Thyrocare Technologies Limited (THYROCARE) Q3 2026 Earnings Call Transcript

Ladies and gentlemen, good day and welcome to the ThyroCare Q3FY26 conference call hosted by ThyroCare Technologies Limited. 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 the conference call, please signal an operator by pressing start, then zero on your touchtone phone. Please note that this call has been recorded. I now hand the conference over to Mr. Preet Zushi from ThyroCare. Thank you and over to you.

Thank you, Ashishri. A very good evening to all and thank you for joining us today for the ThyroCare earnings conference call for the third quarter of FY2026. Today we have with us Mr. Rahul Bua, MD and CEO of ThyroCare, Mr. Vikram Gupta, CFO of ThyroCare, along with other key members of senior management on this call to share the highlights of the business I hope you have gone through the results, release, the quarter earnings presentation,

and the press release which has now been uploaded on the Stock Exchange website. A transcript of this call will be available in a week's time on the company's website. Please note that today's discussion may be forward-looking in nature and must be viewed in relation to the risk pertaining to our business.

After the end of this call, in case you have any further questions, please feel free to reach out to Investor Relations team. I now hand over the call Thank you, Preet. Good evening, and welcome to all on the call. Thank you for taking the time out from your busy schedules to join us this evening. Just a quick introduction to us on the call. My name is Rahul Guha, and I am the MD and CEO of CyroCare, and thank you for the opportunity to present the Q3 results for FI26. I am joined by my colleague Vikram Gupta, our CFO, Preet Joshi from our Strategy and Investor Relations team, Mr. Alok Jagnani from our board, and I am also very pleased to have two new members of our leadership team with us today. I'd like to welcome Dr. Ramesh Kina as our Chief Operating Officer. Dr. Kina is a seasoned healthcare and diagnostics leader with over 17 years of experience in laboratory operations and quality systems, bringing deep expertise in operational excellence, strategic transformation, and quality frameworks. Also, I am delighted to welcome Rajdeep Panwar, who has joined us as our Chief Commercial Officer. Rajdeep is an accomplished healthcare leader with deep experience in diagnostics, having led the launch and scaling of over 200 labs across India, and brings strong expertise in business expansion, P&L management, and multi-center operations. It's great to have them both on the call today. As in all my calls, I will start 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 TharoCare can take its business model to Africa and make affordable, high-quality diagnostics accessible to all. Before we get into the details of the quarter, I am pleased to share that CyroCare has onboarded Madhuri Dixit as our brand ambassador. Madhuri brings unmatched trust and credibility, and together we want to make routine workshops a non-negotiable part of Indian life. You may ask, why does a B2B company require a brand ambassador? We felt given the journey we have done on quality and joining hands with an evergreen icon in our mission, this helps us communicate to all our partners the quality ThyroCare stands for. This commitment to trust-led, patient-first healthcare continues to translate into strong recognition from the ecosystem. We were recognized at the National Diagnostics Forum and Awards by Voice of Healthcare with two national honors, Best Diagnostic Lab Chain of the Year and Patient-Centric Diagnostic Company of the Year. Our franchise business continues to be a key growth driver for ThyroCare. It has now been almost three years since we implemented the pay-for-performance structure, and that continues to lead to renewed energy and motivation within our franchise network. Supported by this new renewed energy, along with strong brand equity and market demand, our franchisee base has reached its highest level ever. To further accelerate growth, we have expanded both our field and central teams, enabling us to penetrate deeper into India and open high-transacting stores more quickly. As of Q3 FY26, we have 10,300 active quarterly franchisees, compared to 9,165 in Q3 of FY25. In the quarter, our active franchisee base grew by 200, and despite low seasonality, we were able to get deeper into new geographies. Our pace of franchise expansion has picked up meaningfully in this year, supported by renewed partner interest, strong brand equity, and our strategic expansion into Tier 3 and beyond. To further strengthen engagement and relationships with our franchisees, we regularly conduct structured interactions. This quarter, we hosted five franchisee meetings across different locations in India with healthy participation from our franchisee partners. Insights and feedback from these interactions directly inform how we strengthen processes, service delivery, and quality outcomes. Quality remains our highest priority. It is a continuous journey of improvement and innovation. Last year, we became India's first and only 100% NABL-accredited national laboratory chair, a prestigious milestone reflecting our commitment to world-class diagnostics excellence. Achieving NABL accreditation across all labs was possible through robust quality management systems, advanced technology, rigorous training, and proficiency testing. Given that only 2% of pathology labs in India hold this accreditation, this achievement underscores our leadership in redefining diagnostic standards. A few quarters back, we had set a target of achieving six-sigma level quality, tracking complaints per million with a goal to bring it down below 3.4. This quarter, I am happy to announce that we have achieved the set benchmark by bringing the number down to 3.2 complaints per million tests, down 43% year-on-year. To communicate our journey on quality, we regularly host advisory board meetings with a panel of esteemed doctors to gain their insights on enhancing our quality milestones. In Q3 FY26, we have hosted several meetings at different locations. Doctors witness our cutting-edge technologies and protocols, reinforcing our commitment to diagnostic excellence. In the last few quarters, we have added multiple advanced technologies, including histopathology, a new HPLC platform, coagulation tests, and the BioFire PCR platform. Specifically, in the last quarter, we have started in-house testing for allergy panels using the FADIA platform. In our commitment to ensure that all Indians have access to affordable testing, the allergy panels have been included free of cost in our highest-selling aerobium packages so that every Indian can test for allergic reactions, and we all know how the air quality index is affecting this particular affliction. We continue to translate real-world diagnostic data into actionable clinical insights. Our fever study, based on three years' data from our Jansh fever panels, reveals that one in three fevers are more complex infections such as dengue, typhoid, malaria, and influenza, reinforcing the need for timely testing and treatment through our comprehensive Jansh fever profile. While maintaining the highest quality standards, we continue to improve turnaround time. During Q3 FY26, we released reports within an average of 3.28 hours from sample receipt at the lab, made possible by robust processes, automation, and streamlined workflows. Our lab network now stands at 39 labs in India and one in Tanzania. During the quarter, we commissioned two new labs, one in Davangare, Karnataka, and another one at Mandi, Himachal Pradesh. These additions enhance processing capacity and improve turnaround times by bringing testing closer to key demand clusters. Beyond operations, we are expanding our test menu and consumer offerings. We recently launched a 100-plus SKU menu on the Fadiya platform. Our flagship brand, Arogyam, continues to lead the preventive healthcare segment, growing at 16% year-on-year, complemented by Jansh, which caters to lifestyle and chronic health needs. That has also grown 16% year-on-year and is becoming a strong pillar of our lifestyle offerings. Despite softer demand during the quarter due to festivals and seasonality, we delivered healthy growth across businesses, reflecting the resilience of our model and strong execution across the network. Our core franchisee business remains stable, supported by consistent service quality and customer trust. During Q3 FY26, we processed 49.6 million tests, a 22% year-on-year increase, and served 4.5 million patients, up 14% year-on-year. At a consolidated level, we delivered revenue growth of 18% year-on-year, primarily driven by our pathology business, which grew 20% year-on-year. The franchisee business recorded revenue growth of 12% year-on-year in Q3 FY26, with the ThyroCare franchisee base continuing to deliver consistent mid-teens year-on-year growth across all quarters in FY26 so far. Polo 2 reported strong year-on-year growth of 29% in Q3 FY26, while Vimta saw planned underperformance due to tighter credit controls. Revenue for retained franchisee has continued to improve for franchisees added post-FI22, driven by our slab-based pricing model, improved quality, stronger doctor and channel partner relationships, as well as expansion of the test menu. Our partnerships business performed strongly during the quarter, driven by onboarding of new health tech clients and expansion of existing accounts. The segment delivered year-on-year growth of 39%, with the API FarmEasy partnership growing by 30% year-on-year, supported by our ongoing investments. The pre-policy medical check-up insurance business performed well, delivering 70% year-on-year growth, driven largely due to the capabilities acquired from the ThinkHealth acquisition, gaining traction. On the B2G side, we continued execution of the TV projects in Maharashtra as planned. Internationally, in Tanzania, while the business remains nascent, we delivered 140% year-on-year revenue growth with around 250 clients onboarded. We expect the business to reach operating break-even over the next 12 to 18 months. Thus, our three pillars of growth, customer success, network expansion, and menu expansion continue to be the three drivers of our consistent performance, reinforcing our focus on operational excellence, franchisee growth, and continuous improvement, innovation, to deliver long-term value. With that, I will hand over to Vikram to cover the financial results.

