Metropolis Healthcare Ltd
NSE:METROPOLIS

Watchlist Manager
Metropolis Healthcare Ltd Logo
Metropolis Healthcare Ltd
NSE:METROPOLIS
Watchlist
Price: 2 061.85 INR 2.32% Market Closed
Market Cap: 105.7B INR
Have any thoughts about
Metropolis Healthcare Ltd?
Write Note

Earnings Call Transcript

Earnings Call Transcript
2021-Q1

from 0
H
Harith Mohammed Ahamed
Vice President

Good morning, everyone. This is Harith from Spark Capital. On behalf of Spark Capital, I'd like to welcome you all for the call today. I thank Metropolis management for the opportunity to host this call. From Metropolis, we have with us Ms. Ameera Shah, Managing Director; Mr. Vijender Singh, Chief Executive Officer; Mr. Rakesh Agarwal, Chief Financial Officer.Over to you, Ameera ma'am.

A
Ameera Sushil Shah
MD & Executive Director

Thank you, everyone, and good morning to all. Thank you for joining us for the Q1 FY '21 earnings call, and I hope you and everyone around is safe and in good health.I'm joined today by Vijender Singh, CEO; and Rakesh Agarwal, CFO; and SGA, our IR Advisors. The presentation and the press release has been issued at the stock exchanges and uploaded on our company's website. I hope everyone has had the opportunity to go through the same.Let me first start by giving you a strategic view of where Metropolis is. We continue to focus on reaching normalized levels of revenue. Happy to share with you that June 2020 compared to June '19 was a normalized revenue month, in spite of multiple challenges in terms of continued lockdown restrictions, especially in our focused cities.Our efforts are geared up to increase our non-COVID business, which has seen a month-on-month improvement in revenues from April to June. The strong momentum continued in July, which has witnessed a mid- double-digit growth over June 2020.Our cost control initiatives and increased levels of testing in June 2020 has led to operating level benefits. We have thus been able to achieve a near normalized level of EBITDA margin in June 2020 in spite of contribution from COVID-19 tests, which is margin dilutive in May.We have increased our home testing services across focused cities, and are witnessing a healthy uptick. Happy to share that home visit sales grew by 2x as compared to previous highest, and July 2020 home testing revenues were the highest so far in the calendar year 2020.Our digital strategy is an important piece in our journey of upscaling revenues. We have gone live with a number of digital initiatives, and results so far have been encouraging, more so as it further strengthens the brand recall and equity of Metropolis.We are a 0 debt company with cash and cash equivalents. We have been successful in improving our working capital cycles even during these challenging times. This, therefore, exhibits that we can navigate even longer than expected in an economic slowdown, and the business fundamentals remain on strong foothold.Let me give you a quick update on our business. We started Q1 FY '21 with a twin approach of scaling up COVID testing as well as focusing to return to normalcy with increased levels of non-COVID testing.While lockdown affected revenues in the month of April 2020, we saw a revenue degrowth of 63% on a Y-o-Y basis. With increased testing, the pace of de-growth reduced to 27% in May 2020 on a Y-o-Y basis.With scaling up non-COVID business to about 70% levels in June 2020, which was the highest revenue month for the quarter, we were able to achieve last year June sales in current June, which means we returned to normal. Let me now share with you what we have done in Q1 FY '21 to strengthen the business on sustainable basis. Number one, we have focused on the home service opportunity. We clearly believe that home service as a method of sample collection is set to rise to further penetrate in the segment and capture the mind share of Metropolis with customers. We have strengthened the standardization and safety procedures for home testing to get increased level of comfort to customers. Each home visit has a stringent guideline and SOP with regards to PPE kits, safety equipment, material disposal, collection and logistics equipments. Second, we have rolled out our national apprenticeship programs scheme to encourage Phlebotomists to help us scale this piece of business. Three, in small towns and cities, we have tied up with agencies in a variable cost model so to scale the services on a capital light way. And overall, our focus in home testing is to grab a larger pie of the market while driving productivity enhancement at per unit and agent level basis. Second, what we have done is we have ramped up our digital and e-commerce initiative. Our digital strategy revolves on the premise of building a better brand perception, increase customer leads and create an unmatched customer experience from the journey of pre-test to after sales-service. Let me spend a little time on what we have done here. Increased communication effort to rigorous campaigns to assure customers on safety and hygiene of Metropolis centers and home testing services. Second, we've put a fully integrated website and app for online booking, multiple payment modes, digital support, support storage as well as enabling doctor engagement through digital medium. Third, we've introduced a symptom checker on the website and app as part of our initiative to educate customers. Fourth, we have done extensive communication efforts through social media platform to reach out to our target audience to make them aware of our presence for testing. Fifth, through our digital engagement efforts, we have substantially increased our brand equity, in the mind of consumers, as a trusted and reliable health care service provider and the early results of our strategy has been very encouraging where our call centers volumes have increased by 2x due to digital reach. Our daily conversion of 1,000 leads per day and there is a 2,000 -- 2x jump in website traffic as well. Overall, we are happy to share that we have reached 20 million audiences through digital campaign during lockdown. While customer focus is key at Metropolis, and other important stakeholders is also an important part of our ecosystem, we have spent considerable time during COVID to rope in and introduced new doctors to the service network, new hospitals and labs and also walk-ins. All this will enable us to create deeper inroads in the end market. Our efforts in testing during COVID-19 has got a tremendous engagement opportunities with government and decision makers, allowing us to play a more meaningful role in the Indian diagnostics journey ahead.We have been continuously working with our vendor network for renegotiations and better trade terms. As and when volumes come back to normalcy, the operating leverage may play sooner than later. We have put in extra efforts in terms of improving collection efficiency and cost management, which has resulted in improving our DSO days and working capital. Further, we have also ensured some part of fixed cost savings, we realized in Q1 FY '21, become more sustainable over a larger period of time. To focus on energies and time on M&A, we look for potential targets, which can help us increase our foothold in end market and leverage our brand equity to gain faster traction. And also increase employee engagement efforts for digital training modules, thereby creating new benchmark of performance. These were all the actions we've taken. With further opening of doctors clinics, increased schedules witnessed for critical surgeries, we are witnessing an increase in non-COVID testing in July 2020 and August as well. Having said that, the journey to normalized revenues in June 2020 has its own set of unique challenges, especially for us, given our position in the market. As you know, we are a player with highest revenue contribution from South and West India. During Q1 FY '21, this part of India was the hardest hit in terms of COVID outbreak, which resulted in strict implementation of lockdown, which was still not eased out completely as compared to other parts of the country. This severely affected our business, especially in focused cities such as Mumbai, Chennai, Bangalore and Pune. Second, Metropolis is built on the ethos of a large test menu, especially specialized one. However, on account of COVID-19, many specialized hospitals were converted to COVID-19 hospitals, leading to a reduced flow of samples from hospitals, clinics and OPD centers. And furthermore, specialist doctors have been engaged by municipal corporation in care of COVID patient on a mandatory basis, therefore, leaving non-COVID patients who need specialized doctors without as much [ space ]. Ours is the prescription-based business with higher share of acute care. This piece of the business has fallen more than chronic care, where the prescription is not needed by the patient. And local clinics and doctor operations were significantly reduced, and we have witnessed a drop in doctor meeting point, which is part of our B2C by 50% to 60%. This is one of the channels in B2C. Furthermore, COVID-19 resulted in only 25% to 30% doctors, offering consultancy on a full time basis, while the rest have engaged only on critical and emergency medical cases. A small but important part of our business is B2G samples, which is business to government, due to all India lockdown and air travel restrictions across states during April and May, the sample flow was negligible from our B2G business of NACO, thus impacting us. These challenges are further evidence of the fact that overall pharma market has been cut during the quarter, while chronic grew 8% month-on-month in June for the pharma markets, there was a sharp decline observed in the acute segment.Both segments, however, continue to gain in July. Our own revenue showed sharper dip in June 2020, [indiscernible] [ 32% and 29% ] respectively compared to North and East India, which dropped by 22% and 12%.The pace for resumption of economic activities and other consumer necessities has seen a faster recovery in North and East India as compared to South and this has certainly affected the Q1 revenue. Having said that, I'm happy to share that we have recovered handsomely in July 2020, wherein we witnessed a healthy mid-double growth over June 2020, and this positive momentum continues in August as well. As part of our employee reward program, the Board of Directors approved the grant of 206,700 restricted stock units pursuant to the Metropolis restrictive stock units plan 2020 to the eligible employees of the company and subsidiary. This is a new RSU plan initiated by the company, and as always is linked to KPIs and milestones being achieved. This scheme is applicable from June 2020. Let me conclude that we are hopeful on improving efficiency and strengthening business processes, cost structure management and increasing non-COVID tests. We will not only be able to return to pre-COVID revenues, but also substantially improve the product and enhance margins from June 2020 level.That's all from my side. I would now like to hand over to Vijender Singh, CEO to take you through some of the operational [ parameters ].

