Dr. Lal PathLabs Limited (LALPATHLAB) Earnings Call Transcript & Summary

Ladies and gentlemen, good day and welcome to Dr. Lal PathLabs' Q4 and FY '21 Earnings Conference Call. [Operator Instructions] Please note that this conference is being recorded. I now hand the conference over to Mr. Nishid Solanki of CDR India. Thank you, and over to you, sir.

Thank you. Good evening, everyone, and welcome to Dr. Lal PathLabs' Q4 and FY '21 Earnings Conference Call. Today, we are joined by senior members of the management team, including Honorary Brigadier Dr. Arvind Lal, Executive Chairman; Dr. Om Prakash Manchanda, Managing Director; Mr. Bharath, CEO; Mr. Ved Prakash Goel, CFO; and Mr. Rajat Kalra, Company Secretary and Head of Investor Relations. Let me share our disclaimer here. Some of the statements made on today's call could be forward looking in nature, and the actual results could vary from these forward-looking statements. A more detailed statement in this regard is available in the results presentation, which has been circulated to you earlier and also available on the stock exchange website. I would now request Mr. -- Dr. Lal to share his perspectives with you. Thank you and over to you, sir.

Thank you very much. Good evening, ladies and gentlemen, and thanks for joining us today for Dr. Lal PathLabs' Q4 FY '21 earnings conference call. Health care and vaccine, COVID-appropriate behavior have gained higher significance within our society in response to the persistent pandemic. Citizens are making immunity-boosting habits with vaccination as priority. Simultaneously, awareness around wellness and preventive health checkups is also building. Corporates are likely more than ever to encourage or coax employees to go for health check packages to manage and take responsibility of their own health. This dovetails with our own aspiration of being the leading branded customer -- or consumer health care provider, offering complete diagnostic testing services with wide accessibility. As you are all aware, at this time last year, we experienced the initial phase of the lockdown, whereas this year, we have had to contend with a very strongly resurgent second wave with cases on the rise at a higher rate than before. The need for quality testing that is both accessible and affordable has seen a commensurate increase. The strategic decision taken by the management at the onset of this pandemic to form a dedicated task force to basically address the requirements for COVID and non-COVID segments, respectively, ensure that we were never found wanting in servicing our patients and clients at any time. And being true to our DNA, in the present scenario, we have redoubled our efforts to maintain high levels of service across the network, as demonstrated last year during the first wave of the epidemic. Established master chains are better equipped on account of the scale, experience and capability. On accuracy and reporting perspective, the DLP brand stands heads and shoulders above the rest. Given investments in technology, we can monitor all our labs with every single transaction on the quality front on a near real-time basis and thereby troubleshoot wherever and whenever the need arises. Such operational salience is unique within an industry that is largely unregulated and fragmented. Work on further extending our testing network, enhancing the capacity and capability of existing labs has continued in the past year. That's enabled drive efficiencies and productivity across our operations. Patient behavior, too, has evolved during the period with higher preference for online interaction, coupled with sample collection at home. Our technology-enabled infrastructure backbone has allowed us the flexibility to make these adjustments to our model smoothly. Using our extensive network of patient service centers, we have been able to scale up home collection services crucial to the management of the pandemic. With the right vision and execution, we are geared to extend our leadership beyond the core geographies. The scale, experience, brand engagement that is possible for leading chains like DLPL is difficult to replicate readily. We believe that we have the right approach to serve the health care requirements of the nation and are confident of guiding a best-in-class operating model through these trying times and refocusing on the long-term agenda in the days beyond. With that, I would like to hand over the call to Om to share his thoughts. Thank you very much.

Thank you, Dr. Lal. Good evening, everybody, and thank you for joining us on today's call. I would like to take this opportunity to share my thoughts on the industry, our initiatives and the way forward. The past year has been an extremely challenging year for all the stakeholders. The challenge still continues and has further gone up in the current financial year. In these trying times, we've seen our role as that of a big purpose. To the best of our ability, we have tried to continue our operations around the clock wherever required: service to our patients with bold steps, taking care of needs of the travelers, taking care of our employee welfare and work with various authorities to comply with various requirements. Our leadership team has remained in constant touch with the phlebotomists, fields executives and lab operations staff to keep their morale high. The current crisis also has tested the ability of our operation model to take sudden spikes in demand and simultaneous shortage in supplies. Our employees have shown a lot of resilience in these times. Given our established presence nationwide, we could play a role in scaling up the RT-PCR testing bandwidth across the country. Our network was able to accommodate the sample flow during the lockdown phase both across the COVID and non-COVID segments. Moreover, with wider prevalence of RT-PCR testing and our enhanced home collection offering, Dr. Lal PathLabs brand could attract a newer set of patients in the B2C segment. A key feature of our pandemic SOP was to optimally use our established network infrastructure by leveraging technology. Given how we have already embedded technologies deeply into our operations, we could accommodate the transition in patient behavior from walk-in to home collections very smoothly. Booking of collection, receiving reports, et cetera, have been very crucial during the pandemic to provide our patients with quality diagnostics they desire in an extremely seamless manner. When a small lab organizes a home visit versus Dr. Lal PathLabs doing it, there is a vast difference in the hygiene, quality, processes and convenience part being better in our case. We have around 3,700 PSCs returning with geo maps and thereby we are able to pool all our service requests centrally and optimize uses across the network. Talking about our overall strategy at a macro level, we continue to grow Rest of India business, especially West and East regions, thereby further moving towards geographical broad basing of revenue contribution. Contribution from Rest of India, ex Delhi NCR has increased, and it now stands at 64.8%, even though the contribution from Delhi NCR is getting now smaller, but we still continue to enjoy healthy margins on the back of better realization of scale. Our plans to widen our footprint are on track, and very soon we will be commissioning new regional reference labs, once each at Mumbai and Bangalore. These labs will be supported by a number of satellite labs in the areas and an effective network of PSCs. Concurrently, our approach of acquiring smaller and bottom-of-the-pyramid [indiscernible] Unifiers, which is our subsidiary, has started now, giving us meaningful business. Our efforts will continue in this direction, and this will further help us see the clusters that we are trying to build in South and Western markets. With that, I conclude my opening remarks and would now request Bharath to take you through the operating performance of the company. Over to you, Bharath.