Thank you, Ahur, and a warm welcome to everyone 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 high teens to every 20% growth over recent quarters and outperformed pathology diagnostic industry growth, which is growing from mid to teen weeks. All of our strategic growth heavers are continuing to perform well. Tharugia franchising growing by mid-teens, partnership business growing by 39% growth, internationally, Sanjani has doubled the revenue, the growth. So this sustained performance reinforces our commitment to long-term valuation. Before we discuss the financials, let me briefly touch upon our Empire Stock Option plan and new labor grace code impact. On the price of option plan, as covered in our earlier course, our parent company has expanded the APA ESOP pool to include Thyroga senior management. From an accounting standpoint, these ESOPs are recognized as an expense in the profit and loss account and equity contribution from the parent in the balance sheet. It is important to note that this is a non-cash charge and does not impact our cash source. We are reporting normalize the beta by excluding these non-cash expenses also in the earnings costs. On the new labor codes, as you are aware, several labor laws have been combined into four new labor codes. While we are assessing the recurring financial impact of these changes, during the period, we have recorded a one-time provision for the employee retirement benefits, which has been shown under exceptional item in the profit and loss account. Exception item also include one-time costs related to capital restructure due to the bonus issuance. Now let me take you through some of the key financial highlights for the current quarter. On the revenue style, stand-on revenue for the quarter stands at Rs. 183 crores, a year-over-year growth of 70%. This is driven by growth in both the franchisee business and the partnership business, including FarmEasy. Consolidated revenue stands at UPS 196.0, a robust year-one-year growth of 18%. On margins and profitability, stand-alone gross margin is at 75%, which is 300 basis points up, mainly due to the REU capitalization impact. In accordance with the NDS 116, we have capitalized the machine taken on re-agent renters, and the corresponding impact has been taken in the cost of goods sold, depreciation, and finance Please note that there is no material impact of the same in profit and loss account for the same. The standard normal rate of margin is at 34%, which is a growth of 31% on year-on-year basis. Consequent to the RU capitalization, the piece percent charge is higher versus last year, which has been reported in the Q3 finances. In our Q3 finances, we have also reported the exceptional items aggregating to a profit store. This includes 4 courts related to the impact of new labor courts, and the rest related to the issuance of bonus issues. At the consolidated level, consolidated normalize EBITDA margin is at 32%, which is a growth of 26% on a year-on-year basis. And the reported EBITDA margin has also viewed by 38%, while reported PAT has seen an increase of 47%. Earning per share has been adjusted on account of the issuance of the bonus shares in the last quarter. Q3 upper 26 EPS comes at rupees 1.64, which is 39% up from rupees 1.18 in the corresponding last quarter. With that, now I hand over to Ahul for the strategic updates.

