MedPlus Q4 FY2026: Scale, store maturity, and improving operating leverage

MedPlus Health Services Limited ended Q4 FY2026 with a sharper growth profile and better operating leverage. Consolidated revenue rose to ₹18,643.9 million, up 23.5 percent year on year and 3.2 percent sequentially. Operating EBITDA increased faster than revenue, reaching ₹1,076.3 million, up 34.0 percent year on year, while PAT came in at ₹639.7 million, up 24.6 percent year on year. For the full year, MedPlus reported revenue of ₹68,924.7 million, a 12.3 percent increase over FY2025, with a clear improvement in profitability. Gross margin expanded to 26.2 percent in FY2026 from 24.4 percent in FY2025, and PAT rose 46.2 percent year on year to ₹2,196.1 million.

The quarter’s numbers are best read alongside the operating model that MedPlus continues to reinforce: dense, cluster-based store networks, backed by an omni-channel layer that benefits from the physical footprint. As of March 31, 2026, the company operated 5,330 stores across 13 states and 1 union territory, serving customers in about 800 cities. The store base is still young, with 24 percent of stores less than two years old, which matters because profitability improves meaningfully with store maturity.

Q4 FY2026 performance: strong revenue growth with stable gross margin

Q4 revenue growth of 25.5 percent year on year was supported by both network expansion and improved performance in stores older than 12 months. Gross margin in Q4 was 26.5 percent, broadly stable year on year and 30 bps higher sequentially, even as the company scaled store openings. Expenses increased at a slower pace than the gross margin pool, which allowed Operating EBITDA margin to move up to 5.8 percent in Q4 from 5.3 percent in Q4 FY2025.

An important lens for MedPlus is to separate headline growth from the underlying productivity of established stores. Stores older than 12 months delivered 17.8 percent revenue growth in Q4, and their Store Level EBITDA margin improved to 13.1 percent. Store level operating ROCE for these mature stores reached 80.0 percent in Q4, reflecting the structural advantage of high inventory turns, localized catchment strength, and scale procurement.

Diagnostics, while smaller in revenue, continues to show high segment profitability. In Q4 FY2026, diagnostics revenue was ₹347.8 million and Operating EBITDA was ₹53.1 million, translating into an Operating EBITDA margin of 15.3 percent. The bulk of the business remains pharmacy retail, where Q4 revenue was ₹18,265.9 million and Operating EBITDA was ₹1,021.8 million, for a margin of 5.6 percent.

Financial summary

Network expansion and store maturity: growth that should compound

MedPlus added 618 net stores over the last 12 months, with 792 gross additions in FY2026. In Q4 alone, the company opened 295 stores and closed 77, resulting in 218 net additions. Expansion remains tilted toward deepening coverage, with 147 net additions beyond Tier-One in Q4, consistent with the company’s stated approach of deeper penetration rather than wider reach.

The store base age profile shows why near-term reported margins need context. As of March 2026, 17 percent of stores were in Year 1, 7 percent in Year 2, and 76 percent in Year 2+. New stores are an investment phase for staffing, ramp-up, and local marketing, while mature clusters benefit from operating discipline and route density. This maturity effect is visible in the trajectory of the 12+ months store metrics. Over the past five quarters, store level revenue growth moved from negative territory in Q4 FY2025 to 17.8 percent in Q4 FY2026. In the same period, Store Level EBITDA margin improved from 11.5 percent to 13.1 percent.

The operating bridge shared by the company helps quantify the drag from new stores. In Q4 FY2026, Operating EBITDA from 12+ months stores was ₹1,133 million, while 12+ months stores adjustment was -₹36 million and the less than 12 months stores impact was -₹76 million, resulting in pre-operative operating EBITDA of ₹1,022 million for pharmacy. Diagnostics and other segments lifted consolidated Operating EBITDA to ₹1,076 million.

Omni-channel built on physical density: scale benefits that are hard to replicate

MedPlus positions its omni-channel advantage as a function of its store network density. The company argues that hyperlocal presence enables 2-hour delivery in ways that online-only models cannot match without comparable store coverage. This also lowers customer acquisition cost because stores act as physical brand touchpoints and order fulfillment points.

