Got it. And lastly, on Core Diagnostics. Now, given the nature of these testing, I would believe that there is a lower portion of seasonality related to these oncogenomic tests, right? So, I think sequentially, we would have seen a sharper drop in Core based on certain assumptions that I've made. What drove this? I understand that there was some delay in machines, et cetera, but sequential drop in revenues has happened. Is that understanding correct?
No, there is no sharper drop as you have been just mentioning. A slight drop because in quarter 3, normally because of festivities, etcetera, the procedures comes to a halt and it comes back in quarter 4. So, a very marginal drop in quarter 3. But I mean, we are seeing quarter 4 coming back in full form.
Got it. So just understanding the price revision again because I was going to come to that second question. Is the environment conducive for price increase from a competitive standpoint? Yes, while GST benefits need to be passed on, do you think there is a revised time line now of when you can relook at pricing for yourself?
Yes. We see the market is definitely may be able to absorb some price increase and the environment is conducive. But we are delaying it, deferring it for the reasons I've already mentioned. I mean when exactly we will do it, that's still a decision that we have to make. We will keep observing the market for some more time. And then at appropriate time, we will use the price levers as well.
Very helpful. Last question, just on like medium-term thought process around guidance for top line only. If you are able to do 6%, 7%, I'm just using patient volume growth, 6%, 7%, somehow test volume and patient volume for you seems to be same number, similar numbers. And you add RPP 5%, 6% and then mix change, let's assume, right? Which should come in RPP. Why are we not able to grow faster than the 12% to 13%?
Well, I think we have delivered a 15% growth in quarter 3, as you could see it, right? And in the days to come, of course, you can expect improved performance on the top line. Yes. See, the estimate for this year was 12% to 13%, and we would like to hit the higher end of the 12% to 13% bracket that we have been talking about it. And hence, a similar trend that you will see it in quarter 4 as well.
So, this would include Core Diagnostic as well, right? I would appreciate if you can highlight organic revenue growth over there.
Correct. Well, at this point of time, I won't be able to give you the specifics, but I think it's growing faster than the company's revenue growth, I can tell you that.
Sorry. Just a follow-up on that. So, from what I can gather from your comments, pricing is probably not a key lever in determining what customers are choosing or the diagnostic player that they are choosing from in preventative health care. Would that be a fair assumption to make now?
Look, I think that It would not say that price is not an important factor in preventive health care. I think in illness and curative health care, it's definitely not an important factor. But in preventive health care, I think it's still an important factor, but it's not the only factor. We have to remember that finally, if somebody is buying something, they still have to trust what comes out of it. So, I think the quality of it, the acceptance by the doctor, the convenience, the experience that you go through, these are all other very important the interpretation you give, is there a doctor doing a consultation with you at the end of it. These are all very important parts of also how people choose a wellness package. Price is one of them, but definitely not the only and most important factor.
Okay. And can you also give us, let's say, the capex guidance? What I believe was that we were targeting to improve the CC per lab ratio from, let's say, around -20, 22 collection centers per lab to around 30. So, by when do we expect that? Okay. Okay. So, any capex guidance that you would like to give for the next 2 years?
Well, I mean, that's an aspirational goal. I already mentioned it that way, right? And that the number of labs are getting consolidated and the centers are going up. It's a gradual progression. And I know it's very difficult for me to put a time line to when will you hit the 30 number. And I also believe that it just doesn't matter when you will hit it, but as long as you're progressing in the right direction. At this point of time, no. And I think at a later stage, maybe we'll be able to share with you.
Sir, my first question, is it possible to share what is the organic volume growth that we would have seen in the test side?
Organic test volume growth is 8% for this quarter.
Okay. And my second question was on the genomic initiatives. So, we have added equipments that -- and we have expanded the capability there. And this is also considered to be a kind of a value growth driver for us going ahead. But concurrently we know that genomic has never been a kind of high-volume growth area for India so far, and there is a kind of a rising competition on that front also with disruptive prices that it is talked about. So, what is your thought process here and how do you see this opportunity really contributing incrementally in terms of value terms?
