Thyrocare Technologies Ltd (THYROCARE) Q2FY27 Concall Transcript - Sep-2026 Qtr
Moderator: Ladies and gentlemen, good day and welcome to the Thyrocare Technologies Limited Q2 FY27 earnings conference call. As a reminder, all participant lines will be 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 this conference, please signal an operator by pressing "*" then "0" on your touch-tone phone. Please note that this conference is being recorded. I now hand the conference over to Mr. Prathmesh Parekh from Thyrocare Technologies Limited. Thank you, and over to you, sir.
Prathmesh Parekh (Thyrocare Technologies Limited): Yeah. Thank you, Darwin. Good evening, everyone, and thanks for joining us today. I am Prathmesh Parekh, from the Strategy and IR team of Thyrocare. It's a pleasure to welcome you all to our Q2 FY27 earnings call. Joining me on the call today are Mr. Rahul Guha, our MD and CEO, Mr. Rajdeep Panwar, our Chief Commercial Officer, Mr. Ramesh Kenner, our Chief Operating Officer, and Mr. Vikram Gupta, our Chief Financial Officer. I hope you have gone through our results release and the quarterly earnings presentation and press release, which have now been uploaded on the Stock Exchange website. The transcripts of this call will be available in a week's time on the company's website.
Rahul Guha (Thyrocare Technologies Limited): Thank you, Pranesh. Good evening, everyone, and thank you for joining us today. As in all my calls, I will begin with a quote from Nelson Mandela, in recognition of our foray into Africa. It is in your hands to make a better world for all who live in it. We believe Thyrocare has the opportunity to take its proven business model and make affordable, high quality diagnostics accessible to many more patients. Diagnostics today has moved from a back-end support function to the center of clinical decisions and preventive care. And that is exactly where our model of affordable, accessible and dependable testing fits. Technology is a growing part of that story. We continue to invest in digital capabilities across booking, logistics, lab operations, and reporting, which improves efficiency today and prepares us for future innovations. Continuing the growth momentum of over 20% achieved in each of the past two years, our pathology business grew even faster in Q2 FY27, delivering 27% growth. This performance reflects our sustained investments in service levels and quality, which continue to strengthen our franchisee network. During the quarter, we recorded our highest ever franchisee additions, taking our active franchisee base to over 12,911, 4x the base we started with at the time of the acquisition. Our laboratory network has expanded 17 labs in FY21 to 49 labs today, of which five new laboratories were opened in Q2 FY27. Across most of India, a Thyrocare lab is now within 150 km, so samples no longer travel to Mumbai, except for specialized tests, thus enabling faster and more efficient turnaround times. Our test menu has grown nearly five-fold to more than 1,420 tests, and our quality backbone has grown with it. More than 108 MD pathologists, and every lab we own is NABL accredited, in a country where only 2% of labs carry that accreditation. On the collection side, our 2,100 plus phlebotomists, one of the largest home collection networks in the country, arrived on time for 99% of their visits. The most exciting part of this year is specialty. We took the Thyrocare photo of scale, reach and affordability into specialty diagnostics, starting with allergy and genomics. And the business is now live, and gaining steady traction. We call this journey from routine to remarkable, the next frontier of diagnostics. Specialty diagnostics in India is underpenetrated, expensive and fragmented. The same problems Thyrocare solved in routine and preventive testing. Our operating model, built on scale, automation, quality, and affordability is why we believe we can win here. Our investments in expanding in-house capacity and broadening our test portfolio have enabled us to progressively bring specialty testing in-house, reducing our reliance on reference lab. Building on our historically modest specialty testing portfolio, the recent additions in allergy and genomics are beginning to deliver encouraging results. While the specialty segments currently contribute only around 4% of our pathology revenue, the early traction reflects the benefits of our strategic investments, enhanced in-house capabilities, and continued expansion of our test menu. This is not just a portfolio expansion. It is a proven execution engine pointed at a larger, fast-growing segment. Our ambition is to build one of India's most trusted, accessible and scalable diagnostics.