In Q4 FY2026, channel revenue was ₹927 million. Delivery mix continued to tilt toward home delivery, which represented 53 percent of channel delivery in Q4, with store pickup at 47 percent. The number of delivery hubs increased to 711 in Q4 from 699 in Q3, and online orders value for the quarter was ₹3,077 million.

The broader strategic aim is clear: as store count rises within clusters, the online layer should gain reach at low incremental customer acquisition cost, while fulfillment costs benefit from proximity and route density. This is a model that can be measured over time through mature store productivity, delivery hub expansion, and sustained gross margin levels.

Mix, margins, and capital productivity: signs of improving quality

On mix, MedPlus continues to emphasize private label expansion, supported by a 1,550-plus SKU basket. The company describes over 850 private label products in pharma and over 700 in non-pharma categories. However, the quarterly mix table shows a nuanced picture. In Q4 FY2026, private label pharma contribution was 11.3 percent of revenue, down from 13.6 percent in Q4 FY2025. Private label others contribution was 10.6 percent, up from 9.7 percent in Q4 FY2025. Branded pharma remained the anchor at 62.8 percent in Q4 FY2026.

Geographically, the revenue mix shows gradual scaling beyond metros. Metro contribution to pharmacy store revenue was 46 percent in Q4 FY2026 versus 48 percent in Q4 FY2025. Tier-Three and beyond rose to 15 percent from 13 percent over the same period, while Tier-Two held at 24 percent.

Margin expansion at the consolidated level in FY2026 was driven mainly by gross margin improvement, which rose to 26.2 percent from 24.4 percent in FY2025. FY2026 gross margin in rupee terms increased 20.9 percent to ₹18,078.6 million, outpacing revenue growth. Operating EBITDA margin for FY2026 was 5.3 percent, up from 4.5 percent.

Capital productivity indicators are moving in the right direction as well. Net working capital days improved to 53 days as of March 2026, down from 63 days in March 2025, and remained stable through the year. ROCE, defined as operating EBIT over average capital employed and annualized, improved to 26.3 percent in Q4 FY2026 from 19.3 percent in Q4 FY2025.

The balance sheet also reflects continued investment with liquidity comfort. As of March 2026, PPE and CWIP were ₹3,503.4 million, inventories were ₹13,816.9 million, and cash was ₹5,942.1 million. Trade payables were ₹3,069.5 million.

Cash conversion is an area investors will track closely given the pace of store additions. In Q4 FY2026, operating cash flow was ₹917 million. Free cash flow was negative at ₹-280 million, mainly due to capex of ₹-486 million and lease liability payments of ₹-712 million. Working capital movement reduced cash generation by ₹-722 million during the quarter. The company also invested ₹379 million of surplus cash in fixed deposits, and the quarter ended with a decrease in cash and cash equivalents of ₹-166 million.

Takeaways: a quarter shaped by expansion discipline and mature-store strength

Q4 FY2026 was a strong quarter for MedPlus on both growth and profitability, with revenue up 23.5 percent year on year and Operating EBITDA up 34.0 percent. The improvement in mature store metrics, including 17.8 percent revenue growth for 12+ months stores and 80.0 percent store level operating ROCE, indicates that the cluster model is working as intended even while the network remains in expansion mode.

The business still carries the typical near-term trade-offs of rapid store additions, including the profitability drag from new stores and the cash flow impact of capex and lease payments. But the operating bridge and store age mix make the direction of travel clearer. As a larger share of the young store cohort crosses the 12-month threshold, the company’s reported operating leverage should increasingly resemble the strong economics visible in mature stores.

For investors, the quarterly theme is disciplined execution at scale. The company is expanding the footprint, improving gross margin at the annual level, and keeping working capital under control. If MedPlus sustains cluster density and store maturity benefits while steadily extending omni-channel fulfillment through more hubs and pincodes, the model has room to compound with relatively predictable unit economics.