Ladies and gentlemen, good morning and welcome to the Metropolis Healthcare Limited business update call. This conference call may contain forward-looking statements about the company, which are based on the beliefs, opinions, and expectations of the company as of the date of this call. These statements are not the guarantees of future performance and involve risks and uncertainties that are difficult to predict. We request participants to discuss the acquisition announced by the company and refrain from discussion on current quarter performance. 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 a touch-tone telephone. Please note that this conference is being recorded. I will now hand the conference over to your host, Ms. Ameera Shah, Chairperson and Executive Director, Metropolis Healthcare. Please go ahead, ma'am. Good morning, everyone, and thank you for joining us today for this important business update call. I'm joined by our CEO, Surendran Chemmenkotil, Avadhut Joshi, Chief Business Development Officer, and SGA IR Advisors. Yesterday, we announced the strategic acquisition of Core Diagnostics, a significant milestone that reinforces our commitment to leadership in specialized diagnostics. The relevant documents have been uploaded on the exchanges and our company's website, and I hope you've had the opportunity to review them. As you know, throughout our previous discussions, we have consistently emphasized our focus on exploring inorganic growth opportunities from two primary strategies. The first strategy is that we aim to acquire local pathology labs which have strong B2C brand presence in non-core geographies. This approach would enable us to establish a foothold in that city or region and subsequently grow the business organically by leveraging Metropolis's extensive testing, distribution, and management capabilities. The second strategy is where we have been identifying targets who have built a niche business in a highly specialized testing area. While they have built expertise and trust with doctors in a specific therapeutic area, their scalability remains limited in the absence of a national footprint and distribution network. Under the Metropolis umbrella, these businesses can scale rapidly and become more profitable, supported by our geographical reach and operational efficiency. Our acquisition of Core Diagnostics aligns seamlessly with this second strategy. This move reinforces our commitment to advancing specialized diagnostics, particularly in oncology, a market which is poised for significant growth in the coming years. The Indian oncology market is one of the fastest-growing sectors projected to achieve a CAGR of 17.5% over the next five years. This rapid expansion is driven by rising cancer incidences, advancements in treatment technologies, improved healthcare access, and increased public health awareness. There are about eight labs offering specialty cancer testing facilities, half of them among national players and half of them standalone. Cancer testing is one of the many things they do. These players are not just focused on cancer exclusively. Most of these standalone single-specialty labs are operating at subscales as they don't have a large distribution network and therefore are not able to get large volumes. The total cancer diagnostics market in India is estimated to be between INR 4,000 crores and INR 5,000 crores, but this includes entry-level to specialized oncology testing. With this acquisition, Metropolis is well-positioned to address the increasing demand for advanced cancer testing with Core. Core Diagnostics is renowned for its excellence in advanced cancer diagnostics, supported by robust infrastructure and a team of world-class experts. This strategic acquisition positions Metropolis to become India's leading cancer testing chain. It also paves the way for the company to become a center of excellence in cancer diagnostics, offering a comprehensive portfolio of tests under one umbrella. Additionally, Core Diagnostics' strong presence in North and East India enhances Metropolis's ability to connect with leading cancer specialists and hospitals in these regions, deepening our partnerships and increasing our penetration into North and Eastern geographies. As cancer continues to grow very fast globally and in India, and with approximately 1.4 million Indian cancer cases anticipated annually, all we can do is to diagnose faster and better to manage this disease. With new developments in the treatment like targeted therapies, there is significant need for advanced diagnostic services to support effective cancer treatment. Growing healthcare awareness and an increasing focus on early detection and prevention are further driving demands for specialized diagnostics in this domain. This acquisition is more than a growth milestone. It represents our continued dedication to scientific excellence, operational growth, and meeting the evolving needs of our healthcare ecosystem. I'm confident that this new phase of growth will enable Metropolis to better serve patients and strengthen our collaborations with top healthcare providers. Now, I'll hand over to Suren to take you through an overview of Core and its strategic fit with Metropolis. Thank you, Ameera, and good morning, everyone on the call. Let me give you some more information about Core Diagnostics. Core Diagnostics is a specialized diagnostic chain headquartered in Delhi NCR, with a significant presence in the northern and eastern India. It is recognized as India's leading specialized cancer testing lab chain, supported by some of the most cutting-edge diagnostic technologies, best onco-pathologists, and a large number of cancer biobanks and data analytics. With a portfolio of over 1,300 + high-end tests, including 150+ tests in oncogenomics, Core Diagnostics operates through six subspecialized divisions, which contributes to 85% of the total revenue. Their collection network spans over 200 + cities, supported by an NABL and a CAP-accredited central reference lab in Gurgaon, one regional reference lab in Hyderabad, and seven satellite labs. 51% of the revenue comes from via B2C channels, with 1,600 + oncologists writing prescriptions. Approximately 15% of business comes from pharmaceutical companies and balance from 1,200 + B2B labs and hospitals. The top cancer doctors and hospitals of India are their customers. Since cancer is one of the fastest-growing illness segments, cancer testing is very critical for the patient and the supporting doctor in diagnosis and therapy management. It takes several years for the lab to build the trust among oncologists. Having a larger cancer test menu and very accurate reports is fundamentally important for this segment. However, high-end oncology and oncogenomics testing remains a challenging segment offered by very few players in India due to significant entry barriers. This field requires specialized expertise, strong R&D capabilities in oncology, and the ability to scale operations by earning cash from oncologists. It's particularly challenging and takes time to build. With Core Diagnostics under our umbrella, we believe we can make these services more available and accessible in India for patients suffering from cancer. For Metropolis, while we work with top oncologists and top hospitals in West and South, offering them entry-level and specialized cancer testing solutions, we currently don't offer the super specialized test menu here. While building these scientific capabilities internally could have happened in two years, but building the same trust with 1,600 oncologists and 1,200 hospitals and clinics predominantly in North and East would have taken us maybe 5 + years. This acquisition accelerates our growth and positions us as a leader in end-to-end oncology