Thanks, Om. Good evening, everyone, and welcome to our Q4 '21 earnings call. I hope all of you are keeping safe and well. Q4 '21 was an eventful quarter with an encouraging trend month-on-month of non-COVID business recovery with walk-in and B2C channel recovery clearly visible, along with continued robust growth in our PUP business. This enabled us to register a Q3 -- a Q4-versus-Q3 sequential growth in non-COVID business as well. As the intensity of the first wave subsided, the COVID portfolio saw a decline sequentially with respect to Q3 '20. All this cumulatively resulted in us recording a revenue of INR 431 crores with a growth of 42.9%. We served 5.9 lakh patients, a growth of 33.3%. We carried out 4.5 lakh RT-PCR tests in this quarter. It is heartening to see the Delhi NCR region returning back to growth and rest of India continuing its strong growth momentum. Our Swasthfit program also saw an increase in contribution to 19% of non-COVID revenues, up 300 basis points from last year same quarter. Our high-end portfolio, including genomics-focused GENEVOLVE division, continues its strong growth momentum led by focus on key therapy areas. Q4 '21 also saw us making progress on our previously stated objectives of South and West expansion with satellite labs opening and also construction being progressed on our New Reference Labs. Our past few quarters' efforts in South and West across both organic and inorganic are also yielding increasing response. South and West contribution in our business has moved up 340 basis points versus last year's same quarter on total business and 140 basis points on non-COVID. In Q4 '21, we also launched a new patient app. Our other technology cutting across digital as well as lab and medical site continues to make good progress. As we look back on fiscal year 2021, it was indeed a challenging year operationally, but it also helped us get better serve patients at large, leveraging our expanding geographic coverage, medical, digital and people capabilities to enable us to progress towards our vision of being the most trusted health care partner, enabling healthier lives. Thank you. Ved, over to you.

Thank you, Bharath. Good evening, everyone, and thanks for being on this call today. I'm now sharing some of the important financial highlights. Revenue for Q4 FY '21 is at INR 431 crore as compared to INR 301.7 crore in last year same quarter, a growth of 42.9%. Revenue for the year FY '21 is at INR 1,581.3 crores as compared to INR 1,330.4 crores in last year FY '20, a growth of 18.9%. Revenue contribution from COVID RT-PCR, antibodies and Allied tests in Q4 and full year FY '21 is at 11.2% and 18.3%, respectively. Out of this, allied tests, that is Il-6 and D-dimer, is about 12% of our total COVID portfolio revenue in Q4 and FY '21. Revenue realization per patient for Q4 FY '21 is higher at INR 733 as against INR 684 for last year same period. The higher revenue realization is mainly due to COVID portfolio and higher sample per patient in our non-COVID business. Normalized EBITDA after eliminating the impact of stock-based compensation and CSR expense in Q4 FY '21 stood at INR 129.5 crores as compared to INR 64.2 crores reported in Q4 FY '20, a growth of 101.7%. Full year FY '21 normalized EBITDA stood at INR 462.6 crores as against INR 365.6 crores last year. PBT for Q4 FY '21 is at INR 110.8 crores as against INR 45.4 crores in Q4 FY '20, a growth of 144%. PBT for the full year FY '21 is at INR 394.4 crores against INR 310.5 crores in last year. PAT for Q4 FY '21 is at INR 85.1 crores as against INR 32.6 crore in Q4 FY '20, a growth of 161%. PAT for the full year FY '21 is at INR 296.5 crores against INR 227.6 crores in last year, a growth of 30%. Basic EPS for Q4 FY '21 is INR 10.1 per share versus INR 3.94 in the same quarter last year. EPS for the year FY '21 is INR 35.33 versus INR 27.42 last year. Investments in FD and mutual funds, including cash and bank balances, at the end of March 31, 2021, is at INR 985.9 crore. We are pleased to share that the Board of Directors of the company have approved a final dividend of 80%. That is INR 8 per equity share. With this final dividend, total dividend for the year FY '21 is 200%, that is INR 20 per equity share. In spite of extraordinary situation and COVID-19 pandemic, we have added 15 labs and close to 600 collection center and 2,200 PUPs in FY '21. This includes close to 70 collection centers and around 900 PUPs added through acquisition under the -- our subsidiary, Pathlabs Unifiers. Further, our efforts towards automation and digital initiatives are performing well, and we are able to optimize our margins and maintain our DSOs, inventories and full supply chain under control. That brings me to the conclusion of my opening remarks, and I will now request the moderator to open the forum for Q&A. Thank you.

[Operator Instructions] The first question is from the line of Chandramouli from Goldman Sachs.

My first question is on the non-COVID realization. I think the previous quarter, the non-COVID realization per patient was about INR 745. And just if I estimate it right, this quarter, it seems to be around the mid sort of INR 710 to INR 715 range. So just trying to understand the -- if there's any [ partners ] that have changed Q-o-Q, if it's down to maybe a different sort of mix in home collection business or the mix of that has changed. Just trying to understand if there's anything structural in there.

Ved, do you want to take this question?

Yes, this is Ved. Our realization per patient has gone up overall, which is in Q4 INR 733. But if we take out the COVID-related patients, RT-PCR and Allied tests, the realization per patient is INR 715 per patient. However, as you know, this realization has increased due to 2 factors. One is, of course, COVID. But then, non-COVID business also has shown some increase due to tests per patient has gone up. So overall, if you see the -- test per patient is seen as flat. But if we remove COVID RT-PCR patients out of this, then our number of tests per patient has gone up. So that is the main reason. And there is some bit of test mix change also in this quarter.

Got it. Got it. That's helpful. Second question is...

Chandra, if I may broadly add to -- I think if I read the question carefully, I think you're trying to understand the non-COVID realization per patient going either downward or upward or is there any impact on that, right?

That's right. That's right.

I think there are 2 factors that may be operating -- that are operating on this non-COVID revenue per patient either way, okay? What happens when there is a lockdown, we have noticed that normally, the routine tests, which are like sugar panel and the lower realization tests, they actually tend to go down because they are somewhat discretionary in nature, but high-end tests continue to remain, hence the contribution of tests on revenue per patient going up for that quarter. Sometimes now, as we've seen, the illnesses are very, very high, and doctors tend to prescribe more and more tests a day, COVID tests for patients. So that time also, you see revenue per patient going up. But the moment lockdown gets lifted up and you have more flow of non-COVID patients coming in, we tend to come back to the normal revenue per patient. So my sense is in a stable scenario, non-COVID revenue per patient will remain the same, but we have definitely seen a higher contribution of specialized tests in the last few quarters that actually is having a slightly better impact on revenue per patient.

Got it. Got it. And just a follow-up to that. So the higher specialized tests within the non-COVID space the past few quarters, do you think this is a byproduct of the pandemic? Or is this something that you think is more structural just from realizations that you've seen suggest?

It's actually a by-product of -- you will notice that our volume growth is not that high. And most of the volumes that have dropped are of routine tests. So the moment routine tests go away, you tend to have a higher revenue per patient. It's a by-product of multiple things. But if I were to pick up 2 or 3 factors, number one, lower volume growth, which -- that means the contribution from high-end tests is higher. The second factor is number of tests per patients also have gone up that results into higher realization per patient. And number three also is that, especially we will talk about this as we go along, you will see some of these COVID Allied tests, which are D-dimer, IL-6, they also have a higher realization that tends to impact our overall realization.

