Metropolis Healthcare (METROPOLIS) Investor Update summary

Strategic rationale and market opportunity

• Acquisition of Core Diagnostics aligns with the strategy to expand in specialized oncology diagnostics and strengthens presence in North and East India.

• Indian oncology diagnostics market is valued at INR 4,000–5,000 crores and is expected to grow at a 17.5% CAGR over the next five years, driven by rising cancer incidence and advancements in treatment.

• Core Diagnostics is recognized for advanced cancer testing, with a strong infrastructure, expert team, and a high-end oncology test menu, positioning the combined entity as a leader in cancer diagnostics.

• The acquisition enables a comprehensive cancer test portfolio, deeper partnerships with leading hospitals and specialists, and supports a vision of scientific excellence and operational growth.

• Oncology testing segment has high entry barriers due to R&D intensity, need for oncologist trust, and high operational costs.

Core Diagnostics profile and integration benefits

• Core Diagnostics operates a central reference lab in Gurgaon, a regional lab in Hyderabad, and seven satellite labs, with a network spanning 200+ cities.

• 85% of Core's revenue comes from specialized testing, with 51% from B2C channels, 1,600+ oncologists prescribing its tests, and a large bio bank of 40,000+ samples.

• The acquisition accelerates national reach in oncology testing, leveraging Core’s established trust with oncologists and hospitals, especially in North and East India.

• Integration will drive cost synergies through consolidation of labs, procurement efficiencies, logistics, and overhead reduction.

• Cross-selling opportunities will be realized by offering Metropolis’ test menu to Core’s clients and vice versa.

Financial details and expected returns

• Metropolis will acquire 100% of Core Diagnostics for INR 246.8 crores, at 2.2x FY24 revenue and 2x FY25 revenue, funded 45% by equity swap and 55% by cash.

• The deal is expected to close within 60 days and Metropolis will maintain a zero-debt position.

• The acquisition is expected to be EPS accretive from FY26 and ROCE/ROE accretive from FY28, with full cost synergies realized in 3–4 years.

• Core Diagnostics has shown a 22% revenue CAGR (FY22–FY24), with an average revenue per test of INR 2,300 and a patient base of 4.5 lakhs annually.

• Payback period is estimated at 6–8 years on EBITDA and 9–10 years on PAT basis.