Detailed Narrative
Network Expansion and Store Performance
Medplus Health added 145 new stores in Q2 FY26, resulting in a net addition of 117 stores, bringing the total network to 4,930 stores across 2.6 million square feet. The company remains confident in achieving its target of 600 new store additions for fiscal '26, including approximately 100 franchisee stores. Stores operational for over 12 months contributed 95% of pharmacy revenue and achieved a store-level EBITDA margin of 11.8% and ROCE of 68.6%.
Financial Performance Overview
For Q2 FY26, consolidated revenue stood at INR16,793 million, with consolidated operating EBITDA at INR887 million, representing a 5.3% margin. Pharmacy operations accounted for 99% of revenues, growing 8.8% YoY on a GMV basis and 6.3% YoY on a net basis. The net working capital improved to 53 days, reflecting efficient inventory management with warehouse inventory at 33 days and older store inventory at 37 days.
Private Label and Revenue Mix
Private label sales constituted 21.5% of total revenues in Q2 FY26, with pharma private labels at 12.1% and non-pharma at 9.6%. While private label pharma growth was intentionally toned down this quarter, management expects it to re-accelerate at about 1% quarterly growth from next quarter. Non-pharma private label sales are driven by strategic store layout changes (racks outside) and an expanded assortment of FMCG products, with a gross margin of 34%.
Diagnostics Segment Performance
The diagnostics segment demonstrated robust growth, with revenue increasing to INR332.5 million in Q2 FY26 from INR283.1 million in Q2 FY25. Operating EBITDA for the segment significantly improved to INR50.9 million (15.3% margin) in Q2 FY26, up from INR21 million in Q2 FY25. However, the company has paused further expansion of its capex-intensive diagnostic centers until subscription numbers reach 250,000.
Impact of GST Changes
Following the GST rate change effective September 22, Medplus passed on the entire benefit to customers. The change led to a temporary blockage of input tax credit, averaging 7% for the pharma sector, due to inventory procured at higher rates. To mitigate working capital impact, the company negotiated one-time📎 extra credit periods with suppliers.
Employee Costs and Attrition Management
Employee expenses grew 19% YoY, primarily due to first-time payouts from a year-old employee retention scheme. This scheme, which includes a cash bonus for employees staying over 12 months, has significantly reduced attrition by approximately 15% in major cities. Management expects the year-on-year growth in employee costs to moderate from the next quarter.
Future Growth Outlook and Strategy
Medplus aims for same-store sales growth (SSSG) to gradually reach high-single digits (9-10%) within the next two years, supported by changes in incentive plans and supply chain capabilities. The company is also seeding initial stores in new regions like Chhattisgarh and Madhya Pradesh, indicating a cautious but continuous geographical expansion beyond its southern and eastern strongholds.