V
Vijender Singh
Chief Executive Officer

Yes. Hi. Good morning, everyone, and thank you, Ameera. Let me give you a perspective on our operational parameters. For Q1 FY '21, we reported patient visits of 1.37 million and conducted 2.65 million tests. Revenue per patient and revenue per test increased on account of high-value COVID-19 tests. On a like-to-like basis, non-COVID revenue per patient and revenue per test stands at INR 820 and INR 405 respectively.We have witnessed a very marginal drop in revenue per patient and revenue per test metric. This is also on account of lower contribution of specialized test for Q1 FY '21. Primarily due to low immunity patients suffering from cancer, kidney failure, neurological disorder and other chronic diseases avoided engagement with health care services, currently because of the fear of catching COVID-19 infection. Fear to step into the hospital still exists and people are deferring the procedures. With semi-emergency and elective surgeries marginally rising in July and August, still the numbers are 25% to 30% of the original volumes as compared to last year. As per various news articles and media reports, few major hospitals in Mumbai and other metro cities have seen a patient admission drop of 75% to 85% as compared to non-COVID-19 levels. This has led to decrease in test volumes and patients in Q1 FY '21, especially for specialized and semi-specialized tests. With easing of restrictions and economic activities coming back to normalcy, we expect that these metrics to come back to normal levels in Q3 FY '21. As guided in previous quarter, we had announced a onetime rationalization exercise. To this effect, we rationalized the bottom pyramid of network, which was counterproductive in our overall scheme of things. This onetime exercise expected to end in September 2020. Rationalization will lead to better productivity and efficiency as well as improvement in management bandwidth. Revenue contribution from closures of these centers were extremely low. Our revenue profile among focused seeding and other cities stood as follows. Focused cities, which is 5 cities, contribution has moved from 58% in Q1 FY '20 to 63% in Q1 FY '21 on back of increased contribution COVID testing in urban cities. Seeding cities, which is 8 cities has moved from 22% in Q1 FY '20 to 19% in Q1 in FY '21 while other cities contribution has moved from 20% in Q1 FY '20 to 18% in Q1 FY '21. Our B2C revenues in focused cities in Q1 FY '21 for non-COVID business was stable at 55%. Let me now give you highlights of test mix on volume and value basis. Including COVID-19 tests, which are part of specialized tests the volume and value mix for specialized test has seen an improvement. Volume and value mix of non-COVID specialized test has witnessed a drop on account of conversion of hospitals to COVID hospitals, postponement of surgeries and unwillingness of low immune patients to visit the hospitals. During the quarter, 5 new tests have been validated and added to the test menu despite the challenging times. Of these, 4 tests were added in chemistry and 1 test was added in the specialized category of molecular biology. I'm glad to share that we have been working very diligently on our supplier agreements and after having rolled out new agreement with Roche Diagnostics for improvement in routine test pricing and standardization across units where you will see -- units will see visible benefits in quarters to come. At Metropolis, our efforts are geared towards increasing the non-COVID revenue while enhancing the customers' experience and making Metropolis the customers' preferred choice for testing. All this while still maintaining a keen eye on cost optimization measures that can be done across all functional areas in our business. So that's all from my side, I'll ask Rakesh to take you through the financials.

R
Rakesh Agarwal
Chief Financial Officer

Thank you, Vijender. Good morning to everyone on the call. Let me give you a snapshot of our financial performance for the quarter. Happy to share that we have been able to surpass our own expectations that we laid down during last call. We had expected June to be at 75% of normalized revenue. However, improving market dynamics led to 100% normalized revenue for June 2020 vis-Ă -vis June 2019. On the revenue front, we have been able to scale up revenue from INR 25.4 crores in April 2020 to INR 68.1 crore in June 2020, which is equal to last year June 2019. The EBITDA losses of INR 10.6 crore in April 2020 has been reversed to a positive EBITDA of INR 17.2 crore in June 2020. Our margin moved to 11.2% in May, and to a more normalized level of 25.2% in June 2020. This is despite COVID-19 tests, which are margin dilutive in nature. As guided in our earnings calls in May 2020, we have been able to post higher-than-expected revenue in June, along with higher margin on back of cost rationalization program, where we are able to reduce fixed cost by 9%, semi-variable cost by 12% and variable cost by 21% and overall cost by 16%. Some of the fixed cost has been reinvested in strengthening our digital initiatives, increasing testing facilities and augmenting IT infrastructure. Therefore, 25% to 50% saving in fixed and semi variable costs may be retained in coming quarters also. On account of COVID-19 testing during lockdown, related expense and higher consumables for COVID-19 testing, our variable cost increase for June 2020 by 5% on Y-o-Y basis. Despite higher B2B revenue in Q1 financial year '21, we have continued to focus on collection efficiency and improved our debtor days and overall working capital days. Cash and cash equivalents as of June 2020 stood at INR 235 crore as compared to INR 223 crore in Q4. OFC (sic) [ OCF ] to EBITDA stood at 135%. For Q1 financial year '21, our revenue stood at INR 143 crores with EBITDA of INR 12.1 crore and a margin of 8.5%. Our EBITDA before CSR and ESOP cost stood at INR 13 crores with margin of 9.1% as compared to INR 55.6 crore for Q1 financial year '20. Our PAT stood at INR 2.9 crore with a margin of 2%. As lower revenue has significantly dented our margin profiles, we strongly believe an uptick in revenue will bring our historical margins back. That's it from our side. We now leave the floor open for Q&A. Thank you.

