Metropolis Healthcare (METROPOLIS) Investor Update summary

Strategic Rationale and Market Opportunity

• Acquisition of Core Diagnostics aligns with a strategy to expand in specialized oncology testing, leveraging Metropolis' national reach and operational scale.

• The 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 diagnostics, with a strong presence in North and East India, a portfolio of 1,300+ high-end tests, and a large bio bank of 40,000+ samples.

• 85% of Core's revenue comes from specialized testing, with significant capabilities in onco genomics and a patient base of 4.5 lakhs annually.

• The acquisition positions Metropolis as a leading cancer testing chain, deepening relationships with top oncologists and hospitals and expanding its footprint in high-growth regions.

Integration and Operational Synergies

• Integration will occur in two phases over 18 months, focusing on organizational alignment, IT integration, and unified branding.

• Cost synergies are expected from consolidation of labs, procurement efficiencies, logistics, manpower, and overhead reduction, with full benefits realized in 3–4 years.

• Cross-selling opportunities will be leveraged by offering Metropolis' extensive test menu to Core's clients and vice versa, enhancing revenue and client engagement.

• A steering committee will oversee integration, with retention plans for key talent supported by ESOPs and bonuses, and standardized processes to align with Metropolis' quality standards.

• Core's high-end oncology test menu and strong doctor connect complement Metropolis' distribution and brand.

Financial Impact and Deal Structure

• Metropolis will acquire 100% of Core Diagnostics for INR 246.8 crores, at 2.2x FY24 revenue and 13.9–14x estimated FY25–26 EBITDA, funded 45% by equity swap and 55% by cash.

• The deal is expected to close within 60 days, preserving Metropolis' zero-debt status and enabling future M&A flexibility.

• The acquisition is expected to be EPS accretive from FY26 and ROCE/ROE accretive from FY28, with a payback period of 6–8 years on EBITDA and 9–10 years on PAT.

• Core Diagnostics has shown a 22% revenue CAGR (FY22–24), with an average revenue per test of INR 2,300.

• Combined entity will see oncology revenue contribution rise from 4% to 10% of total revenue, enhancing leadership in the segment.