New Delhi, July 9 -- Redcliffe Labs, the LeapFrog Investments-backed diagnostics chain, is targeting aggressive expansion by growing its presence beyond metro cities and acquiring diagnostics labs to build a comprehensive healthcare services platform, a top executive told VCCircle.
After divesting its IVF business, Redcliffe is now singularly focussed on building an integrated diagnostics chain encompassing pathology, including both offline and home collection, and radiology.
The company is also expecting to achieve EBITDA breakeven in the fourth quarter of this year, co-founder and CEO Aditya Kandoi told VCCircle. "What has changed in our thinking and approach is that we want to be more aggressive, given how India is embracing preventive healthcare," he said.
Redcliffe Lifetech Pvt Ltd, which operates the New Delhi-headquartered diagnostics network, is "taking a punt" at opening labs in tier II, III, and IV cities where there is a dearth of access to quality diagnostics, Kandoi said.
The company recently opened a lab in conflict-hit Imphal by partnering with a doctor operating a radiology centre and adding pathology services to provide comprehensive diagnostics. Kandoi said the lab has grown rapidly over the last two months despite the challenging environment.
Redcliffe is also launching a lab in Tripura, where it already has a presence in Agartala, and is in the final stages of setting up a facility in Jorhat, Assam.
"The northeast and east are priorities because the per capita availability of quality medical access is extremely low compared to other parts of India," Kandoi said.
Background, fundraising
Founded in 2018 by Dheeraj Jain and Kandoi, Redcliffe operates in over 220 cities through more than 80 labs and offers over 3,600 diagnostics tests. Jain serves as the company's non-executive chairman, while Kandoi is the CEO. They collectively hold about 19% of the company on a fully diluted basis.
The company's subsidiary, Redcliffe Medicentre, operates 16 labs and 150 collection centers, offering integrated diagnostics in Udaipur, Bhilwara, Banswara, Chittorgarh, Kota, and Ajmer, while offering pathology services in Jaipur and Jodhpur.
"We will further expand into other districts of Rajasthan, strengthening our network and presence in Bikaner, Sikar, Sri Ganganagar, Hanumangarh, and Churu, among others," Kandoi said.
The company operates a mix of company-owned and company-operated (COCO) labs, labs within hospital premises through lease or partnership arrangements, and franchise-owned and franchise-operated (FOFO) collection centres.
Redcliffe is backed by multiple investors including development finance institutions such as Impact Fund Denmark and the International Finance Corporation (IFC), the private sector investment arm of the World Bank Group. Other investors include LeapFrog Investments, Alkemi Growth Capital and HealthQuad.
In April, VCCircle reported that Redcliffe was in talks to raise $30 million (Rs 281.5 crore then) from the IFC to support the expansion of its pan-India, omnichannel integrated diagnostics and radiology platform.
On further fundraising, Kandoi said the company has enough capital to support both organic and inorganic expansion.
Redcliffe is also targeting a listing on the stock exchanges within the next three years, he said.
Expansion strategy
Redcliffe divested its entire stake in its IVF (in-vitro fertilization) business, Crysta IVF, to MMG Group in April as part of its strategy to sharpen its focus on its core diagnostics business. It also plans to acquire regional diagnostics and radiology platforms. Last month, the company acquired an Ajmer-based diagnostics centre as part of its efforts to bolster its presence in Rajasthan.
The company is not only looking at setting up new centres but also to "partner with" established radiologists, Kandoi said. Besides the northeast and east, the company is planning acquisitions across western, central, and southern India, with two-three acquisitions planned in the next 6-12 months.
The company is targeting integrated diagnostics or radiology-led businesses that are market leaders "with a good brand name", revenues of Rs 50-100 crore and a high degree of profitability, Kandoi said.
Within pathology, Redcliffe is doubling down on home collection, which is growing at nearly 40% annually compared with the traditional diagnostics industry's 12-13% growth rate, he said. Growth has been driven by preventive health testing at homes and corporate wellness camps. "People are embracing convenience. We have grown this vertical more than 50% year-on-year for the last three years, and this year we will grow at almost 35-40%," he said.
Financial goals
In April, Kandoi had told VCCircle that Redcliffe clocks around Rs 45 crore in monthly revenue and is targeting 40-50% growth over the next three-four years, which is well above the industry's 12-13% pace.
In FY26, the company recorded gross revenue of Rs 470 crore, he said. Radiology contributed 10% of revenue, while pathology accounted for the remaining 90%. Of the pathology business, about half of the revenue comes from home collection, while the rest is generated through offline operations in tier-II cities and beyond.
The company has also improved its gross margins by expanding its portfolio of specialized tests including genetics. Gross margins have increased to around 75% over the past two years from 55-60%, bringing them in line with industry peers, Kandoi said.
While large diagnostics companies typically conduct around 2.5 tests per patient at an average revenue per test (ARPT) of Rs 300-400, Redcliffe conducts about 5.5 tests per patient, with an ARPT of around Rs 200.
For FY27, Redcliffe is targeting around 35% organic growth and aims to end the year with Rs 630 crore in revenue, Kandoi said.
Published by HT Digital Content Services with permission from VC Circle.