testing across the country and gives us a great platform in North India to make bigger inroads in specialized testing. Aligned with our strategy to enhance capabilities and enter niche and super specialized testing domains, this acquisition is a seamless fit within Metropolis' portfolio. Through the acquisition of Core Diagnostics, Metropolis will be able to do the following things: one, deepen our relationship with leading oncologists across the country through 100+ specialized technical sales team. Two, strengthen our North and East India operations through their partnership with hospitals and labs. Three, integrate advanced cancer testing and capabilities with state-of-the-art testing solutions, reinforcing our expertise in oncology, which is the fastest-growing area of the next many years. Four, leverage cross-selling opportunities, offering Metropolis extensive test menu to Core Diagnostics hospitals and doctor customers while adopting Core's super specialized cancer test portfolio for Metropolis oncology clients. And five, achieve cost synergy through consolidation of overlapping labs, procurement efficiencies, logistic integration, and overhead cost reduction, which will drive operational efficiencies and improve profitability. Together, Metropolis and Core Diagnostics will emerge as the largest and the most profitable oncology testing provider in India. With 85% of revenue derived from specialized testing, this acquisition now aligns perfectly with our strategic focus. With this, now I will hand over to Avadhut for financial merits and the integration plan. Thank you, Surendran. Good morning, everyone. As the leading oncology testing lab in the country, Core Diagnostics has demonstrated robust performance with a revenue CAGR of around 22% over FY 2022 to FY 2024, an average revenue per test of around INR 2,300, and a solid patient base of 4.5 lakhs annually. Metropolis will acquire a 100% stake in Core Diagnostics at an equity value of INR 246.8 crores, representing 2.2x their FY 2024 revenues or approximately 2x of current year FY 2025 revenues. The company is professionally managed, with its majority stake being held by institutional investors comprising Artiman Ventures and Eight Roads. While Core Diagnostics is marginally profitable at an operating level, we anticipate significant EBITDA growth over the next two to three years, driven by cost synergies, operational scale, and the strength of Metropolis' brand. For H1 FY 2024, the unaudited revenue stood at INR 59 crores. The acquisition will be financed through a combination of 45% equity swap and 55% cash consideration. Metropolis remains a zero-debt company with cash and cash equivalents of around INR 187 crores as of September 2024. We expect the acquisition to be EPS accretive from year one, that is FY 2026, and ROCE and ROE accretive from year three, that is FY 2028, ensuring strong returns for the stakeholders. While the business is marginally profitable due to subscale, our internal calculations show we are acquiring it at FY 2025-2026 estimated EBITDA multiples of 13.9x-14x, showing a strong IRR on the capital deployed. It would take three to four years to derive full cost synergies in the P&L and to bring Core Diagnostics' margin equivalent to Metropolis. Because the profit profile has not played out fully at Core Diagnostics, it gives Metropolis a very good opportunity to buy a high-quality specialized business at a very reasonable price and turn it into a valuable profitable company. We have also planned how we will integrate Core with Metropolis over the next 18 months. The first phase will be of six months. To ensure a seamless transition and unlock the acquisition's full potential, we will establish a steering committee to oversee integration and track the progress. The organizational structure will be redesigned, supported by retention plans to secure key talent. Resource optimization efforts will focus on streamlining outsourced test costs, merging overlapping labs, and consolidating resources. IT integration will involve rolling out Metropolis systems, software, and providing comprehensive training to the team. The test portfolio will be optimized by refining existing tests, while processes will be standardized to align with Metropolis quality standards. Additionally, cross-selling strategies will be launched to promote non-oncology tests and new offerings, driving revenue growth and enhancing client engagement. The second phase of integration will span between six to 18 months. In the second phase, the integration plan will focus on bringing the oncology segment of both the companies together under a common brand name and aligning marketing strategies to establish a unified brand identity. Full business integration will consolidate teams, back-end operations, and support functions into Metropolis systems while implementing unified performance metrics. International business operations will be centralized to streamline management, enhance scalability, and leverage the expanded network for global outreach. Similarly, pharma alliance operations will be integrated and centralized to maximize efficiency, strengthen collaborations, and expand service offerings with key partners. These steps will ensure complete operational alignment, enhance efficiency, and position the acquired company as a fully integrated part of Metropolis' ecosystem. Fortunately, Metropolis has done 24 acquisitions in our journey, and we understand the key drivers to make this acquisition successful. That's all with me. Now, I request our chairperson, Ms. Ameera Shah, to provide her concluding remarks. Thank you. In conclusion, I'd like to emphasize that the strategic new position of Metropolis as the leader in advanced cancer diagnostics, one of the fastest-growing diagnostic segments. It also gives us deep access to top doctors and hospitals in North and East India and allows us to create large shareholder value with better management and scale of a subscale high-quality asset. By reinforcing our leadership in oncology, we're also poised to expand into future focus areas such as genomics, further enriching our diagnostic portfolio. Our commitment to high-quality specialized diagnostics drives our vision of shaping the future of healthcare in India. With a strong foundation for sustainable growth, Metropolis continues to solidify its position as the most trusted and respected scientific healthcare brand in the country. We are confident that this acquisition will create long-term value for our stakeholders, enhance patient outcomes, and contribute to the advancement of healthcare for years to come. We welcome the core team to the Metropolis family and look forward to a strong partnership. Thank you for your time, and that's all from my side. Now, we're happy to answer any questions that you may have. 