Rahul Guha (Thyrocare Technologies Limited): diagnostics platform, and with it, the company's next long-term growth engine. On NHL, Nuclear Healthcare Limited, as approved by our board in the Q1 meeting and as communicated during our previous investor call, we have initiated for the shareholders' approval for the disinvestment of NHL, our radiology business, for a consideration of 141 crore to Trovera, which is a mix of cash of 81.9 crores and equity of 59.5 crores. The decision is after considering the strategic rationale, including focus of the management on the pathology business, where growth, profitability, and return on capital are much higher. The return on capital employed, ROCE, of Thyrocare is 34.91% and NHL ROCE is 6.95%. The limited growth prospects of NHL as a stand-alone PET-CT player in the competitive integrated radiology market, which is reflected via NHL's de-growth of -9% in the past 5 quarters, -9% versus +22% average growth of Thyrocare stand-alone. NHL is pulling the consolidated revenue growth rates and EBITDA margin down by 2% and 1%, respectively. NHL also has low operating PAT, and the investments required to continue Nuclear, as many equipment are at end of life, is substantial. Hence, we took the decision to exit NHL. Trovera is a more scalable platform which will consolidate India's fragmented radiology market by acquiring established doctor-run centers and integrating them through centralized radiology reporting, shared procurement, and back-office efficiencies. Excluding NHL, Trovera has already executed definitive binding agreements for acquiring 39 radiology centers. We feel NHL will have found a good home in Trovera in the competitive radiology market. I'm also pleased to announce the launch of our pregnancy test kit, a rapid home testing solution that delivers results in just 5 minutes. We have onboarded Yami Gautam as our brand ambassador to strengthen awareness and consumer outreach for this product. This launch marks the first of several products in our pipeline, and there will be more news to come in the coming quarters. With that, I will now hand over the call to Rajdeep to take you through our business and commercial performance.
Rajdeep Panwar (Thyrocare Technologies Limited): Thank you, Rahul. And good evening to everyone present. We continue to deliver strong growth numbers with consolidated revenue delivering 25% year-on-year growth in Q2 FY '25. Aarogyam, our flagship preventive brand, and Jaanch, our curative and chronic care range, continue its strong growth momentum. While Jaanch is still only 2.5% of pathology revenue, it grew by 58% and is fast becoming a strong pillar of our non-lifestyle portfolio. Let me now break this down across key business segments. Our franchisee business grew 27% year-on-year. We added about 1,180 franchisee in the quarter, our highest quarterly addition in 3 years, taking the active base of franchisee to a record of 12,911. We also keep investing in our relationship with channel partners. During the quarter, we held two structured partner meet, three CMEs, and one round table conference with the doctors, giving partners a platform and to have an open dialogue with our doctors. The feedback and knowledge sharing in this forum happen very consistently. These meets continue to shape our service levels and our next set of initiatives. Specialty, which Rahul spoke about, is now commercially live and building momentum. Our dedicated specialty team works directly with physicians, hospital, and health care institutions through scientific discussions, one-to-one engagement,
Rajdeep Panwar (Thyrocare Technologies Limited): and visit to their clinics and labs, such that they can see our quality system first-hand. The goal is not more test on a menu, it is sustained clinical adoption. Affordability, scientific engagement and our national network together let us take advanced diagnostics to far more patients than the segment reaches today. Moving to our partnership business, the business grew 28% year-on-year. Growth was led by insurance and health tech along with continued scaling of existing accounts. Our API-based integration let partners switch on diagnostics across multiple cities very quickly, which strengthens our position as a preferred B2B business partner. This growth has been led by strong momentum in insurance and health tech segments, along with controlled scaling of existing accounts. Our API-based integration are also enabling partners to expand diagnostics offerings across multiple cities seamlessly, reinforcing our positioning as a preferred B2B partner. As Rahul mentioned, this quarter we also stepped into the consumer product business with the launch of Thyrocare Pregnancy Test Kit. It is a rapid home test that gives a result in 5 minutes with 99% accuracy when used as directed at an MRP of just Rs. 60. What makes it distinctly Thyrocare is the second assurance that comes with it. Every kit carries a coupon of a beta hCG blood test at half price, Rs. 399 instead of Rs. 800, which can be booked for home collection or at Thyrocare outlet. One kit with two assurances, a quick answer at home and lab confirmation one step away. It also brings a new customer into our network at a at the moment what mattered. To drive wider adoption we are leveraging the API Holdings Group distribution network to PharmEasy and Ascent respectively to make the kit accessible to consumers. Today we are already present in 10,000+ pharmacies. Across channels, our focus remains depth, improving partner productivity and widening the value we deliver through a broader test portfolio, stronger service, and now, our own products. With that, I will hand it over to Dr. KInat to walk you through the operational and lab initiatives.
