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Medplus Health Services Limited — Q1 FY27 earnings call

Call held 22 Jul 2026

Management summary

MedPlus Health Services reported a robust 21.8% Y-o-Y growth in pharmacy operations revenue for Q1 FY27, with consolidated revenue reaching INR18,796 million. However, operating EBITDA margin compressed to 3.5%, partly due to a contraction in private label share and increased employee costs. The company has paused its diversification capex plans and is addressing challenges in its franchisee model, while maintaining its target of 800 net new store additions for FY27.

Highlights

Consolidated revenue stood at INR18,796 million.
Pharmacy operations revenue grew by 21.8% Y-o-Y on a reported basis.
Diagnostics revenue for the current quarter grew to INR370.8 million compared to INR302.9 million in Q1 FY26.
Diagnostics segment recorded an operating EBITDA of INR65.9 million compared to INR41.3 million in Q1 FY26.
Net addition of 146 stores during the current quarter, contributing to a total network of 5,476 stores.

Concerns

Consolidated operating EBITDA was INR651 million, representing 3.5%, indicating margin compression.
Private label sales for Q1 FY27 constituted 20% of total revenue, a contraction from previous periods.
Capex proposals for a food park and wellness services facility, previously approved by the Board, have been put on hold.
Employee expenses have gone up significantly, with 60% increase in Karnataka and 25% plus in Telangana.
27 franchisee outlet closures occurred, with management acknowledging an 'expectation mismatch' in the model.

Key financials

2 periods

Headline

Consolidated Revenue
18,796 Mn
Consolidated Operating EBITDA
651 Mn
Consolidated Operating EBITDA Margin
3.5%
Pharmacy Revenue Growth
21.8%
Pharmacy Operating EBITDA
588 Mn
Pharmacy Operating EBITDA Margin
3.2%
Diagnostics Revenue
370.8 Mn
Diagnostics Operating EBITDA
65.9 Mn
Private Label Sales Share
20%
Total Stores
5,476 stores
Average Store Size
539 sq ft
Net Working Capital
54 days

Q1 FY27

Net Store Additions
146 stores

What they filed

Q1 FY27: revenue up 21.8%, net profit down 21.4% against the same quarter last year.

₹ Cr · quarterly

Line item	Q2 FY25	Q3 FY25	Q4 FY25	Q1 FY26	Q2 FY26	Q3 FY26	Q4 FY26	Q1 FY27
Revenue	1,576	1,561	1,510	1,543	1,679 +7%	1,806 +16%	1,864 +23%	1,880 +22%
Expenses	1,452	1,429	1,373	1,412	1,530	1,648	1,695	1,746
EBITDA	124	133	136	131	149 +20%	159 +20%	169 +24%	133 +2%
Margin	8%	8%	9%	8%	9%	9%	9%	7%
Other income	12	13	16	15	17	18	21	20
Interest	25	26	27	27	29	31	33	33
Depreciation	63	62	64	66	69	73	76	78
Profit before tax	48	57	61	53	69 +44%	73 +28%	80 +31%	42 −21%
Tax rate	19%	19%	16%	20%	19%	21%	20%	21%
Net profit	39	46	51	42	56 +44%	58 +26%	64 +25%	33 −21%
EPS	3.24	3.83	4.29	3.54	4.63	4.82	5.33	2.76

How to read this

₹ crore, as filed. The percentage beside a figure is the change against the same quarter a year earlier — never the quarter before, which would make every seasonal business look like it collapses and booms each year.

Segment breakdown

Share of Operating EBITDA

653.9 Mn Total

Pharmacy Operations 588 Mn 89.9%
Diagnostics 65.9 Mn 10.1%

Capital allocation

high confidence

Capex Capex disclosed Cut — market feedback and re-evaluation of strategy for non-core areas
- Food park and oil extraction unit
- Wellness services facility
Sujit Mahato: "Additionally, we would like to inform that the capex proposals as approved by the Board has been put on hold by the company. We would evaluate and later inform, update the market on the utilization of the fund on the balance sheet."
Debt Net ₹1,150 Cr

Sujit Mahato: "It's close to around INR1,150 crores. All Included, which is interest included."