Got it. Got it. That's really helpful. My second question is on the second COVID wave that we've seen over the past couple of months. I think in the first COVID wave in the June quarter last year, we saw a 35%, 36% decline in volumes on the non-COVID side. Just in comparison to that period, what has been the experience in the second wave? Any context there would be very helpful.

Sorry, Om, are you on mute?

I'm sorry. Well, sorry, I was on mute there. Sorry.

Yes.

Maybe I'll start again. I think second wave was quite different from the first wave, and most of us are quite aware through media and WhatsApp messages that are going around. But I'll still try, and based on my understanding, the way I see the difference between first and second wave. In second wave, we saw a lot of patients actually going to hospitalization. And we also saw, unfortunately, very tragic, very sad higher death rates as well. Now that actually had impact on COVID Allied tests going up. If you recall in earlier quarters, we started talking about COVID Allied tests. And there are 4 or 5 such tests which are actually in [indiscernible] markers. We saw a sudden spike in these tests in wave 2, which actually was to a much lesser extent in the wave 1. That's a big difference with wave 1. I think that if I were to pick one, this is the big one.

Got it. Got it. And just last follow-up.

But otherwise, overall, okay, we have so many. So the volume of our testing has been much higher in wave 2 than in wave 1.

Got it. Got it. And just as a final follow-up to this. Just trying to understand. I think in the June quarter last year, there was sort of a stigma for patients who go into patient service centers with their blood samples. Is that something that's recurring now in the second wave? Or do you think that stigma is something that's much lower?

No. Well, those stigma per se now, I think earlier people were really hesitant to get tested. Now I don't think that's behind us. But people are still hesitant to go to a center and give blood samples. They always prefer for a home collection because they think, maybe rightly, so that it's much safer. But we have actually tried to manage our patients flow both ways because at some point in time, we found that the home collection capacity is constrained since there was a sudden spike in demand, we really couldn't catch up to the pace -- or to catch up with the demand because many of our own employees also got impacted by COVID. So we did try, especially in Delhi NCR, to open up dedicated collection centers only for COVID. But there was no such hesitation on the part of the patients because once we told them it's very difficult to do home collection, we did direct them to the nearest dedicated collection center for COVID. And Bharath, if you can add to this. I think we found a lot of people coming to our centralized collection center as well, right?

Yes, indeed, Om. We saw good traffic in our CBC center as you call them. So that was a very large portion of what we collected for COVID RT-PCR samples, yes. The only large request for home collection were from people who were really positive or from senior citizens. But otherwise, rest of them would come to CBC without any problem.

[Operator Instructions] The next question is from the line of Neha from JPMorgan.

My first question is on the non-COVID recovery that was happening in the fourth quarter. Given we did have a national lockdown during the second wave, is it fair to say that the entire recovery was really long? Or did you see a similar impact like we saw last year on the non-COVID business this time around, sir?

You mean to say when -- the current lockdown, which is not that strict a lockdown as we saw last year, right?

Yes.

There was a national lockdown this time we're seeing. So I think it's a good question. I think the impact that we had last year on non-COVID was very severe. But to say that in this lockdown it has no impact on non-COVID, that's not true. We have seen a depression in our non-COVID flow as well. But to me, that's not really captured in Q4 because of -- I think Maharashtra saw it in maybe March. They did saw it end of March or early April. So just a short answer to your question is if there is a lockdown, is there any adverse impact on non-COVID business? Answer is yes. Is it that severe as it was last year? Answer is no.

Okay. So it would be more depending, because of these that number would change, so it's not -- I can't assume that, that impact is similar to the last 2 months.

Yes. Because, see, at least the patient movement that we allow for essential services, you can see go out. Last year, it was very, very difficult. Actually, people were just not moving out. So this time, people are cautious, but they are still coming out to get tested. But I think, again, it's so varying week to week basis, it's very difficult to comment as to how it is going to pan out.

Yes. Yes, fair enough. My second question is on the entire home collection business. You did mention in your opening remarks that there was month-on-month recovery of the non-COVID side, both on the walk-in and the B2C. Therefore, if you could just give us a sense of -- some sense on how much did the home collection come off? I think there was some state of normal in the March quarter. And so that helps us in terms of post COVID, what could be a normalized home collection run rate?

Right. Bharath, do you want to take this question?

Sure, Om. So first of all, on the B2C side, we saw good recovery coming through Jan to Feb to March on the lab walk-in and the PSC side of the business. Number two, the home collection business, it depends actually on the COVID base. There is steady state of business, which we have seen about 2, 2.5x. We don't give out channel-wise split of revenue at this stage. So I will be constrained by that guidance. But yes, we saw a sharp increase, about 2, 2.5x of what normally we would do in home collection. And that run rate continues to remain on a steady basis even now. What we have done, like Dr. Om mentioned in his opening speech, is that we have been able to leverage our collection center network to further augment this upsurge, which we saw. So we take the leads, provide it to them and they do the home collections at a nearby point and the last mile being handled by them. And we monitor the service level centrally.

Okay. Understood. Just to add to what Bharath is trying to say, if we look at the -- Neha, can you hear me?

Yes, sir, I can.

Hello? So there are 4 main revenue streams. One is home collection; second is our walk-ins; third is through collection centers; and fourth is, our pick-up point. Whenever there is a lockdown, the worst affected is walk-ins because people hesitate to come to a large lab format where there is a bit of a crowd. And loss of that channel tends to shift to 2 main other channels. One is home collection, so people prefer home collections. But entire thing does not shift to home collection. Home collection, maybe in Delhi NCR, we can do that. But far from area, it actually tends to shift to collection center because collection center is a small format. It's about 100, 150 square feet area. There's not too much of crowd out there. So walk-in is worse affected. Benefit flows into collection center and it flows into home collection. That's the way normally what happens when there is a lockdown. When the lockdown restrictions actually gets lifted up, people are getting less anxious. We have seen walk-ins coming back as well. And that is the impact we saw in Q4. And suddenly, with the Wave 2 happen, and then we are a bit of back to square one.

Understood. And sir, if I may squeeze in one last question. Based on the employee cost in this quarter, is this a normalized run rate that we should be assuming? Or is there any one-off in this quarter's number?

Ved, just continue, please.

Yes. So Neha, this is usual. We haven't taken any one-off item. I think you may be referring to new wage costs, which is not yet factored in. Having said that, last year as it was not usual year as increments and all that stuff was not fully factored for the full year, so, I mean, this is truly not representative of what usually we have on a personnel cost basis.

The next question is from the line of Sriraam Rathi from ICICI Securities.

Sir, firstly, just a question on the COVID revenue. So at current prices, which has been already, I mean, reduced significantly, is this like at the EBITDA margin level, is that business dilutive for the overall company level margins? Or we are still not able to make company level margins in everything?