Operator

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

C
Chandramouli Muthiah
Research Analyst

So the first question is on the regional dynamics, which you touched upon a little bit in the opening remarks as well. The data seems to show that West and South India saw close to 30% impact in the June quarter and North and East were less impacted and a lot of that is not in our control. So could you maybe touch upon what sort of trends you're seeing in your key geographies in July and August? That would be really helpful to understand the forward path.

A
Ameera Sushil Shah
MD & Executive Director

Sure. As you know, health is a state subject, and therefore, while the initial national lockdown was recommended by the PM, as we know each state has made their own decisions around what kind of lockdown they will implement. What we have landed up seeing is that cities like Bombay, Chennai and now Bangalore in South India and, of course, many other cities, including Pune, Nashik and Nagpur, all Maharashtra based, have seen quite a strict lockdown from March because COVID started here in March itself. And therefore, we have seen a prolonged COVID crisis from March on an ongoing basis, it continues in August as well.Compared to this in some other states, especially in North and East, cities like Delhi, for example, have never really been fully shut down, like the way Bombay has been for the past few months. And on top of that, the crisis have started more around June and therefore, have gotten into control faster because of the involvement of center itself. So while this is what happened in Q1, I think what we are seeing in Q2 is July and August, we continue to see an improvement in the non-COVID revenue compared to Q1. And we also have to remember that our business is made up of lots of different pieces. So I just feel I can give you a little bit of understanding of the separation.So as we know, we have a B2G piece, which is also a non-COVID part and the B2G piece, which is mostly the NACO and the MCGM contract, as mentioned, did not come up to the full revenue potentials as we normally do because of the lack of air traffic, we are hopeful that the revenues which have been lost in Q1 will be try to make up in the balance of the year. Keeping that aside, if we look at the non-COVID business, which is separate from B2G, we are seeing definitely an uptick in August -- July and August compared to Q1, and we are hopeful that there will be some resumption to normalcy hopefully seeing that to come.

C
Chandramouli Muthiah
Research Analyst

Got it. That's very helpful. My last question is on the broader market environment, on the previous call, you mentioned that smaller standalone labs and smaller chains, maybe seeing the brunt of COVID-led volume pressure and maybe looking forward to more industry consolidation? So could you maybe touch upon this dynamic and what sort of conversations you're having on this dynamic, that would be helpful?

A
Ameera Sushil Shah
MD & Executive Director

Sure. So while we have seen -- I mean a lot of the small labs actually in the major cities of Bombay, Chennai and Pune, et cetera, continue to be closed. And therefore, they have not even opened yet because the lockdown is still in force. What we you have seen from midsized labs, which were the ones, which were usually 1, 2 or 3 in their market, we have seen an interest of labs to get consolidated or labs which have been functioning for the last 5, 7, 8 years and not been making money are definitely seen to have the part of some M&A. So there are a lot of reach outs coming. Obviously, at this point, there is nothing to announce. But there is a lot of discussions that these guys are initiating on -- for wanting to be acquired or wanting to merge with the larger players.

Operator

The next question is from the line of Bharat Shah from ASK Investment Managers.

B
Bharat Shah
Executive Director

I appreciate in very, very difficult and trying circumstances for the business to have done what it is done. And given the kind of resilience, Metropolis' distrait to deal with the situation. But I have concerns on operational and financial slippages. So last year, we suffered a financial loss on account of IL&FS exposure. We can say that a lot of other entities have suffered, but point is Metropolis did suffer for whatever it is. And we also witnessed operational losses in terms of non-recovery of hospital dues. I mean this kind of losses can damage the business performance. Therefore, tightening of these other areas is very vital. And I would hesitate to describe this as exceptional losses ,the way company has described because these are part of the business. And all of these, apart from the business have to be handled tightly.

A
Ameera Sushil Shah
MD & Executive Director

Thank you for your comments, Bharat. And I don't disagree with you that there are. I believe we could have avoided IL&FS, we would have been very happy, too. I don't think as a company, we are obviously in favor of losing our hard earned money based on our AAA graded investment. Unfortunately, that was something that happened to the best of the best in the country. And as a treasury management, we have outsourced our treasury management to the most reputable firm, based on grading of papers, we need an investment. And honestly, I think we will continue to outsource our treasury because we are not a financial services company. And therefore, it's not wise for us to start taking those decision internally. And what we can do differently is to change the treasury management company, if we can. And I think that we'll have to leave it to the experts to make that call as far as treasury management. As far as the hospital write-off, I don't disagree with you. It was a hit to the organization. The reason the auditor chose to put it as an exceptional item was because this is not receivables of 1 year, it was receivables of the last 5 years put together. And as we know, we have made that decision more as a prudent organization not because we have written-off anything, but we have only provided for us, considering that we had an arbitration and the arbitrations will continue for longer because of COVID, which we were expecting to finish actually by Q4 FY '21 -- FY '20. And since that did not happen, we decided to just provide for it as prudency. And we are still hopeful that the arbitration will go in our favor, and we may be able to write back this, but obviously, that is not completely in our control. And therefore, all we can do is [ laud ] our investors and stakeholders in a conservative manner upfront. And B, on the cautious side, which is what we try to do. I hope that's appreciated.

B
Bharat Shah
Executive Director

Sure. The second one is given the fact that, the toughest part of challenge in dealing with COVID-related disruption in all probability, probably is behind Metropolis. Do we think in a couple of quarters or so at a firm level in entirety both our business as well as margins would exceed the normal business last year?

