MedPlus Health Services Ltd (NSE: MEDPLUS) Q1 2026 Earnings Call dated Aug. 04, 2025
Corporate Participants:
Unidentified Speaker
DRN Srinivas: — Sr. Manager Finance
Mr. Sujit Kumar Mahato — Chief Financial Officer
Mr. Gangadi Madhukar Reddy — Chief Executive Officer and Managing Director
Analysts:
Unidentified Participant
Sanjay — Analyst
Sudarshan Agarwal — Analyst
Lakshminarayanan K.G — Analyst
Sidharth Sreekumar — Analyst
Raman KV — Analyst
Madhav — Analyst
Aradhana Jain — Analyst
Omkar Hadkar — Analyst
Neelam Punjabi — Analyst
Presentation:
operator
Ladies and gentlemen, good day and welcome to the MedPlus Health Services Limited Q1 FY26 earnings conference call. As a reminder, all participant lines will be in the listen only mode and. There will be an opportunity for you. To ask questions after the initial remarks from the management. Should you need assistance during the conference call, please signal an operator by pressing Star then zero on your touchtone phone. Please note that this conference is being recorded. I now hand the conference over to Mr. Dr. And Srinivas. Thank you. And over to you sir.
DRN Srinivas: — Sr. Manager Finance
Thank you Sagar. Good evening everyone. On behalf of MedPlus, it’s my utmost pleasure to welcome you all to the MedPlus Q1 FY26 earnings conference call to discuss the financial results of MedPlus for the first quarter FY26 which were announced earlier. We have with us today the senior management team represented by Mr. Merkar Reddy Gangadi, CEO and MD and Mr. Sujit Mato, CFO. Before we begin, I would like to mention that some of the statements made in today’s discussion may be forward looking in nature and may involve risks and uncertainties. Please note the disclaimer mentioning these risks and uncertainties on Slide 1 of the Investor presentation shared with all of you.
Earlier documents relating to our financial performance were circulated earlier and these have also been posted on our corporate website. I would now hand over the call to Sujith. Thank you. And over to you Sujith.
Mr. Sujit Kumar Mahato — Chief Financial Officer
Thank you Sriniva and good evening everyone on this call. As informed earlier, we continue to strengthen our backend operations and infrastructure to support long term scalability and ensure seamless execution. We remain focused on optimizing our existing network while laying a strong foundation for opening new stores across the 13 states in which we operate. As an update, out of the 10 additional warehouses, six warehouses have become operational.
This disciplined approach will enable us to drive sustainable growth and enhance value for all stakeholders. In terms of our network, we have opened 124 new stores during the current quarter. Over the past 12 months we have added a net total of 369 gross additions of 456. In terms of new stores throughout Q1, there were 23 store closures. Considering both openings and closures, we achieved a net addition of 101 stores during the quarter compared to the 100 stores added during the last quarter. Store closures also includes eight franchisee conversions. We continue with the outlook of adding 600 new store editions in fiscal 26.
In terms of our store network age, around 21% of our stores have been operational for less than two years and the remaining 79% of our stores have been operational for two years or more. At the end of the quarter our Network grew to 4813 stores with 2.5 million plus square feet compared to 4444 stores and 2.3 million plus square feet. At the end of June 24th. The average store size is 527 square feet on the revenue mix presently Medplus offers over 1350 carefully selected SKUs. So spanning across pharmaceutical and non pharmaceutical categories, private Label sales for Q1FY26 constitute 21.5%, pharma being 12.8 and non pharma 8.7 of our total revenue on GMB basis.
During the current quarter, the share of private label pharma sales stood at 20.4% compared to 7.9% in Q1 FY24 prior to the launch of MedPlus branded pharmaceutical products. On our financial numbers our consolidated revenue is 15,426 million for the quarter. Our consolidated operating EBITDA stood at 728 million representing 4.7% for the quarter. Around 99% of our revenue is from our pharmacy operations. Revenue from pharmacy operations grew by 6.6% YoY on GMB basis and 3.3% YoY on net basis. The pharmacy operating EBITDA stood at 690 million representing 4.6%. Update on our Stores Performance I would like to update on our stores older than 12 months.
Revenue from these stores in Q1 was 14,188 million representing 95% of pharmacy revenue. These stores had a store level ebitda margin of 10.9%. The store level operating ROCE of these stores stood at 59.8%. A word here on the store level EBITDA margin by age while stores greater than 12 months had a margin of 10.9. This was 11.1 for stores greater than 24 months and 6.9 for stores in the 13 to 24 month age bracket. If we allocated non store related costs then the operating EBITDA of stores greater than 12 months would be 727 million which translates to a margin of 5.1%.
