The conference call was addressed by (Hony) Brig. Dr. Arvind Lal – CMD, Dr. Om Prakash Manchanda - Whole-time Director and CEO and Ved Prakash Goel – CFO.

Highlights of the call:

Dr. Lal PathLabs is one of India's leading consumer healthcare brand in diagnostic services.

In June 2019 quarter revenue increased 14.7% in Q1 FY 20 to Rs 335.2 crore.

Business momentum continues to be driven by higher patient volumes and sample growth supported by Dr. Lal's established hub-and-spoke model and emphasis on quality. The company has been witnessing a progressive shift in the sector where volumes have started moving from unorganized to organized players.

Large portions of people are still under-diagnosed and require specialized medical care, therefore, time-based diagnostics become a key requirement for treatment.

The company has grown as a national healthcare services brand on the back of patient-centric solutions that it developed.

As it moves to the next phase, it will strive to strengthen network presence and test menu, both, to enhance accessibility to existing and new patients.

The diagnostics sector remains attractive of brands like LPL where it can offer differentiated services and accurate diagnosis.

At a broader level, AB (PM-JAY) under the aegis of Ayushman Bharat, promises to bring in a transformational change in the arena of healthcare covering almost 40% of India's population. The scheme aims at making path-breaking interventions to address health holistically in primary, secondary and tertiary care systems covering both prevention and health promotions. As the country moves towards access to healthcare for all, the company will play a strong role in the development of the sector.

In Q1 FY‟20 the company achieved the highest ever quarterly revenue of Rs 335.2 crore, up 14.7%. This robust growth in the revenue was backed by 15.9% growth in patient volume and 19.8% growth in samples.

The total number of patients served on patient basis has gone up to 4.9 million in Q1 FY 20 as against 4.2 million in Q1 FY 19. Samples per patient went up to 2.4 in Q1 FY 20 as against 2.3 in Q1 last year.

The company's efforts put into growing the rest of India market are showing up in healthy growth trends.

In Q1 FY 20 rest of India has grown at about 17.1% in value and 19.2% in volume. The contribution of rest of India business stands at 58% now.

June 2019 quarter financials are reported after implementation of IndAS 116; however, normalized EBITDA margin excluding the impact of IndAS 116 is stable at 27.1% in Q1 FY 20.

Its bundled test program, "Swasthfit" has been performing well and has contributed 15% to the company's revenue in Q1.

Revenue realization per patient for Q1 FY 20 is slightly lower at Rs 684 as against Rs 691 for Q1 FY 19.

This major impact is coming from contribution of rest of India, which is growing and there realization per patient is not that high.

Especially, realization per patient in Eastern part of India is lower and has this impact on overall Revenue realization per patient.

Normalized EBITDA after eliminating the impact of stock-based compensation, CSR expense and impact of IndAS 116 in Q1 FY 20 stood at Rs 90.8 crore compared to Rs 79.3 crore, reported in Q1 FY 19, a growth of 14.5%.

PBT is at Rs 89.4 crore as against Rs 75.4 crore in Q1 FY 19, up 18.6%.

PAT is at Rs 59.1 crore against Rs 49.7 crore in FY19, up 19%.

Cash and liquid funds at the end of Q1 FY 20 stood at Rs 792 crore.

Current quarter reported numbers are as per IND 116, the company has adopted modified retrospective approach for the transition to IndAS 116 from 1st April 2019. This approach does not require restatement of comparative information for Q1 FY 19.

The company's wholly-owned subsidiary Pathlabs Unifier Private Limited has acquired 70% stake in Centra Pathlabs Private Limited which has acquired the business of Central Lab, Indore, a partnership firm and M/s. Vinita Kothari, a proprietorship concern. This acquisition would help the company to further strengthen presence in Madhya Pradesh.

The new competition or PE-funded competition is the same as in last quarter. As far as online aggregators are concerned, the management does not have any hard data to substantiate whether they are either gaining momentum or not but their sense is right now at this stage there is nobody who has scaled up or likely to scale up. There are one or two players who are very active in the space. Some of them are in southern part of India, some of them are in northern part of India but the management does not think there is anybody who has achieved that scale which is worth talking about in this call.

September is the month which is flu season. Right now, there is nothing that the management is seeing.

It has grown as a national healthcare services brand on the back of patient centric solutions that it has developed.

Its primary objective has been to widen geographical presence and drive value & volume growth through competitive price-value equation. Strategies and initiatives are at play in order to realize this growth.

During the past year, it has focused on scaling up the Kolkata RRL in order to build a strong base in Eastern and Central India and this has seen good progress.

The company recently announced a venture with local partner at Indore, Madhya Pradesh, which will extend its presence in key geographies where it is expecting good progress.

The company is pursuing a multi-tired strategy towards focus cities in South and West, selective pursuit of HLM while it encourages its PSCs to reach out and further develop their respective regions.

The decision it has taken to increase share of bundled testing is yielding results and the company intends to add further combinations geared towards enhancing value to the patients.

The company is focused on deepening presence in existing geographies.

It is following distinct strategy for newer cities.

Emphasis is on creating sustainable volumes across routine & specialized tests.

It is taking methodical efforts to enhance productivity and contain costs to support margins

It continues to evaluate inorganic opportunities that offer the right organization and operational fit.

It targets to grow ahead of the industry.

Investments in FDs and Mutual Funds at Rs 791.6 crore as on June 2019, up from Rs 707.7 crore as on March 2019.

As on March 2019, DLPL's has 200 clinical labs (including National Reference Lab at Delhi & Regional Reference Lab at Kolkata), 2,569 Patient Service Centers (PSCs) and 6,426 Pick-up Points (PUPs).