Guidance & targets

Store Count

Net New Store Additions Store Count · FY27 · High confidence 800

We continue with the outlook for adding 800 net new stores, including the franchisee stores in FY27.

— Sujit Mahato

Private Label

Private Label Share Growth Private Label · per quarter · Medium confidence 0.3-0.5%

We think we will, with this quarter, be arresting the slight, I would say, degrowth which we have had and from there on, start building up again at the rate of around 0.5% or 0.3%, 0.4% kind of stuff.

— Madhukar Gangadi

Profitability

Gross Margin Recovery Profitability · during the year · High confidence 100 bps

We are pretty confident that during the year, we will make up for that. So the 100 basis points, we will make up for that during the year. A significant portion, we should see a traction coming back in the next quarter and beyond.

— Sujit Mahato
Overall EBITDA Margin Profitability · future · Medium confidence 9% odd

our target also, again, is to go back to the earlier reported numbers and do it in a manner which is more sustainable.

— Sujit Mahato

Inventory

Inventory Loss Inventory · per quarter · High confidence INR12 crores

around INR12 crores is the inventory loss per quarter, and we should be on the same range on a quarter-to-quarter basis going forward.

— Sujit Mahato

What to watch in Q2 FY27

Capex Utilization Plan

Next quarter

Current On hold

Target New plan for fund utilization

Why it matters

The revised capex plan will indicate the company's future growth and capital allocation strategy beyond core pharmacy.

Sujit Mahato: "We would evaluate and later inform, update the market on the utilization of the fund on the balance sheet."

Risks & concerns

Increased Employee Costs
medium

Minimum wage hikes in Karnataka (60%) and Telangana (25%) have led to a 'permanent hit' on employee expenses, prompting changes to retention plans.

Both acknowledged
Franchisee Model Viability
medium

An 'expectation mismatch' among first-time entrepreneurs has led to franchisee store closures, requiring the company to tweak its model for better performance.

Both acknowledged
Private Label Share Contraction
medium

Private label sales share declined to 20%, impacting gross margins, though management has a plan to gradually recover it.

Both acknowledged
Competition and Discounting
low

Ongoing discounting by offline and online pharmacies is noted, but management believes it will not significantly affect their overall business as competitors are 'bleeding cash'.

Analyst downplayed

Q&A highlights

6 direct

Capex Plans on Hold Direct

But the fact that the market reacted so strongly and the fact that a bunch of our investors have also said the same thing and all, we feel that maybe we are not 100% right. So happy to put it I would say happy to put it on hold, but yes, we have taken the feedback, and we want to put it on hold.

Management explained the rationale behind putting approved diversification capex on hold, indicating responsiveness to market feedback and a re-evaluation of non-core strategies.

Asked by Sudarshan Agarwal

Private Label Share Decline and Recovery Direct

We think we will, with this quarter, be arresting the slight, I would say, degrowth which we have had and from there on, start building up again at the rate of around 0.5% or 0.3%, 0.4% kind of stuff.

Management addressed the contraction in private label share, attributing it to past over-pushing and outlining a strategy for gradual recovery, which is crucial for margin improvement.

Asked by Sudarshan Agarwal

Franchisee Model Challenges Direct

However, there is in some cases, what we are observing also is there is an expectation mismatch both from the franchisees who are first-time entrepreneurs, they get into this.

Management acknowledged issues with the franchisee model, specifically an 'expectation mismatch' leading to closures, and stated they are tweaking the model, highlighting a potential area of concern for expansion.

Asked by Divyansh Gupta

Employee Expense Increase Direct

So on a year-on-year basis, the major impact is coming from people which we had added in the various warehouses. So we are getting the full quarter impact now. Additionally, we articulated on the labor force changes, especially in Karnataka and Telangana, where the increase has been more than, I would say, significantly more than the average of generally 4%, it was to be.

Management detailed the reasons for increased employee costs, including warehouse additions and wage hikes in specific states, and outlined steps to mitigate future impact.

Asked by Saion Mukherjee

Diagnostics Business Scaling Strategy Direct

So for that reason, while we may do a little bit of maintenance kind of work here and there and replace 1 or 2 machines here or there, in on the whole, I don't think we'll be expanding that in a significant fashion. At least the radiology part.

