Medplus Health

Medplus Health reported a consolidated revenue of ₹15,426 million for Q1 FY26. The consolidated operating EBITDA stood at ₹728 million, translating to a margin of 4.7%. Pharmacy operations accounted for 99% of the revenue, growing 6.6% YoY on a GMB basis and 3.3% YoY on a net basis, with an operating EBITDA margin of 4.6%. The diagnostic segment showed robust growth, with revenue increasing to ₹302.9 million in Q1 FY26 from ₹242.4 million in Q1 FY25, achieving a strong operating EBITDA margin of 13.6% (₹41.3 million).

The company expanded its store network by adding a net of 101 stores in Q1 FY26, bringing the total count to 4,813 stores across 13 states. This includes 124 new openings and 23 closures (8 of which were franchise conversions). Medplus maintains its outlook of adding 600 new stores in Fiscal 26, with at least 100 planned as franchise conversions. Stores operational for over 12 months demonstrated a healthy store-level EBITDA margin of 10.9% and an operating ROCE of 59.8%.

Private label sales constituted 21.5% of the total revenue in Q1 FY26, with pharma private label reaching 20.4% on a GMB basis, a significant increase from 7.9% in Q1 FY24. This strategic focus has driven gross margin expansion from 22-23% to 26%. Management acknowledged a trade-off where aggressive private label push temporarily impacted branded sales and overall topline growth. The company is now tempering private label growth to 0.5% on net sales value (1% on MRP) per quarter and realigning employee incentives to balance private label push with overall topline growth.

The diagnostic segment recorded revenue of ₹302.9 million in Q1 FY26, with an operating EBITDA of ₹41.3 million, representing a 13.6% margin. The company currently has 164,000 active plans, covering 340,000 underlying lives. The strategic focus for diagnostics is to grow active plan members to 250,000 before considering expansion into new states or cities. Management is exploring B2B opportunities to accelerate membership growth, citing high customer acquisition costs for B2C.

Medplus faced challenges in its backend operations, including supply chain and warehousing, which affected fill rates and overall sales. To address these, 6 out of 10 additional warehouses have become operational, aiming to improve logistics and stock availability. Net working capital for Q1 was 59 days, with warehouse inventory at 36 days. Inventory levels for first-year stores were 97 days, while older stores (12+ months) maintained 39 days.

Management expects same-store growth (SSG) to return to single-digit figures within one to two quarters, as ongoing backend and supply chain issues are resolved. Employee incentives are being realigned to promote both private label and branded sales, aiming for balanced topline growth. The company is focused on ensuring stores reach break-even rapidly and is not overly concerned about the current growth slowdown, viewing it as a temporary phase during strategic adjustments.