MedPlus Health Services Limited (NSE: MEDPLUS) reported a strong financial performance for the third quarter ended December 31, 2025, with net profit climbing 26% year-on-year. The results, underpinned by a 15.7% increase in revenue, highlight the company’s success in scaling its pharmacy network beyond Tier-1 cities and improving store-level unit economics. Following the announcement, the stock closed up 3.33% at ₹798, as investors responded favorably to the expansion in operating margins and the healthy throughput from mature stores.
Expansion-Led Revenue and Margin Improvement
The central driver of MedPlus’s Q3 performance was the aggressive rollout of its store network, particularly in semi-urban and rural markets. Consolidated revenue from operations reached ₹1,806 crore, up from ₹1,561 crore in the prior-year period. This growth was accompanied by a 110-basis-point expansion in gross margins, which reached 26.2%.
The company’s ability to drive profitability while expanding is largely due to its “cluster-based” strategy, which leverages existing warehouses to serve new stores with minimal incremental logistics costs.
Data-Driven Operational Analysis
The quarterly results provided a granular look at the performance of the company’s 5,112-store network. Mature stores (those operational for more than 12 months) continue to serve as the backbone of the company’s cash flow.
Network Growth: Added 182 net stores in Q3, with 116 additions located in markets beyond Tier-1 cities.
Mature Store Performance: Outlets older than 12 months delivered 10.5% same-store sales growth and a robust 12.4% EBITDA margin.
Cash Efficiency: Operating cash flow stood at ₹90.5 crore, representing 93.5% of operating EBITDA, ensuring that growth remains largely self-funded despite high capital expenditure.
Q3 FY2026 Key Financial Metrics (Consolidated):
| Metric | Q3 FY2026 | Q3 FY2025 | YoY Change |
| Revenue from Operations | ₹1,806.1 Cr | ₹1,561.4 Cr | +15.7% |
| EBITDA | ₹158.5 Cr | ₹132.4 Cr | +19.7% |
| EBITDA Margin | 8.78% | 8.48% | +30 bps |
| Net Profit (PAT) | ₹57.8 Cr | ₹45.8 Cr | +26.2% |
| Gross Margin % | 26.2% | 25.1% | +110 bps |
Private Label Strategy and Executive Commentary
A key strategic priority for MedPlus is the expansion of its private label portfolio, which now includes over 1,500 SKUs. While private label pharma growth was moderated during the quarter to focus on operational stability, the company saw continued traction in its general goods and over-the-counter (OTC) offerings.
During the earnings briefing, Madhukar Gangadi, Managing Director of MedPlus Health, outlined the company’s calibrated approach to high-margin products:
“For this quarter, we treading a bit more cautiously on the private label pharma side as we focus on store throughput,” Gangadi noted. “However, the general goods side remains completely in our control and is growing without replacing existing products. We plan to restart the ‘accelerator’ on private label growth next quarter, aiming for a 1% increase in MRP-based contribution every quarter.”
Regarding infrastructure, Sujit Kumar Mahat, a member of the leadership team, emphasized the backend readiness:
“Over the last 18 months, we have added 10 new warehouses across our network. This strengthens our back-end infrastructure to support long-term scalability and ensure seamless execution as we deepen our presence in existing and new clusters.”
Sector Outlook and Competitive Landscape
The organized pharmacy retail sector in India is currently benefiting from an increased consumer preference for “omnichannel” services. MedPlus’s hyperlocal presence allows it to fulfill <2-hour deliveries, a proposition that differentiates it from pure-play e-pharmacies which typically struggle with acute (immediate-need) medication fulfillment.
Strategic Headwinds & Opportunities:
Quick Commerce Pressure: While quick commerce platforms are entering the OTC space, MedPlus’s “Big Saver” pricing and deep prescription inventory provide a defensive moat in the chronic medication segment.
Labour Code Impact: The company recorded a one-time non-recurring impact of ₹7.06 crore related to new statutory labor codes, an industry-wide headwind that was successfully absorbed in this quarter’s earnings.
As MedPlus approaches the 5,500-store milestone, analysts expect the focus to shift from pure geographic expansion to maximizing the Return on Capital Employed (ROCE) of its newer stores, which currently stands at 77.7% for its mature units.
Reasons to pass on MEDPLUS:
- Valuation risk after rally: Shares rose on the results, potentially limiting near-term upside after strong expectations are priced in.
- Thin operating margins: Despite improvement, EBITDA margin remains sub-9%, leaving limited buffer against cost inflation or pricing pressure.
- Expansion-heavy model: Continued store additions require sustained execution; any slowdown in ramp-up could weigh on returns.
- High dependence on mature stores: Profitability is concentrated in older outlets, while newer stores may dilute margins during scale-up.
- Private label growth paused: Cautious approach to private label pharma delays a key margin expansion lever.
- Rising competitive intensity: Quick commerce players and e-pharmacies are pushing deeper into OTC and convenience segments.
- Regulatory cost exposure: One-time labor code impact highlights sensitivity to statutory cost changes.
- Capital intensity persists: Ongoing investments in stores and warehouses keep free cash flow visibility tied to continued operating discipline.