A
Ameera Sushil Shah
MD & Executive Director

Yes, I think a lot of it depends on which quarter things come back to normalcy, which depends on the government's -- of state government's decisions. For example, at this point of time, while the time, the lockdown period stays to be August 31, there was a notification, which came out yesterday saying passenger railways are deferred for unlimited time line in the future.So I think a lot of it will depend on when normalcy comes back into situation. Ours, as you know, is a business of volume and operating leverage. If the revenue shows a difference of 10% or 20% more, you see the profit margins soon. So I think, it is for us, it is only about that, I think our cost management has been exceptional, we have done a really good job at keeping the ship very, very steady in very turbulent times, and now it is just a matter of revenue picking up, we have already come back to 100% of normalcy. I think in Q2, if we move into the positive zone, which we are very hopeful and certain that we will in a positive growth, I am absolutely sure that, that will definitely impact our margins in a very significant way. Is it going to go beyond last year's margins? For sure, in some quarters it will, because as you know even in last year where things were normal, every quarter-by-quarter, the margin profile is different. In quarters where the volumes are higher, we see a much better margin and quarters where volumes are lower like Q3, traditionally is a flexible quarter for us, and we usually see lower margins. The same way this year, we will see a different margin profile every quarter. If Q2 volumes pick up and continue, as we are hopeful that they will, I do believe that Q2 should be a good margin.

B
Bharat Shah
Executive Director

No, I think in a very difficult environment, this has been commendable in terms of the way business is dealt with it, and in a way silver line is that there are structural tailwinds because of sudden event like COVID, even though there is a near-term disruption it has caused, so on a long term probably puts business on a better kill, and better positioning, in terms of general health consciousness testing and what I view.

Operator

The next question is from the line of Sudarshan Padmanabhan from Sundaram Mutual Fund.

S
Sudarshan Padmanabhan
Research Analyst

Ma'am, my question is, you know, I think a really commendable job especially in the June month when I you know look at the numbers of COVID, which is almost 70% to what it was, but if I look at the COVID, I mean, a couple of things here. One is, we saw that the BMC has relaxed, the need for prescriptions being there for COVID patients. So I mean logically the assumption would be that, if anybody can test the volumes will increase. So number one. Number two is on the pricing side because of the volumes increase, do we see that the prices have come down and also you know the PPE kits and the associated cost coming down and number three on the rapid test because now several states have also said, given a go ahead for rapid tests. So are we there what is the kind of future that we are looking at? and in the context of, if I just look at the INR 2,000 to INR 2,500 a test, I mean back calculating typically we are running at around 300 to 400 tests a day. So can we expect this number to be substantially higher primarily say July, August and September?

A
Ameera Sushil Shah
MD & Executive Director

Thank you. Let me address those questions one-by-one. Number one, your question about BMC opening up testing, I think if the opening up of testing had been done in April, I think you're right, we would have seen the volumes completely fly. The reason it has not, is because I think somewhere the panic has come down, people have started resuming, not being constantly worried about COVID, and we have very surprisingly, we also expected that in a city like Bombay, we would see a great number of prescriptions, but that has not happened. And I think we believe it is because and it's not happened for anybody in the industry and we believe that is because the panic is actually subsiding and not increasing. The testing continues for COVID, but not at a crazy hectic pace, that we have originally thought that there was pretesting.On the antigen, what a lot of states have done is actually that one of the reasons why PCR testing also is not interesting, is because the antigen test has been promoted. Frankly as a medical services company, which put science before everything. Whole industry has their own concerns around the accuracy of the antigen results. And therefore you will find that most scientific players are actually not promoting the antigen test at all, because in comparison then ICMR has also said this. There is a very, very, large number of false negatives that come out of the antigen testing part. That puts obviously companies like us at risk because you give a negative result and if it's a false negative, you do not want to put that on your letterhead in your front.So I think people are being very conservative, labs are being conservative are doing antigen testing and that is also reducing the PCR testing. I won't say reducing, but stagnating the PCR testing because state governments are pushing a lot of consumers towards antigen testing. That is the second piece. I think the COVID test in Q1 could have been significantly higher as well, but in Q2, we will continue to see a good momentum for COVID testing. That does not come only out of Bombay, that comes across India. We are doing thousands and thousands of these tests per day, not hundreds, and we are getting business not only from Bombay, but from big markets in Delhi, in Chennai in -- from state governments all across the country. And we have also rolled out smaller PCR machines across the country in smaller towns to be able to take up the demand in these small cities which we have done in Q4.Just one comment on the antibody testing that is also an opportunity with corporate, that we believe will show some indication in Q2 and ongoing.

S
Sudarshan Padmanabhan
Research Analyst

Ma'am, on the pricing and cost for these tests as the volume becomes...

A
Ameera Sushil Shah
MD & Executive Director

Yes. So as -- what we have seen the government do and the state government do, is that every time there is a slight reduction in cost, they do come in, and bring the cap of the price is lower. So we have seen multiple divisions in every state bringing the price down. I think despite the fact that the price capping has been -- the prices have been coming down. We have been managing our costs very well on the back end. And therefore, we feel that we have been able to still make these tests viable for Metropolis and be able to add to the contribution margin of the overall company and not let them be adding to losses to the company, but they are definitely adding to the overall margin in general. We expect that this process of continuing to cap prices will continue by different states, and we will have to continue working at the back end to keep reducing our cost as volumes increase.

S
Sudarshan Padmanabhan
Research Analyst

My second question is on the pledge. So recently, you have raised some money to reduce the pledge. If you can throw some color with respect to I believe that this is primarily at the point where you had bought in your partner stake and that is when the pledge was created. So I mean if you can give the some sequence, I believe, I mean, some amount was purged during the IPO. So post IPO, how much was the loan amount that was remaining and how much we have purged? And whether we should be in a position to unwind the entire amount, say in the next couple of months or quarters or so.

A
Ameera Sushil Shah
MD & Executive Director

Sure. I'll give you the sequence events, and I'll be able to share some details with you that I've shared in the past. In 2015, I purchased the stake holding of Warburg Pincus, they owned 27% in Metropolis at the time. I took a loan from a structured finance company and I bought out Warburg Pincus' stake. I then proceeded to continue to pay interest on that money that I have raised until 2019. In 2019 April, when Metropolis went public, I chose to sell a significant stake of mine and to be able to get the capital to be able to pay off more than half of the debt, which I completed in April '19. I then went on in June 2020 as for my commitment to all investors and stakeholders to bring down the debt very significantly. I went on to pay off majority of the debt. Currently, I have left about only 2%, 2.5% of my shares pledged, which as you would appreciate, is a very, very insignificant amount. So therefore, the loan amount, as you can imagine, is much, much smaller because that is the collateral cover-to-cover for it. At this point of time, I do not feel that there is a risk or any worry that I need to pay off whatever small stub of loan that there is and the pledge is not high at all. It's very, very small, it's 3.5%. And therefore, I feel quite comfortable where I am. As and when I feel that, that is something that I want to let go off, I will do that, which may not be necessarily in the coming future.

