Mylab’s Pandemic Boom Turns Bust: Revenue Plummets as Demand for COVID Testing Normalizes

During the peak of the pandemic (FY21 and FY22), Mylab witnessed exceptional growth, with its revenue skyrocketing by a staggering 100 times to reach Rs 825 crore. However, as the world transitioned towards normalcy post-pandemic, Mylab’s business scale plummeted by a significant 64% in FY23. This decline in demand resulted in Mylab incurring substantial losses in FY23, a stark contrast to the profits it recorded in the previous two fiscal years.

Financial Statement Reveals Revenue Decline

Consolidated financial statements filed recently with the Registrar of Companies offer a detailed picture of Mylab’s financial performance. The documents reveal a sharp decrease in the company’s scale, dropping from Rs 825 crore in FY21 to a mere Rs 95 crore in FY23. This downward trend began in FY22 when operating revenue dipped by 68.4% to Rs 260.71 crore.

Diagnostic Kits: The Sole Source of Revenue

Since its inception in 2016, Mylab has focused solely on developing and selling diagnostic kits for clinical purposes. This trend continued in FY23, with the sale of these kits remaining the company’s sole source of operating revenue.

Income and Expenditure Breakdown

Beyond revenue from diagnostic kit sales, Mylab generated an additional Rs 29 crore in FY23 from interest and miscellaneous sources, bringing its total income to Rs 124 crore. On the expenditure side, the cost of manufacturing these kits constituted 27% of the total expense. However, aligning with the declining scale, this cost was reduced by 60% to Rs 50 crore in FY23.

Employee Expenses and Total Expenditure

Employee benefits, legal fees, advertising expenses, royalties, conveyance costs, and other overheads contributed to Mylab’s total expenditure, which went down to Rs 185 crore in FY23 from Rs 250 crore in FY22. Refer to TheKredible for a more detailed breakdown of these expenses.

Losses Incurred for the First Time

The combined effect of a reduced scale and fixed overheads forced Mylab to face losses for the first time in three years. The company recorded a loss of Rs 47 crore in FY23, compared to a profit of Rs 16 crore in FY23. Furthermore, Mylab’s ROCE (Return on Capital Employed) and EBITDA (Earnings Before Interest, Taxes, Depreciation, and Amortization) margin witnessed a significant decline, reaching -18% and -24.19% respectively. On a per-unit basis, Mylab spent Rs 1.95 to earn a single rupee in FY23.

Echoes of Edtech: Offline Players Reclaim Market Share

The situation faced by Mylab bears a similarity to the challenges encountered by online education companies (edtech) post-pandemic. Just as online edtech firms saw students returning to traditional schools and institutions, Mylab is experiencing a resurgence of offline diagnostic labs and healthcare providers. These established players, with their well-established patient connections and testing infrastructure, are reclaiming market share lost to online entities during the pandemic. Additionally, concerns regarding the accuracy of home-based testing kits further impact Mylab’s business model, which relies heavily on these kits and ancillary services.

Mylab’s Path Forward

To ensure its survival and future growth, Mylab needs to develop a more robust strategy. This will likely involve a reevaluation of its business model and a potential expansion beyond its current focus on diagnostic kits.