Thank you, Vikram. Briefly, I would like to take a few minutes to recap to you our strategic direction, and then I will open it up for Q&A. First, I will reiterate our value proposition to the customer. We will continue to remain an affordable option to all patients with good quality and on-time reports. All our efforts on our value proposition is towards ensuring low cost to the patient, assurance on quality of testing through our certification and engagement with doctors. We have made substantial progress on this, which I updated in my initial comments and is reflected in the presentation. This will remain at our core and will continue to guide all that we will do. Second, our strategy. We continue to maintain our strategy of being the B2B partner of choice to all front-end diagnostic services companies 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 health tech marketplace, we are happy to work with them to provide low-cost, robust testing solutions so that they can serve their patients in the most effective manner. If they require phlebotomy, we are happy to mobilize our phlebotomy network of over 2,000 phlebotomists, including our network partners, to serve them better. This strategy has been working well for us, with both our franchise and partnerships business hosting Strong Crew. That, in a brief, is our mandate as management. Thank you so much for giving us a patient hearing. I will once again end with a quote from the Mahatma, find purpose, the means will follow, and our purpose remains to provide affordable, high quality testing to the masses. With that, we will open it up for Q&A.

Thank you very much, sir. We will now begin the question and answer session. Anyone who wishes to ask a question may press star and 1 on their touch on telephone. If you wish to remove yourself from the question queue, you may press star and 2. Participants are requested to use handsets while asking a question. Ladies and gentlemen, we will wait for a moment while the question queue assembles. We'll take our first question from the line of Parikshis Kabra from PKD. Please go ahead.

Hi, thank you for the opportunity and congratulations on your service. I had a couple of questions. The first one, I just wanted to get a feel for your B2B offering, your partnership offering. Would it be fair to say that you guys have by far, you know, a huge lead on anyone else in terms of the value proposition that you're offering the partner And hence, the growth rate that you're currently demonstrating, XAPI, should be sustainable for a very long time. But maybe you cannot answer the second part, but at least the first part. Is anyone close to you in terms of the value proposition itself?

Actually, I don't want to reveal too much about why we win in this space, but I would say two things. I think one is we are the only company with a dedicated phlebotomy fleet, you know, to service corporate partnerships. So we don't rely on the franchisees to service the orders. We have a dedicated fleet that services the order. That fleet is now almost 2,000 phlebotomists, right? And because it's a dedicated fleet, we can control the experience in terms of on-time arrival, adherence to SOPs, all of that at a different scale. So that's one advantage that is difficult to replicate. It's not easy to build a 2,000-member phlebotomy fleet that easily. I think the second value proposition to our partners is our technology platform, where with one single API integration, I can enable you to take diagnostic orders in 400 cities in the country, right? And it's a seamless experience from exposing the slot to booking the slot to delivering the report. So, I think these two things have really made our value proposition quite strong in this segment.

So, as a follow-up on that, of course, guessing the fact that you are the cost leaders in this space also enables them to make good margin compared to anyone else, right? That would be clearly the first proposition.

Yeah, that goes without saying. Of course, people can forego their profit to get in and, you know, win, but that is not sustainable. I think the convenience and the service level adherence is what creates the stickiness. You can get in for price, but I think it's difficult to replicate the experience we deliver at the cost we deliver. Got it.

And the second part I wanted to understand was the recent uptick in FarmEasy's business to you. What has caused this uptick? How sustainable is it? Because in the past, of course, there have been fluctuations. So can we assume now that this is on a steady state or this is not something that you are counting on?

See, we anyway don't count on it, you know, but what I will say is, in the health tech space, diagnostics is really front and center, not only with PharmEasy, but if you look at PharmEasy's competitive set also, almost everyone is focusing on, you know, diagnostics along with medicine rather than pure medicine delivery. So, I would say it's front and center for PharmEasy for sure and will remain a focus area and will grow faster than the medicine platform and accordingly they will invest. So, I think without, you know, second guessing, I would say this is a good level of growth and, you know, should sustain. Thank you.

Thank you.

Ladies and gentlemen, in order to ensure that management is able to answer queries from all participants, kindly rest your questions to two at a time. You may join back the queue for follow-up questions. We'll take our next question from the line of Raman Singh from Equal Investment. Please go ahead.

Hi, sir. Can you hear me?

Yes, please go ahead.

Yes, Raman. Yes, sir, my first question is with respect to your franchisee business, one thing which stood out that overall your franchisee business grew by mid-double-digit, growth with respect to Wimta, there was a degrowth with respect to Wimta. So, can you comment on that? Why did that particular business de-grew during the quarter? One is that I'll answer the next question after.