Operator

The next question is from the line of Susmit Patodia from Motilal Oswal Asset Management.

S
Susmit Patodia;Motilal Oswal;Analyst

I continue to be amazed at your disclosure levels. My first question is on -- you've outlined about 3 or 4 tech initiatives from Oracle NetSuite payments to -- are they talking to each other? Is my first question. If you could just give us a little more detail about the second initiatives that you've done, that would help us.

A
Ameera Sushil Shah
MD & Executive Director

I'm sorry, could you repeat the question? Can you give us more details about what initiative?

S
Susmit Patodia;Motilal Oswal;Analyst

The tech initiatives that you've outlined in your presentation.

A
Ameera Sushil Shah
MD & Executive Director

The technology initiative.

S
Susmit Patodia;Motilal Oswal;Analyst

About -- yes, about 4 initiatives, I think inventory, Oracle NetSuite, home visits and payments. So are they talking to each other? What exactly and how are you integrating them?

A
Ameera Sushil Shah
MD & Executive Director

So I'll just make a couple of comments on it, and Rakesh will probably know more and he can jump in. Absolutely, they're all talking to each other. The idea is to make everything cloud-based. So that is all integrated. The Oracle NetSuite is now live. And corporate portal is live, the Home Visit app is live. These are all things that are in work in progress in the last 3 to 6 months. There are couple of -- there are more initiatives that are still in process. One of them is what we call as -- it's an Inventory Management Suite, this will go live actually this month. Based on which, we will be able to have even better visibility of consumption and tracking per test, which will allow us the information and the BI required to be able to take more stringent initiatives on managing our material costs bigger, which is the biggest cost on the P&L, and we'll be able to manage that better we believe. We also have a couple more portals coming up. And yes, everything will speak to each other in an integrated fashion. Rakesh, Vijender, if you want to add anything?

R
Rakesh Agarwal
Chief Financial Officer

Yes. So basically, as Ameera said that we -- this all the integration whatever we have been talking to each other and, obviously, making our life very easy and to control very efficient. So that is the whole purpose of ensuring that this all the [ SRs ] are up and running, all the systems are up and running. Just to give a flavor, Oracle NetSuite is a financial system. We had an old financial system, which was not very trendy. So now we have changed this to Oracle NetSuite, which will really give us more operational benefits. This Oracle NetSuite is integrated with R&I, which is also live now, which is a billing platform. So earlier, we were having [ platform ] in billing, now we have changed it to R&I, which is a much, much newer version of how can we do the billing system.

A
Ameera Sushil Shah
MD & Executive Director

R&I is registration and invoicing system.

R
Rakesh Agarwal
Chief Financial Officer

Yes, registration and invoicing. So this is talking to Oracle. The R&I is also talking about Home Visit. The Home Visit app is now up and running, which basically starts from call receiving to scheduled delivery visits, payment status and reporting everything, so that everything is in the flow, that is again talking to R&I as well as NetSuite. And there is a StockOne which has gone live in the first phase, which basically the inventory management. So now that full inventory will be system-driven. The consumption, the monitoring, the ordering, everything will be a system-driven. So all this taken together will actually give us a lot of leverage and a lot of visibility on the whole operation, which will definitely convert into making our operations more efficient and leveraging the whole piece.

A
Ameera Sushil Shah
MD & Executive Director

So as we have mentioned for the last 2, 3 quarters, the technology is going to be very much a backbone of making ease of business, getting the visibility and therefore, the efficiency. Just to give you an example of the kind of efficiency we are talking about. If you take something as simple as a call center, where you have these housed in multiple locations all across the country. Some of it internal, some of it external, in terms of outsource to players. Often what you find is when call volumes increase or decrease, you are not able to optimize all the different people sitting at different location. And therefore, if you have the enough, the right technology to be able to consolidate all of them together in one location, you are able to optimize those people and their hours in a much better way. This is just a very simple example of the kind of efficiencies that we believe technology will drive. And this now will push across many areas, including inventory, people, financial controls, cash management, et cetera. And therefore, we believe that there will be a lot of potential areas that now we have the information, we can actually act.

S
Susmit Patodia;Motilal Oswal;Analyst

My next question is on the cutting the tail of the service centers, as you have outlined that by September, it will be done. When do you think the company gets back on the growth path on additional service centers? And if you could give us some flavor from a 3-, 5-year perspective, that will be helpful?

A
Ameera Sushil Shah
MD & Executive Director

So Vijender, do you want to take that?

V
Vijender Singh
Chief Executive Officer

We've been talking about this particular subject on rationalization of network since Q4 of last year. And that was basically our plan, and it was not just a plan that COVID is going to come and hence, we've taken this stance. This is pre-COVID because ultimately, we have to really go back and bring hygiene, and that's what we thought that we need to rationalize. So in Q1 of this year, we've rationalized almost about 140 centers. And it looks like that in Q2 also, the number would be similar to the same. And Q3 would be the time where probably we'll come back with a new plan. And we'll take a sort of next level of expansion in an aggressive way. And next 4 to 5 years, definitely, there's going to be exact or even more than that in terms of our expansion. That's what our target is.

S
Susmit Patodia;Motilal Oswal;Analyst

Sorry, sir, how much did you say? I'm sorry I missed that numbers. How much...

V
Vijender Singh
Chief Executive Officer

In next 5 years.

S
Susmit Patodia;Motilal Oswal;Analyst

Okay. Last question for me. Ameera, are you changing the franchising terms? Is there any change that's going to happen from October? Is that what your reference is to?

A
Ameera Sushil Shah
MD & Executive Director

No, currently, we have not envisaged changing any financial terms. While we expand the network, yes, it may happen under a different model, but that isn't finalized at this point.

Operator

[Operator Instructions] The next question is from the line of Jeetu Panjabi from EM Capital Advisors.

J
Jeetu Panjabi;EM Capital Advisors;Analyst

So two questions. One, when you're looking out of the other side of COVID, say 2021 onwards, are there very significant structural changes you expect in the business, either in distribution or in processing? Or any part of the chain that you expect will be completely different, and thus, you prepare for that today and gain a competitive advantage to that?

