Metropolis Healthcare Acquires Core Diagnostics for INR 246.8 Cr, Strengthens Leadership in Cancer Testing

The acquisition will be executed through a combination of cash (55%) and equity shares (45%) via a preferential issue. The equity issuance is subject to shareholder approval.

Metropolis Healthcare Ltd, India’s second-largest pathology lab chain, announced the acquisition of a 100% stake in Core Diagnostics, a Delhi-NCR-based specialized diagnostics player, for INR 246.8 Cr.

This move positions Metropolis as a leader in advanced cancer testing while expanding its footprint in the northern and eastern regions of India.

Ameera Shah, promoter and executive chairperson of Metropolis Healthcare, stated to Mint, “Cancer is now globally one of the fastest growing diseases and will continue to be for the next 5-10 years, and Indians need access to the best cancer care diagnostics as well as early diagnostics. And with this acquisition, it catapults us to the leading cancer testing chain of labs in the country.”

The acquisition will be executed through a combination of cash (55%) and equity shares (45%) via a preferential issue. The equity issuance is subject to shareholder approval.

Metropolis expects the transaction to conclude within 60 days, as no additional government or regulatory clearances are required. Once finalized, Core Diagnostics will operate as a wholly owned subsidiary of Metropolis Healthcare.

Founded in 2012, Core Diagnostics operates in 200 cities across India with nine labs, including a National Accreditation Board for Testing and Calibration Laboratories (NABL) and College of American Pathologists (CAP)-accredited laboratory in Gurugram, a regional reference lab in Hyderabad, and seven satellite labs in Bengaluru and the northern and eastern regions.

The company focuses on advanced oncology diagnostics, offering over 1,300 high-end tests.

In FY24, Core Diagnostics reported a revenue of INR 110 crore, with a projected annual revenue run rate of INR 120-122 crore for FY25.

Its revenue has grown at a compound annual growth rate (CAGR) of 22% over the past three years, driven by an 8-10% volume increase and higher revenue per patient, currently averaging INR 2,300.

With the acquisition, Metropolis enhances its oncology testing portfolio, which will now contribute 10% of its revenue, up from 4% previously. Additionally, the share of specialized tests in Metropolis’ revenue mix will rise from 37% to 41%.

Core Diagnostics collaborates with over 6,000 specialty prescribers, including 1,600 leading cancer specialists.

“Metropolis conducts cancer testing but focuses on entry-level and specialized diagnostics, whereas Core is more super-specialized,” Shah explained.

Synergies & Market Expansion

The acquisition will create significant synergies, allowing Metropolis to market Core’s advanced oncology tests to its extensive customer base in western and southern India.

Conversely, Core’s customers in northern and eastern India will gain access to Metropolis’ portfolio of over 4,000 diagnostic tests.

“There will be no change in Core’s pricing; the focus is on leveraging synergies in revenue and cost,” Shah said.

The partnership aims to bridge the gap between Metropolis’ stronghold in the south and west and Core’s dominance in the north and east.

Currently, 50% of Metropolis’ business is derived from western India, 25-26% from the south, and the remaining from northern and eastern regions. Core’s presence in the latter regions will strengthen Metropolis’ market penetration in these territories.

“This acquisition enables us to connect with leading hospitals in northern and eastern India,” said Surendran Chemmenkotil, CEO of Metropolis Healthcare.

Avadhut Joshi, Chief Business Development Officer, added, “Core is a leader in specialized diagnostics, unlike other peers who focus primarily on retail or routine testing. The combination of Metropolis and Core positions us to achieve the next level of growth.”

Metropolis plans to continue its focus on strategic acquisitions in niche areas of diagnostics alongside organic expansion. The company is keen on “bolt-on acquisitions” and specialty segments with advanced scientific capabilities. Shah emphasized, “We aim to create leadership positions in technical and scientific spaces through such acquisitions.”

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