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 their touch-tone telephone. If you wish to remove yourself from the question queue, you may press star and two. Participants are requested to use 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 Harith Ahamed from Avendus Spark. Please go ahead. Hi, good morning. Thanks for the opportunity. So when I look at the profitability of Core Diagnostics over the years, except for maybe the COVID years, it's been loss-making. But your comment on EPS accretion in FY 2026 and the transaction multiple that you mentioned of around 14x, I presume it's on a FY 2026 basis, give you EBITDA. So that implies Core Diagnostics' EBITDA margins moving up to a healthy double-digit level. So that's a significant ramp-up. The first question is, why are Core Diagnostics struggling to be profitable over the last few years, and what are some of the drivers that you're seeing for such a sharp margin improvement? Sure. Thanks for your question. I think globally, let me tell you what the trend that's happening is that there were in the last 10 years - 15 years, many such companies that started with a focus on single specialty diagnostics. Oncology was one example, neurology, genomics, etc. And what all of them ended up finding is that the cost that it takes, the operating cost that it takes to do high-cost customer acquisition at the hospital or the doctor level doesn't always get justified as a single specialty player. And therefore, we're finding that across the world, single specialty players are getting acquired by larger players like LabCorp in the U.S. and similarly a Metropolis in India because they're able to manage these assets, single specialty, much better as part of a larger group rather than stand alone on their own where the unit economics don't play out completely. So we are actually following a similar trend line by bringing in a single specialty diagnostics into a larger benchmark. And if you actually look at 2023, 2024, while they have been not profitable, in 2024, 2025, there will be a low single-digit margin profitability in the books in the operating EBITDA. And obviously, in 2025, 2026, we expect this to move higher. Plus, we will add in the cost synergies that will come out of bringing these two businesses together. Some of which I did mention, like the material procurement cost, some of the overlapping lab infrastructure. There are many areas that we can potentially synergize together, and with this, we believe over the next four years, we will be able to bring the margin of core up to the MHL margin over this period of time, but starting with 2025, 2026 itself, which will be the first year of operations under Metropolis, it will certainly move. Okay. So my second question is on one of your slides. You mentioned that in super specialized oncotesting, especially in the therapy monitoring area, Core Diagnostics is very strongly positioned, and in fact, it's stronger than Metropolis in this particular segment. So just trying to understand what exactly, or if you can give some examples for some tests in therapy monitoring that will make this capability a little bit clearer for us? Avadhut, want to explain a little bit about entry-level to super specialists? Yes, I can. I can. So if we look at the overall oncology testing portfolio, we can divide that into three parts, right? One is entry-level tests, which are typically prescribed by the normal doctors or the physicians when you go and visit them, and they are age-appropriate, for example, PSA total and so on. These are blood-based tests. And then there is a second level of testing which happens when the consultant finds something significantly wrong, which are typically the tissue-based tests, right? So this is a combination of the entry-level tests and then the mid-specialty or specialty tests. The super specialty tests typically include certain genomics-based testing, which is required for the targeted therapy. If we look at the overall journey of oncology treatment over the last 10 years, we have come a long way. Today, the treatment options are primarily based on the targeted therapy, personalized medication, and making sure that there is a companionship with the pharmaceutical products which are prescribed along with the treatment options, right? So the super specialized segment today actually is something which we are not fully catering into, which Core Diagnostics has emerged over the last seven to eight years. And this is how we are looking at combining our ability to perform the entry-level tests, mid-specialty tests, and their ability to conduct the super specialty tests. So there is an overlap of about 30%, but the rest is completely exclusive with both the companies. I hope that answers the question. Yes, that's all from my side. Thanks for taking my questions. Thank you. Ladies and gentlemen, if you wish to ask for questions, please press star and one. The next question comes from the line of Kunal Shah from Carnelian Asset Management. Please go ahead. Hello, can you hear me? Yes, please go ahead. So my first question is, what specific steps are being taken to ensure the seamless integration of Core technology and infrastructure into Metropolis? So I mean, if you talk about the, I'll talk a little bit about the people, and I'll ask maybe Avadhut to talk a little bit about the technology and infrastructure. I think what we have done as far as the people, because at the end of the day, we have a corporate team, we have a back-end team, and a front-end team. Obviously, the leadership team of Core is currently running the business, is aligned to us closely, and will be continuing to run the business under our umbrella over the next many years to come. We have put in the long-term incentivization programs, the kind of cultural alignment that is needed to really get the teams to work closely together. Avadhut, do you want to talk a little bit about technology and stuff? Yes, absolutely. So what we have observed very carefully is while they have a presence in 200 cities, that is also an additional cost, right, for them because they are currently operating at a subscale level. Whereas we have overlapping collection centers or the lab infrastructure, which can very well be utilized when we merge both the operations together. On the people side, what we have noticed is there are overlapping teams where we will see how we can optimize the resources, and then the key talent at Core Diagnostics will continue functioning with us on the similar platform. If I can just add one or two more things. We have also created a steering committee and teams between Metropolis and Core Diagnostics team. And then we will work together and keep looking at the progress of the integration on a regular basis on all the domain, which is technology, which is products, which is people distribution, etc. So this will be purely backed up by the Metropolis leadership team for a better execution. Okay. And one more question about post-integration. The labs and logistics, they will be overlapped. So how will it be optimized going forward? With respect to the lab infrastructure, currently they have nine odd labs. Out of them, one of them is the National Reference Lab, which will continue functioning. The satellite labs is where we can see overlap, and we can look at merging operations. This is where the SteerCo will come into the play, and they will work out the overall seamless integration over the next six to eight months' time. Okay. And after this, our presence will increase in more than 10 countries, I think. And then the question is, how will Metropolis plan to centralize and also expand the international operations? So let me take this. So if you look at the Metropolis current structure of international operations, it can be divided into two parts. One is where Metropolis has made direct investments, which is in Sub-Saharan African countries. We have presence in five countries through 25 odd labs. And there are around 10 countries where we are doing insourcing of the specialty tests. So we have franchise partners in 10 countries who send samples back to our global reference center in Mumbai. If you look at Core's infrastructure, the Core has exactly the similar structure, which is the franchise-operated network, and they import or they insource all specialty tests. So we see a part of overlap, close to about 40% overlap between both the countries, I mean, where the client servicing is happening currently. And other 60% are the completely new countries. And the way it will happen is today, some of the test portfolios, which are currently offered by Core, are not really being offered by us to our customers. So there is a lot of cross-selling opportunity we can