So I think I'll take this question. It's a great question. And I think what has actually happened, I have tried to analyze over a period of last 12 months. This is a period when we had a sudden fall in our non-COVID business. So at that time, we were looking at COVID business in its entirety. We just looked at from loss revenue period EBITDA. But as COVID -- as non-COVID revenue started coming back, we actually had a very good operating leverage in the system. Like lots of -- because if you study our P&L, we have close to 48%, 50% of our cost structure is very fixed in nature. So at a gross margin level, we are not worried of, even at current prices. If you are able to leverage our current infrastructure like the space, people, logistics, we are able to manage it very well. I think -- and plus, with the revenue going up and plus a couple of other factors like we saw in Wave 2, you do home collection, you go for 1 person. We found that number of samples collected per visit, per person also was very high at this time. So that also helped us. Number of tests per patient also per visit also high. That also helped us. So we actually could use some of this leverage to manage the margins better. So if you take COVID business in isolation and somebody can say, yes, it is dilutive. But if you take it along with the rest of the business that we have, so we are able to leverage it better. So we are able to manage reasonably well so far.

Okay, got it, got it. That's very helpful, sir.

Dilution will happen if the non-COVID business does not goes back -- goes down, then will be a challenge. But I think we have recovered quite a bit of non-COVID. And if you go back a couple of quarters back, when we used to say that we have not allowed any dilution of effort on non-COVID because we realized early in the year itself that if we don't put focus on non-COVID, it is going to become challenging. That has really paid us well during the year.

Okay, okay. Got it, sir. Perfect. And sir, secondly, on the non-COVID business, you mentioned that there is some impact because of the lockdown. So is it fair to assume that, I mean, the business will be below normal level currently, let's say, in the last 1 month?

Actually, it's very difficult to say. I know you're trying to ask more about the recent weeks. But my general understanding is that in health care, it is -- the demand loss today doesn't mean demand is completely lost. People are delaying it, but unfortunately, in health care, you can't really avoid sometimes these things. So they say so, some of people are waiting and watching. And now I know fortunately positivity rate is coming down, people are coming now. As it opens up, we do believe that it will come back. And I'm talking from the experience of the last 4 quarters. Because we also panicked a little bit in the first quarter when the long COVID fell as if what's going to happen. But I did see a recovery happening. And it was not only completely new demand. It was actually old demand, which could not be serviced in the first quarter, came back in Q2. I'm not sure if I see some depression in sales in these weeks, and I'll say, no, no, this is not -- this is going to be trend going forward. I think there's always some recovery of non-COVID demand coming back later on as well. But as I've mentioned that the price fluctuation is so high, it's very difficult to actually tell a pattern. But over a longer period, I think non-COVID will come back. I don't think we'll lose this result.

Sure, sir. Sir, just a follow-up to that, sir. I mean like in the last quarter 4, we had, I mean, more or less flattish kind of revenue because of the impact from the COVID wave -- first wave. And on that base, we have grown around 26% odd this year in this quarter. And now if I look at FY '21, we have a volume decline of around 3% to 4% in the non-COVID business. So assuming things to become normal sooner, so I mean, can we expect like, I mean, the growth can actually be like very high kind like we have seen in quarter 4 for FY '22? Just qualitatively if you can.

Yes, relatively, in terms of tailwinds, yes, clearly, there is a base advantage, right? So because Q1 is so low, it will definitely benefit into the growth. I think the recovery started in Q3 onwards. So definitely, to that extent, there will be an advantage to the non-COVID business growth this year, in FY '22. But we also have to see how lockdown really happens because, in fact, when we were sitting in the month of March, early March, we never anticipated that there's going to be a Wave 2 and it's going impact the whole thing. And as I mentioned, the moment we have a very strict lockdown, non-COVID business does go down. And the moment restrictions are lifted up, it tends to come back. So I -- it's very difficult for me to actually project a trajectory of COVID for next few months. Non-COVID business, in terms of headwinds, will all depend on how COVID trajectory will be. But overall, base advantage definitely is there because of non-COVID activity.

Got it, sir. Got it. Sir, lastly, just one question. In terms of your sample per patient, that has been consistently improving over the years. Now this quarter, it was close to 2.7 samples per patient. So I mean, we have seen that in the last 3, 4 years, the proportion of bundle test is more or less in the range of 14% to 15%. But this ratio has continued to improve. So just wanted to understand, I mean, what can be optimum level? Is there anything which you have in mind that, I mean, which you basically kind of level in terms of the Swasthfit?

See, I think there are 2 big variables for this. One variable is what is the sort of a ticker price of a panel. As you rightly picked up, as a contribution of Swasthfit goes up or there are other panels tend to go up, it has a favorable impact on 2 people. One is doctors tend to prescribe panel. Patients also don't mind because they say, okay, fine, if 5 tests, I can get more tests. So I'll actually get to -- there is some value of additional information through additional test as well. So as long as we are able to creatively price these panels around some number, let's say, INR 1,000, INR 1,500, you tend to see that prescription habits as well as patient desire tend to move from a single or dual test or 3 tests to a panel test. And panels always will have a battery of tests like 8 or 10. And some of these restrict panels are ideal, 20 tests also. So that's one big variable that is there for this number to move up. The second is as practice of medicine itself because it's becoming more evidence-based or awareness about -- sorry, health awareness is so much these days that virtually patients tend to ask a lot of questions to doctors saying that, "Okay, why are you doing this? Why you doing that?" And they also want to see more tests to be done. So it's as the practice of medical tends to become evidence-based, this number also will go up. And if I were to benchmark with Western world, there, of course, somebody else pays for them because they are all insurance covered, it's not out-of-pocket market. There, the number is as high as close to 10 per patient. So I'm not saying that we're going to that number, but it gives you an idea as to where it can go. But definitely, this number will have a tendency to go up rather than go down.

[Operator Instructions] The next question is from the line of Shaleen Kumar from UBS Securities.

Just wanted to know what's your current capacity of RT-PCR? And second, when you're looking at COVID Allied testing, is it that Allied test is coming from a COVID-positive patient? Or is it certain test you're qualifying as COVID Allied tests?

So we are actually -- I think COVID Allied test, Ved, correct me if I'm wrong. There are about 5 or 6 tests which are put in this cluster. And majority of the revenue coming from these 2 tests, which is D-dimer and IL-6, and there is a third test CRP test. The CRP test is done in many other solutions. I think D-dimer and IL-6 are the 2 tests, which are primarily, certainly have come up in our portfolio due to COVID. So that's where -- and we picked it up very early also. In fact if you recall, we started showing these numbers much early. We knew that there is a tendency of these tests to go up. And hence, we wanted to take it out of our non-COVID business. So today also, we -- if you see our presentation, you'll see non-COVID. Then there's COVID Allied, which consists of 5 or 6. Ved, we have 6 tests or 5 tests?

