Leapfrog Investments-backed online diagnostic platform Redcliffe saw modest growth in the fiscal year that ended in March 2024, reducing losses by 28%, primarily due to a huge drop in advertising and material expenditures. According to Redcliffe's consolidated financial filings obtained from the Registrar of Companies (RoC), the company's operating revenue increased by 11% from Rs 313.86 crore in FY23 to Rs 348.38 crore in FY24.

Redcliffe Labs is a network of labs that specialize in pathological testing in several areas of radiology and biochemistry. These services accounted for over 98% of their operating income in FY24, or Rs 341.02 crore. During the previous fiscal year, product sales brought in Rs 2.16 crore and other operating revenue, Rs 5.20 crore, respectively. With additional non-operating income of Rs 5.3 crore, including interest income and excess provisions written back, the company's total income in FY24 surpassed Rs 353 crore.

In FY24, the Noida-based company's material expenditures decreased by 15% to Rs 106.31 crore, while its advertising costs decreased by 45% to Rs 65.38 crore. Nonetheless, there was a noticeable rise in depreciation expenses and laboratory test fees, which increased by 3X and 62.2%, respectively. Overall, the business was able to keep costs under control, as they decreased from Rs 647.30 crore in FY23 to Rs 556.16 crore in FY24, a 14% decrease.

Ultimately, the business was able to reduce its losses from Rs 345 crore in FY23 to Rs 250 crore in FY24, a 28% decrease. Its EBITDA margin was -57.55%, while its ROCE was -544.68%. In FY24, Redcliffe Labs earned one rupee by spending Rs 1.6 per unit. As of FY24, Redcliffe has current assets of Rs 89.64 crore and cash and bank holdings of Rs 15.87 crore.

Redcliffe Labs has raised a total of $113 million so far, including LeapFrog investments, according to TheKredible. The business recently purchased Bengaluru-based Celara Diagnostics for about $7 million and raised $42 million in a Series C fundraising transaction. The development was exclusively reported by Entrackr.

Redcliffe faces competition from PharmEasy-owned Thyrocare, Healthians, and 1mg, all of which are venture-funded businesses.

While Healthians achieved EBITDA margin with Rs 243 crore in FY24, Tata 1mg's operational revenue climbed from Rs 1,627 crore in FY23 to Rs 1,968 crore in FY24. The publicly traded company Thyrocare reported a 20% increase in revenue to Rs 177.4 crore in Q2 FY25, with a profit of Rs 26.4 crore after taxes.

Despite being established in 2018, Redcliffe Labs experienced significant interest and support for its goals in the year following the COVID-19 pandemic, when some investors viewed diagnostic labs as little more than money-making machines. As a result, investment has increased as normal. However, the momentum has essentially slowed down during the last two years, and, similar to edtech, legacy businesses like hospitals have retaliated to regain their market share. The bottomline pressure will continue to impact, and Redcliffe's topline growth is still disappointing given its smaller base when compared to its peers. 

To no one's surprise, it has made a number of purchases in an attempt to buy its way out of stagnation, but it has obviously failed. Even while the overall size of the category is far higher than it was before 2020 and appears to stay that way, the entire category nevertheless confronts growth challenges today. Growth is hampered by the competition for market share among numerous other firms, particularly those who secured capital at high post-COVID valuations. 

Despite numerous claims, no company has distinguished itself with a game-changing product or service, such as quicker speed, cheaper prices, or specialized, precise diagnosis. Another year of attrition is expected in FY25, and Redcliffe's best chance may still be a reasonable acquisition by a bigger company rather than attempting to forge its own path.