see very clearly. So the customers, what they currently have, will get an opportunity to send tests which are there with Metropolis and vice versa. Okay. Thank you. Yes, sir. Thank you. Thank you. The next question is from the line of Kunal Randeria from Axis Capital. Please go ahead. Hello, good morning. So while I note that this oncotesting market is growing, oncotesting market, I'm just wondering how much of this opportunity can be tapped by companies like Core because from what I understand, a lot of hospital chains are focusing on providing end-to-end oncotesting services and are also investing in diagnostics. So just want your thoughts on this. See, even if you look at today, all the top hospitals we can think of outsource the specialized pathology, not only in oncology, but across segments. Because a company like Metropolis has 4,000 varieties of tests. The most top hospital in India will have maybe 1,000-1,500 varieties of tests. Now, if you are a hospital provider who's competing in diagnostics, you still don't have all the facilities and all the kinds of tests that Metropolis does or Core does. So even though it appears as if hospitals are investing in diagnostics, what they're investing in is the top 1,000-1,500 varieties of tests out of the 4,000 varieties that we already have. And obviously, with this acquisition, our 4,000 varieties also goes up because we are adding now new varieties of very esoteric tests to our menu. This situation and trend is not unique to India. It's global. So hospitals are actually treatment-focused players, and they don't have expertise in pathology, and therefore they outsource it to the pathology experts like Metropolis or the equivalent in other countries for a super specialized testing. This is a trend that we don't expect to change. Even if your top one or two hospital chains start insourcing more tests, there will always be enough tests that they have to continue to outsource because they lack the skill and they lack the technical expertise to be able to do the entire range that we expect. In addition to that, what I would like to say is in the oncology treatment, a lot of these tests are dependent on the therapy, right? And these are not necessarily required when the patient is actually hospitalized. So you would see in the oncology, you have two clear streams. One is the oncosurgery stream, and then the medical oncologist stream. So medical oncologists are the ones who are clearly using the therapy monitoring tests, confirmatory tests, and so on. And these are largely the daycare surgeries or daycare procedures or the polyclinics where they are practicing. And this is where you will see even Core Diagnostics get a lot of these patients directly from the clinicians because they are operating in the OPD environment. So then how much of your revenue will be coming from these kinds of tests? Today, if you look at the Core specialty, almost 85% of the revenue is based on the oncology, which is into these segments. If you look at the overall contribution, today, Metropolis' contribution of the oncology is about 4% of its total revenue. With Core's acquisition, it will jump to around 10%. Sure. Sure. Thanks. Second question is on the gross margins. From the data that is available, I see that despite Core gaining scale in the last decade, the gross margins are somewhere around 60% for this business. So just wondering, is this the kind of margin that these businesses typically operate at? So specialty businesses and specialty diagnostics always operate at a lower gross margin than routine tests. If you were to break up Metropolis's P&L or a competing player's P&L, you will find the same story. But the specialized businesses operate at lower gross margins. But the EBITDA per sample, obviously, is higher because their pricing is higher as well. So we actually find that the right balance for diagnostics is to be able to have a fair amount of routine business, which gives you the high gross margin, but to have a fair amount of specialty business, which gives you the cutting-edge brand, and which also gives you the high EBITDA per sample if you're able to get a good quality business. Because that's when you're relevant. If you're only a routine player, you're not relevant in the doctor's mind because you could be one among 300,000 labs. It's the specialty diagnostics that's actually separating you from all the other peers. I'm talking about unorganized and organized. And therefore, even though you make lesser margins at a subscale level, at a scale level, your margins can still be good on the specialized platform. And that's one of the reasons why the standalone single specialty diagnostics players are not really functioning well economically, partly because of the low gross margin. Got it. Got it. Just one more, if I can squeeze in. You did mention of some cross-selling synergies that you foresee in the future. Can you talk a bit more about how you intend to do this? Sure. So I mean, the synergies will come from two places, right? So one as Avadhut referred to, there are some sat labs, which satellite labs all across the country where we do believe there is an overlapping infrastructure, and potentially you can have a consolidation there. The second key area would be sort of material procurement. Obviously, the prices of this Metropolis test and some prices of this Core test that is a synergy there. And that could be certainly leveraged to be able to overall aid the common sort of combined P&L of the business. Besides that, the management costs in the diagnostics business have only increased over the last 10 years. Talent has gotten more expensive. The infrastructure has gotten IT has gotten more expensive. And therefore, you're finding that subscale players are not able to operate on a sort of clean unit operating basis on their own. So you'll also find some consolidation in some of these infrastructural and corporate costs. So overall, we believe that as sort of Core lands up becoming a very key segment within the Metropolis umbrella, there will be a fair amount of synergy at the back end that we'll be able to leverage at the operating level and at the corporate level. I think the question was around the cross-selling opportunities, right? I think, yeah. Would you just talk about it? Yeah. So when we talk about cross-selling opportunities, today, Metropolis works with close to 10,000 + hospitals, and we have close to about 1,000 + oncologists where we touch base upon. And today, some of these super specialty tests are not in our portfolio and not really being focused, right? And as we mentioned earlier, that it may take a couple of years for us to really build those capabilities. It will take probably four to five years to build that trust. So with Core coming in, the test menu is readily available with Metropolis, which can be easily offered from day one to its existing customer base. So that's one opportunity. The second opportunity is taking the Metropolis test menu, which typically falls at the entry-level screening and a light test, confirmatory test, and then the routine follow-ups, which typically happens after the treatment of any cancer patient, can also be offered along with the Core super specialty test to its customers. Currently, as we mentioned, Core offers their test menu to close to 1,200 + hospitals and 1,600 + oncologists, right? So that remains a great opportunity for us to take our test menu of 4,000 tests and actually sell it to them. So this is how the cross-selling opportunity will come in play. Geographically, the way we are looking at is north and east is extremely strong with Core Diagnostics, with great brand equity, with the oncologists and great hospitals, whereas west and south is very strong with Metropolis. And this is