Ramesh Kenner (Thyrocare Technologies Limited): Thank you, Rashid. Good evening, and a warm welcome to everyone joining us today. I'll focus on three areas today. First, our lab network, second, our operational capabilities and research, and third, how we are improving the experience of patients and doctors. Starting with the lab network, we now operate 48 labs in India and one in Tanzania. This quarter we added five new labs, four Regional Processing labs at Asansol, Nashik, Madurai, and Jabalpur, and one Hybrid lab partnership at Jamshedpur. Each of them brings processing capacity closer to the fast-growing Tier 2 and Tier 3 markets where demand for quality diagnostics is rising fastest. Now, to the second area, our operational capabilities and research. We continue to widen the specialty portfolio, building on the foundation we laid earlier this year with genomics, specifically non-invasive prenatal testing and allergy testing during the start of this year. Our approach remains measured, introduce clinically relevant offerings, invest in physician education and scientific engagement, and then scale adoption over time. In specialty, credibility comes before volume. Now, the third area, patient experience, which is something I care deeply about. Diagnostics is fundamentally a trust business. Every improvement we make is driven by a simple question, does this make the patient and doctor feel more confident in us? We answer it through four pillars that underpin trust in medical diagnostics. First, accuracy and quality, which remains non-negotiable. With our NABL accredited labs and continuous investment in the state of the art equipment and upgrades, 96% of samples were processed in NABL accredited labs this quarter. Second, faster resolution when things go wrong. We strengthened our complaint channels, shortened resolution times and communicated more proactively with patients.
Ramesh Kenner (Thyrocare Technologies Limited): per million tests in Q2, comfortably within six sigma levels and our lowest we have ever recorded. Third, faster reports. Better logistics, tighter lab processes, and opening of new labs have brought our average turnaround time to 3.5 hours in the quarter. Fourth, we continue to strengthen trust with doctors, who are often the patient's first point of contact. We host doctor meets at our own laboratories, giving physician first-hand exposure to our quality systems, equipment, and processes. This quarter, we conducted 45 such meets engaging over 100 plus doctors. In addition, our CMEs and RTM meetings helped us connect with nearly 300 specialist doctors. These relationships are increasingly important as we expand our specialty portfolio, where doctor-led adoption plays a very critical role. Overall, we are building an operations model that can support growth without compromising on quality or experience. With that, I'll now hand it over to Vikram for the financial performance.
Vikram Gupta (Thyrocare Technologies Limited): Good evening, everyone, and thank you for joining us today. I am pleased to report that we delivered another quarter of strong financial performance, driven by consistent revenue growth. Thyrocare has consistently delivered 20% growth rate over the last nine quarters, with the last two quarters going faster at 25% plus. This sustained performance reflects the strength of our business model. Now, let me take you through the key financial highlights for the current quarter. Starting with revenue, our stand-alone revenue came in at Rs. 256 crores, which is 26.7% up year-on-year. This is driven by strong growth across both our franchisee and partnership businesses. On a consolidated basis, revenue stood at Rs. 271 crores, reflecting a robust 25% year-on-year growth. Moving to margins and profitability, our consolidated gross margin was at 74.2%, reflecting an improvement of more than 190 basis points year-on-year. This was largely driven by a strong 27% growth in test volume, which helped us improving operating efficiency. Employee and other overheads increased year-on-year, primarily due to inflation, higher volumes, lab expansion, and investment in new growth areas like specialty and pregnancy kits. Our EBITDA margin for the quarter was at 33% with year-on-year growth of 25%. Profit after tax before exception stood at Rs. 60 crores year-on-year with a PAT margin of 22%. Earning per share before exception for the quarter was at Rs. 3.78, compared to Rs. 3.01 last year, representing a year-on-year growth of 26%. For the half year ended 30th September, consolidated revenue is up year-on-year by 25% and EBITDA and PAT are going year-on-year by 29% and 30%, respectively. Now, coming to the accounting and exceptional items pertaining to the NHL operations. As covered by Rahul, the board of directors of the company has approved the