Management clarified that despite growth, the diagnostics business has not met expectations for B2B/B2C subscriptions, leading to a decision against significant further expansion, particularly in radiology.

Asked by Jasdeep Walia

Promoter Leverage Reduction Partial

So that is actively being looked at by the family office. But at present, there is no such plan. And as and when that happens, adequate disclosures will be made to the market.

Management provided an update on promoter debt, indicating it's under review by the family office but without a concrete plan or timeline for reduction, leaving uncertainty for investors.

Asked by Jasdeep Walia

Same Store Sales Growth (SSSG) Tracking Direct

So, as we have been informing the market, one, we do not really track SSSG per se because we strongly believe that while SSSG is a good metric for a retail store, but in pharma retail purely doesn't work because, one, we continuously add stores, which is close by to our own stores beyond a certain densification. And when we look at possibilities that it could be cannibalized by other stores or other competition, we do cannibalize our own store. And therefore, as a model, we really do not track SSSG, Anil.

Management explained why they do not track SSSG, citing continuous store additions and potential cannibalization, which is important for analysts using this metric for retail performance.

Asked by Anil Sarin

2 min read 6 chapters

Detailed narrative

Q1 FY27 Financial Performance Overview

MedPlus Health Services reported consolidated revenue of INR18,796 million for Q1 FY27. The consolidated operating EBITDA stood at INR651 million, translating to a margin of 3.5%. Pharmacy operations demonstrated strong growth, with revenue increasing by 21.8% year-on-year, and contributed INR588 million to operating EBITDA at a 3.2% margin. Diagnostics revenue also saw significant growth, reaching INR370.8 million compared to INR302.9 million in Q1 FY26, with its operating EBITDA rising to INR65.9 million from INR41.3 million in the prior year's comparable quarter.

Strategic Capex Plans Put on Hold

The company announced that previously approved capex proposals for a food park and a wellness services facility have been put on hold. This decision was influenced by market feedback and a re-evaluation of the strategy, as management acknowledged they might not be '100% right' on these diversification efforts. However, MedPlus clarified that capex for its core pharmacy business remains unaffected and will continue as planned, indicating a more focused approach on its primary operations.

Private Label Share Contraction and Recovery Strategy

Private label sales constituted 20% of total revenue in Q1 FY27, with pharma at 10.7% and non-pharma at 9.3%, representing a contraction from previous periods. Management attributed this to an initial aggressive push by employees and a subsequent shift to prioritize customer choice. The company aims to arrest this degrowth and gradually build up the private label share by 0.3% to 0.5% per quarter, expecting this to contribute to gross margin improvement.

Challenges and Adjustments in Franchisee Model

MedPlus reported 27 franchisee outlet closures during the quarter, with an average store age of only 0.7 years. Management identified an 'expectation mismatch' among first-time entrepreneurs as a key reason for these closures. In response, the company is implementing adjustments, such as providing support to help franchisees achieve breakeven faster, to improve the model's viability and reduce churn, while still targeting 800 net new stores for FY27, including franchisee outlets.

Rising Employee Costs and Mitigation Efforts

Employee expenses have seen a significant increase, particularly in Karnataka (60% rise) and Telangana (25% increase), driven by minimum wage hikes and the full-quarter impact of new warehouse staff. To mitigate these rising costs, MedPlus has stopped new sign-ups for its retention bonus plan, effective March 1st, and is actively optimizing non-statutory payments. This highlights a key cost pressure point the company is actively managing.

Diagnostics Business Outlook and Promoter Leverage

Despite strong Q1 FY27 performance, management indicated that the diagnostics business has not achieved the desired scale, especially in B2B/B2C subscription members, which remain around 2 lakh. Consequently, there are no plans for significant expansion in diagnostics, particularly the radiology segment, beyond maintenance. Separately, the company acknowledged promoter debt of approximately INR1,150 crores, stating that the family office is actively looking into reduction strategies, but no concrete plan or timeline has been disclosed yet.

This is an AI-generated summary of a publicly available earnings call transcript.

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