how, again, the cross-sell will play. Sure. This is a bit of an oversimplification, but do you kind of will come up with, let's say, oncotesting packages, new bundle packages for patients with this? See, oncology works primarily through once you've obviously got cancer and you're there. I mean, you can try to bundle some of these, but frankly, each doctor has its own unique prescription. So we will try to do certain things on the screening side where consumers can make decisions on their own or try to do some for the doctor's prescription. But we'll have to see whether doctors still prefer to make their own prescriptions which are customized to each patient, or whether bundling can be an option. Thank you. Ladies and gentlemen, in the interest of time, please restrict yourselves to two questions per person. The next question comes from the line of Shyam Srinivasan from Goldman Sachs. Please go ahead. Yeah. Good morning. Thank you for taking my questions. Just the first one is on the CAGR growth that has been provided, right, to 22%. Just want to kind of separate it out if you can in terms of volume and price changes, if any, right? The average revenue per test seems to be INR 2,300. But just want to understand how these two dynamics, like price and volume, have actually changed over the years. Even a longer time frame would be helpful. So the specialized tests that usually happen in the portfolio are that when we launch new tests, you are obviously pricing them a little bit higher because you do not have the volume. And over time, actually, as the volume builds, we find that the pricing starts to move downwards. This trend happened over the last 10 years in oncology, where you will see that actually the pricing has moved to more affordable levels. Because you have to remember that in India, the OPD testing, which is not in hospitalization, is still paid out of pocket and is not covered by insurance. And therefore, the more affordable and accessible we are able to make sort of specialized testing, the more volumes we are able to actually bid. So traditionally, you would have seen even with Core or with other players, the volumes would have been probably about 10%-12%, and the rest of it would have come from sort of moving up the value chain, not necessarily from an average revenue per patient, but really moving up the value chain. It's not because the price increases, but because you're selling more complex and more advanced tests. And therefore, you're able to get sort of a higher price for that particular test. So the volume of patients obviously will continue to increase at a fair pace. But more importantly, are you able to get the patient the right test for them at the right time and keeping them moving in the value chain that's required for them? Avadhut, do you want to add anything? No, that's. Yeah. So Ameera, I'm just trying to get the outlook here. So essentially, you're saying price will now stabilize after it has fallen, and then we'll get volume growth like whatever cancer incidence is going up. So 11%-12%, should that be if you were to make a projection? I'm not asking you to, but I'm just saying, how should we look to model this one out in the path forward in terms of growth? See, if we take the overall CAGR, I didn't want to break it up at this point into volume and price because we would also like to continue to understand the segment deeper. But if you look at the CAGR of 22% that we've cited for the last three years, is actually removing COVID, adjusting for any COVID testing, and adjusting for any non-recurring revenues. So for example, they may have got a government contract which expired, etc., etc. So 22% has been the CAGR from a B2B and a B2C perspective, which means it is a pretty fair CAGR, and our goal is obviously going to be to try and uphold that, but with a better quality of means and better quality of business. Often what happens in the unorganized space is that without too much governance, there is a focus on growth. Obviously, when a company like ours comes in and puts even stronger governance parameters, you may see growth moving down 1%, 2%, 3%, but you'll also see, because of better management capabilities, the growth moving up. So hopefully, I think this 22% CAGR sounds like a fairly good number to us, even for the future. Thank you. The next question is from the line of Abdulkader Puranwala from ICICI Securities. Please go ahead. Thank you for the opportunity. Just first question, if I look at the first half revenue numbers, there seems to be a slowdown as compared to the 22% CAGR what we are talking about. So could you highlight some on it that why there was, say, the first half numbers were just at close to INR 59 crores? Sure. See, if you look last year, the revenue was approximately INR 110 crores. But actually, if you look at one layer beneath, it also included a hospital lab management contract, which actually came to an end before we acquired this business in April 2024. And actually, therefore, the base would have reduced to INR 103 crores instead of INR 110 crores. So if you look at the growth, actually, of what you're seeing today is from INR 103 crores to probably where it will land at INR 120 crores or INR 122 crores if you take the run rate of this one. So the growth from INR 103 crores onwards, you can calculate it would be around the same level. And that's why we said that the CAGR 22% is adjusting for COVID and non-recurring businesses. Got it. That's helpful. And the second one is on PPT, you mentioned about certain ESOPs being offered to the key team members which are going to come from Core. Could you highlight what could be the incremental hit on the EBITDA and how does that pan out in the 14x EBITDA multiple what you spoke about for 526? So that's not really being plugged into the Core space. It will be plugged into the overall Metropolis space. And the idea is very simple. It's to basically create long-term alignment for the Core team to Metropolis because if you want to get them to not only execute the synergy revenue and cost with Metropolis team, they need to be aligned to the performance of Core, but also the performance of Metropolis. So the similar kind of programs that we have done for our Metropolis leadership team have been done for the Core leadership team. Thank you. The next question comes from the line of Anshul Agrawal from Emkay Global. Please go ahead. Hi. Thank you for the opportunity. So I suspect Core Diagnostics doctor network would be more oncology-focused. So how do you plan on cross-selling our non-oncology test bouquet over here? I understand there are synergies, there are cross-selling opportunities around entry-level oncology testing, but how do you plan on sort of cross-selling a routine test menu or other category test menu over here? Avadhut, d o you want to take it? Yeah, sure. So the cross-selling will happen on two levels. One, if you see, we have mentioned clearly that they have contracts with 1,200+ hospitals and labs, correct? So those 1,200 hospitals and labs are not only oncology testing hospitals and labs, but they are multi-specialty hospitals, which also cater to oncology, right? And what we have seen is that there is barely about 5%-10% overlap in the client base. That means 90% of those hospitals and labs remain open for us to take all other test menu of Metropolis because they are anyway outsourcing some of these tests to some other lab, correct? The only oncology piece is actually going back to Core. So using that existing relationship, which is built over the last four to five years, can be utilized to sell Metropolis test menu. That's one on the hospital side. On the consultant side or on the oncology side, if you look at the patient journey, even at the detection level, you will need to do a