Medplus Health Services Limited — Q3 FY26 earnings call

Call held 2 Feb 2026

Management summary

Medplus Health reported a strong Q3 FY26 with consolidated revenue of ₹18,061 million and healthy growth in pharmacy and diagnostic segments. The company achieved a net addition of 182 stores, contributing to a 10%+ SSSG driven by strategic incentive structure changes and improved availability. While a one-off charge related to new Labour Codes impacted EBITDA, management remains optimistic about margin trajectory and continued store expansion.

Highlights

  • Consolidated revenue stood at ₹18,061 million for Q3 FY26.

  • Net addition of 182 stores in the quarter, bringing the total to 5,112 stores and 400 net additions for FY26 YTD.

  • Pharmacy operations revenue grew by 15.6% year-on-year.

  • Diagnostic revenue grew to ₹326.7 million in Q3 FY26 from ₹274.7 million in Q3 FY25.

  • Diagnostic operating EBITDA margin improved significantly to 15.5% in Q3 FY26 from Q3 FY25.

  • SSSG (Same-Store Sales Growth) is over 10%, driven by incentive structure changes and improved availability.

Concerns

  • A one-off nonrecurring expense of ₹70.59 million was incurred due to the implementation of new Labour Code.

  • On-time renewal rate for active plans decreased slightly to 23% in Q3 from 24% in the previous quarter.

  • Net realization on private label pharma has decreased from 83 to 45-46 after blended discounts, requiring a couple of quarters for like-to-like comparison.

Key financials

2 periods

Headline

  • Consolidated Revenue
    18,061 Mn
  • Consolidated Operating EBITDA
    ₹96.8 Cr
  • Consolidated Operating EBITDA Margin
    5.4%
  • Pharmacy Revenue Growth
    —
    YoY +15.6%
  • Diagnostic Revenue
    326.7 Mn
  • Diagnostic Operating EBITDA Margin
    15.5%
  • Total Stores
    5,112 stores
  • Net Working Capital
    53 days
  • Private Label Sales (of total revenue)
    22.2%

Q3

  • Net Store Additions
    182 stores

What they filed

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

₹ Cr · quarterly
Line itemQ2 FY25Q3 FY25Q4 FY25Q1 FY26Q2 FY26Q3 FY26Q4 FY26Q1 FY27
Revenue1,576 1,561 1,510 1,543 1,679 +7%1,806 +16%1,864 +23%1,880 +22%
EBITDA124 133 136 131 149 +20%159 +20%169 +24%133 +2%
Net profit39 46 51 42 56 +44%58 +26%64 +25%33 −21%
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.

Guidance & targets

Store Expansion

  • New Store Additions Store Expansion · FY26 · High confidence 600
    We continue with the outlook for adding 600 new stores in FY '26.

    — Sujit Mahato

  • New Store Additions Store Expansion · FY27 · Medium confidence similar numbers of this year
    It should at least be the similar numbers of this year.

    — Sujit Mahato

Profitability

  • Gross Margin Profitability · 4Q and next year · High confidence remain at the same level
    on the gross margin level, we expect it to remain at the same level.

    — Sujit Mahato

  • Pharmacy Operating Margin Profitability · next couple of years · Low confidence 6%
    I don't see any reason why not. It's a little early to say.

    — Madhukar Gangadi

Sales Growth

  • Same-Store Sales Growth (SSSG) Sales Growth · next 1 quarter · High confidence remain at current levels or improve
    At least for the next 1 quarter, I have a very clear visibility, but we will see as we move forward.

    — Sujit Mahato

What to watch in Q4 FY26

New Labour Code Final Rules & Impact

by end of March, end of April
Current One-off charge of ₹7.059 crores incurred; rules not yet final.
Target Clarity on final rules and any recurring impact.

Why it matters

Determines if the one-off expense becomes a recurring cost or if the issue is resolved, impacting future profitability.

So in corporate expense line, there includes a one-off nonrecurring expense also we'll have to be mindful of that 70 million or INR7 crores, which was the impact of the past service cost post the implementation of the new Wage Codes. So that's a one-off. Going forward, it should be more or less in the same range because, one, we'll have to be mindful of what could come, those notifications and the rules are still not yet final. So we are looking, like others, we are keeping -- closely monitoring this space. And maybe by end of March, end of April, we should have more clarity.

Risks & concerns

  • Impact of New Labour Code

    medium

    A one-off nonrecurring expense of ₹70.59 million was incurred due to the implementation of new Wage Codes, and the final rules are still not yet clear.

    Management acknowledged|monitoring

  • Inventory Risk for Private Label Products

    medium

    The inventory risk for private label products is on the company's books, with a provision of 0.9% to 1% of private label sales for deterioration.

    Management acknowledged|provisioned

  • Competition in Online Pharma / Quick Commerce

    medium

    The company is carefully watching competition and offerings from quick commerce in the online pharma space and is ramping up its own offerings.

    Management acknowledged|working on serviceability

Q&A highlights

3 direct, 2 evasive
Drivers of 10%+ SSSG and Private Pharma GMV Sales Direct
we have tweaked the incentive structure so as to consider the total sales growth at our store level, which is paying off dividends. We are clearly seeing the improvement in the branded pharma uptick as well as the uptick in the private label non-pharma, which is helping us to achieve these numbers.

Explains the operational changes driving strong SSSG and private label performance, indicating management's strategic adjustments are yielding results.