Sure. That's a very simple thing. See, in ThyroCare franchise business, we operate a prepaid model. So, we don't extend credit. In the WIMTA model, the credit terms were, you know, 60 days, but in reality, even longer than that. So, we actually tighten the credit policy quite a bit, and that's why you're seeing the degrowth over there.

So, by when do you expect this VIMTA, or revenue from VIMTA to be normalized and get normalized and start growing?

I think this is the normalized level. You should see growth from here.

Okay. Oh, understood, sir. And so, my second question is, I just want to understand the revenue recognition when it comes to franchisee business and partnership business. If my understanding is right, you pay the franchisee fee and you recognize the entire revenue operated in the franchisee business, whereas in partnership, you only recognize your percentage revenue. Oh, correct me if I'm wrong. I just want to understand what's the difference in… No, no, that's not correct.

In our franchise business, we operate a B2B model. So, we have a flat rate with the franchisee. Let me elaborate this with an example, right? Our list price for thyroid is roughly about 300 rupees, the thyroid profile, right? In reality, our franchisee discounts and sells at about, I would say, about 150 to 200 in that range. We would invoice him a fixed billing for thyroid test of 60 rupees, and we recognize the 60 rupees as our revenue.

Understood.

And what about the partnership model?

In the partnership, it's effectively because we do the collection from the house. We recognize the entire 100 rupees or 300 rupees in the case of Thyroid, right? And then we pay the commission to the partner.

Understood. Sir, just a follow-up on this. The 60 rupees which you get from franchise, invoice to the franchise, does this include in the 150 rupees cost which they are selling? Or that's like 150 plus 60 for them?

No, no. It's included in the 150. The franchisee will collect 150 rupees from a patient and basically keep 90 rupees and pay 60 rupees to ThyroCare.

Understood, sir. And this is a flat rate or a percentage, this thing?

No, it's a fixed rate per test. So, depending on the menu, for every one of our tests, there's a fixed rate. The rate varies depending on the category of the franchisee. So, if you are a diamond category, you get an X rate. And then we have tiers, which is diamond to bronze. The amount of business that they give us, so the diamond category gets the lowest rate in the healthcare network.

So basically, you are... I regret to join back the queue, please, as we have participants waiting for their time. Thank you. The next question is from Prakash Kapadia from Kapadia Financial Services. Please go ahead.

Yeah, thanks for the opportunity.

Two questions from my end. And after many quarters, growth has come below 20%. So from year on, is this going to be the normal sales growth trajectory? I do understand, you know, this is not a very big quarter in terms of the season, but I was looking at year on year growth. So, that's my first question. Given, you know, sales growth is around 18%, EBITDA margins are still expanding and they are at 29.5%. So, is this right to believe that, you know, any sales growth of more than 13-14% will continue to expand our EBITDA margins given the cost and nature of the business? Is that right understanding? Those are my two questions.

So, I'll just clarify one or two things. The 18% growth is a consolidated growth, which is our pathology business plus our radiology business. Our pathology business grew by roughly about 20%, so in line with previous quarters. Our radiology business is what has folded down to 18%, right? Right. So that's one part. That being said, I have consistently been guiding that our long-term growth rate will be mid-teens. Right. So we have done better in this year. But, you know, if you go back to the beginning of the year and, you know, I do remember

Raul about, you know, you were cautious and you were, you know, hinting at low growth, but every time you surprised on the positive. So, just, you know, trying to understand how will that, you know, shape up. So, is it fair to, you know, assume 15% is more sustainable over the long term? Is that the right way to look at the business?

Yes, that is the way I've been saying. And if we do better, we'll do better. But as I said, that's there. And as you rightly pointed out, because we have done well this year, we are sitting on a high base, right? And I was cautious about that even in the beginning of the year. Q3, we were already sitting on a high base, but we've done well in Q3 also. So that's the part. With your question to operating leverage, yes, it's true if we don't invest, but as I keep telling, I will invest to sustain the growth rate, right? In the beginning of the call, I mentioned that I will invest heavily in specialty. We have already set up the labs. We are putting up a field force there. So some of that you will see reflected in the expenses. So I think it will be difficult with EBITDA margins, you know, now touching 32, to give you even more operating leverage because I need to invest to sustain the growth rate. Okay.

Okay.

Okay. Okay. Understood. Understood.

And how critical...

Rakhash, I request you to join back. Sure, I'll join back. Sure, sure. Thank you. We'll take our next question from the line of Arman from BlueSky Fintech. Please go ahead. Arman, I'm sorry to interrupt. Can you use your handset more, please? Your audio is not clear.

Hello. Yes, please go ahead.

Yes, please go ahead. Sorry, we've lost the connection of Arman. We'll move on to the next question from the line of Gata Jain from Anantanath Skycon. Please go ahead.

Hi, thank you so much for the opportunity and congratulations on good sets of numbers. I just needed a little bit idea on the Tanzania numbers. What sort of volume are you looking there and what sort of business do you think will come from there? If you could just throw a light over it.

Yeah, see, the Tanzania business is very small. So, I don't think it's relevant in the near term to look at the Tanzania business. You know, I think this year we would have done, what, three crores we'll do? So, it's 3 crores in, you know, 800 crores at this point. It will, you know, it's doing very well, doubles every year. So, that way, you know, it's a good seedling in our strategy. But I think it's too early to focus on Tanzania.