An update on Our Working Capital Our net working Capital for quarter one was 59 days. The inventory in our warehouse was 36 days. In Q1, the inventory level of our first year stores was 97 days. In comparison for our stores older than 12 months, the inventory was 39 days. An update on our Diagnostic Business Diagnostics revenue grew to 302.9 million in quarter one FY26 compared to 242.4 million in quarter one of fiscal 25. Diagnostic segment recorded an operating EBITDA of 41.3 million representing 13.6% compared to 3.3 million in quarter one of the last fiscal. In April we sold 457 gross plants a day.
In May and June this was 468 and 520 plans respectively. As on end of June we had 1 64,000 active plans covering 340,000 underlying lines. As on 31 March this number was 157,000 plans covering 3,27,000 underlying lines. Our current observed on time renewal rate was 24% in Q1 versus 27% in the last quarter. That concludes our update for the quarter. I request the host to open the line for questions.
Questions and Answers:
operator
Thank you very much. We will now begin the question and answer session. Anyone who wishes to ask a question may press Star then one on their Touchstone phone. If you wish to remove yourself from the question queue you may press Star then. Two participants are requested to use hand fits while asking a question. Ladies and gentlemen, we will wait for a moment while the question queue assembles again. To register for a question please press Star then one. Our first question comes from the line of Sanjay from Bastion Research. Please go ahead.
Sanjay
Hi sir, thank you so much for the opportunity. Sir, my first question would be our growth has been quite lackluster in the last five six quarters and in terms of SSV it is degree. I understand we have scaled our private label revenue and therefore the growth has been quite lower. But can you explain me a bit more on that side when we expect the growth to come forward and the degrowth in the revenue is not just, you know, able to kind of think on that side. So can you explain more on that?
Mr. Gangadi Madhukar Reddy
Sure. See as we explained in the last call also there were some issues out there on the supply chain and also on the warehousing and a couple of other things out there on the manpower and all. Most of them are getting addressed and as you go forward you will see a growth in sales. We are already seeing that right now. Second see you also have to see. That we grew from 7.9 to 20.1% by GMV on the private ledger. And that has actually driven our margins, gross margins from something like 22, 23 all the way to 26. Right. So it is, I would say definitely there’s a small trade off out there. Whenever our employees go in and push this very actively, we want to see some employers, some customers who may not want to switch and who may even get put off a little bit and go. So that is something which we are addressing right now. But we were aware that something like this would happen.
It is a trade off, as I said. We’d rather take slightly flattish sales and go in for 2, 3% extra private label is what we thought originally and that’s what happened. Now we are again tempering the whole thing and basically holding the private label at that number. We probably still continue to grow going Forward at around half percent to 1% every quarter, although we did promise 1% every quarter. I think most of it has already achieved in the Q4 for at least a couple or more quarters. So we’re going to be holding it out there, adjusting the overall incentives and everything else to our employees, aligning it in line with the overall company objectives of increasing top line at the same time growing the private label.
So for us, you know, not too concerned about this at this point. We just continue to focus on profitability and getting the stores to break even and all rapidly.
Sanjay
Thank you for the answer, sir. Another question would be as in the last con call also we said that, you know, and you also alluded to right now as well, we will see private label to grow by 1% quarter on quarter. But when we see this quarter, the private label share has been dipping down and therefore the margin has also been dipped for the quarter. Is this a. There is something to read on that line. Is this one off or we will see for a full year. As you alluded, that margin will improve 5060 basis point from here on. Is the trend continue and how should one think on that line?
Mr. Gangadi Madhukar Reddy
See last quarter I did say that we would actually have a slight dip or flattening of sales in private label because Q4 had actually taken a lot of sales from the power. So employees are heavily incentivized. There were all sorts of plans and they ended up actually doing a little bit more on Q4. So Q1 was always going to be a pullback and that is just the reason for that. Maybe Q2 will also be slightly flattish and everything else, but for us there’s nothing more to look into it. As I said, it’s a trade off if I continue to push in private label, the sales will be sad.
We don’t want to do that. So we will have 1% kind of growth. By the way, 1% growth or whatever is on the overall GMV sales, which means it’s on the MRP value. Otherwise the net sale value will always be around 0.5% growth quarter on quarter. So if I think most likely, I would say this quarter will probably be flattish or something like that. But beyond that will again continue to grow.
Sanjay
Great. Sir, another question. We can see in breakups of store closure this time that there are eight stores which have been converted to franchises. So what is the strategy regarding how we are identifying which existing stores to convert to franchises? Are these less performing stores or you know, the strategy regarding franchising models? So in the coming year, what proportion of stores can we expect from this model like four, five years down the line?