A
Ameera Sushil Shah
MD & Executive Director

Yes. I do expect that there will be a change in the way consumer deal with us, which is there was a traditional way, which will be walked into centers, they walked into doctors' offices and they engage with us in a very physical ways. While I do believe that will continue, I think there will be a percentage of customers who will now say, I would prefer to get a home service and the same way there will be a percentage of customers who will want to go for teleconsultation. But it's still early to determine what percentage is going to be. And therefore, it's difficult for me to ascertain whether it's going to be a structural switch or just an incremental transition. The reason I say it's early is because when we go to doctors today in Bombay, for example, and ask them the question, that look post 31st August, are you going to practice normally? They themselves don't know yet, and I think people are still figuring it out as they go ahead as to how they are going to behave, how they're going to change their clinics? Are they going to continue to see as many patients? Are they going to do half teleconsultation, half physical. So I think a lot of it depends at the end of the day on the behavior of doctors because our business is dependent on them. My sense tells me that we will see an incremental shift in the short term -- short to medium term. And potentially a more structured shift in the medium to long term. Health care is not an industry which transitions very quickly. And even with crisis like COVID, people tend to go back to certain habits. So that's my sense.

J
Jeetu Panjabi;EM Capital Advisors;Analyst

Okay. The second question is, was there a bit of a backlog in the demand or the demand for services that came out in July and what you're seeing now as well? Is it kind of saying people deferred testing and then came in all-in all of a sudden? Do you think this is back to normal for good?

A
Ameera Sushil Shah
MD & Executive Director

Again, very difficult to distinguish, but I can tell you what we are sure of. What we are sure of is that, in the most of the first quarter in April, May June, like Vijender mentioned in his speech, consumers or patients who had some immune compromised comorbidity, either they were a heart patient or cancer patients or neurological issues or kidney failure or whatever. They are being very, very, very careful, and they continue to be very careful because they're very worried about catching infection. So let's say, if a cancer patient was regularly doing tests every month, a cancer patient chose not to do test every month because they were worried about coming in contact with any health care services, considering that health care services has been exposed to COVID infections and patients.So for example, now whether those tests for those 3 months will be done very fast later, I don't know, depends on what the [ top notch ] treatment protocol will be for that patient and diagnostic protocol. My sense is that some of that demand of the first quarter would be lost forever. And some of that demand would have been deferred to Q2 and Q3. And I say Q3 also because Q2 continues to be under lockdown. And therefore, we are not going to get that sudden surge. What we have seen in July is not in a sudden surge of business, we believe it's a more normalized assessment business. If a surge is going to come, it will come in September onwards.

Operator

The next question is from the line of Bhaumik Bhatia from Aditya Birla Sun Life Insurance.

U
Unknown

And congrats on a good set of numbers in these challenging times. One question. First question was regarding -- just a confirmation. You mentioned that the promoter pledge overall is down to 2.5% of equity, right, which used to be about 17%, 18% as of June. Did I get it right?

A
Ameera Sushil Shah
MD & Executive Director

That's right. That's right. As of June, it was about at 18% to 19%, which is now down to 2.5%.

U
Unknown

Okay. Great. And secondly, on the cost front. So you mentioned in the presentation and you actually said in the opening remarks also that there is a significant cost reduction that has happened on fixed, semi-variable and variable fronts. So maybe if you could highlight a little more in terms of, you also mentioned that 25% to 50% of fixed and semi is sort of sustainable going forward. If you could put some numbers and as things normalize, what percentage of the overall costs are you actually looking at in terms of sustained reduction? And what that does to the margin profile going forward?

A
Ameera Sushil Shah
MD & Executive Director

Rakesh, you want to take that?

R
Rakesh Agarwal
Chief Financial Officer

Yes, yes, sure. So see, what we have said in our earlier earning call that we are looking at all the cost-saving measures. And obviously, there are 2, 3 parts to it. One is that because of the sales coming down. So then there were some costs, which actually reduced by itself. Then we did some intervention and because of this, some costs came down. And because we were very minutely looking at each and every costs, we see some opportunity here and there where -- which we could have reduced. So these are the 3 components of cost reduction, which we took when we took it in March end. So now out of these 3 components, first component is basically because of the sales going down. Now, as we go to normalization, this cost will anyway increase because of sales going up. So all the other utilization will go up, so we'll see the cost increase. The second part when we went ahead and did a lot of rationalization in costs like going to the landlord and cutting down some cost and so on. So now those will start coming back because of the normalization of business. So that is number two. And number three, where I said that we have seen some smaller opportunities here and there, we did certain activity because of the cost came down. So that was a permanent thing which we did because that will also help us in the future. So therefore, what we are looking now is that whatever we did in quarter 1, at least 30% to 40% of that, we will see that, yes, that can continue as we go along. So that will be efficient in building in the system. And you are right that yes, some part of this efficiency will result in good and our margin being a bit higher. So that is something which we are looking at as of now. And you will see in the coming years also.

V
Vijender Singh
Chief Executive Officer

And also, I want to add there is, during COVID days, there were exceptional costs, which were related to our staff, especially on the transportation side. Now since there is an improvement on the normalcy in transportation -- public transport. So that cost also will get reduced. Second is on, on certain business models, also we are working on a hybrid model where that model would be cost efficient. And in the long run, it's going to pay us back in terms of savings.

U
Unknown

Okay. But is it possible to sort of quantify it on an overall percentage of revenue and percentage cost because we don't know -- we don't really know what base we are talking of, right? Let me say that see fixed costs are down by 12% -- 9% or semi-variable by 12%. So -- And it's very difficult to actually make meaning out of this. So is it possible to sort of quantify it?

A
Ameera Sushil Shah
MD & Executive Director

Maybe we can come back to you on this. We can run some internal numbers and come back.

U
Unknown

Sure. And secondly, when you say variable costs are down by 21%. And then in the month of June, they're up by 5%. So is it better negotiations with the vendors that is bringing this down? Or how should one read on the variable front?

V
Vijender Singh
Chief Executive Officer

So variable cost obviously goes down with the revenue going down. So as you see, if you look at our June revenue, our June revenue was at par with what we had done in last June '19. So ideally the revenue -- the cost should not have gone up. You know the...

U
Unknown

Understood. So you're talking more on an absolute. Sorry, you're talking more on absolute basis. Understood. Got it.

Operator

The next question is from the line of Nikhil Mathur from AMBIT Capital.

N
Nikhil Mathur
Associate of Small Caps

My question is on the COVID testing. If I understand correctly, as COVID testing is more operating expense heavy versus the non-COVID business. So this takes me to question that if, say, over the next 12 to 18 months, if the COVID tests are here to stay, the only way that the margins can be improved is by improving the gross margin. And if the government keeps cutting down the ceiling price, is there a way for you to improve gross margins maybe through better supply procurement terms with your vendors like it's done in the non-COVID business?