lot of blood markers, right, which are blood-based entry-level tests. And that portion is quite significant. And then you move to the super specialized test segment when the patient needs the therapy. Once the therapy is over, then the patient moves to survivorship. The survivorship is nothing but the follow-up. And during the follow-up also, then oncology tests have a sunset, and then again, the routine tests like CBCs and the total blood markers, etc., will follow through. And those tests are typically required at least twice or thrice a year. So what we have noticed in the entire lifecycle of a cancer patient, the number of tests required is close to about three-to-four times than a normal patient requires, out of which maybe one-third will be contribution from the oncology, but the rest two-thirds comes in from the routine test, which is the strength of Metropolis. And currently, those patients are being offered only the oncology-based test because Core currently doesn't really deal with those kind of test menu. Got it. I take your point on the B2B portfolio, but in the B2C portfolio, is there a use case wherein we can sort of cross-sell non-oncology test packages or test menu to these B2C consultants? Yes, because if you see, for example, like I've just said, in oncology, let's say when a patient goes to them, first, the patient has to get routine tests done, right, in whichever location that oncologist is. And then they get some semi-specialized and specialized tests done to figure out whether the patient first has cancer or not and in the early part of the treatment, right? Now, Core today doesn't have that infrastructure at all in terms of number of labs across the city to be able to do that entry-level and that specialized testing for the patient. And therefore, that doctor is working with some other lab for those entry-level and specialty cancer tests. And Core only comes into the picture when that doctor wants to now outsource a super specialized test. So we could potentially leverage that relationship with the doctor to try and capture the entry-level and specialized tests because Metropolis does have labs all across the country, and we are present in 750 cities. So by doing the entire journey from entry-level to super specialized, we're able to capture all the prescriptions of the patient, via the doctor or via the hospital, and continue the relationship from start to finish rather than it being a broken relationship. Thank you. The next question comes from the line of Surya Narayan Patra from PhillipCapital. Please go ahead. Yeah. Thanks for the conversation. I apologize, Surya. If you could please speak up. Your audio is not clear. Yeah. Is it audible? Yes. Please go ahead. Surya has left the question queue. We move on to the next question, which is from the line of Rishi Mody from Marcellus Investment Managers. Please go ahead. Can you hear me? Yes, Rishi. Please go ahead. Yeah. So my first question was on the if you are to build a bear case scenario for this acquisition, what could go wrong out here? Or where do you see near-term headwinds? Let's say 50% is B2B. Do you see any business that you would not want to continue because of receivable management or anything? So while 51% is B2C out of the balance 49%, 15% is actually from pharma support programs, where pharmaceutical companies that are providing targeted therapies are, in many cases, doing their subsidized testing for those patients. And the balance 35% is from B2B. The risks, look, at the end of the day, the risk here is really on the business execution side, where it's up to now Metropolis and Core management teams to be able to generate the synergies at hand, whether it is the cost synergies, whether it is the revenue synergies. So that obviously is one risk that we obviously are on top of and want to make sure that we are able to generate the kind of profits and returns that we would like to do from this deal. I think the B2B synergies, what we are alluding to, we don't see very large because the customer bases are quite different, but there is some price points which will be different between Metropolis and Core, and while that does not impact in the first year, when we do start to do a full integration, we may see that some of the pricing has to be tweaked to make sure that we're putting out a common pricing in the market, so that has been already captured into our business model as we have looked at the synergies and received these synergies of both these businesses coming together. Okay. Any other risks or downside cases that you think can or cannot may play out? I mean, theoretically, there are obviously many risks at hand in any transaction you do or any business you do. But I would say these are the ones that we are the most mindful of. While we have identified all the risks, we have tried putting mitigation plans for all of them. Now, will all of them work 100% perfectly? Never does in real life. So we'll have to see and try our best to ensure that all the risk mitigation plans are completely put in place and then create the buffers for the situations which are unaccounted. Understood. On the upside, right, any non-linear optionalities or something which I heard a gentleman mention that you all have been researching some new testing, but it's just started. So if you could just give color on what's the upside which is not there in the business today but can come through? See, I think the capabilities in the business, the R&D capabilities in Core in terms of starting new tests and tapping new segments have been reasonably strong. And we believe that with some amount of capital, with some amount of focus, with some amount of re-energizing the system, we are wondering whether there is an ability to keep sort of doing more and more R&D and sort of really stay ahead in terms of testing. That obviously will remain unknown at this point. Once we deep dive and we start to put some energies there, we'll come to know whether there is an option to really create a completely new test menu, not only in oncology but potentially in other areas as well, that allows us to then keep expanding. So I think that remains an option at this point, which could be, like you said, have a very different trajectory. But it's too early to sort of have any commitment to that at this point. Thank you. The next question comes from the line of Gagan Thareja from ASK Investment Managers. Please go ahead. Yeah. Good morning. I hope I'm audible. Yes. Hello. Yeah. I have just one question that pertains to the financing arrangement for the acquisition. In particular, what made you choose a CCPS and a cash structure rather than perhaps an all cash or a cash and debt deal here? So we looked at a couple of things. I mean, we felt that we had about INR 187 crores of cash at the end of September, and Metropolis has been working all year on a deep funnel of potential M&A that we would have seen a really good idea we'd like to do. And usually in our industry, when you're buying businesses from pathologists who are on the ground, you can't really use your stock as currency as an option to do that because they are not comfortable with stock as an option, and they only prefer cash. We felt this was an opportunity to use our stock as currency as well because these are private equity players on the other side. And with them, they have the understanding of how it could work. Therefore, we thought that instead of using all our cash or debt lines at this point, let us use partly our stock as currency as well. Since we have that availability of usage in this particular case, that also leaves things more open for us to do additional M&A if the right deals and targets come about and doesn't really block us from doing anything further. Really, it's about just using