Mr. Gangadi Madhukar Reddy
Yeah, see for us some of the existing stores where we feel that a franchisee can do slightly better in some places where these are in slightly secluded kind of locations where they have to be, I would say will probably benefit from a franchisee who comes in and does the informal kind of labor thing in which he stays longer hours and everything else where we think there’ll be benefit, we’ll most likely give it. There’s no particular model out there. But going forward though, while this year, of course as I said, we will only be doing piloting on the franchisee stuff while going forward, that is the plan for us.
I don’t see any major changes. We will have some more conversions, but not to a major extent. We will once the pilot is done, maybe in a quarter or two, we will be able to guide you on the future, which is what percentage will you end up actually going as franchisee versus company owned stores. Right now it’s still not yet. I would say the numbers are not yet frozen.
Sanjay
So my last question would be we have seen that our diagnostic segment has been ramping up and we were making losses at operating EBITDA level a year ago and now we make 13.6% operating EBITDA level. So is the plan to not grow this business still intact or we can expect some expansion in this segment, at least in the states we are already operational.
Mr. Gangadi Madhukar Reddy
No, no, we don’t really expect to grow this at all at this point of time. While we were never in doubt that we should actually get to profitability and all that is not the criteria which we have set ourselves. Or at least that is not the metric which will decide Whether we end up expanding or not, the metric is the membership numbers. They are still at only 164,000 as of now. We need them to go beyond 200 and preferably closer to 250,000 members before we decide on expanding into new states or new cities.
Sanjay
Thank you so much for answering. I will get back into the queue. Thank you.
Mr. Gangadi Madhukar Reddy
Thank you.
operator
Thank you. Our next question comes from the line of Sudarshan Agarwal from Access Capital. Please go ahead.
Sudarshan Agarwal
Yeah, am I audible? Hello? Yeah. So on the branded generic side, I think in the last call you did highlight that, you know, for incentive scheme on the private level side was kind of affecting the branded piece this quarter. Obviously the decline has dropped a little bit to around 3% y on y. Could we expect that, you know, the branded piece to grow going ahead in future quarters?
Mr. Gangadi Madhukar Reddy
No, no, I don’t think so. I don’t think the percentage of private label is going to dip any further or it will go down too much. So it will be there. But we expect as we go forward, as the incentives of the employees are aligned not just for private label growth, but also for top line growth, we will see a overall increase in top line. The absolute numbers of brand agencies may go up with the overall increase in top line. But, but yeah, I, I don’t expect that they will end up being higher at the cost of private label.
Sudarshan Agarwal
Got it, got it. And on the SLG point I understand that, you know, it is better versus last year, last quarter. Sorry, but when do we expect us to be back to let’s say high single digit kind of SSG growed by.
Mr. Gangadi Madhukar Reddy
I think couple, maybe one quarter or two. I think we still need a lot of work to happen at the back end for us to actually really take advantage of whatever, you know, we have in the front end. So that is, you know, slightly, has been slightly slower than what we expected. Although we did open some warehouses. We still need more and so we are getting that done. Maybe a quarter or two is what I think. Two quarters maybe.
Sudarshan Agarwal
Got it, got it. Thank you. This is from my side.
operator
Thank you. Our next question comes from the line of Lakshmi Narayan and KG from Tunga Investments. Please go ahead.
Lakshminarayanan K.G
Hi. A few things. The first is that how the branded fill rates have actually taken place in the last two, two quarters because you mentioned that there were some incentive keys. So just wanted to check if the branded genetics or the branded pharma fill rate dropped in those two quarters and if so, if it was at the employer, the front end did not do the fill rate or the company took a choice of actually pushing the private. What actually took place and how do you track the brand fill rate and where are we now?
Mr. Gangadi Madhukar Reddy
No, it is actually nothing to do. With the brand fill rate. While the fill rate is definitely an important criteria, it is more a function of the warehousing as well as the logistics and purchasing department out there. The employee has nothing to do with their own bill. So as I said, we had a little bit of a challenge on the back end and hence the fail rate was getting affected in some of the places, especially in the slightly more distant places from the main city. So that is one challenge. The employee part comes in only where they’re getting incentives only for, let us say some private label.
And so their interest then is only in selling that and nothing else. And so in some cases we have seen them almost being disinterested when someone else comes from other products. So that has changed. So on their side, as long as the product is there and which is not their work, the product being there in the store is the work of the supply chain guys, they will now basically be more than enthusiastic, at least be not as enthusiastic about selling non private label products.
Lakshminarayanan K.G
Fair enough. And again, if I just look at your omnichannel, omnichannel sales, because last two, three quarters it has been either stable or it has actually declined. And you know, why is that? So is it a. Is it a conscious choice and just want to understand how many orders you actually do, what is the number of bill cuts that actually happen and is it a decline in the value of the bill or the. Or what is what has taken place.