Asked by Riddhansh Chandak

Gross Margin Trajectory for 4Q and next year Direct
on the gross margin level, we expect it to remain at the same level.

Provides clear forward guidance on a key profitability metric, indicating stability.

Asked by Riddhansh Chandak

Quantitative details on Franchisee Expansion Evasive
I think going forward, we would like to do a comprehensive disclosure on that. But for the moment, I think we will continue with this, yes. We can connect offline.

Highlights a lack of immediate transparency on a new growth initiative, suggesting it's still in early stages or not ready for detailed public disclosure.

Asked by Riddhansh Chandak

GMV Growth on a Consolidated Basis Evasive
I have to take it offline. I do not have it handy.

Indicates management did not have a key top-line metric readily available during the call, which can be a minor red flag for preparedness.

Asked by Umakant Sharma

Increase in Non-Store Expenses Direct
So in corporate expense line, there includes a one-off nonrecurring expense also we'll have to be mindful of that 70 million or INR7 crores, which was the impact of the past service cost post the implementation of the new Wage Codes. So that's a one-off.

Clarifies that a significant expense increase was a one-time event, alleviating concerns about recurring cost pressures.

Asked by Gaurav Nigam

Long-term Pharmacy Operating Margin Target (6%) Partial
I don't see any reason why not. It's a little early to say. There are a lot of pieces out there on the ground. But given that only 20% of our sales now come from general goods and most of our competitors are in the range of around 30% to 40%, even 50%, even a slight jump in the general route side and most of it coming from private label will not only -- will definitely increase the top line and also will improve the profitability. Yes, I feel confident about that, but I can't really give you an exact time line in which this will happen.

Management expresses confidence in achieving higher margins through private label and non-pharma growth but refrains from giving a specific timeline, making it an aspirational target.

Asked by Madhav Marda

Impact of Private Label Mix on Inventory Partial
So currently, we are carrying both the inventory, Madhav. So we have not yet what we had discussed earlier. At a certain point, we can then cut the tail or the long tail of the brand. But for the moment, we have not so that we ensure full availability to our customers.

Clarifies that while private label could theoretically reduce inventory, the company is currently prioritizing full availability, indicating a trade-off.

Asked by Madhav Marda

Sustainable SSSG Growth Rate and Metro vs. Non-Metro Sales Contribution Partial
I think it's not a straight answer, but what we could also keep in mind, we need to be mindful of the net realization on our private label pharma, especially. Earlier, we were able to realize around 83, 100 minus 17 of blended discounts, we were able to realize 83 vis-a-vis now 45, 46. So that has to play out for a couple of quarters to have a like-to-like comparison.

Reveals a significant drop in net realization for private label pharma, which could impact profitability and makes direct comparisons challenging, requiring monitoring over the next few quarters.

Asked by Akhil Parekh

2 min read 6 chapters

Detailed narrative

Robust Store Network Expansion and Strategic Relocations

Medplus Health demonstrated strong network expansion in Q3 FY26, adding a net of 182 stores, bringing the total store count to 5,112 across 2.6 million square feet. This contributes to 400 net additions for the current financial year, with an outlook to add 600 new stores by FY26 end. The company strategically managed 46 store closures, with 17 being relocations and 7 converting to franchisee models, optimizing its footprint.

Diversified Revenue Mix and Margin Performance

The company's revenue mix shows private label sales constituting 22.2% of total revenues in Q3 FY26, with pharma at 11.6% and FMCG at 10.6%. On a GMV basis, private label pharma sales reached 18.9%, significantly up from 7.9% prior to the launch of MedPlus branded products. Consolidated operating EBITDA stood at ₹96.8 crores (5.4% margin), while pharmacy operating EBITDA was ₹92.5 crores (5.2% margin), with stores older than 12 months achieving a 5.8% operating EBITDA margin.

Strong Growth and Margin Improvement in Diagnostics Segment

The diagnostics segment exhibited robust performance, with revenue growing to ₹326.7 million in Q3 FY26, a notable increase from ₹274.7 million in Q3 FY25. This growth translated into a significant improvement in operating EBITDA, which reached ₹50.7 million in Q3 FY26 compared to ₹22.1 million in Q3 FY25, resulting in an impressive 15.5% operating EBITDA margin. The company also reported 1,80,000 active plans covering 3,68,000 lives by December 31, 2025.

Optimized Working Capital and Inventory Management

Medplus Health maintained efficient working capital management, with net working capital at 53 days in Q3 FY26. Inventory in warehouses was optimized to 34 days, and for stores older than 12 months, it stood at 35 days. The introduction of the franchisee model has also contributed to working capital efficiency by reducing inventory carried on the company's books by ₹15-18 lakhs per store.

Incentive Structure Driving SSSG and Private Label Growth

The company's Same-Store Sales Growth (SSSG) exceeded 10%, attributed to a revised incentive structure that now considers total store-level sales (branded and private label) rather than just private label. This change, coupled with improved product availability from new warehouses, is effectively driving both branded pharma and private label non-pharma sales. Management expects gross margins to remain stable and is bullish on the non-pharma private label segment's growth potential.

One-off Expense and Monitoring of New Labour Code

Medplus Health incurred a one-off nonrecurring expense of ₹70.59 million in Q3 FY26, related to past service costs due to the implementation of the new Labour Code. Management clarified this as a one-time charge and is closely monitoring the evolving regulations, expecting more clarity by March or April. This indicates a cautious approach to potential future impacts of regulatory changes.

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