Medical diagnostics chain House of Diagnostics (HOD) has initiated a process to secure between $30 million and $40 million in a largely primary funding round. This move comes as the healthcare and diagnostic services sector in India experiences significant growth and investor interest.
A Landmark Fundraise for Expansion
According to two individuals with direct knowledge of the development, the Delhi-based company has commenced the fundraising effort, which is being managed with the assistance of EY India. If successful, this will mark the first instance of external capital infusion for HOD. The funds are earmarked for business expansion, both within India and potentially in international markets.
The company, established in 2008 by founders Shubham Sogani, Labham Sogani, and Shanti Kumar Sogani, currently operates in Delhi, Haryana, and Uttar Pradesh. Its financial performance shows promising growth, with total revenue rising to ₹150 crore in FY24 from ₹120 crore in the previous fiscal year. Notably, it turned a net profit of ₹4.3 crore in FY24 after reporting a loss of ₹3.5 crore in FY23.
Riding the Wave of a Surging Market
This fundraising initiative aligns with a period of robust growth forecast for India's diagnostics industry. A recent CareEdge Ratings report projects the market to expand at a compound annual growth rate (CAGR) of 12% over the next five years, reaching a valuation of $15-16 billion. Although diagnostic services constitute less than 10% of the overall healthcare market, their role in early disease detection and treatment guidance is critical.
Several powerful trends are fueling this expansion. Increased demand for wellness and preventive testing packages is a major driver, alongside demographic shifts, an aging population, and the rising prevalence of chronic diseases. The expansion of healthcare infrastructure beyond major metropolitan areas into tier-II and tier-III cities, coupled with growing penetration of health insurance, is also creating new opportunities.
Legal expert Shantanu Jindel of CMS IndusLaw highlighted that while access in rural areas remains a challenge, it presents a significant opportunity for expansion and consolidation. Companies are adopting strategies like hub-and-spoke lab networks, government partnerships, and mobile testing units to reach these underserved regions.
Technology and Competition Shape the Future
The diagnostic landscape is becoming increasingly competitive and technologically advanced. HOD competes with a range of players from smaller chains like Tenet Diagnostics and Aarthi Scans to industry giants such as Dr. Lal PathLabs, Metropolis Healthcare, and Thyrocare.
Innovation is set to be a key differentiator. High-growth segments include advanced molecular tests like RT-PCR, oncology panels, and infectious disease panels. Furthermore, the integration of artificial intelligence for image analysis in pathology and radiology, workflow automation, and telemedicine-diagnostics platforms are expected to define the next phase of growth for larger chains.
"Innovative technologies and increased competition are likely to keep prices competitive, and with rising incomes there will be a continued focus on preventive healthcare. All of this should drive demand and keep investors interested in quality assets," Jindel stated. The sector's positive outlook, supported by a favorable policy environment and foreign investment, continues to attract capital, with several other smaller diagnostic companies also reportedly in various stages of fundraising.