Mr. Gangadi Madhukar Reddy
So I think as a percentage it may not have gone down too much, but it has not been growing. We are now taking steps to make sure that we are able to do this. We are revamping some of our software in order to get this whole thing done. That’s all internally done. So I think maybe a quarter or. Two we should be ready with right now. No, we’re not doing anything. So the only thing which we don’t do like most of the other companies out there, is that we don’t have any special discounts or we do any promotions and all we have found that the cost of acquisition of customers is way too high. It’s not really worth the incremental business. So we have not done much on that. But I think just by there may be a gap in some of our service levels. And that has come out of the huge demand for delivery boys across all the cities in which we have not maybe kept up with the salaries or salaries or whatever is the. This thing which has to be given to the delivery guys. So some of those things are being addressed and I expect that as we go forward we will definitely increase our sales. But no, we are conscious of the fact that some of the customers will want to go online. But we are not, I would say against selling or we have nothing against the online channel.
Lakshminarayanan K.G
What is the average bill ticket online?
Mr. Gangadi Madhukar Reddy
The average bill value for us is north of 1500 rupees per bill because we have a 20% discount above thousand. So a lot of the people who come to us are people who have chronic ailments and all and they will tend to buy slightly on the higher side.
Lakshminarayanan K.G
So yeah, you introduced a platform fee or something, some standard charges. So has it. Does it. Is it meaningful or is it just. Or you intend to increase that also?
Mr. Gangadi Madhukar Reddy
No, no, I don’t think we’ll increase it. The platform fee or I think has been on all the online builds that is there that is in line with most of the other companies. I don’t really expect to increase that in anyway.
Lakshminarayanan K.G
Good, good. Thank you.
Mr. Gangadi Madhukar Reddy
Thank you.
operator
Thank you. Our next question comes from the line of Siddharth Srikumar from itot. Please go ahead.
Sidharth Sreekumar
So my first question is you said that going forward you are seeing only 0.5 percentage growth per quarter for your private label. Does that mean that the percentage of private label in your overall sales will come down and therefore gross margin will also be not 26 percentage going forward?
Mr. Gangadi Madhukar Reddy
No why do you say that? I said you’ll grow from here. Right. So if I’m growing From here by 0.5% every quarter, it should either be. It should actually grow. It’s not going to come down.
Sidharth Sreekumar
But you are saying that 0.5 percentage is the volume growth or is it like the share in your overall sales?
Mr. Gangadi Madhukar Reddy
Share in our overall sales.
Sidharth Sreekumar
Okay. It’s not the growth number. Okay. Second question I have is regarding like when I went for a lot of. You went to a lot of your stores. The one thing which was visible was that they don’t have all the branded generics which are not your brand and therefore some customers are not buying from the store. So do you plan to address this issue in any way?
Mr. Gangadi Madhukar Reddy
As much as possible. It is almost impossible to have 100% fill rate. Will take several crores of inventory in each store to do that. So our goal is to be the best in the market out there. I believe we are still much better than most of our competition. But it is possible that in some places, in some stores, maybe some brand we may not have. It’s a continuous process of improvement actually. And we continue to get better and better.
Sidharth Sreekumar
Okay, so one more question I have was regarding the warehousing like Pan India level. How many warehouses do you have? And like how what, how many stores can one warehouse cater to effectively without actually pressuring your supply chain?
Mr. Gangadi Madhukar Reddy
Sure. So around 40 warehouses is what we are currently having. Including the 10 which we have recently, roughly around 350 to 400. 450 max. We can sweat the each of the warehouse to service our stores in that region.
Sidharth Sreekumar
Okay, so 40 is the overall number of warehouses across the country. And one warehouse can service how many stores? 300 stores.
Mr. Gangadi Madhukar Reddy
350 to 450 range. You know, again, some of the warehouses are purely only pharma. Some cater to the FMCG products as well. And that’s how we think for our current network this would service at least in some areas. We swept up to 500 stores. In some areas this is between 300, 400, which means there is sufficient capacity even to grow new stores in those areas.
Sidharth Sreekumar
Okay, thanks. Thanks for answering questions.
operator
Thank you. Our next question comes from the line of Raman KV from Sequential Investments. Please go ahead.
Raman KV
So I have more. It’s more like a clarification. My understanding is as your private share of private label increases, your revenue. Mr. Revenue, sorry. So level MRP decreases mainly because the cost, average cost of private label medicine is comparatively less than branded generics. Is my understanding right?
Mr. Gangadi Madhukar Reddy
That is right.
Raman KV
So. So if we are growing the private share label, there will be a one, two things there won’t be the same. Store growth will be very hard to achieve and the store level MRP grows will be declining. So how are you planning to address this? One is that. And a follow up on that is you initially mentioned that you the employees were incentivized to push private label products. So, and now you have talked about that the strategy has changed. What was, what’s the change in the strategy? How are you planning to bring same store growth across all the stores of Metroplus?