Look, if you look at Metropolis' positioning, we have never really been the company who is focusing on tests which are commoditized in high volume. We've been the company who's focusing on making sure that all the places that we are really working in are non-commoditized areas, which are really focusing on giving the right report to the patient when it's required in the clinical setting. Genomics, if you look at the therapeutic areas which are growing the fastest in the world are actually oncology and neurology over the next 10 years, and the same situation is going to be in India. And for cancer and for any brain or nervous system areas, finally, the most important tests are going to be genomics. So, we expect this category to grow very fast over the next 10-odd years and longer. And therefore, being a critical player in that market is important. And the business that comes, there you're right, there are at least 7, 8 players in the space, but it's only 7, 8 compared to all the other tests where you have 3 lakh players. So comparatively, you're talking about still this being a cohort which has lesser competition. And even amongst the 7, 8 or 10, 15 players who are doing genomics, we have to remember that the doctors are going to need the most quality and precise report, which is where Metropolis' positioning will stay. And we are finding that our pickup of genomics has been very rapid since we have launched the test.
Next question is on the network expansion side. Generally, it is also believed that there is a [inaudible 0:24:41]. Now, clearly, Metropolis is focusing more about splitting of the assets after creating a strong network expansion over the recent years. and that's why there is a kind of a marginal moderation in the modern network addition front that we have witnessed. But simultaneously, that is also considered to be a kind of a key growth driver. So, given that your thought process in the subsequent period?
So, I mean, we have mentioned this in the past also, largely the laboratory expansions are mostly done with, to service the 750 towns that we are focusing. Now the focus is on going deeper into the 750 towns and improving and enhancing the customer service network there, and mostly through the franchised channel. So that's what we have been doing in the last 2, 3 quarters, and we continue to do that, and we find enough and more opportunity to further expand our network in the 750 towns, and we'll keep doing this and get more volumes and revenue growth from the Tier 3, Tier 4 kind of cities.
Okay. Just last one point from my side, sir. See, we have seen in the opening remarks also, you mentioned ma'am that there is a kind of a volatile situation in terms of the currency, in terms of the trade issues, everything that we have witnessed. So, while this industry is immune from all that, given it is a domestic one, but any impact that one should anticipate to the reagent cost and all that?
See, at this point of time, we don't anticipate anything. But look, I mean, if the rupee runs away like crazy, there is obviously always a chance that vendors can come back and potentially talk about renegotiations. But having said that, a lot of our reagents and vendors are actually more EU-based and maybe even some Japan-based and less, I would say, U.S. So, I don't see there to be too much of an exposure at this point of time.
Congrats on the good set of numbers. I was just looking at the data point wherein you kind of say that you have kind of closed down 4-odd labs in this quarter. Can you tell me, is this to do with Core or the recent acquisitions and what drove this close down? And is there any more closures expected in the upcoming quarters?
Well, I think all the laboratories we had closed down in the last 2 quarters are largely because of integration. Wherever there are duplicate labs available in a town, we have just decided to go with only 1 of the 2. And that's always been the stated strategy that we had. And there are a couple of more labs that we may shut down in the quarter 4 as well and the numbers could be a little more lower than what we are starting the quarter with by the end of this year, right? So, you can expect maybe 2, 3 more labs getting integrated.
Got it. And in terms of your volume growth, as you kind of guided, it will kind of improve. It has come at around 8-odd percent. Q4 is near term, but in a longer term, do you expect this mid-to-high single-digit patient volume growth kind of to sustain?
Yes, 7% to 8% volume growth has always been our aspirations in the near future, and we are working towards it, and we have started seeing the early successes on our programs, and we continue to believe that 7% to 8% is a range that we can strike up in the days to come.
Just first one on GST impact from a pricing perspective. In Q3 or maybe in Q4, is there a change to how, given all the reagent lower GSTs, how does this pan out for us? Is it already reflective in our RPP for Q3? Or we should expect realization to change in Q4?
See, there is a very marginal impact on the GST for us. I mean, what actually has happened, if you have observed it, the GST on materials into the diagnostic was at around 12% and it's moved up to 5%. And some of the reagents were already at 5% and some of them are at 12%, 18% has come down to now 5%. So, there's a marginal benefit that we actually get comes into our results. But if you also know that in January, every year, we used to do a price revision. So, this year, we have delayed the price revision and it did not happen in January, basically so that at least the customers continue to get the benefits of these revisions.
