Metropolis Healthcare Is Banking On Acquisitions To Fuel Growth

(MENAFN- Live Mint)

After aggressive organic expansion between FY21 and FY25, when it added nearly 90 labs and more than doubled its patient service centres from 251 to 530, Metropolis Healthcare Ltd is now shifting gears. The diagnostics chain is betting on acquisitions to drive its next phase of growth.

India's second-largest diagnostics chain, Metropolis, has been on an acquisition spree since last year. The Mumbai-headquartered firm last week announced its fourth acquisition in the past 10 months, strengthening its hold in Kolhapur, one of its key markets in western India.

Dr Lal Pathlabs is the largest diagnostics chain in the country.

Also Read | Healthcare gets a uniform code: Now, standard protocols for 28 specialtie

The diagnostics chain aims to strengthen its business-to-consumer (B2C) reach and deepen its presence in tier-III and tier-IV markets. To achieve a strong hold on these markets, it is banking on regional acquisitions.

“Our guidance was that after FY25, we are not going to expand the greenfield labs as heavily," Ameera Shah, promoter and executive chairperson, Metropolis Healthcare, told Mint in an interview.

Diagnostics is typically a hyper-regional business, so acquiring local assets that are market leaders would help the chain strengthen its presence in different markets.

Key Takeaways

• Metropolis added 90 labs and doubled service centres between FY21 and FY25 before pivoting to acquisitions.
• Four acquisitions in 10 months have expanded its footprint in Maharashtra and North India.
• The 'String of Pearls' strategy focuses on building regional clusters through niche buyouts.
• Core Diagnostics' losses have temporarily impacted Ebitda margins.
• Tier-III cities are driving growth, with a 17% revenue increase in Q1FY26.

Acquisitions

On 18 September, Metropolis announced the acquisition of Ambika Pathology Laboratory, a leading diagnostic player in Kolhapur, for an undisclosed amount. Maharashtra is a key growth market for Metropolis, contributing nearly 40% of total revenues. The acquisition strengthened the company's hold in the regional market, and Ambika will be developed into a mini regional reference lab, offering over 4,000 advanced and speciality diagnostics to patients in Kolhapur and neighbouring tier-II and tier-III towns, the company said in a release.

Earlier this year, Metropolis made two acquisitions to increase its presence in North India: Dr Ahuja's Pathology and Imaging Centre in Dehradun, and Scientific Pathology in Agra-both are established B2C brands with deep-rooted equity in the region, said the company.

Also Read | CVC Capital to exit Healthcare Global via ₹550 crore block dea

In December 2024, Metropolis acquired Delhi-NCR-headquartered Core Diagnostics, a prominent player in India's specialized diagnostics sector, for ₹246.8 crore.

These additions significantly strengthened the company's presence in North India, with the region's contribution to overall revenues rising from 8% to nearly 14-15%, according to its FY25 annual report.

What lies ahead

Metropolis is employing a 'String of Pearls' strategy, which focuses on leveraging local and niche expertise to strengthen its overall footprint. The company said in its release that the idea is to build strong regional clusters and expand access to advanced diagnostics across India.

“We've already done three acquisitions this [calendar] year," said Shah.“It's unlikely we're going to do anything more this year, but we will continue to build the funnel for next year," she added.

In Q1FY26, the company's revenue grew 23% year-on-year, of which 13% was organic growth.

While its acquisitions in Dehradun and Agra were already profitable, adding to the company's base, Core Diagnostics was loss-making last fiscal year, which is expected to weigh on its earnings before interest, tax, depreciation and amortization (Ebitda) margins in the near term.

After breaking even in Q4FY25, Core Diagnostics turned Ebitda positive with low single-digit margins in Q1FY26. Metropolis management said during the company's Q1FY26 earnings call in August that the company plans to bring Core's margin profile to high single-digits by the end of this financial year, as the integration processes and synergies begin to reflect.

In Q1FY26, Metropolis Healthcare's reported Ebitda margin, including the acquired assets, was 23.1%, down from 25% in Q1FY25.

“The interest is not just to acquire that business, but to get them to grow faster as we move forward, as well as to make better profits," said Shah.

Small-town foray

Metropolis is deepening its presence in smaller towns and cities.“While a significant part of our business comes from tier-I and tier-II markets, our expansion is largely happening in the tier-III and tier-IV markets," said Shah, explaining that these markets are seeing significant growth.

Also Read | Bengaluru rehab startup Sukino in ₹200-250 crore talks with top VC

“These markets are where doctors have to move to, you're seeing illnesses like oncology and neurology being treated locally," said Shah, adding that as healthcare services increase here, the need for diagnostics increases as well.

Tier-III cities alone registered a revenue growth of 17% in Q1FY26 for the chain.

However, challenges such as affordability and the availability of pathologists remain.

Managing director of Metropolis Healthcare Surendran Chemmenkotil told Mint in an earlier conversation that Metropolis has employed a micro-market pricing strategy with market-relevant pricing in different regions.

MENAFN23092025007365015876ID1110101590