Alright. And do you spend Africa somewhere? Or at the moment, is this Tanzania?

No, at the moment, it is just Tanzania. We are still learning the Africa market. You know, I think it will be foolhardy for us to rush into four or five markets in Africa. We will get a good understanding, build our base in Tanzania, make sure we have got all the dynamics of the market well understood before we expand.

All right. Thank you so much. Best of luck.

Thank you. We'll take our next question from the line of Surya, Narayan, Patra from Philip Capital, India. Please go ahead.

Yes, thanks for the opportunity and congratulations for the great set of numbers. My first question is on the growth that we have seen in the partnership model looks really strong and the momentum anyway that is continuing. So, how sustainable, so although you have been saying that it's sustainable, but how sustainable and what is likely to sustain this growth momentum on the partnership side further, if you can just indicate, that would be helpful.

See, it's difficult to, you know, say, of course, this kind of growth, you know, almost 36% is very encouraging to see. And, of course, the value proposition to our partners is doing well. But everyone is seeing this also, so I expect people to try to get into this space and try to steal some of the market from us as well. I would say I will maintain what I have been saying for a while now. For a long term, I believe our franchise business will do between 12% and 15%, depending on how much we push the needle. And the partnerships will grow about 1.5 times that, right? And that's kind of a good number to keep in your head to get to a consolidated mid-teens growth rate for the company, right? I think beyond that, it is, to use a Hindi phrase, all malay. But definitely, I think, you know, what is sustainable is, you know, 12 to 15% for the franchise business and 0.5x that the partnerships.

Sure. Second point was on the kind of investment that you have been talking about. So I think the long-distance point about investment was the genomic things. That is one. And in between, we heard from one of the large corporate entering into genomic and disrupting the pricing and all that. So, given that, what would be your reaction and what are the kind of areas of investment for you going at?

Allergy is, as I told you, a big team, which we've already made the investments and we are now live. So, I would encourage you to book your allergy test on ThyroCare. You'll find a price that you cannot find anywhere else. That being said, on genomics, we have just finally finalized the equipment platform and all of that. But see, Genormix is a very large opportunity, right? And India is at a nascent stage in that opportunity. So I think more players coming in to expand awareness of Genormix will only grow the industry, and there is room for multiple players in that business. So, I don't see it as a concern. I see it as actually a good thing, where if a large corporate house comes in and creates a lot of awareness of generic testing, the industry as a whole will benefit. Okay, sure.

And just a couple of this book-keeping questions. See, in fact, the depreciation this quarter looks higher, and the reason for that you have violated the capitalization of ROU. So, what is the kind of quantum of the capitalization that we have done in this quarter and so far in this current financial year, and also the total capex so far that we have done, if you can just.

So, I'll let Vikram take this.

So, for the nine months, we have done approximately 28 crore rupees of capex, 28 to 30 crore of capex, excluding this RRU capitalization. This RRU capitalization would be, again, in the range of 20 crore, which we have done till nine months, which basically includes the machine sedition for the capacity and the new reps.

Thank you. I request you to join back the queue, please.

Yeah, I'm done.

Thank you. We'll take our next question from the line of Abdul Qadir Puranwala from ICICI Securities. Please go ahead.

Yeah, hi. Thank you for the opportunity. Just a follow-up to the previous participant. Can you help us understand this entire change in your accounting policies of RUV assets?

There is no change in accounting policy for the RUV assets. This we were doing, we were doing We are doing now also. Basically, the only thing is that we have taken some machines this year, which are high on number, we want to sustain all of our capacity and the web addition, which we have done, those we have capitalized in the quarter. So, we were, so that array view accounting is a, like, is a recurring thing, which happens. In fact, we were doing array also. So, these machines we have capitalized, so what, what actually the NDS 116 says, that as per the NDS 116, the machines which we take,

So, would it be possible to quantify that impact on depreciation and the cost

Yeah, because of this, the cost of goods sold has approximately reduced by Rs. 6 crore in this quarter, and there is an increase in the deficit in sales for the similar amount.

Understood.

We'll take our next question from the line of Krishna Raj K from P-VT. I'm sorry, sir, please go ahead.

Yeah, I was saying that just to clarify that this is only a P-VT because there is no change in the, there is no impact on the P-VT.

Thank you. We'll take our next question from the line of Krishnaraj K from Equity Wealth Management. Please go ahead.

Good evening, sir. Last time, you had mentioned that GLP-1 is a very good opportunity for diagnostics industry. I just wanted to know, what would be the 3-4 test, both in value and volume, which anyone who is taking GLP would have to mandate it?

Yeah, so firstly, you know, I stand corrected on that one. We haven't seen the uptick that we thought we would see on GLP, right? What has happened is people are taking the medicine, but have not yet matured to the point where they are, how do you say, testing, right? So, I think it will take some time before we see the full benefit of the GLP. Now, to address your question, effectively, the main tests are, you know, see, what happens is when you take GLP, it has significant impact on your liver, kidneys, you know, your inflammation, and your pancreas, right? So, the typical tests of liver function test, kidney function test, pancreas, which is serum lipase and serum MLase, as well as the core cardiac risk markers of, you know, lipoprotein, APO, and high-sensitive CRP are the main tests that we have combined into a GLP-1 package.