Mr. Gangadi Madhukar Reddy
Okay, so first of all, if, let us say the private label is sold more, even if the top line actually goes down, the absolute amount of money you make is much higher. So if you are making let’s say X on a brand after the discount, you actually take 2x on this not as a margin or not as a percentage, but actually in absolute terms. So it is actually good if you were to do it. So there’s nothing Wrong now but all the. So that is not the intention though, right? It is not to make private label 100% and not supply the customers what they want.
Because not everyone wants our private label. There will be people who want the brands. So the goal is to basically be a multi branded guy, keep offering our private label and show the benefits of it and keep convincing some people to switch. That’s all. Now on the employee incentive. So where the earlier incentives were only aligned towards improving the private label, now they have a mix where they are supposed to also grow the top line for them to get the private label in sector. So it is, you know, different in different places. I can’t go into the full details but yeah, that’s what it is generally. So they are no longer linked only to one part of their performance. Okay.
Raman KV
And so with respect to capex per store, what’s the capex for per store? For us.
Mr. Gangadi Madhukar Reddy
Typically 7 to 8 lakh rupees per store. It of course depends on the size of the store. The rental advances around 2 to 3 lakhs. So you could say 10 to 11 lakhs overall.
Raman KV
Answer with respect to the. You said now you will be aiming for zero point every increase in private label share products by 0.5% every quarter. So which is. Which is effectively 2% increase from current 13% to 15% by the end of this year. So I just wanted to understand how will the gross margins and operating margins will improve?
Mr. Gangadi Madhukar Reddy
Yeah, it’s a little unlikely that this quarter will also grow. So most likely the quarter after the. The reason I say that is because we kind of achieved the growth of 2 or 3/4 in last quarter and we are stabilizing it out there in Q4. So after that it will continue to grow. So it is going to be a function of, you know, the growth of private label half a percent on net sales value or 1% on MRP value, which is what we have been saying.
Raman KV
Yeah. So how if you, if you are increasing half percentage on net sales value, how much will your gross margin improve? By any ballpark number, every half percent.
Mr. Gangadi Madhukar Reddy
Will probably give it to you by around or give you around 0.2% gross margin improvement.
Raman KV
Okay, thank you sir.
Mr. Gangadi Madhukar Reddy
Thank you.
Unidentified Speaker
Thank you sir.
operator
Thank you. Our next question comes from the line of Mata from Fidelity. Please go ahead.
Madhav
Yeah. Hi sir, good evening, thank you so much for your time. Once again, just one question. I joined the call a little late, sorry about that. Maybe it’s a repeat question but just wanted to understand thinking, you know, going ahead, how is the Management thinking about balancing the margins and the growth, I guess margins have been very strong and seems like we still have levers to grow the private label, which means gross margin should remain strong going ahead. But how do we think about just the top line and the gross margin or EBITDA margin equation for the next sort of few quarters or one or two years? That would be great, sir, thank you. Just want to understand that.
Mr. Gangadi Madhukar Reddy
Okay, sure, sure. So a couple of things. One, the margin can come down if the number of new stores we open are going to be very high. The overall margin, I don’t mean the gross margin. Right. But we expect to open only 600 stores, so it’s not going to be a huge impact on the overall EBITDA of the company. Now, on the gross margin, obviously it is very beneficial for us to continue to grow the private label and we are doing that. But at the same time we don’t want to put off customers who are coming for brands and so that will be counterproductive. So we are going to, as I. Said. We have already realigned some of the incentives and all. So we expect that if not this quarter, from next quarter onwards we will continue with the same kind of growth which is either 1% on MRP sales or half a percent on net sales.
Madhav
Okay. So the mix part is quite clear actually just on getting the top line growth back because I guess if you can balance that with the gross or the EBITDA margin, then sort of earning growth becomes pretty strong for the company. Even now it’s quite good. But just to get the top line moving, you know. Yeah. How do we fit that equation?
Mr. Gangadi Madhukar Reddy
Sure, sure. So we’re doing a couple of things. One, you know, making sure that the back end is strong, it is able to supply in time and it’s able to also do the fill rate properly and all. And also we are aligning our employees into doing a little bit more of the top line sales and everything else. So both those will, you know, help us catch up on the ssg. I don’t think it’s going to be a big concern. So yeah.
Madhav
You know, just on the EBITDA margin side, now that, you know, Q1, we’ve done about 4.5, 4.6% and I guess this is easily one of the weaker quarters for the company. Correct me if my understanding is wrong, please. So is it fair to assume that for a full year basis our EBITDA margin should be north of 5% for sure and maybe moving closer to 6% in coming times? Is that how we should think or that’s being a little too optimistic.
