MedPlus FY26: Growth Returns, Mature Stores Strengthen Margins

MedPlus Health Services closed FY26 with improving growth and profitability, backed by a large and still expanding store network. Consolidated revenue for FY26 stood at INR 68,924.7 million, up 12.3% year-on-year. Operating EBITDA rose to INR 3,658.4 million, taking the operating EBITDA margin to 5.3% versus 4.5% in FY25. PAT increased to INR 2,196.1 million from INR 1,502.3 million.

The March quarter was stronger than the earlier part of the year. Q4 FY26 revenue grew 23.5% year-on-year to INR 18,643.9 million, while operating EBITDA rose 34.0% year-on-year to INR 1,076.3 million. The operating EBITDA margin improved to 5.8%. Gross margin was 26.5% in Q4, broadly steady year-on-year.

Store engine: Mature outlets carried the quarter

The company continues to position itself as a cluster-led pharmacy retailer with an omni-channel layer built on physical store density. As of March 31, 2026, MedPlus operated 5,330 stores across 13 states and 1 union territory, serving customers in about 800 cities.

A key operational data point in the quarter was the performance of stores older than 12 months. Management stated these stores contributed about 96% of pharmacy revenue in Q4 FY26 and delivered a store-level EBITDA margin of 13.1%. The investor presentation also showed store-level operating ROCE for these older stores at 80.0% in Q4 FY26, up from 59.2% in Q4 FY25. Store-level revenue growth for 12-plus month stores accelerated to 17.8% year-on-year in Q4.

The expansion pace remained high. In Q4 FY26, MedPlus opened 295 stores and closed 77, resulting in 218 net additions. For FY26, net additions were 618 stores.

Financial summary

Segment lens: Pharmacy dominates, diagnostics remains profitable

Pharmacy Retail continues to be the core business. In FY26, Pharmacy Retail revenue was INR 67,526.9 million out of total revenue of INR 68,924.7 million. Diagnostics is smaller but meaningfully profitable at the operating level.

In Q4 FY26, Diagnostics revenue was INR 347.8 million with operating EBITDA of INR 53.1 million, translating into a 15.3% operating EBITDA margin, up from the prior year quarter as described by management.

Levers for FY27: Franchisee scaling, private label mix, and store upgrades

Three themes repeatedly appeared across the investor presentation and the earnings call.

First, MedPlus is expanding through a mix of company-owned growth and a newer franchisee route. Management said that in FY26, about 310 of the roughly 600 net store additions were through the franchisee model, and total franchisee stores including older ones are now around 500 plus. The company described franchisee expansion as a faster growth adjacency that can reduce the operational burden of hiring and managing very large incremental headcount. In the franchisee model described on the call, capex is invested by the company and inventory is purchased by the franchisee from MedPlus on day one as an outright sale.

Second, the company is trying to increase private label contribution while remaining balanced as a multi-brand retailer. The deck highlighted a private label basket of 1,550 plus SKUs. Management reiterated that its earlier private label trajectory remains intact after incentive restructuring. It also provided margin color: private label non-pharma gross margins are around 23% to 25% versus branded non-pharma gross margins around 9% to 10%. At the same time, management confirmed a structural trade-off: the expiry and write-off risk for private label inventory sits with MedPlus.

Third, MedPlus is attempting to create capacity for more assortment inside existing stores. In response to questions on store space, management said there is a project in the current year to upgrade or modernize 600 plus stores through smarter storage and rack systems, including better demarcation between behind-the-counter and open display.

Cash, capital productivity, and disclosures

The balance sheet and capital productivity metrics showed improvement. Cash and bank balances were INR 5,942.1 million at March 2026. Net working capital was reported at 53 days, and the investor presentation showed consolidated ROCE rising to 26.3% in Q4 FY26.

One disclosure item stood out in the concall. Management stated there was a corrigendum to the investor presentation: FY26 operating cash flows should be read as INR 4,956 million instead of INR 917 million, and the OCF to operating EBITDA ratio for the full year should be 135.5% instead of 85.2%.

Takeaways

FY26 showed a clear improvement in MedPlus performance, driven by stronger mature store economics, better operating leverage, and steady gross margin expansion versus the prior year. The company is now trying to scale faster through a franchisee model while simultaneously pushing private label and adding more non-pharma assortment. The key monitorables from management commentary remain the pace and quality of store expansion, how closures evolve, and whether private label growth can resume without increasing inventory risk outcomes beyond what the company can absorb.