Okay. And sir, just a follow-up, because the generics of GLP-1 would come and go off-patent in March, so then would you see more uptake, because now it is all patented and the price is a bit on the heavy side. So, won't you see more volumes in March?

Yeah, see, only time will tell. I was expecting a lot of people who are on GLP-1 will test, you know, to ensure that their health is well preserved. That has not happened. So I think it will take some time for, you know, doctors to, you know, treat obesity as well as test the results of GLP-1. So, it will take a little bit time more for this to mature. In that situation, we are investing in, I would say, education programs to talk about the benefits of testing when you are in GLP-1. But as you know, that takes a long time to build awareness. Okay. Okay, sir.

Thank you. That's it from the side.

Thank you. Next question is from the line of Yash Toshi from Unify Capital. Please go ahead.

Hi, am I audible?

Yes, please go ahead.

Yeah, congratulations on what set of numbers. Actually, I had a question of gross model birthday of the other UFS. So, this quarter we reported on the scientific type of gross model. So, my question of going forward is the number because you have a corresponding impact on the depreciation.

This quarter gross margin has an upside impact of about 2% to 2.5% because of that. But as I said, most of them, this is a recurring thing. So this is subject to, I think, one person which may be on an incremental side this quarter, that thing would be sustainable.

Yeah, so it will be in the adjustment mode.

So, again, it will be 75 percent?

Yes, please go ahead. Another question was taxation was lower this quarter. If I remember using taxes around 25 to 28 percent. But this quarter, I think the tax rate was around 17 to 18 percent. So, is there any specific reason, or should we have a higher tax effect in two holes?

Yes, sir. This year, this quarter, we have created a deferred tax asset, and that is also some part of that is consequent to this account review capitalization, and that's why that is over. On a steady state, that would be the same rate which you have mentioned.

Thank you. Just a second, last question. How many samples have you processed this quarter?

Yes, I am sorry, but your voice is not very clear. Can you use your handset mode, please?

Yeah. How many samples have you processed this quarter?

He asked how many samples have you processed this quarter. We have processed 70.7 lakh samples this quarter. 70.7 lakh. Thank you.

Thank you. Next question is from the line of Vinu Patiparampil from Ilara Capital. Please go ahead.

Hi. Good evening. Just again a clarification on this ROU. You said you capitalized some extra machines this quarter. Were they pre-existing machines or new machines, newly bought machines?

Hi, Dr. Vinu. I'll let Vikram answer this question.

So, the capitalization is for the new machines added during the year, which includes both machines added for the capacity and the new webs which we have opened during the year. Understood.

So, what I don't understand is...

Yeah, please go ahead.

What I don't understand is if you add new machines and capitalize them, the depreciation can go up, I understand. But how does cost of books change when you add new machines? That's the percent of sales.

So, I just explain this to you. So, basically, what happens, and this is an industry practice also, let's say, if you refer to the NEPESZ also, they would have also done the similar treatments. So, what happens in the industry is that machine providers supplies the machine, which is on a real and real sort of basis with the commitment that we will purchase the reagent from them. So, what does this mean to the company that we are not paying for the upfront capex, and we are getting the machine, let's say, in free, and in return of that, we are giving a commitment of the purchasing of the reagent materials from those machine providers. So, this is also an impact over volume and the negotiation which we are able to do with the vendors that we are getting these machines. Having said that this is an industry practice also and many operators are getting that. Now, in regard to the accounting treatment, there is an NDS 116 that prescribes that in case you are getting the machine for free and there is a commitment and there is a contract that we need to purchase a re-agent So, we have captured these machines as an RAU asset and we have created a corresponding liability, RAU liability. In the P&M, this gets reduced from the Cox and that gets added to the deposition. This is a standard accounting with Sheffield. We were also doing this earlier, but having said, because these machines we have purchased, which are traded on RSI, this Yes, hence this number you are seeing.

Okay, and this 116 accounting policy was being followed even in the earlier quarters, right? Or has it changed? Yes, this accounting policy is according to the other answer.

So, there is no change in accounting policy.

Okay, thank you. And one last question.

No, I request you to join back the queue, please, as we have a lot of participants in the queue. Yeah, thank you. Ladies and gentlemen, in the interest of time, can you rest with your question to one at a time, please? We'll take our next question from the line of Parikshit Kabra from PKD. Please go ahead.

Thank you for the opportunity again. So, you know, of course, this is the first call I've attended of yours, and I'm hearing that, even the previous calls you've said that the guidance is for mid-teams. But I'm not sure what I'm missing here. If the market is as large as it is, and our value proposition is as strong as it is, Why is mid-teams the realistic and stable growth number? Why wouldn't it be higher? What am I missing in my understanding of the market? If you could help me understand it better.

See, the market grows at 10%, right? 10, 11%. If you look at the peer-said results also, it's all in that organic, in that range, right? How you expand and grow is a direct function of how you expand your franchisee network. Right? And your franchisee network expansion is a direct result of the investments that you put in. Right? So, yes, I could, for example, increase the cost by 30% and try to grow faster, but that is fraught with risk. Right? So, I would much rather invest 10-12% of the cost and maintain the growth above market. Right? So, that's what you're seeing there. On the partnerships business, look, it's sitting on a high base, right? So, you know, you have to remember this business was, you know, very, very small three years ago, right? And it's expanded to a substantial base now. So, you know, it's very difficult to sustain this level of growth on that base, right? So, that being said, I have said it will grow faster than the franchisee business, and then when you compute the math, you know, you arrive at that mid-teens growth, and as I said, this year, we have done better than we expected, but who knows how next year will go.