Just a couple of questions on my end. One is on routine testing, we've seen a growth of 12%, whereas your industry peers actually have seen a dip in that segment. So, would this be attributed to the geography that we are present in? Or would you attribute this to our strategy of focusing more on volume, which has been our strategy for the last 3 to 4 quarters or maybe more? So, some light on that would be helpful.
See, the routine and semi-special in fact, all the test volumes category-wise that we have mentioned in the investor deck is at a consolidated level, right? And so, in the routine and semi-special numbers that you are seeing 15% to 16% growth in quarter 3 is including all the new entities that we added during this year.
Yes. Sir, even in organic, we have grown 12%, if I'm not mistaken. No, I'm talking about the revenue growth, the segmental revenue that you give. So, I was just wondering if it was driven by geography that we are in the West of India that is driving it? Or this is more a focused strategy that we have?
In organic, the test volume growth is 8%. Not really. I mean, as at the end of the day, it's your execution strength. So, it's not so much about the geography actually, if you see North is probably the fastest-growing geography for us. So, I think it's about the strategy and the execution of it. 12% is routine and 9% is semi-special.
Understood. This was on the back of the peers underperforming. So, I thought maybe just wanted a clarity where it was coming from. That is one. Second is the GLP drugs which are coming off patent, so do we have a focused strategy out there to take advantage of testing requirements that will come because of this? Or do we believe that the requirements are pretty much fulfilled in the existing test menu that we are offering to customers? So, just your thoughts on that.
See, the GLP therapies that are all coming out will all require a baseline testing to find out what's happening in the body to moderate dosage, along with a continuous monitoring to see whether it's actually effective and not harming the body in any way. So, our expectation is that like any other drug, if people are going to take medicines, they are going to have to monitor their blood levels as the underlying effect. So, of course, with GLPs coming in a big way, we do expect that our GLP packages as well as all the other products we have launched will pick up in a fairly bigger way. And we've launched all of these GLP-1 packages already.
So, I keep seeing some sort of rumors keep floating around WhatsApp. I know that some of them are really baseless, but about Reliance entering the genomics field and charging very low rates for testing. So, how is this or how strong are these rumors? Could you speak what you're hearing on the ground and how this affects your genomics business, if at all?
Look, I think difficult to comment, obviously, on their strategy or what they're doing, but there was already a business, a genomics business, which was in distress, which they then acquired from, I think, NCLT. And I don't know what their goal with it is because obviously, they are not in the larger space of pathology. But what we are told is that it's more of a data strategy, which is more D2C and more of a screening test and not a diagnostic test. The difference between the 2 is you can do a screening test, but you can't actually take any decision unless it's a diagnostic test because that is more confirmatory versus screening test gives you some info, but you can't really take any action on it. but of course, the time will tell sort of which direction it goes in. I think Metropolis' positioning is very different, which is we are all in the diagnostic space, which means we work very closely with prescribing doctors for very complex diseases.
Understood. Understood. Great. And just one more question on the Labor Code. I kind of understand what could happen over the next 5 plus, 10 years, obviously, over a very long period of time that can reduce the unorganized competition. So, obviously, government regulation is one, which I don't think much has happened on, correct me if I'm wrong. But even Labor Code acts as some form of government regulation. Do you see that as a possible catalyst to reducing unorganized competition in any way over time?
Look, I mean, I think, definitely, with government coming in with stronger regulatory frameworks, whether it's on the wage code, whether it's on the quality framework, certainly will help organize the unorganized sector. Obviously, but this depends on enforcement, and it depends on whether people follow the rules on the ground in the unorganized sector. But by the way, we are also seeing, for the first time, I would say, in a very long time, we are seeing the government very intent on sort of creating deregulation and appropriate regulation in multiple sectors across the country, including health care, and an intent to want to give some compliance framework, which is focused on not only access and affordability, but also quality care.
Ma'am, is it possible, can you share the 9-month organic revenue growth from Northern India? The idea is just to understand whether Metropolis' positioning has changed after acquisition in the Northern market, mainly the B2C market?
