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.