All right. Thank you. That's all. Thank you. Next question is from Varish Bangor from TE Shipping Family Office. Please go ahead.

Hi, Rav. I wanted to ask that our franchisee edition every quarter was around about 400 to 500 franchisee net edition. This quarter, it has slowed down to 100 franchisee. That is question number one. Question number two is, wanted to get a sense on revenue per test X of Polo and Vinta for this quarter.

So, Varij, the first thing, just to correct, it's 200 additions this quarter. Actually, if you go into the history of the company, we have never added between Q2 and Q3. It has either gone down or remained flat. This is the first quarter where the net addition has been 200. Actually, a lot of the franchisee addition happens in Q1 during the season, sorry, Q2 during the season, and then Q4 during the season, right, where franchisees are looking to partner and, you know, take benefit of Janj and Arogyam and all of that. Historically, if you go back last three years, we have actually never expanded the franchisee base between Q2 and Q3. So, this is the first time the net addition is 200. So, that should answer your first question, Varej. On the revenue per test, it's 36 rupees ex-Polo Vivta.

Okay.

Thank you. Varej, I request you to join back the Q3.

Follow up on that. Like, the revenue per test has gone down from 38 to 36, Y01?

YoY has gone down from 36.6 to 35.9. So, I mean, 2% YoY. It's a little bit of, you know, during this quarter, we, I won't get into the competitive details, but we discounted, you know, sugar tests quite heavily to encourage our franchisees to do camps. And as a result, you know, we got a lot more of the sugar test volume than we thought, and that's why you see that happening. Thank you.

Take our next question from the line of Arman from Blue Sky FinTech. Please go ahead.

Yeah. Am I audible?

Yes, please go ahead.

Yeah, first of all, congratulations on good set of numbers. My question is a bit on a different thing like on FarmEasy. Is there any update or anything you could tell us about any FarmEasy IPO and its overall revenue growth or top-line growth for this financial year?

See, this call is a ThyroCare management call for ThyroCare results. So, you know, I don't want to deviate the discussion on the parent. The API group, what I can tell you is the API group is performing very well. It's back on a growth track, and the losses are coming down substantially. And you can join the API earnings call. I think we host one every quarter, where you can get into the full details of what's happening. Got it. Got it. Thanks. Excellent.

Thank you. Next question is from the line of Deerej from White Oak. Please go ahead.

Yeah, so Rahul, you mentioned that franchises cash and carry, so then the entire receivable of, you know, 40 days is on the partnership business revenue, right? So when you adjust for that, then it will be like 120 days of receivable. Is it correct on this training or is there some missing something?

No, no. It will turn out to 90 days. Basically, we have a credit period of 60 to 90 days on the partnership business. This also includes some of the government business also. Maybe in total, that's why it is looking higher. But on the partnership business…

When you show the break-up, Sanchise, Partnership and D2C, where is government residing?

In partnership. In partnership. But that is very marginal. So, if you see, if you see over credit period is around 30 to 40 days at a blended level, and if we see only partnership, that would be in the window 60 to 70 days.

The match will not add, Akram. If it is 30 to 40, and it is answered on the business, then it will be 90 to 120.

What you are saying is partnership is one third of your business. Yes. Right. So, if your average day's outstanding is 30, then if it's one third, one is zero and the other is 90.

Yes, given the approximate numbers, but I remember the last business in which I reported that the partnership credit period was 78 to 80 days only.

I am not understanding, I take it from this thing offline.

I just asked one question,

two questions please, just a small question. Yes. This ROG thing, the cash charge of that last year was about 13 crores, right? The rental charge, which has come below EBITDA. What will it be this year?

That rental charge was 13 crores. I guess this year would be around, I think, at a totality Thank you.

Participants have strictly requested to restrict their question to one at a time, please. The next question is from the line of Lokesh Manik from Valam Capital. Please go ahead.

Yes. Hi. Good evening. My question was...

I'm sorry. Can you use your handset mode, please, Lokesh? Your audio is not clear.

Sure. This is better now?

Yes. Please go ahead.

Perfect. My question was that, you know, since we are a B2B player and we deal in high volumes, our model for doing Capex was doing, you know, purchasing the equipment so that we could, you know, lower the cost of the consumables. So, with this, you know, this new ROU entry and the new, the rental reagent model, what our peers follow, where we are venturing into, is there a change in our CAPEX strategy now going forward? If you can just throw some light on that. That is one, and second is just a suggestion. Yeah. Yeah, please go ahead. Sorry.

So, there's no change in the, sorry, there's no change location in the strategy. Where it makes sense to buy, we buy. Where it makes sense for a reagent rental model, we go with reagent. So, it's a misnomer that 100% of our machines are bought out. In fact, our entire biochemistry is on reagent rental model. Immunoassay is bought out. So, to that extent, there is no change in the strategy. We buy where we get the best rate on reagent. If we don't get the best rate of reagent, then there is no point putting our caps. And so depending on the technology, there are fully bought out machines as well as reagent rental machines in our ecosystem.

