Metropolis Healthcare To Align Newly Acquired Core Diagnostics' Margins In Four Years

Metropolis Healthcare Ltd. aims to align its recently acquired business, Core Diagnostics, with its own margin profile within the next four years, the company's Promoter and Executive Chairperson Ameera Shah has said.

Metropolis Healthcare on Dec. 9 announced the acquisition of New Delhi-based Core Diagnostics at a cost of Rs 246.8 crore. Metropolis will acquire a 100% stake in Core Diagnostics through a combination of cash and stock, financing 55% of the transaction in cash and 45% through an equity swap.

Talking to NDTV Profit about the deal, Shah said that the acquisition can become a “great partnership” between both companies. 

“It's a good quality business, but one which has not been able to shine on its own from an economic and financial perspective. But we think with the Metropolis umbrella, the very good team at Core, this will hopefully be a great partnership for both,” she said.

Discussing the finances of the new business, which clocked a revenue of around Rs 110 crore in FY24, the Metropolis chairperson noted that Core is “currently not a fully matured profit-making business.”
“We are actually buying a subscale business, which has not fully played out its profit majority. And standalone, it would be difficult for it to do so,” she noted.

“But under the Metropolis umbrella, it actually functions as an oncology segment, and that will actually allow it to fully be able to explore its complete profitability. And we believe in 4 years, we should be able to bring it to the Metropolis margin profile,” Shah said.

The top executive added that Core Diagnostics' growth under Metropolis Healthcare will be “reasonably proportionate.”.

“Year 1 it (growth) will move hopefully from a low single-digit profit margin. There will be a leap there that will come in from part of the synergies that would come into play on some of the cost synergies,” she noted.

Shah said that every year for the next few years, there will be a leap in the Ebitda margin percentage for the Core Diagnostics business.

“So every year, my feeling is that we would see sort of a leap in Ebitda margin percentage. That will be because the synergies will take the next 2 to 3 years to fully play out. But it's not going to be that you're not going to see any benefit in the first two,” she said.

Shares of Metropolis Healthcare Ltd. were trading 1.17% lower at Rs 2,194.80 apiece on the NSE in early trade on Wednesday. Compared to this, the benchmark index Nifty 50 was flat at 24,606.15 points.