, we are actually including bundling packages through it as well. So like I mentioned, if a patient walks in for three, four tests, sometimes they are preferring to do a larger package because they are saying, look, I’m anyway coming to get my blood so I might as well do more tests at one-time.
So it may not be necessarily a well patient. It may not be somebody who is doing it from a preventive care basis. It might be somebody who is already unwell with a fever or somebody who is coming to check their thyroid, but may end-up doing other tests as well. So you can Call-IT wellness and bundling, right, as a combination , which for us constitutes about, as we said, close to about 17%, 18% of our contribution today. And as we include more this packages in it, it will continue to grow.
Surya Patra
My second question is about the capital allocation priorities, man. So while we have said that now we want to go slow bit on the center addition front. But I’m just trying to understand that whether the — on the M&A front, we will remain as focused as we were or we are like to prioritize there also for targeting like, let’s say, North may not be thinking right now about East on that front?
And what is the kind of investment that you’re targeting for ’26?
Ameera Shah
See, from a capex basis, certainly the capex numbers will come down. While we have spent probably between INR60 crores to INR70 crores in the last couple of years. We believe that the capex numbers will be closer to 50% for the organic business on for this year so you can say INR50 cro INR55 crores. And in terms of acquisitions, look, I mean, I think it’s — I don’t think we are at this point looking to go out and do another three deals in the first-quarter of this year.
I don’t think we are in that place. Having said that, there are always multiple discussions going on in terms of funnel that we keep building. And if and when we find something that meets our priorities on we mentioned on the financial priorities, on the strategic priorities, on the good-quality business, then it would be difficult to either wait or to delay because these opportunities don’t always come exactly at the time you want.
So I would say broadly, we are not actively looking to close any deals in the next three to six months. But if any of the discussions are discussions conclude into something, we may — we may look at something. And yes, the idea would be to continue to build more in the north, but opportunities can come from across the country.
There are still markets even in West and South in which we don’t have a strong B2C connect. Where-is something interesting came, we would be open to it as long as it met our criteria. Thank you. Thank you, man.
Operator
The next question comes from the line of Gaurav from Antique Stockbroking. Please go-ahead.
Gaurav
Hi, all of you can please unmute these. Hi, good morning. So just you know, on the gross margin item, to understand better for the organic business. Did we take any price hikes in FY ’25 and do we intend to take any price hikes in FY ’26?
Surendran Chemmenkotil
Yes. So in the quarter-four of ’25, we did we did do a price increase in the select markets, like I said, as a part of the micro marketing strategy, about four, five markets, we took the prices up, you know, and then few markets we also kind of you know, rationalized the prices. The net impact of that is about close to 2 percentage.
And so that’s as far as quarter-four of last financial year is concerned. So for the next two, 3/4, definitely there is no plans to do any price changes. And as we get into the next calendar year, we will see looking at-the-market dynamics and the related stuff, we will take a call.
Gaurav
So we maintain the gross margins around 1% level for around eight quarters now going-forward we see some pressure on the gross margin front for the organic business with input cost etc?
Surendran Chemmenkotil
We are not — yeah, we’re not anticipating any further pressure on the gross margin levels, you know.
Gaurav
Okay, that’s helpful. Sorry, if you hang on score, you’ve been asked a lot of questions, but so revenue seems to be flat FY ’24 to ’25, what you in December ’24 and now. Any reason why they’re not able to scale-up despite the Doctor Connects? Is there a capacity issue? Is there just less BD marketing focus?
And what is the core revenue — what is the peak revenue that core can achieve with the current capacity? If you can share revenues?
Surendran Chemmenkotil
Revenues were not. I don’t know where you picked that up from. The revenue is growing at we said last — last year we were ended with about INR110 crores, which came at a, 15% 16 percentage growth and we are also saying this year, we will be growing in excess of 13 percentage, right? So financial year ’25 was INR116 crores, right?
So it’s not growing, it’s not a steady-state and what is the best revenue that you can hit? And I don’t want to comment on that first, but I think we are looking at 13% 14 percentage year-on-year revenue growth for the financial year ’26.
Gaurav
Okay, looking at it differently, do we envisage any capex CapEx one year-after integration?
Surendran Chemmenkotil
The other could be some capex. We really want to strengthen the genomics portfolio there using the core as a platform. So there will be some capex we will be incurring in core?
Gaurav
Just last clarification. You mentioned gross margins are lower assessment of other specialty plays. Will gross margins for the core business be in the 55% 60% range or in that ballpark
Surendran Chemmenkotil
Once again, what is the gross margin years. So gross margins of coal is at 60 percentage levels, you know levels and you know and like we said, getting the procurement benefits coming on the back of procurement process, I think we should only be able to get some benefits from improvements on the gross margin levels of core.
Ameera Shah
One more thing we have to remember on core that while we had signed the deal at about INR247 crores of acquisition value, finally, what we booked in our books is INR218 crores of acquisition value on closing. So that’s just information for you.
Gaurav
And the equity cash me crores was cash and the rest was equity. And the co-founder continues to be a part of operation.
Ameera Shah
Yes, the CEO who was running the business before we acquired continues to be the CEO of the business and the team is.
Gaurav
Well, thank you all the best-in there.
Surendran Chemmenkotil
Thank you.
Operator
Thank you. Ladies and gentlemen, due to time constraints, that was the last question. I now hand the conference over to the management for their closing comments.
Ameera Shah
Thank you, everybody for joining us today. As we mentioned, it’s been four years of many opportunities, challenges and great transformation at Metropolis. And while we’ve stayed bold and taken some big actions on expansion, acceleration and lots of changes along the way, we do believe these were all very fundamental in the growth — growth phase for the next step.
Going into this next year, we are looking-forward to continue to accelerate the centers, increase our volumes and really fill our labs even more and really focus on productivity and efficiency in this next phase. And we’re very excited about the direction that we are headed in and certainly believe that the industry continues to offer the right opportunity to credible incumbents like us who have always took around the science and expertise being the driving force of this business.
While technology, while distribution, while commercials, all of them are important, the core of the business still remains the scientific expertise as we’ve. So with the acquisitions, we are looking-forward to a big leap forward in FY ’25, ’26 with strong organic growth, good margins and the acquisitions totally adding to a, 25% 26% revenue growth for Metropolis in this next year.
I look-forward to chatting with all of you at the end-of-quarter one. Thank you and have a good weekend.
Surya Patra
Thank you. On behalf of PhillipCapital India Private Limited, that concludes this conference. Thank you for joining us and you may now disconnect your lines