Sure. Just a small suggestion, Vikram, if you can just give us pre- and post-NDS gross margin numbers going forward, because that is what many retailers also do when they have that NDS impact on the EBITDA due to their rent expense. Maybe it will be more clearer to understand the NDS impact coming on the gross margin going forward. It's just a suggestion you can pick up.

I'm sorry, sir. You're not audible. I am saying that we will appropriately disclose it in the numbers, we will report. Sure, sure, sure.

Thank you so much.

Thank you. We will take our next question from the line of Rekash Kapadia from Kapadia Financial Services. Please go ahead.

Yeah. You know, one follow-up from my side, given that, you know, we are trying to scale these speciality offerings in our, you know, product portfolio, any number you can share on internal sales team as of now, doctor reach, because I would guess, you know, some of these tests would, you know, require doctor recommendations. So any numbers, if you can share, that will be helpful. And, you know, what kind of scale can we expect or which areas we are focusing on?

Right now, we have, Prakash, about 40 people on the field, and we will expand that team. You know, we have 80 doctors on staff as well, right? And each of them connect with doctors in turn, right, to explain the technologies and all of that. I don't have handy the exact doctor reach at this point in time, but I can share it at a later point in time. But the investments have been made. We have the expansion expected in this next financial year, plus 80 doctors who work with us in each of our labs.

Thank you. We'll take our next question from the line of Naman Bagresha from IIFL Capital. Please go ahead.

I just wanted to know whether we can grow, let's say, 15-16% over the next two years on an organic basis and deliver, let's say, margin improvement from here on as well, or that growth will come at a cost.

I have always been saying this, you know, 15-16% from a growth rate point of view is definitely achievable, but it will come at a cost. So, you know, we don't expect margins to dilute, but we don't expect margins to improve loss.

And last question, on the gross margin front, I mean, should we take this 75-76% gross margin as a new base, or it's just one quarter phenomena, and consequently, what would be the base for depreciation and amortization?

See, I think, as Vikram said, you know, we anticipate this to continue. So, I would say plus minus 1% is where you can take this as the new normal, right? Unless we take some price action or, you know, the dollar swings very sharply from here. But keeping that aside, you can take this as plus minus 1% the new normal.

Thank you. We'll take our next question from the line of Yash Doshi from Unify Capital. Please go ahead. Yash, can you use your handset mode, please?

Yeah. Am I audible?

Are you on your handset mode?

Yeah. Am I audible?

Yes. Please go ahead.

Yes, very much.

Go ahead, Yash.

Yeah, so on the partnership list, if I recollect, you're saying that basically we collect the money of this Labatomy, collect the money, and basically transfer the partner. So I just wanted to understand in this specific thing, how the credit base comes into picture, because we are collecting on behalf of the partner, right? Right. So, I believe that should not be any credit list, because we are recognizing the entire revenue, then we are starting with the partner.

Can you just help me on this? So, just to explain the business model, there are two kinds of partnerships. There are ones where, I won't bore you with the technicality, but there are what are called prepaid orders and postpaid orders. Right? A post-paid order is where ThyroCare collects the money. A pre-paid order, best example is FarmEasy. FarmEasy takes an order on its app, collects the money from the patient, and then passes the order on to ThyroCare, and then we settle at the end of the month that. Many captive platforms, many of our partners are of that nature, where they effectively collect a prepaid order from the customer. Similarly, in an insurance business, the customer is eligible for a free test, like a pre-policy medical checkup. Nobody charges you for that medical checkup. And many insurance will give you a free annual checkup with your policy. In that case, there is no revenue associated with the test. But we administer the test on the patient and then the insurance company reimburses us for that. Right? I would say a large part of our partnerships business is of this kind. Yeah, okay. There's only one person left, so we can take Yash's question and then go to the next question.

Yash, please go ahead.

Yeah, we had a last conversation that we have on-boarded 3 of the 16 TPS. Is there any increase of 3, the infant TPS?

I think there's 5 now, so that's where we are. And so, I mean, in one, we've added two new partners. So, that's broadly where we are. Thank you.

Thank you. We'll take a last question from the line of Harsh Kataria from RRR Investments. Please go ahead.

Hello. My question was on the partnership side, just to do my understanding.

Like you said that you recognize the complete revenue of the partner in our books. So, is there any pricing band when the business partnership operates or they are free to set their own prices? Because around 33% is coming from the partnership. So, are they free to set their own prices or minimum pricing we provide them?

Actually, they are free to decide their own prices. So, to that extent, depending on platform to platform, it varies. Our invoicing policy is linked to volume of business, so, you know, we typically have a fixed rate, and then they basically charge either above or below, depending on their own commercial construct. Okay, that's what it's got.

Thank you so much.

Thank you. Ladies and gentlemen, we'll take that as the last question for today. I now hand the conference over to Mr. Rahul Guha for closing comments. Over to you, sir.

All right. Thank you, everyone, for a long, detailed discussion and lots of interesting questions and insights from all the participants. This underscores our Q3 performance, and we hope to continue that into the full financial year and look forward to seeing you all in April and wish you all a good evening. Thank you.

Thank you, members of the management team. On behalf of Thyrocar Technologies Limited, that concludes this conference. Thank you for joining us, and you may now disconnect your lines.