Mr. Gangadi Madhukar Reddy
I think the latter may be a little too optimistic. I think we’ll definitely grow from here as we go forward, especially Madhav, since last year was a very, very strong growth year for us on the private label and as I said, we want to balance it a little bit and grow slightly more moderately at around 0.5 or 1% depending on how you look at it. I think the growth may be not as high as that. And last year also we added only around 350 stores. This year we plan to add at least 600. So yeah, that could also be a slight.
Madhav
So any guidance on the top line growth then? You know, any guidance there for the full year how that could end up for us?
Mr. Gangadi Madhukar Reddy
Not right now. We’ll come back.
Madhav
Thank you so much.
Mr. Gangadi Madhukar Reddy
Thank you. Thank you.
operator
Thank you. Our next question comes from the line of Aradna Jain from BNK Securities. Please go ahead.
Aradhana Jain
Hi. Thank you for the opportunity. I have two questions. The first is if you see the total amount of inventory that we have as on June, it would be the lowest that we have seen in the last seven, eight quarters. Now while we understand the upward push to the level of inventory should be the new store addition and the downward push is the shift from branded Gen Z to pl. But if you could help us understand what is the level of inventory you hold in a store and where do you see the inventory settling and would there still be room to see decline in absolute inventory in spite of new store openings? Yeah, that’s my first question.
Mr. Gangadi Madhukar Reddy
See, new store opening will basically increase the number of days of inventory. That’s all in absolute terms. It’s always going to be around 17 to 18 lakhs of inventory per store per upper store. So that’s going to be the number. But when you every time you open a store, you have to open it with a buffer inventory out there. Buffer meaning you really don’t know what the customer lasts. There is a set of products which have to be there in the store and initially since the store usually starts with around three or four or five lakh rupees per month, you’re going to see a much higher number of days of working of inventory.
So that’s one. So that’s not going to change. Second, on the private label, will it push down the inventory and all it’s still early days because we are not really looking to. So we are actually carrying both private label as well as our own right now. At some point we may get a slightly better Idea of which private label, sorry, which branded generic to drop or which not to stock. And then maybe you will start seeing the decrease of inventory days out there or at least the value if I would say for us as we go forward.
Aradhana Jain
Understood. The second question is how is the acute versus chronic mix currently under pl? Is it similar to the historic levels of chronic more than acute or fat 60:40 ratio or has there been any change there?
Mr. Gangadi Madhukar Reddy
No, it’s always been chronic higher mainly because you know chronic patients usually have a much, much higher need of medicines. They are also since they spend so much more, they are going to be affected a lot more by increase or decrease of discount. And so we expect those guys to actually have it. And that’s been the cause. That’s been the case actually. Chronic is always higher for us.
Aradhana Jain
Understood. That’s all from my side. Thank you so much and all the best.
Mr. Gangadi Madhukar Reddy
Thank you. Thank you.
operator
Thank you. Our next follow up question comes from Sanjay from Bastion Research. Please go ahead.
Sanjay
Thank you for this follow. Sir, my question would be when we say backend and supply chains are the challenging for us so what does that mean? What is the challenges we are facing on backend? And you know, you also also mentioned that you are doing some work on supply chain side so opening warehouses, what else we are doing on that side. If you can explain in detail, it would be really great to understand going forward how things will change from here.
Mr. Gangadi Madhukar Reddy
Yeah, so it’s largely what he said earlier. It’s on the warehousing side. Tamil Nadu basically had one warehouse and it was supplying thousand stores and from Chennai you’re supplying all the way down to Madurai and deep south. And that became a problem out there since until we set up the Madurai warehouse. Now Madurai warehouse is slowly coming to speed and so we will see some of those problems going away as we go forward. Similarly in Karnataka we had one warehouse in Bangalore and it is applying all the way to Bangalore in Rupee. Now we have set up one more warehouse in Ripley.
So a obviously when you have something close by you are able to. So that is one just the distance alone will basically come down significantly when you have a local warehouse and you are able to supply every day. Second part the since we had actually opened a lot of stores very very quickly, the warehouses themselves were a physical constraint. They were overflowing out there and so we are not able to just put in enough stock and have it retrieved on time to send to the stores. These are getting addressed. Some of it is done and some of it continues to Be there.
So we hope in the next 1/4 or so we should be all streamlined.
operator
Thank you. Ladies and gentlemen, please press star and one to ask a question. Participants, if you wish to register for a question, please press star then one. Our next question comes from the line of Omkar Hatkar from Miravilles Investment Trust. Please go ahead.