A
Ameera Sushil Shah
MD & Executive Director

That's right. So as you would see in our speech as well as the presentation, we talked a lot about renegotiation with vendors. We also have to remember that the COVID revenue is now classified with 3 different varieties of steps. In the first quarter, it was primarily PCR. But now going forward, it will be PCR, antibody and antigen. And therefore, the gross margins on each of those COVID products will also be different. But overall, as a strategy, we are negotiating with vendors. So there are operational practices, which we can do, which can manage our costs better as well. And this is where our expertise of how to manage volumes and how does that economy of scale comes through those ways of actually managing the business. So yes, we do believe that even if prices do become lower in Q2 and Q3, we believe that we'll be able to work on the back end to be able to protect the margin. And hopefully improve the margin as we go. As we said in June, we've already reached about 25%, 26% EBITDA overall as a company, and that's a combination of COVID and non-COVID revenue. Clearly, that indicates that COVID -- the non-COVID EBITDA margin is much higher, and the COVID EBITDA margin is lower, which is why it's giving you a blended of 25%, 26%, which basically means for the non-COVID business, and it's very difficult to separate because you're using the same infrastructure. But overall, clearly, that it is adding to the margin.

N
Nikhil Mathur
Associate of Small Caps

Okay. Sure. And my second question is on the service collection network. Now it has come down, and it was mentioned in some of the comments that it was a pre-COVID strategy. So what I'm trying to understand here is, are those cost benefits -- so I'm assuming that at an EBITDA level, certain losses are being incurred in these service centers, and hence, they have to be rationalized. So are there any cost savings which have already been realized in this particular quarter? Or it's going to be more out of effect that will happen in 2Q or in second half of FY '21?

A
Ameera Sushil Shah
MD & Executive Director

I'll just comment on it and Vijender can take the question. Look, as you know, our collection center network is asset light, which means it is mostly done by third party. And we ourselves only run about 250-odd collection centers. So out of the rationalization, we rationalized some of our own collection centers. I think about 10 or 15, if I'm not mistaken, of our own collection center we rationalized and then we rationalize the rest for our franchise. Now with the franchisee, while we don't make any capital investment. And we bear the rent and do it by hire a manpower and they pay the electricity. We do bear the cost of logistics, of branding, of sales, of courier, of consumables.So when there is a franchise, who is doing less than optimum revenue, your sales guys, your marketing, your courier, all of those costs are still being allocated towards that franchisee, even if the revenue points are very low. So the point was very simple, that let's go to the bottom of the pyramid and let's take out the guy who, over a period of time, have not been able to build the size of the business. And let's use that manpower and that time of management towards new franchisees who have a potential to grow fast. Vijender, anything you want to add to that?

V
Vijender Singh
Chief Executive Officer

Yes. So if I answer this in 2 ways. One is tangible benefits and another is intangible benefits. So when -- as Ameera mentioned, that we have sort of rationalized about 11 company-owned centers. So there you get to direct tangible benefits. And this quarter itself, we're going to see the benefit coming to us. On the other side, I think it's more to do with intangible benefits, which ultimately helps us in maintaining our sort of hygiene in the market and also cleaning up bad centers and giving matches to the fraternity that Metropolis still believes in quality and certain SOPs to be followed so that is what the whole objective was. But definitely, there was savings in terms of supply of consumables, logistics, but that's not too significant to be quoted.

N
Nikhil Mathur
Associate of Small Caps

Okay. And just circling back to my first question. Can you help us understand the supply situation of the RT-PCR testing kits now? I mean, globally, the number of cases are still going up. So is the supplies some sort of an issue for you to realize better procurement terms?

A
Ameera Sushil Shah
MD & Executive Director

Not at all, actually. I think the supply issues have been reasonably sorted since April, early May. So I don't think we've had any supply chain issues in terms of disruptions or in terms of costing. I think there's a good number of new vendors, which have come in to -- and which are approved by ICMR, to be able to create some competitive tension. We were very cognizant of the fact that in March itself when COVID broke out, and there were some companies which were going in making large capital investments in setting up capacity of COVID, we realized very early that this is going to be a phase, it is not going to be an ongoing business. And therefore, we said, okay, we are not going to spend crazy amounts of CapEx for a 3-month or a 6-month opportunity or a 9-month opportunity. And we were quite prudent about what CapEx we spent. So I think we disclosed this in the last earnings call as well that I think we have invested some INR 1 crore or INR 2 crores thus far and it was not significant at all. And therefore, whatever capacity we have set up, we have actually set up in a way where we have not invested too much money. Because we knew that this would be a 6 to 9 months and the ROCE on that capital will be poor, therefore. And I think managing to build the capacity we have without incurring that capital investment, I think it's a good job done by the team and there's enough options available to be able to create that competitive tension.

Operator

The next question is from the line of Neha Manpuria from JPMorgan.

N
Neha Manpuria
Analyst

Ameera, we have seen some rationalization of collection centers. As we see the home volume pickup, at what point do we require the change in the existing cost structure and therefore, more rationalization of the collection centers to have an optimal mix and a profitable home health care business?

A
Ameera Sushil Shah
MD & Executive Director

We already have a profitable home health care business. I think if we would see theoretically, if we would see out of our B2C business, which is about -- overall, about 45% of the total revenue and about 56% -- 55% of the focused city business. If we were to see a 30%, 40% move to home services, I think we could possibly see a better margin profile from a home services perspective. But then obviously, we will have to take a call and say, look, it's 30%, 40% of the business moves to home services, how many centers need to be rationalized to keep them productive. So I think those -- that reality is not clear yet. And honestly, I don't believe it is going to be a transfer of business in our own pie. I believe that the pie is going to get bigger because of the structural changes and more business is going to come to the organized players like Metropolis. So it is not going to be our brick-and-mortar moving to home services, that is going to be unorganized players brick-and-mortar moving to home services or practices is my estimation of what's going to change. And obviously, that's not going to happen 100%, but I believe at least a significant percentage of that, hopefully, will convert to the organized players.

N
Neha Manpuria
Analyst

And currently, the home health care would still be a very small part of your volumes, right, despite them doubling in the quarter?

A
Ameera Sushil Shah
MD & Executive Director

It's not a very small part, they are becoming more important, but we are hoping to obviously make this a more critical part of our revenue going forward.

N
Neha Manpuria
Analyst

And when you say to home health care is still profitable for us, is it because of the point that you've mentioned that the cost base for this is semi-variable instead of fixed?

A
Ameera Sushil Shah
MD & Executive Director

That's right. Our home service model has always been semi-variable much before COVID days, that's the model that we followed. But I think fundamentally, because especially in focused cities, we are not paying for the rent, which tends to be expensive of a center, you are not paying for the full-time staff sitting there regardless of the productivity. See, if you have a center where you have 50 patients walking in every day, a center or physical brick-and-mortar center will be hugely profitable. But if you have a center where you have 5 to 10 patients walking in every day, you'll find the home service technician to be far more productive. So really, it's a revenue game and it's a productivity game, which is why I was saying that I don't believe and considering the organized sector is such a small part, still only 10%, 15% of the whole industry. I don't believe it's going to be a shifting of business between in our own pie. So hopefully, I think the situation we would like to see is obviously that there is much more walk-in into the brick-and-mortar as well as the movement to home services from the [ outset ].