all the different channels at hand. While we are aware that obviously doing a stock trade as part of it will slightly dilute the ROE and the ROCE, and that gives us the ability to recover from that equity or not, we felt overall, weighing all the pros and cons, using stock as currency also sets potentially a precedent for the future to say that if there are deals that come about, is there a way for us to do it. So that was really the thought process behind it. Yeah. And just one more question is around the profitability of the acquired entity. I think someone did ask this. I would just like to perhaps try and get more of details here if possible. Given their relatively more complex test menu and working in an OPD on-call sort of environment, why have the margins of the company been relatively perhaps low or still in the last five years been a loss-making entity? If you could break it down under cost heads to whatever degree possible for an explanation, it would be helpful. So I mean, if you look at sort of the single specialty diagnostic layer, usually the gross margins, as we talked about, tend to be around 55%-60%, while margins of, let's say, Metropolis or one of our peers would be really more close to between 75%-80%, right? So one big difference there. Now, this tends to be the case more because of affordability issues in India, not because of anything else. So because it's not covered by insurance, you're trying to make the test more affordable for Indians. And the minute it goes over a few thousand INR, that becomes sometimes a challenge. And therefore, you're not able to price it at the way you're able to price routine test because as you're trying to build scale, you need to make it affordable for the volumes of people who need it. So that's one part of it. The second part of it obviously is the corporate cost. That when you're functioning at a sub-scale level, you still need the whole cadre of your professional team, your compliance, your IT infrastructure, all of that, which obviously then becomes a heavy cost on a subscale player. And third, as you're trying to sort of go and do customer acquisition, like we gave you the example of an oncologist where you're trying to go and do a business on. Now, when you go to get your oncologist and say, "Doctor, can you please give me the super specialized?" The doc will say, "Yeah, but I have to give the basic entry and this to somebody else. Why don't you start a lab so you can do the basic test in the city because I need those reports fast?" And then you can take the super specialty to your central lab. So you then land up starting local infrastructure, which is suboptimal and not productive, to do the local test there, but you're not able to really compete with all the other players in the market. And therefore, you land up adding infrastructure cost, which is actually not needed. And it's not a shared service that could be potentially the way it will be between Metropolis and Core in the future. So overall, the way we see it is that if this was a fully mature, profitable lab at a 25%-26% EBITDA, the value of this business would have been closer to between INR 700-1,000 crores, right? Today, you're able to get this business at a much more reasonable price because it has not been fully matured from a profitable perspective. And we had the opportunity to create that value internally in Metropolis as a benefit for the shareholders of Metropolis, right? So we believe that mostly good quality assets do not come at this price. And obviously, if it was already matured, it wouldn't. But that's the opportunity at hand for us. And we believe that we should be able to get it to the Metropolis margin in four years. Thank you. The next question comes from the line of Alankar Garude from Kotak Institutional Equities. Please go ahead. Yeah. Good morning, everyone. Firstly, Ameera, possible to share some details on the current shareholding structure of Core? Sure. The private equity players that own it, I think 50% is owned by Artiman Ventures. How much is by Eight Roads, I think? 34%. Around 34% is by the Eight Roads and the balance to these small shareholders. Sure. Thank you. So basically, the founder of the company doesn't have any equity right now in Core? No. Very small. If anything, maybe 1 or 2%, but not more. 2%-3%. Understood. Second question, possible to share some basic P&L balance sheet details, particularly lease, rentals, net debt, and gross block as of first half FY25? If you're okay with it, we'll come back to you offline with the details. Fine. And the final one, what is the payback period you're looking at? We believe that from a payback period, we think from an EBITDA perspective, it should be about six to eight years. From a PAT basis, it should be about nine to 10 years. Thank you. The next question comes from the line of Rishi Maheshwari from Aksa Capital. Please go ahead. Thanks for taking my question, and congratulations to the team on culminating this. Ameera, I wish to understand basic tests for oncology would be PET scans, CA markers, which are in the vicinity of about INR 9,000, INR 10,000 to about INR 20,000 depending where you're doing it from. So the per-unit test at about INR 2,300 that you've suggested or indicated does not necessarily resonate. So if you can bridge that gap, what are we exactly doing over here in terms of the tests? General oncology tests, as we understand, are these. So please help me understand. So I'll add a couple of thoughts and updates, please, afterwards. See, a PET scan is not an all-in-one treatment technique, firstly. Usually, people will do, and that's on the radiology side, but people will usually do a sonography or you might find something through a clinical examination, which are initial research types. On the pathology side, the early detection markers, which are the CA markers, like you rightly said, are priced closer to INR 600-INR 800 rupees for test and not at INR 10,000, which is more for radiology on the PET scan side. Once you have figured that, yes, you do have some sort of a tumor and some sort of a lump, then you'll get a biopsy done, which is the basic histopathology screening that happens, which is again priced at anything between INR 400-INR 1,000 rupees approximately and not as high as that. It's only once you have figured that, yes, I have cancer and now I'm in treatment. Before that, before you're doing surgery and you need to find the targeted areas, that's when you do a PET scan to figure out the next step. And on the pathology side, and when you're getting treated, you have all of these tests which need to figure out from a surgery and from a treatment perspective how your body is sort of reacting to them and genetically and through molecular genome replication, which is where we are finding all these super specialized tests relevant. And the price point for those will be anything between sort of INR 2,000 and INR 5,000, INR 6,000, INR 7,000 rupees per test. So when we are seeing 2,300, we also have to remember that this is a forced discount, which is passed on from a B2B perspective to hospitals or to labs, and therefore it's symmetric. Avadhut, anything you want to add? No, you fairly covered, and that's absolutely correct. In fact, what I would like to just add here is these are not the only entry-level tests. But as the patient progresses towards more confirmatory tests, the doctors typically prescribe even more complex tests, which are blood-based, right? And it could also include the common tests like HIV, hepatitis B, hepatitis C, vitamin B12, D3. So these are a set of tests which are definitely required for any patient while it goes on to the confirmatory therapy. And this is before the therapy. During the therapy also, the patient would be required to accompany