Yes. I mean, the northern part of the country is growing faster for us than the rest of the country. And I think we have just translated in terms of the contribution, which has gone up from 9% to 17%, right, in the last 3 quarters after the acquisitions.
First question is on organic margins. I believe our organic margins for the 9-month period have expanded by about 100 bps. If I recollect, this was a slated target. have you seen any tailwinds from GST, etcetera, which have sort of resulted into this expansion? Or do we expect this 100 bps sort of expansion in margins to continue as our lab network sort of matures?
So, Anshul, I've already mentioned that the GST impact is very marginal. And the margin expansion is largely on the back of the material productivity improvement and other productivity initiatives we have taken in the organization. And at the beginning of the year, we have made an estimate of 70 to 100 bps improvement in the margins, and we stay put with that. You can see that coming in the coming quarter as well.
Second question was on our radiology foray. Any comment on how that piece is sort of shaping up? And any plans to sort of enter into the advanced radiology space even a pilot basis?
I think we are looking at 2 spaces. One is on the low-end radiology space and how we can potentially scale that up. I think we had mentioned earlier that we already made some progress on this in this last year, where now a fair number of our centers have got ECG for sure, but also in some cases, X-ray and sonography, and we'll continue to sort of scale that up. And there are multiple opportunities, we believe, that can be leveraged through that model. On the high-end radiology, we are certainly exploring to see whether we can pilot a couple of centers and sort of see what kind of results we get. And the idea would be obviously to leverage our very strong brand with doctors, with consumers, along with obviously a brand for technical excellence and very good customer service. So, we will certainly try to see if we can pilot something and then see the results of it before we scale.
Got it. The third question I had was on preventive health care testing on our proven business. The results have been very strong. Could you help me from what I understand, while online players sort of created this market for even organized players, still on pricing front, preventive health care packages by organized players as well as us are slightly or meaningfully higher versus the online players. What according to you is driving growth in this segment? Is it maturity of the population at large? What exactly do you believe is driving this growth in preventive health care testing for organized players as well as Metropolis?
See, 3 things, I think we have mentioned in the past and I reiterate that 3 things are helping on the preventive health, which is wellness and the bundled packages growth. One, of course, is a much better awareness that we are able to create. As an industry, we are able to create much better awareness. And secondly, the affordability the need for doing these preventive checkups are also getting better. And in our case, particularly, our ability to, I mean, engage with our customer base on a regular basis on a customer life cycle management process and digital channels, et cetera, is getting better. So, a combination of all this, I think we are seeing the TruHealth portfolios expanding every quarter.
Got it. Very clear. Just one last bookkeeping question from my end. Could you help us understand what is the capex number for the 9-month period?
The 9-month period is about close to INR 40 crores at a group level. And we think that for the full year basis, this could be something close to INR 60 crores.
Aakash, here. So, my question is to Ameera ma'am. Ma'am, in one of the interviews you had told that Specialty and especially now the Genomics is a high value in tests, but it won't be margin accretive. However, it will increase the EBITDA per patient. So, I just wanted to get a sense, get light on the margin accretive nature of the same. And whether if it's not margin accretive, whether our efforts at cost and other synergies will help us drive up the margins?
Thank you for the question. Just to clarify, what I mean by margin accretive or higher EBITDA is, today, if you look at the group margin of the organization, close to about 25% on the MHL organic business, right? And if the question is that is genomics margin going to be higher than that on an individual stand-alone test, maybe at this point, no. The reason for that is because the gross margins on these super specialized tests are lower than they are on the routine tests. Having said that, but if an existing, who is already coming to you for certain tests or comes to you with a bundle of tests, some routine along with a genomics test, then that additional EBITDA that it adds to your sample is quite significant. So, I think the way we have to look at it is that are you picking up a single genomic sample on its own? Or are you picking it up as a battery of tests, which includes genomics? And if you're picking it up as a battery of test largely, the majority, it will still give you a margin accretion versus if you're picking up only a genomics test alone because the gross tests are different.
Just 2 specific questions. If we look at the labor force charges, there's an impact of almost around 2 to 3 bps of that which would be recurring in nature at least. So if that amount has, let's say, impact on a recurring basis?
On a recurring basis, I think the amount would be around INR 5 crores to INR 6 crores, not more than that.