So for this quarter, we are categorizing only 2 tests, IL-6 and D-dimer.

Perfect. Because we've got manual arms, so we have 2 tests, IL-6 and D-dimer. The reason why we've taken also is because it's easy to relate to COVID because other tests are still common with other conditions as well. So that's why we have not picked it up into our Allied. So IL-6 and D-dimer are 2 tests, which are very, very important tests in COVID situation. That's why we've identified it separately. Now your question -- second question was that why it's going up? And how -- is it in COVID positive patients? Shaleen, what was your question?

Is it you're only capturing these tests -- that are you capturing tests that are coming from COVID positive patients? Or... [Technical Difficulties]

Sorry, Shaleen. I think we are losing your audio.

I think I understood your question. It's primarily coming on account of doctor prescription. And I think it is -- most of these tests would be from COVID positive because when you're diagnosed as positive, then you are actually consulting a doctor and doctor is advising these tests, whether it's fourth or fifth day or later. So it's basically through doctor's prescription these tests are coming.

And the capacity of RT-PCR test?

So RT-PCR capacity can be seen In 2 ways. Number one, it should be seen as a number of locations we can do this test. We -- when we started in April 2020, we had only 1 lab in 1 state, which is Delhi, and it was done in our main lab in Rohini. As we finished 31st March, I think the number has gone up to 14 labs, right, Bharath?

Yes, indeed.

Yes, 14 labs. And now we've added some more labs in April, May as well. So that's why this number is fairly dynamic. And today, if I recollect, the number has gone up to about 17-odd labs in our sector. So that is one way to look at capacity. And these 17 labs were spread across 13 states. And this number I'm telling you as of today, it's not really as of 31st March. That's one way to look at it. Second is D-dimer and IL-6. The good news is that it is much more spread out. I think close to 60 or 70 of our labs are doing these tests. So D-dimer and IL-6 availability is much wider than, let's say, RT-PCR. Now next way to look at the capacity is number of tests that we can do. And I'll hand over this question to Bharath to talk about because capacity actually has 2 elements. One is the people capacity is to collect and other is machine capacity. So maybe Bharath if you can throw a little bit of light on that number as to how you're thinking of capacity.

So capacity-wise side, there are 2 handles to this, like Dr. Om mentioned that there is a machining capacity, which is the number of tests that the RT-PCR machine can do on a per 3-hour shift basis -- 3, 3.5-hour shift basis. The second is around the people and the crew required to manage the entire lab operations right from registration to getting the box open to putting the -- utilizing buffer and so on. The other capacity on the demand side is on the collection capacity. Now that really depends on how you manage your mix. Is it driven by home collections? Is it driven by COVID-dedicated centers? Are you doing large government contracts and so on? So what we effectively do is to run this like a network of labs. When we began last year, each state had consideration saying, you cannot move sample out of my state. Today, the states have realized that they can allow samples to be moved across. It's just that the tax has to be maintained, the reporting accuracy has to be maintained. So leveraging technology, we run our entire operations like a network of labs, network of sites and we're able to transit samples in case 1 location overflows with sample on that particular day. So this demand is also on an everyday basis. It is not what you would call -- where we establish a pattern and then we're able to manage capacities. From a machining or a people perspective, I think -- I don't think we have a real challenge on increasing capacities even further if we want to. Collection and a bit of reporting tends to be bottlenecks at points of time. But otherwise, we are very comfortable on capacity.

So Bharath, considering all the bottlenecks, how many tests can we do bare minimum on a daily basis?

See, we can do about -- we have surplus capacity over 30%, 40% more than what we currently have done in peak.

But any number that what's the capacity -- daily capacity, what we can do?

One of the reasons why we're not talking about the highest -- yes, I think the challenge that we have in sharing that number is because it depends on what channel you pick up. So if you're, let's say, taking more to home collection, the capacity comes down because you are not -- and then we have another constraint that we have to report within 24 hours. And if you do home collection, by the time sample hits the lab, it's already taken 6, 7 hours. So home collection way of doing business, your capacity goes down. But if you pick up government samples, then you have a huge capacity. But if I were to -- since you're insisting on a number, we probably even have gone up to about 25,000-odd samples also per day at a peak level. But as Bharath said that, I don't think we are still sitting -- we can see all this Swasthfit system getting more. But since we have to keep this constraint of 24 hours reporting, we don't want to -- we won't comply with that. We will make sure that our B2C customers are serviced more because we have that franchises for B2B. So keeping that in mind, we've even gone to that number as well. But now -- and these spikes actually happens only for 1 week, 10 days. They are not on a sustained basis every day. And if you look at their trend, it started slowly building up in April. It peaks around third week of April. Now it's just going down. It just -- it falls flat in overnight as well. So that's why it's so fluctuating on a daily basis. To be sure that RT-PCR tests every day you will have that number, it just doesn't happen that way. While since we share with you the quarterly number, you tend to feel, as we've said, divided by 90 this is per day. We think there are very, very wild fluctuations. It just peaks and falls also. There's very, very steep peaks, which we see in these numbers in the quarter.

[Operator Instructions] The next question is from the line of [ Malhar Manek ] from [ Manek Investments ].

Congratulation on a good set of number. I have just one question. I believe we are using data analytics based on customer footfall to optimize the location, size, merchandise, et cetera, of our collection centers and labs. So I was wondering if you can please elaborate on this, like how does it work? What is our optimization accuracy in terms of an approximate percentage? And for how many years have we been collecting this data? And ultimately, how does this investment in technology culminate in quicker turnaround time for customer?

Bharath, you want to take this?

Sure. Yes, I can take this one. Thank you. So first of all, when you set up a retail location, it has a lot of science, a lot of art as well. And there are various considerations, which go behind where you locate a lab or a collection center. Collection center is fairly simple. You locate in high streets or in high throughput locations or in medical hubs effectively. We use certain data techniques and platforms, which I -- for competitive reasons, I can't share exact names to identify locations which are high-traffic and then map against where we currently have supplies from. As far as lab locations goes, there are multiple other considerations, which is real estate availability, plate size, logistics, accessibility, power conditions and so on. So the variables between lab and collection centers are very, very different. A collection center is fairly simple. The good news is that because of our, what you call, let's say, as we gain more experience in leveraging technology and develop science and art, our new collection center success rate is very good. They don't drop off the network very soon. In fact, we have a separate program to baby care some of the new collection centers. So we have a robust plan in terms of how do we identify locations, which is both evidence-based as well as some bit of intuitive and realistic knowledge.

Okay. So if a franchisee proposes to set up a lab in a location which is determined as not optimal, then we reject that. Is that true?

Indeed, okay. Clarification is, it's not a lab, it is a collection center. We don't typically franchise out our labs. So collection centers, yes, we reject a lot of the applications which come from unviable areas.