certain tests every time they go for either radiotherapy or the chemotherapy. And once the patient is into the survivorship, as I mentioned, that again, you need to conduct at least seven or eight varieties of tests in the bundled packages, minimum twice a year. There is ample of opportunity. Just we mentioned earlier as well somewhere, the use case could be we can look at how Core has also built over the last two years. I mean, until two years, they were only into the super specialized segment. When they realized that there is an increasing demand from the oncologists for certain entry-level tests, they decided to actually do a pilot, and they set up six, seven routine labs. Today, almost the routine lab revenue has reached close to about 8%-10%, which is in and around these specialty tests. That can be used as a kind of a use case scenario. Plus, with us also, we have typically observed that when we get one patient for cancer markers and we look at the historical data of the patient, there are at least three to four various varieties of tests which are prescribed for the same patient. So we have looked at both the scenarios and actually made the plans around that. Okay. All right. Thank you so much. Thank you. The next question comes from the line of Surya Narayan Patra from PhillipCapital. Please go ahead. Yeah. Thanks for this opportunity and congrats for the transaction, ma'am. My first question is about your entry into the radiology side also. See, because I wanted to have a sense running a diagnostic business targeted for oncology without radiology, how advantageous or disadvantageous this would be as a strategy. And in the past also, you have mentioned about entering into some adjacencies having some kind of radiology service offering. So should we consider Core as a first step towards entering into the radiology way also? In the past, when we talked about radiology, we talked about basic radiology with X-ray, ECG, and maximum sonography. We, in fact, emphasized that we are not planning to get into advanced radiology, which is PET scans, CTs, and MRIs. And that continues to be the standard at this point of time. Core is not a stepping stone into advanced radiology. Core is very much a stepping stone, like you mentioned, for specialized pathology on the cancer side and for the North India and East India. The radiology business is not one that we favor heavily for many reasons, but primarily one, we find the financial metrics on the business to be poorer than pathology. We also find the governance in the sector to be very poor. And frankly, in the last few years, we have seen an overabundance of suppliers when it comes to things like CT, especially across the country when COVID came in. And that has actually landed us in some ways commoditizing some of the industry. And then in healthcare, we have to remember that there is an expertise mindset. So people often ask the question, "Oh, hospitals have come in, and they can become very good at this business." That's not how it works in healthcare because everybody has to do what they are really good at. And you try to get into somebody else's market and they are really good at it. It doesn't always work. So hospitals are good at certain specialties in treatment, and they do really well at that. They may or may not do well in pathology. The same way a radiology player who expands into pathology may not necessarily do well in pathology, and the same way a pathology expert like us going into radiology may not really succeed in that, so it's all about the expertise in each segment and trying to actually go deeper in your segment to build value. Okay. Second question is about the kind of volume share what Core is adding to Metropolis. So let's say in terms of the patient volume or the test volume, if you consider, it is low single-digit% as of now, although it is bringing in the quality super specialty test to our portfolio. But number-wise, it is really insignificant at this juncture. So how do you see this addition or the Core acquisition will be influential to our overall growth, let's say, over the next two to three years? See, I think acquisitions will be driven by more strategic. I don't think we are really looking to go and buy revenue and even digest it. We are looking at them more strategically as an entry point into something which we can then organically create. So if you look at these 24 acquisitions that we did in the past, we may have acquired a business worth only INR 5 crores annually at some point, but that business today is INR 100 crores in value. And frankly, for the shareholders of Metropolis, that is a far more advantageous strategy than going and just buying businesses which are fully built out and which already have maximized their revenue and are therefore adding a lot of significant revenue and profit to the mix. But you're not then getting a chance to create that on your own, which is frankly where the return on capital employed will be higher. So we like this model of going and buying what we may feel as not very significant pieces, but strategically give us a great platform to leapfrog. And then we are able to create the rest of the journey organically, which is really where, like I said, the value will come in for all of us as shareholders. So today, it may not seem very large, but we believe it's a great step for the future. Thank you. Ladies and gentlemen, we take the last question from the line of Naman Bagrecha from IIFL Securities Limited. Please go ahead. Hello. Yes, Naman. Please go ahead. Thanks. Thanks for the opportunity. Ma'am, just a few clarifications. I'm not sure if you highlighted the cancer or oncology testing market. I heard some INR 4.5-5,000 crore kind of market. Is that correct? That's right. It's about when I'm talking about pure oncology, we are talking about an INR 5,000-crore-odd market for not counting sort of the routine tests which come along with the prescription, but just the pure oncology tests. So we can't compare this to sort of the overall revenues that we see of the diagnostic labs, but we have to compare it only to the specific cancer tests that are being done. And what would be, let's say, this market expected to grow? I mean. The pay growth for the next five years is expected to be about 70, not 50. Thank you. Ladies and gentlemen, this concludes our question and answer session. I now hand the conference over to Ms. Ameera Shah for her closing comments. Thank you, everybody, for joining. It's been a very exciting start of the week for us, something we've been working on for a year. And I think it continues in line with the strategy that we highlighted. Metropolis will continue to build its specialty portfolio in a profitable way as we move forward, and Core is a clear addition to that. It allows us to become the leading cancer testing facility and clinic labs in the country and really positions us to participate in a segment that is the fastest growing in the country. And also, at the end of the day, take care of people who are suffering from this deadly disease. Along with that, it also positions us very well to go deeper into the north and east of the country, really building specialty business with the top hospitals, with the top doctors in a region where we would like to increase our market share and really go deeper and closer to doctors. The financing for this and the value that will be created from the deal, we feel quite strongly and comfortable with. And we believe that going forward, this acquisition will add very well to the returns of shareholders. So thank you all of you for joining, and look forward to chatting again. Thank you. On behalf of Metropolis Healthcare Limited, that concludes this conference. Thank you for joining us. You may now disconnect your lines.