Unidentified Speaker
Like for example insulin or others like. Say DLP drugs etc. Sorry to. Sorry to interrupt. Sorry to interrupt. Omka sir, we could not hear your question earlier. If you can please repeat the question once again. Okay. Is my line clearer now? It’s. It’s a bit clear, sir. Yes, please go ahead, sir. Okay. Okay.
Omkar Hadkar
Yeah. So my question is on the private label. So at this point in time just wanted to understand in terms of availability of private label across the store network, in terms of what your SKUs you launched, is it fully available? And the second part is are there any other kind of missing categories like for example either insulin or GLP drugs or some other things where there is an opportunity to kind of further introduce private label in the overall network. So some color on that would be appreciated.
Mr. Gangadi Madhukar Reddy
Sure. So today I would say 80% of everything which sells in store we would have a substitute for that. The balance would be some of the patented drugs. A lot of the me too drugs, ATR I would say 75 lot of the me too drugs would be the vitamins and small, I would say very little sold combinations which have got either a small change in the strength of one of the combination products or which has additional mineral or additional kind of vitamin D in a multivitamin kind of complex kind of product. So those I would say, I would say we have equivalents we don’t have the exact equal and we’ll probably never have.
But other than those products I would say we probably have everything other than insulins. Insulins, we haven’t really found a very good, I would say a reliable supplier for us to go forward on that. That’s one. And is there scope for newer products? Definitely, I think. You know, GLP1 GLP. I think both Vigovi and Ozandech are going to come off patent next year and we are getting ready to launch it in the one month or first, one month or so after the product comes off patent.
Omkar Hadkar
Got it. Sure. And I have a question on the diagnostic business. So I saw that right at this point in time you are adding about 7,8000 kind of flies per month per quarter. So just wanted to understand maybe the underlying phenomenon there because I guess you would be also Start you, you would have started renewal cycles of some of the older subscribers. So broadly, what, what are the retention rates like for, for that kind of a business and also to reach your kind of stated goal of 2 and a half lakh subscribers at this current run rate, it looks like it might take a while to get there.
So are you kind of working on any strategies to accelerate the net additions in that business?
Mr. Gangadi Madhukar Reddy
Yeah, we’re looking at a couple of things a little early to say, but the basic listing is going to be around B2B and once B2B kicks in, then having, let’s say 5 or 10,000 per month is not a big deal or even more if you get a large company on board. So B2B has to be the way we have to go. And that’s why we have kind of put off all expansion plans till we can convince people to come on board on the renewals and all. I think within the first quarter, anywhere from 24 to 27% is the usual renewal rate for us.
And after that, see, if it is B2C people are going to come and renew when they need it. They’re not going to renew immediately. A lot of the people are chronic customers, so lot of them may have gotten their test done in the last one month of their membership and they want to wait for one quarter or more till when their next cycle of test starts for them to come and renew it. But the renewals have been fairly steady.
Omkar Hadkar
Okay, okay. And I missed part of the call, but if I can just summarize what you said about the inventory. You mentioned that the overall warehouse level inventory has come down because of the opening of the new warehouses and making it more efficient. And the store level inventory is more a function of the pace of the opening of the stores. Is that the right inference on the way inventory?
Mr. Gangadi Madhukar Reddy
No, no, no, no. The second part is right. The inventory level is not going to come down because of opening new inventories. It is just going to be split between, let us say Chennai and Madurai, where earlier it was only in Chennai. So that is not going to come down. Okay. It’s just, it’s going to go faster into the stores and hopefully with better results and everything else as we go forward.
Omkar Hadkar
Okay. So at the warehouse level the turnovers have increased. That is what is reflected in the days. And at the store level it. The metrics are pretty similar. There’s not much change, right?
Mr. Gangadi Madhukar Reddy
Yeah, it doesn’t change much. You know, in the first one year of its opening it’s always going to have A very high days of this thing out there. But the real metric to see is the inventory of stores which are more than one year and that is usually been constant at around 35 to 40 days. It’s around 39 days I think right now.
Omkar Hadkar
And your old private label inventory, has that largely been cleaned up one way or the other?
Mr. Gangadi Madhukar Reddy
More or less. I think there’s a very small, I would say not a material amount still left. And this is all fully provided for.
Omkar Hadkar
Okay, understood. Great. Thank you. That’s all I had questions. Wish you all the best.
operator
Thank you. Our next question comes from the line of Siddharth Srikumar from. I thought. Please go ahead.
Sidharth Sreekumar
So you said that the most of the private label sales is for the chronic side. So I just want to know what would be the like out of the customers you have in that segment, how many customers do repeat?
Mr. Gangadi Madhukar Reddy
Almost everyone. I mean I’m sure you know there are some customers who don’t. We don’t have the exact numbers for it. But anyone who comes and takes a chronic medication is just going to repeat. We haven’t seen. I would say when we looked at it, it is not dissimilar to any branded product out there.
