Thursday, July 31, 2025

Franchise network expansion powers Thyrocare’s Q1 growth: CEO Rahul Guha

Date:

Thyrocare Technologies has delivered a strong set of numbers for the June 2025 quarter, with its revenue rising 23% year-on-year to ₹193.03 crore, and profit after tax soaring 60% to ₹38.29 crore. The company’s Q1 EBITDA stood at ₹57.77 crore, with margins improving to 29.9% from 27.2% last year.Speaking to CNBC-TV18, Rahul Guha, MD & CEO of Thyrocare, attributed this performance to a consistent expansion in the company’s franchise network. “We added about 1,500 franchisees this year versus the same time last year, and that’s what’s driving the growth,” Guha said. He described the growth as the result of “relentless execution” and the compounding effect of two years of steady partner additions.

Guha clarified that the company remains committed to affordability and does not rely heavily on price hikes. Of the 25% revenue growth in pathology, 14–15% came from volume while 11% was driven by realisation. “That 11% in realisation is mostly from mix. We rarely use price as a lever,” he said.

Thyrocare is also seeing a strategic shift in its test portfolio. Routine and semi-specialised tests now account for half the business, down from two-thirds two years ago. The balance comes from high-end specialised tests, which fetch about three times more realisation than routine tests.Preventive testing continues to be central to Thyrocare’s offering. “Aarogyam continues to be about 40% of our revenue,” Guha said, adding that the newer platform, Jaanch, already contributes around 5% and is expected to grow at 1.5 to 2 times the company’s average growth rate.

On international expansion, Guha said Africa—specifically Tanzania—was a long-term play. “In the short term, Tanzania will not be material… but over a 10-year view, Africa will be a big pillar,” he noted.

While the company has returned to a near-30% margin level, Guha said future margin improvement would depend on continued growth. “We are not a company that stands still. We continue to invest… any operating leverage we get will first be considered for reinvestment into growth,” he said.

Despite a strong Q1, the company is not revising its full-year guidance. “We are sitting on a high base as we move into the second half… mid-teens to closer to 20% is the range we are comfortable with,” Guha added.

Below is the verbatim transcript of the interview.

Q: Just wanted to start by discussing the pathology revenue, which is up 25% year on year. Tell us what took place this quarter in terms of volume as well as prices, and what your guidance is going forward in terms of the competitive environment that diagnostic companies have been dealing with?

Guha: What you’re seeing is relentless execution over the last eight quarters. As I’ve been saying, this is a very simple business. You need to add more franchisees, add more partners, keep them happy, and the growth will come.

If you look at our track record over the last two years, we’ve been consistently adding franchisees. This year, versus the same time last year, we added about 1,500 franchisees, and that’s what’s driving the growth. There’s a compounding effect. We really started on this journey about two years ago, and you’re now starting to see the compounding effect of that franchisee addition. Nothing new this quarter—just the continued trajectory and the compounding effect you’re seeing.

Q: I just wanted to understand the pricing scenario. Were there any price hikes taken? If so, when was the last one? And what is the possibility of price hikes going forward?

Guha: If you break down the 25% growth, about 14–15% is from test volume, and 11% is from realisation. But our stated position is to be the most affordable player in diagnostics, so we don’t increase prices much. Actually, that 11% in realisation is mostly from mix. Over the last year, we’ve added a number of specialised technologies that have increased our realisation per test. Of that 11%, I’d say about 9% is mix, and maybe 1–2% is actual price rise. The idea is to make testing affordable, so we rarely use price as a lever.

Q: That’s what we wanted to understand in terms of levers going forward. What proportion of your growth do you expect will come from volumes? And since 9% of the 11–12% realisation growth came from mix, how much revenue currently comes from the higher realisation products, and how much do you intend to increase that share?

Guha: I’ll give you broad numbers, because the exact figures are internal and part of our strategy. Routine and semi-specialised tests are roughly half our mix, and the higher realisation tests are the other half. If you go back two years, it would have been one-third high-end and two-thirds routine. That’s the level of mix shift—from the run-of-the-mill thyroid, HB, vitamin C, and lipid profile tests to the more specialised coagulation, histopathology, and advanced tests.

Q: And what is the delta between the higher-priced half and the routine half? How much higher are the realisations?

Guha: On average, realisation is about 3x between the routine and the more specialised categories.

Q: What we also want to understand is, in terms of preventive testing—screening and HerCheck—what revenue are you generating there, and what was the growth this quarter? What is your guidance for FY26?

Guha: We are very well known for preventive testing with Aarogyam. Aarogyam continues to be about 40% of our revenue. We are the largest preventive testing player in the country. Jaanch, as I said, is a new launch and currently accounts for about 5% of our revenue, but it’s growing very fast.

Q: And what’s the outlook for Jaanch? What growth rate are you anticipating?

Guha: We expect Jaanch to grow at 1.5 to 2x our normal growth rate. So yes, it will grow faster.

Q: How much did Aarogyam grow this quarter, and how much did HerCheck grow?

Guha: HerCheck is a very specialised test, so I’ll leave it out. Aarogyam grew in line with the company.

Q: Tell us what’s happening with Africa. You’ve ventured into Tanzania. What are your expansion plans there? How much revenue have you generated, and how important will Africa be for Thyrocare?

Guha: It depends on your time horizon. If you’re with us for 5–10 years, Africa will be a big pillar for Thyrocare. In the short term, we’re still understanding the market, refining our business model, and ensuring we get the go-to-market strategy right. Over the next 1–2 years, both in terms of investment bandwidth and revenue/profit, Tanzania will not be material. But over a 10-year horizon, I believe Africa will be a material part of Thyrocare’s growth. It’s been less than a year since we entered Africa, so it’s too early to build it into projections.

Q: Just broadly for Thyrocare—you’ve posted around 23% growth and are back to margins of around 30%. This is a two-part question. One, Thyrocare once enjoyed margins of 40%—what’s the internal margin target now? And two, is 20% growth going to be the standard rate for the next few quarters?

Guha: Difficult to say at this point. Normally, Q1 is very soft. Rarely does Q1 exceed Q4, but for us, Q1 has been much better than Q4. We’re encouraged by the growth numbers. Q2 always tends to be better, but if you go back to last year, the compounding effect started showing up around Q2. So, we’re sitting on a high base as we move into the second half. It’s too early to revise guidance. I’d say mid-teens to closer to 20% is the range. Whether we close the year above that is hard to say. Mid-teens growth is something we’d be happy with. We’ve done very well in Q1 and are encouraged by the growth, but let’s see how the second half plays out—maybe we can talk again after H1.

Q: And what about margins, Rahul? The historic highs that Thyrocare used to enjoy?

Guha: Margins are the result of operating leverage. If we continue to grow at this rate, margins will definitely improve. But we are not a company that stands still. We continue to invest. We are looking for more M&A opportunities and expanding our footprint in parts of India where we’re still small. So, any operating leverage we get, will first be considered for reinvestment into growth. So, for now, assume margins will remain stable, and we’ll continue to invest to drive further growth.

Q: From a stock market standpoint, there’s always curiosity about the future of both PharmEasy and Thyrocare. You’re looking at expansion and growth—so is there any consideration of the two coming together, with PharmEasy listing via reverse merger with Thyrocare?

Guha: This has been asked multiple times.

Q: Yes, it keeps coming up from investors.

Guha: This is not a subject of any discussion at the Thyrocare level. If it does come up, as I always say, for Thyrocare shareholders, this would be a special resolution requiring a majority of the minority. It’s not a straightforward or done deal. But that said, there has been no discussion on this front—at least not at Thyrocare.

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