proposed sale of company's entire shareholding in Nukleus Healthcare Limited for an aggregate consideration comprising cash and equity amounting to approximately Rs. 141 crores. Since the requisite shareholder approval and execution of the SPA remains pending, no held for sale / discounted continu- discounted operation classification under Ind AS 105 has been taken in this quarter results. Nukleus Healthcare Limited continues to be consolidated as a wholly owned subsidiary in H1 and the quarter financials. Separately, based on the latest valuation and term sheet, we have reassessed NHL carrying value and taken an impairment of Rs. 9 crore in Thyrocare standalone books and of Rs. 45 crore in the consolidated financials against the goodwill arising from the acquisition of NHL. Please note this is a non-recurring and non-cash charge and does not have any impact on the operational performance of the company. Just to summarize how the impairment has been taken in stand-alone financial books and the consolidated financial books of Thyrocare. In FY20, NHL book value was written down to about Rs. 150 crores in both stand-alone and consolidated books. And for this, company provided a Rs. 44 crore impairment in the stand-alone and Rs. 6 crore impairment in the consolidated books as per Ind AS accounting. Since then, the stand-alone value has stayed at Rs. 150 crores, while in consolidated books, the net worth has grown with the NHL profits from FY20 to FY26. This gap in carrying value in both
Vikram Gupta (Thyrocare Technologies Limited): and consolidated books explains the different impairment charge in the both the books in this year. However, as come covered earlier, this charge is one-time, non-cash with no impact on the operations or cash flow. Our balance sheet continues to be strong and resilient with net cash and equivalents of over ₹211 crores and zero debt as on 30th September '26. In cash flow, during H1 20 '27, we generated INR 133 crore rupees from operating activities. During H1 2027, a capex of ₹30 crore has been invested on account of new labs expansion, five in this quarter and three in the quarter one. and capacity capex to support 27% volume growth. In balance part of the financial year, we are expecting a similar capex investment for the growth of the business. Overall, our steady performance reflects disciplined execution and focus on profitable growth. We remain committed to delivering consistent financial performance while continuing to invest in strategic initiatives that will support our long-term growth agenda. With that, I hand it over back to Rahul for the strategic update. Thank you. Thank you, Vikram. Briefly, I would like to take a few minutes
Rahul Guha (Thyrocare Technologies Limited): to recap to you our strategic direction and then I will open it up for Q&A. First, our value proposition to the customer. We will remain an affordable option for every patient with good quality and on-time reports. Everything we do on this front is about low cost to the patient, assurance on quality through our certification and engagement with doctors. You can see the progress in this quarter's numbers, 3.5-hour turnaround time, 2.9 complaints per million tests, and our NABL accreditation footprint. This will remain at our core and will continue to guide all that we will do. Second, our strategy. We remain the B2B partner of choice for every front-end diagnostics business in India. Whether it is a small diagnostic center in a semi-urban area, a pharmacy in a metro, a small nursing home, an individual doctor, or a leading online diagnostics platform or healthtech marketplace. We give them low-cost, robust testing so that they can serve their patients well. And if they need phlebotomy, we mobilize our network of over 2,100 phlebotomists, including our network partners. The numbers bear this out. This strategy has been working well for us, with both our franchise and partnerships business posting strong growth. Two natural extensions of this strategy are now live: specialty, where an on-ground technical sales team is driving doctor-led adoption of allergy and genomics testing at the same quality and affordable prices as our routine and preventive tests, and marks our real entry into curative diagnostics; and our own products, starting with the pregnancy kit, which connect a quick answer at home to confirmation in our labs. More of both are in the pipeline, and we look forward to sharing them over the coming quarters. That, in brief, is our mandate as management. Thank you for giving us a patient hearing. I will once again end with a quote from the Mahatma, "Find purpose, the means will follow." Our purpose remains: to provide affordable, high-quality testing to the masses. With that, we will open up for Q&A.
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