Sidharth Sreekumar
One more question I have is you have said that 80% of whatever drugs you sell in your stores, you have your own brand for it. So the 80 percentage of the branded generics. Right. And how many have you taken off from your stores?
Mr. Gangadi Madhukar Reddy
Oh, how many branded generics did we remove?
Sidharth Sreekumar
Yeah. And replace with your own brand?
Mr. Gangadi Madhukar Reddy
No, no, that’s not how it works. We don’t replace any of the branded generics. Actually the assortment and the depth of that is completely a function of the sales of the product. Only the sales goes down completely that it actually go off the shelves. Otherwise we don’t take it off proactively.
Sidharth Sreekumar
Okay. Understand. So if I can squeeze in one more like a qualitative question is that what are technical learnings for you? Since the introduction of the private label?
Mr. Gangadi Madhukar Reddy
I think we knew everything. I’m just kidding. So I would have wanted the adoption. To be much faster. Honestly, I thought we would right now be at close to 30% by GMV kind of terms. It is only at 20 out of 80 right now. So it is around 45% of the overall sales. Probably the early adopters after they moved in. I think the rest of the naysayers out there will take a little while to come on board and we are seeing that happen gradually, so slightly slower than expected, that’s all.
Sidharth Sreekumar
Okay, thanks. Thanks for the opportunity.
Mr. Gangadi Madhukar Reddy
Thank you.
operator
Thank you. Our next question comes from the line of Neelam Punjabi from perpetuity. Please go ahead.
Neelam Punjabi
Yeah, thanks for the opportunity and congratulations on the margin execution that we have demonstrated over the last 12 months. My first question is that on a GMB basis overall, how was the growth yoy for the quarter for the pharma business?
Unidentified Speaker
Just hold for a second. Sure.
Mr. Gangadi Madhukar Reddy
I think on a DNB basis it is around 6% is what I remember.6.8.
Neelam Punjabi
Got it. Okay. And my question is on the overall growth. So historically we were growing at a high double digit and you know, in the last four to five quarters we have slowed down to about mid to high single digit growth. And you’ve, you know, mentioned that this is because of private label going up which is at a steep discount to branded generics. However, given that this higher private label is now in the base, can we. Expect the growth to pick up, you. Know, and going go back to the double digit growth that we had historically? Let’s see in the next couple of years.
Mr. Gangadi Madhukar Reddy
Yeah, definitely. You know, it’s going to be a function of two things. One, the number of stores we had and two, the overall growth itself. I fully expect that we will start growing out there. The see one of the things is there’s definitely, I would say a trade off between margins and growth, which is between private label and private label, which basically accounts for the gross margin and just growth which is going to come from selling branded products. So we choose to go the private label way. We wanted to really expand the market, take a form a solid base and from there grow private label slightly in a slightly more consolidated fashion, but again refocus on the branded stuff. So we will now start growing because of that. But for us it is a conscious call. We really wanted to expand the margin and take it to at least 25%.
Neelam Punjabi
That makes sense. But what I’m trying to understand is that while, you know, that has happened in the last, let’s say 12 months or so, is this now a pivotal or a inflection point where, you know, we’ll be able to grow at a better rate compared to the last one year with keeping the margins at this current healthy rate. Like what is that inflection point? Is it today? Is it six months out where the growth would start picking up along with maintaining the kind of healthy margins that we’ve already demonstrated?
Mr. Gangadi Madhukar Reddy
Sure. So two things. One, of course, the reshifting of focus to or realigning the incentives of all the employees to both, to make sure that they sell both banded as well as private label. One second. As I said, streamlining of the overall supply chain and everything else which will take a quarter or two completely to happen. That will also help us increase the fill rate and increase our sales. So both those things will start happening and they’ll result in a top line growth. Thank you.
Neelam Punjabi
Understood. Got it. And just one last question. In terms of our target of 600 store edition, what would be the broad split between the franchisees stores that we’ll be opening and our own stores.
Mr. Gangadi Madhukar Reddy
Thinking. At least 100 odd stores will be franchising? We’re trying to see if we can do more, but we want to make sure that the pilot and all are going well before we really take off on that.
Unidentified Participant
Got it. At least 100.
Neelam Punjabi
Got it. Thank you.
Mr. Gangadi Madhukar Reddy
Thank you. All right.
operator
Thank you ladies and gentlemen. We’ll take that as the last question for today. I now hand the conference over to Mr. Sujith for closing comments.
Mr. Sujit Kumar Mahato
I thank all participants on this call for your interest in the MedPlus journey. Our Investor Relations team can be contacted@iredplusindia.com thank you.
operator
Thank you on behalf of MedPlus Health Services Limited that concludes this conference. Thank you all for joining us. And you may now disconnect your lines.