Okay. And approximately, is there any percentage like optimization accuracy, which is right now?

We don't have signs effectively, which I can't give you a number at this stage, at least in today's call. But yes, we can go back check and then maybe cascade it a bit later.

The next question is from the line of Prakash Kapadia from Anived Portfolio Managers.

Congrats to the team on a good set of numbers. These are tough times. So to deliver these numbers, good sign. So congrats to the team. I had 2 questions, if I can. In the diagnostic player's data, Dr. Lal has relatively lower COVID contribution to overall revenue. So are we better placed in FY '22 for predictability of growth, assuming the second wave has peaked in? Do we think that preventive packages will be preferred by customers and that could see increased contribution going forward? And secondly, if I look at the reference labs coming up in South and West, so what are we doing to create awareness, especially in Bangalore and Mumbai? And what's the plan by Dr. Lal? Because there is already a need which is fulfilled by organized player. So if you could share some insights on these 2 questions that we have, sir.

Okay. First question, contribution of COVID to our total business, I think it's a demand driven. We are looking to serve the demand as it comes. We are not trying to promote it unless we push these tests. So it is a function of disease spread. Some states are affected less, some are affected more. In some states, waves are [ coming before ] and some states later. So I think it's clearly a function of that. And also since we are the largest company in India in terms of base, and I think we've done close to INR 250 crores, which is the highest RT-PCR turnover in the country. That's my sense. I haven't got yet all the numbers in place. That as a percentage of, of course, total overall sales figure, this will definitely be lower because our base is very large. But having said that, it speaks to my mind, a function of whichever market we are strong. Second question is related to Bangalore and Bombay, whatever we are doing and how we plan to grow these markets. I think this is -- this COVID thing, what it has done is that people are now preferring more home collections. And home collection business is not a very easy business to scale. I think in that difficulty lies an opportunity for us. Because if we can execute this home collection service better than our competition, then I think we are home. And to me, home collection business actually has 2 broad components to service. One is that how tech savvy you are and I know that our DNA is not from technology, but I think we are moving rapidly on this path. And also our laboratory services' people, how courteous they are, how they deal with the patients, the entire customer service. To me, all this put together will act as a big differentiator. So to my mind, that is one big sort of opportunity we are seeing in both these markets at both Bangalore and Bombay because they are very discerning customers as well. And market size is fairly large. And we are seeing some traction in recent past, which is primarily driven by COVID testing also. And we are very hopeful that we should be able to track these places.

And part of the first question, do we think we'll see increased contribution of bundled packages? Would customers prefer that given whatever first wave, second wave has happened because there is definitely value proposition is better, and I think you mentioned, customers don't mind of additional debt? Have you seen that or do we sense that could increase further?

Yes. I think I missed that question. So as Bharath mentioned in his opening comments that our contribution of Swasthfit is steadily rising. It clearly shows as a pattern, this is going to fall in place. And I think about 19%, Bharath, it should be?

Yes, sir.

So 19%, 20% contribution on a base like us, which is close to INR 200 crore -- INR 300 crore business. It's a fairly large sort of a number, which is now coming from these packages. I think if I were to do a scenario analysis, all of us are including me and you are now much more health aware. We want to take care of our health very well. So overall, diagnostics is the first place to start because most of us have realized it is -- the health is something inside you not outside. So people would want to get themselves tested. So my belief is that this is definitely a tailwind for health packages to grow. Both directly self-prescribed as well as also even medical fraternity also would want many of these tests to be done when they are seeing a patient. So I think short answer is, definitely, it's a positive -- it's a favorable factor in times to come.

Sure, sure. That is helpful. And lastly, on the Eastern market, how is the trajectory projected because it's been, I think, 3.5 years, we started our reference plan? Is growth better there? Has it met our expectations? And next year should we touch INR 300 crores kind of revenue in the Eastern market? Hello? Yes. Are you connected? Hello?

Bharath, do you want to take it?

Yes, so I think we are very pleased with what we have achieved in East. It took us some time to ramp up operations in East of India. But I think revenue numbers are really robust and growth is really healthy. And in this COVID situation, KRL has established and carved out the name for itself in the markets it operates in. So we are very pleased with what has happened in the East. And that is something which -- the learnings of it is what we are also trying to -- we leverage in as we move forward in South and West as well.

The next question is from the line of Rahul Agarwal from InCred Capital.

Heartening to see non-COVID volumes bouncing back as well as higher dividends. Two questions. One is on the PSC and PUP side, I noticed PSC per lab ratio is heading up as planned. Last year, it was 14 now it's 16, where you ended March '21. I wanted to know the lab expansion plan as well as the PSC/PUP expansion plan for fiscal '22. So obviously, Mumbai, Bangalore are expected very soon, but if you could throw some more light on the balance next 10 months, what kind of labs we're opening. Is there any thought there? And what kind of PSC and PUP network goes up in fiscal '22? That's my first question.

Bharath, would you take this?

Sure. Thank you. Yes. So as far as the -- yes, you're right in saying that PSC and Pick Up contribution per lab has moved up. And this has been a conscious way we have been operating for quite some time now is to bring in leverage into our lab operations as well as servicing the market. As we look forward, and this we have demonstrated even with the lockdown period of last year, our lab expansion program continued without any challenge and so also our collection center expansion plan. We are leveraging technology on the collection center network. So there's a lot of stuff which has happened on technology enablement. And that is something that definitely helped us to have a far more accelerated collection center network opening program. Plan, I think our pipeline is robust. And like Om mentioned, apart from the reference lab, we'll also be putting up a network of satellite labs. In fact, some of them have got operationalized in South and West, and we continue to build upon this. So I don't think you will see us withering on our expansion plan, including satellite labs and also collection center and Pick Up Point network will continue. And the one thing which I want to state is while South and West also is a key focus area, there are still markets in Northern-East and rest of North which -- where we can still expand to. We can go deeper into the population or we can -- as cities expand, we can continue to expand within the city itself. So those efforts of identifying micro clusters and establishing presence continues unabated.

Got it. So could I say 50 labs a year, 500 PSCs a year is there, like just in terms of addition going forward, like 20% on PSCs, 5% on lab network, Y-o-Y? Fair number?

PSC network, I wouldn't like to commit a number to at this stage, 500 or 450, whatever it is. Last year, we achieved a good number. But yes, our effort will continue to remain at a very robust level because the other point of opening collection centers is we also need to baby-care them. There is no point opening collection centers and then shutting them after a year or so. So there is a lot of growth opportunity establishing, then it takes 1 year, 1.5 years to get them to shape. There are investors who are putting money to open these collection centers. We owe to them also to give it a full shot to succeed. So it's important to find out where the gaps, what are the full servicing suite, which you need to put in. We just start opening collection centers. There's a lot of marketing efforts which go into it. There's logistics, there's doctor connect. So the whole suite of market activation which needs to be put in place. So the thought will be to stabilize all of this and then build the next level. But the efforts continue unabated is what I would like to assure you of.