N
Neha Manpuria
Analyst

Understood. And my second question is on the specialized test portfolio. Now I understand that this quarter, the revenue mix seems high because that volume is more emergency and must have stayed on even though the routine test fell off. But as -- if you look at occupancies in hospitals, they still are not normalized or no way close to normalized. So over time, do you see the specialized test lagging routine, especially as we recover?

A
Ameera Sushil Shah
MD & Executive Director

Not really. Look, I think it's just a matter of months. I think if you look at it on a very short-term basis, a quarter, yes, you may see it continuing to lag if the lockdown continues until -- obviously, continues until August, but it will continues into September as well, you will see that lag. But otherwise, I mean, if you look at it more from a 6 months to 1 year basis from now, I don't believe the specialized testing lag effect.

Operator

The next question is from the line of Anubhav Aggarwal from Crédit Suisse.

A
Anubhav Aggarwal
Associate

One question is on structured trend of gaining share from the smaller labs or midsized labs. So I'm just trying to understand that how aggressive we are in, let's say, communicating to the customer of a -- let's say, one is the normal preference of the customer changing over a period of time versus the accelerating that shift. So what are we doing there because I remember, we have reduced our sales and promotion or which are other ways we can make it exclude that shift?

A
Ameera Sushil Shah
MD & Executive Director

So we have moved our sales and promotions from traditional below the line activities, right? So what are the kind of activities we did before COVID. We did a lot of camps, for example, below the lines, where in each of our collection centers as we would do a camp, which will allow patients to come and experience our services. That is a big part of our revenue. We would do a certain amount of radio jingles. We would do certain amount of promotional flyer. There is a lot of -- some amount of commercial marketing in terms of e-mailers and mailer campaigns, et cetera, we were doing. What we have done post COVID is move a lot of those costs, while we have spent similar amounts of money slightly less, we have moved those costs more into digital applications because everybody is sitting at home. Therefore, a lot of the other options don't become sensible at this point in time. Digital spend makes much more sense. So we have started moving it. And yes, there is a very clear communication to consumers, talking about the hygiene, quality, safety protocols of Metropolis. There's a conversation around COVID. There's a conversation around non-COVID because that is the core of the business.So there is very much -- some amount of push. But of course, the amount of media and amount of PR that diagnostic testing and good quality diagnostic testing is anyway getting, we believe it's not just a push but also approach.

A
Anubhav Aggarwal
Associate

So I appreciate what changes here, but I'm still asking that is it like -- do you think you were doing enough to accelerate that shift? I mean, still a lot of things have gone to customers, let's say, when I shift around, a lot of people do not even know what is NABL testing or what is CAP acquisition means, do the normal people really understand that. So just trying to understand that are you doing enough? Do you think that?

A
Ameera Sushil Shah
MD & Executive Director

No, I don't think the industry is doing enough. I don't think any player is spending a disproportionate amount of their revenue or cost on sales and promotions for differentiating a good quality labs from bad quality. If we were to do that, it would definitely mean that we would disrupt the P&L for a significant number of quarters. And honestly, we don't know for sure whether -- at least pre-COVID, we did not know that even after spending that money, whether that shift would happen because you have to understand this is not the consumer making the decision alone. This is a joint decision between the consumer and a doctor. And usually, the consumer's opinion is 30%, 40%, and the doctor's opinion is 60% about where to go to testing. So in pre-COVID situation, if the doctor was going to say no go to this local lab for whatever reason, and the patients would say no, no, but I've heard about X, Y, Z lab, it would still not work. In a post-COVID environment, we still don't know the consumer and doctors strength of wealth. Consumer voice, we believe, will be enhanced and stronger, but we have to still determine how much money is worth spending in this time towards consumers because also we have to realize that if they are deferring their health care requirements, spending money today for a health care need, which will be 3 months later, is again not a wise way to allocate properly. It makes more sense to spend that money when actually there is a health care need. So I think we will wait and watch for the next month or so and then make probably more bolder call.

Operator

The last question is from the line of Keshav Lahoti from Angel Broking.

K
Keshav Lahoti
Analyst

As you can see that non-COVID business is rising month-on-month when it was almost 70% in June. What would be that number for July month?

A
Ameera Sushil Shah
MD & Executive Director

I don't -- can't give you a specific number yet because we're still crunching the numbers. But I can tell you that from what we have seen, it is significantly more. Again, you have to -- if you're separating out the NACO-B2G government business and you're looking at money domestically, I would think there's a big -- there's a big shift up.

K
Keshav Lahoti
Analyst

Okay. One last question from my side, as you can see that COVID testing is rising in India. Is my sense correct, the rise is happening, but it is more government is gaining the market share, more of the test is happening on the government side. And probably, you might be also getting some business of COVID from government in the Q1 and probably government might reduce outsourcing it to players like you, instead they might know it internally as they are also creating their infrastructure?

A
Ameera Sushil Shah
MD & Executive Director

Sorry, I couldn't hear your question fully, but I think your question was about government testing. While in quarter 1, we did see the government had much lower capacity. Therefore, government -- state governments were outsourcing more of COVID business to private players. In Q2, they have each built some more capacity. And therefore, the ratio of the amount of government testing to private testing has increased from what it was in Q1. But of course, the market has also expanded, like we said, PCR testing in Bombay, et cetera. So we are not seeing a huge increase in COVID number, but we have not even seen a dip. I would say there is a gradual increase. I'm talking about COVID PCR because antibody is separate.

Operator

I would now like to hand the conference over to Ms. Ameera Shah for closing comments.

A
Ameera Sushil Shah
MD & Executive Director

Thank you, everybody, for joining us today on this earnings call. We continue to remain excited about the business. And of course, with the COVID crisis, as Bharat bhai mentioned as well, we see a big structural change going forward in the industry, and we believe we are poised to take advantage of this. Some of these things obviously are not going to work out quarter-to-quarter, but more from a medium to longer-term basis. But even quarter-to-quarter, we are very excited by the cost management we have managed to do and we'll continue to do the technology implementation that we've done, which we believe will bring visibility, analytics and therefore, efficiencies for us to act on into the system. And we are also excited about the fact that our revenues have come back to normalcy. And we believe Q2 will give us a much better uptick compared to Q1 as the July and August momentum is demonstrating to us. And therefore, we are just looking forward, I think, to this next quarter and to the rest of the year, which we believe will be quite exciting. Thank you so much.

Operator

Thank you.