Medi Assist Q3: Revenue Soars 30%, But Profit Plummets 86%

Medi Assist Healthcare Services announced a mixed set of results for the third quarter of fiscal year 2026, revealing a significant divergence between its top-line growth and bottom-line performance. While the company posted robust revenue figures, driven by strategic acquisitions, a sharp decline in net profit has raised concerns among investors about rising operational costs and margin pressures.

Strong Revenue Growth Fueled by Paramount Integration

For the quarter ending December 2025, Medi Assist reported a total income of ₹247.2 crore, a substantial 29.9% increase compared to the same period last year. Revenue from contracts with customers grew by 28.9% year-on-year to ₹239.7 crore. This impressive top-line performance was primarily attributed to the successful integration of Paramount TPA, which has bolstered the company's market presence and premium management capabilities. For the first nine months of FY26, the consolidated total income stood at ₹680.0 crore, marking a 23.5% year-on-year increase.

Profitability Collapses Under Cost Pressures

Despite the strong revenue figures, the company's profitability took a significant hit. Net profit for Q3 FY26 collapsed by 85.88% year-on-year to just ₹4.17 crore, a multi-quarter low. Consequently, the Profit After Tax (PAT) margin compressed dramatically to 1.73%, a stark contrast to the 16.09% margin reported in the corresponding quarter of the previous year. This decline highlights severe pressure on the company's operational efficiency. The adjusted consolidated PAT for the nine-month period was ₹46.3 crore, which was impacted by exceptional items totaling ₹14.2 crore, including costs related to a cybersecurity incident and provisions for alleged claims.

Rising Expenses Erode Operating Margins

The primary cause for the sharp fall in profitability was a significant increase in operational expenses. Employee costs surged by 30.85% year-on-year to ₹103.37 crore, outpacing revenue growth and indicating potential wage inflation or aggressive hiring. More notably, interest expenses climbed 236.95% year-on-year to ₹8.39 crore, the highest quarterly figure on record, reflecting increased debt servicing costs. This combination of rising costs led to a compression in the EBITDA margin, which fell by 154 basis points year-on-year to 18.6%, even as EBITDA itself grew 12.4% to ₹44.6 crore.

Aggressive Deleveraging Strengthens Balance Sheet

In a key positive development, Medi Assist has made significant strides in strengthening its balance sheet. The company drastically reduced its debt from ₹243.4 crore in September 2025 to just ₹39.4 crore by the end of December 2025. Management confirmed that the company achieved a near debt-free status as of January 2026. This deleveraging, combined with a healthy free cash position of ₹200.1 crore and a net worth of ₹795.7 crore, provides substantial financial stability and liquidity.

Technology and Market Share Gains

Operationally, the company continues to show strong momentum. Revenue from its proprietary technology platforms surged by 81.5% year-on-year. Its AI-powered tool, MAven Guard, played a crucial role in identifying approximately ₹400 crore in potential fraud, waste, and abuse. Medi Assist also expanded its market footprint, with its share in the Group segment growing by 307 basis points to 32.2%. The total premium under management increased by 21.9% year-on-year to ₹19,289.1 crore.

Stock Performance and Valuation

The market has reacted cautiously to the conflicting signals from the company's results. As of February 6, 2026, the stock was trading at ₹400.15, down 29.04% over the past year and significantly underperforming the Sensex. The stock is trading 32.68% below its 52-week high, reflecting investor concerns about the deteriorating profitability. With a P/E ratio of 36.62x and a P/B ratio of 5.14x, the valuation is considered expensive, particularly given the recent earnings trajectory.

Outlook and Forward Path

Medi Assist is at a critical juncture. The company's ability to leverage its technology and market leadership to restore profitability will be closely watched. Key priorities include completing the integration of Paramount TPA, which is expected to unlock further synergies after its slump transfer on February 1, 2026. Investors will need to monitor whether the company can control its rising costs and improve operating leverage. The management's strategy for margin recovery will be crucial in rebuilding investor confidence and justifying its premium valuation.