Second question is more to do with first quarter, April, May 2021, which we're going through right now. Earlier, my thought was we were picky in terms of where we want to do the RT-PCR in COVID business based on state pricing because they were deviating in -- higher in some states, lower in some states. But right now, my sense is it's pretty much regulated across. And as Dr. Om said, that even at current prices, given non-COVID support, we are profitable on COVID testing at current prices. So would that mean first quarter run rates actually are very, very large, if I compare it quarter-on-quarter sequentially in terms of RT-PCR testing? Like for example, if we did 450,000 tests this quarter, would it mean like we will be doing 8 lakhs, 9 lakhs a quarter? Because there is a situation that is actually worse of this time around versus the first wave?

No, no, no. I don't think we want to make any guess on this number because this is so volatile, so dynamic. Situation seems very vague. I don't think I would go into that area of putting a figure for the quarter. And we will supply the demand as it comes. But of course, we know that second wave has been very, very strong and peak has been very high. But accordingly, it is coming down as well in the last few days, that is what we have seen. So I think it's -- we still have 1.5 months to go. I definitely don't want to put a figure for the quarter right now.

[Operator Instructions] Next question is from the line of Sameer from Morgan Stanley.

If I remember correctly, our earlier focus on the expansion of the distribution was more towards TSEs, but a bit surprised to see that Pick Up Points have also gone up significantly, I would say, actually much faster than PSC, about 30%. So just your thought on that, what's really driving this?

Yes, I think what has happened is that we have done a few acquisitions through Pathlabs Unifiers. So they have very large Pick Up Point business and even a small Pick Up will also get valid. So that has -- also has contributed to this. And second area also has been that unfortunately, last 1 year has been extremely stressful for many health care institutions. Due to lockdowns, they have not been able to manage their load. So they actually always found some bit of outsourcing to be done through our labs. We were also able to service them better. So that also has contributed to this large growth. So some Pick Up Points want to ask to give us a sample. Obviously, we end up entertaining them. And Pick Up Point, a number per se is not a very sticky number. So it tends to fluctuate much more. From a strategic perspective, I think somebody asked this question in terms of labs and PSCs, we definitely want to improve the ratio between lab to PSC. And when I say PSC, this means our own as well as franchises. And this is one unit of growth that we really want to nurture because we believe that as the business moves towards very personalized service, home collection, the entire center of action is going to be Patient Service Center. And these Patient Service Centers are going to be franchised out, and we want to embrace this entire network through technology with us on a real-time basis. I think fundamentally, that's a direction we want to go. The Pick Up Points, I would say they are getting added because of the market forces and the demand coming in. Bharath, if you want to add something to it please do that.

No. I think you summed it well.

Just one more, if I may. And that is -- is there any role that the company is thinking of playing in the vaccination drive and your updated thoughts on the volumes that you are getting or you may get from e-pharmacies?

It's a good question, Sameer. Though I know that in the beginning, a lot of health care institutions or allied institutions like chemist shops or even pathology labs, it is usually seen that if we really want to widen the network of vaccination, some of us can also participate in this direction. I really don't know. We are actually definitely asked to do so, we will rise to that occasion. But there is a bit of a question mark at our end because there's a requirement of certain spaces to be done. You need to have a waiting area, then you have to have a vaccination area, then you need to have an observation area. And the person has to wait for half an hour there. And there is also a requirement for any adverse event that happens post vaccination. So the way I see it is that it actually, if we have to really scale up in a big way, then it is like building a new infra. And our phlebotomists, I'm not very sure that they're from a regulatory perspective authorized because actually they only blood -- they do collection. I think it will be more driven by the authorities actually come back to us saying that we want to now widen the vaccination network, driven by the guidelines that we get from authorities. But if asked to do so, we will not hold back. But from an operation perspective, I'm not very sure whether we are just there to do it naturally because we don't have too much of space. Collection centers are too small, 100, 150 square foot area. So I'm not very sure how we can manage all these 3, 4 rooms that are required. Adverse event, we don't know. And even if we do a tie-up with some hospitals, you need to have some kind of scale to even have some kind of ambience there. So I think operationally, it looks to me a bit challenging as far as I see. But if authorities want us to be involved, so we will definitely come forward and help the country and society if required.

Got it. For e-pharmacies?

Sorry, what was the question on e-pharmacy?

Are you seeing enough volumes? Are they scaling up on the diagnostic side? And can there be a funnel into your labs?

So e-pharmacy like 1mg and PharmEasy kind of guys, they can lead, is that what you say?

Yes. There were certain diagnostic services as well. So there would be...

Yes. I know I have seen this. Many of these guys on their own they have started diagnostics. Bharath, do you want to take this question?

Yes. Let me get this one. So we have tie up with all the large e-pharmacy chains, like 1mg and so on. So they sell our test packages and they give us the leads for us to service or they give us samples for us to give the reports back to them. So that is actually in place. Some of them are putting up their own labs. I think there are a couple of them who put up labs in Delhi, for example, Healthians and 1mg. Healthians is a fixed e-commerce player, but he has 1mg in it. So they are putting up their own labs. But -- yes, and that is something which we keenly watch. And -- but we are also building our own e-commerce channel for us to be able to offer services digitally.

Some of these guys actually got advantage during COVID spikes because there's always a spillover of demand from larger setup because the demand during this period went up so sharply, and it has come down as well. It's not that it's just staying there. It happened just for 2 weeks. Demand was so high. Most of us actually couldn't cater to it, whether it's D-dimer, IL-6. And I was just doing a math actually. It just went up 15x the normal rate. So there is no lab or nobody actually can meet this demand. That's what happened on the hospital side as well. But now it has come down as well. So there is excess capacity. I think some of these labs got benefit of the spillover demand. And since most of this demand was home collection and customers using tech solutions, so they did benefit out of this. So having said that, I think some of these guys are not to be taken lightly. So they are definitely competitors emerging in this space.

The next question is from the line of Surajit Pal from Prabhudas Lilladher.

Given the kind of situation has been evolved, kind of sectoral strategic shift could also happen. For the guys like Dr. Lal, whose presence was not that great in South and West, do you think that the current pandemic for the last 1 year, which could be going for next 1 year too, I know the presence of digital also helped you to expand faster over here, if that be the norm going forward?

Yes, if I were to sum up, I think there are more tailwinds for us to enter new markets than in the fourth quarter.

Brick-and-mortar volume...

And the tailwinds are coming more because tech solutions, tailwinds are coming because of people wanting to actually get the test done from reputed labs and all about it. And we're always looked around as good brand in the medical fraternity. And we were not that big B2C player, but definitely, we were a preferred player amongst medical fraternity. So the short answer is, definitely, it is an advantage post COVID for a player like us to go into new markets like Southwest. Now it is for us how quickly we leverage that.

Yes, right. One another question is, just if you could reiterate the contribution of RT-PCR and allied in Q4 and FY '21, I just missed it.

So I know there was some person trying to ask for FY '22 quarter 1 as well. And I'm really hesitant to comment on that because we still don't know what that contribution could be going forward. But historically, yes, Ved, if I'm correct, quarter 4 is 11.2%.

In RT-PCR.

So -- RT-PCR? I'm talking about total business, total COVID. COVID alone is very small last year. So -- and for the total year, it's about 18%. Ved, are you there? I think Ved has dropped off. So I think it's in that range about 11% for the quarter and 18% for the year.

[Operator Instructions] The next question is from the line of Kunal Randeria from Edelweiss Financial Service.

First question is I just want to understand a bit more on the stickiness of these COVID allied tests, especially D-dimer. Because there are some -- this vaccination -- one vaccine is associated with the blood clots and all. So do you see a longer tail to D-dimer until the vaccination is done?

It's a little technical question. I don't know if Dr. Lal can answer this, if he's on the call. Otherwise, I'll take a crack on this. Dr. Lal, are you there?

Hello. Can you hear me?

Yes, sir.

Hello. Dr. Lal?

Yes, yes. I can hear.

Can you answer this question slightly? I think the question which I thought was related to vaccination and D-dimer. So can you repeat the question?

Please repeat the question.

Okay. Okay. So my question is, I'm just trying to understand the stickiness of allied test, COVID tests like D-dimer. So with one vaccine being associated with blood clots and all. So I'm just wondering whether you will see a very long tail with D-dimer test.

See, first of all, this is a myth that 1 vaccine gives rise to blood clots, et cetera. It is well within it is -- something like 6 cases in a million have been spotted or something like that. That can happen with anybody. And the -- what you have to remember is it is not vaccine-related, but it is related to COVID. COVID itself goes and affects the blood vessels of the lungs, and that is what causes these kind of problems. There is no -- to me, no vaccination-related coagulopathy, as we call it, in India has been reported. But yes, they are on record, but they are insignificant. So the problem what you're asking is do -- so it's the COVID effect, it's not the vaccine effect on a large scale.

Okay. So if I were to understand, as COVID -- as it tapers down in India, some of -- these tests will also go down, follow the same trajectory.

Yes, yes, yes. That's very clear. To me, I think it's a fairly clear thing. It is -- these RT-PCR, IL-6, D-dimer, they are all linked to the trajectory of COVID. If the COVID goes down, these sales will go down. And that's why I'm a little hesitant to actually quote full year number because I still don't know what's going to happen in the future.

That's absolutely correct. It's like a sign curve. When the epidemic is on and the peak is on, now the peak -- second peak is now definitively coming down. So you will have a less testing of all these tests. And these are all follow-ups in any case. The post-inflammatory reaction to the virus. So they automatically come down. And the number of deaths in India, unfortunately, have not come down, but you will see them coming down, and you will see the effect everywhere.

Next question is from the line of [indiscernible] Investment Private Limited.

Over the last year, we've seen hospitals walk-in among patients have dropped. So in terms of the hospital tests coming down in favor of home collection, have we -- is there any texture you could link to what you're seeing from a data perspective? And as an extension of this, do we expect that once hospital walk-ins go back to normal level, there will be a reversal of some kind -- some stand-alone labs to maybe hospital-based labs?

I think it's -- there are 2, 3 things that you have mentioned. Hospital walk-ins have come down, that's correct. A lot of OPDs have gone online, which is also correct. So walk-in coming down does not mean that consults are not happening, consults are happening online. If I -- I have talked to a few colleagues of mine who run hospitals. They did mention to me -- in fact, most of us used to think that this is permanent shift and people will not come back. But when the COVID went down, a lot of people actually started coming back as well. Because there is a patient interface with the doctor face-to-face also have its own therapeutic aspect, right? So there is a tendency for patients to come back. So right now, since we are in the middle of this crisis, in wave 2, a lot of it is actually gone back online. I think your second question was will hospital labs play a big role. I think some hospital labs have already started home collection, but their reach is only within 1 to 2 kilometers area. So it's not something they decide to build a retail pathology network. We only service their own current patient base. So to that extent, they are doing some kind of home collections, hospital labs.

Yes, and if I may add, Om, to what you have said, when the COVID epidemic or pandemic is fully on, the people who suffered who are actually old patients of what we call the noncommunicable diseases, what we call comorbidities, people like diabetics with problems, hypertension with problems, cardiac patients with problems, cancer patients with problems, renal transplant patients with problems and other kind of problems, you know, strokes, et cetera, those people, they stopped coming. They -- nobody even actually entertains that because you are full of COVID patients. So it works both ways. The moment COVID decreases, these patients start coming back because they are on treatment. Imagine there's a patient of cancer who's on chemotherapy, therefore, the chemotherapy has been stopped. So he has to go back. So it is inversely proportional.

The next question is from the line of [ Himanshu ], an individual investor.

Congratulations on a great set of numbers. I'm supremely satisfied on how my parents were serviced by Dr. Lal during this pandemic. However, I would want to say one thing. You should focus catering tests through collection centers rather than labs because at the end, we are serviced by more than phlebotomists and suppose all the time [indiscernible].

[ Himanshu ], you said we should service our patients through collection centers?

Yes, because I will share the one incident. At one point of time, my -- I called the community center for my mom's RT-PCR test, but I got waiting period for more than 3, 4 hours. But once I came to know that there's a collection center around my home, so I called the collection and the service was the -- collection center was -- assisted me very well and they supported me even at night. So I just want to focus like why Dr. Lal is not catering sales to collection centers rather than labs?

Thank you for the input. Actually, that's our stated sort of way forward because the purpose of franchisee is to scale because otherwise, if we start doing it on our own, we can't scale this business. That's the reason why we have a franchisee. And then we want to actually embrace the entire franchisee network through technology, so that we are also able to see the entire customer experience at franchisee level. While you have had a great experience at franchisee, sometimes we also have cases other way around as well. But we want to keep the visibility of the entire experience customer is going through of our franchisees. But you're absolutely right. To scale this business, we have to go through franchises that's where we'll be able to go every bit and corner of this country.

Thank you very much. Ladies and gentlemen, due to time constraints, that will be the last question for today. I will now hand the conference over to the management for closing comments.

Ved, do you want to give vote of thanks?

Yes. So thank you, everyone, for being with us on this call today, and look forward to connect you again on our next call. Until then, I wish all of you and your family to be safe and healthy. I would now request the moderator to close the call. Thank you.

Thank you very much. On behalf of the Dr. Lal PathLabs, that concludes this conference. Thank you for joining. You may now disconnect your lines. Thank you.