QMS Medical Allied Services Limited (QMSMEDI) Q2 FY2026 Earnings Call Transcript & Summary

Ladies and gentlemen, good day, and welcome to the QMS Medical Allied Services Limited Q2 and H1 FY '26 Earnings Call hosted by Stellar IR. [Operator Instructions] Please note that this call is being recorded. I now hand the conference over to Mr. Mahesh Makhija, Chairman and MD from QMS Medical Allied Services Limited. Thank you, and over to you, sir.

Thank you. Good afternoon, ladies and gentlemen. I'm Mahesh Makhija, Chairman and Managing Director of QMS Medical Allied Services, and I welcome you all to the Q2 H1 FY '26 earnings conference call. Our financial results and investor presentation has been uploaded on the stock exchange as well as on our website. And I hope you had the opportunity to review them. We are pleased to report a steady and a consistent performance for the quarter. For Q2 FY '26, net revenue from operations stood at INR 44.7 crores, reflecting a 20% year-on growth. The operational execution remains strong across our B2B pharma partnerships and point-of-care offerings. During the quarter, we delivered an EBITDA of INR 6.9 crores, translating to an EBITDA margin of 15.5%. PAT for the quarter was INR 3.6 crores with a PAT margin of 8%. Looking at the first half performance, H1 FY '26 net revenue from the operations was INR 91.2 crores, registering a 35% year-on-year growth. For the first half, we achieved an EBITDA of INR 13.4 crores at an EBITDA margin of 14.7%. PAT for the H1 FY '26 stood at INR 6.7 crores, reflecting a PAT margin of 7.4%. These results reflect the strength and resilience of our operational model, supported by consistent performance across both our services and product verticals. Our product business continued its positive trajectory driven by a stable demand across health care and wellness categories, including our flagship devices brand and also with a strong distribution partnership and a growing presence across our e-commerce platform, QMS Medical (sic) [ QMSMEDS ], the government E-Grameen portal and our digital marketplace, our product footprint continues to expand across geographies. Our service business remains a key strategic driver, benefiting from deeper engagement with leading pharma clients and increasing adoption of the structured patient support programs across therapy areas. The successful integration of Saarathi Healthcare in which we hold a 76% stake has further strengthened this vertical by enhancing our capabilities and expanding our reach within India evolving patient service ecosystem. I am pleased to share that we conducted more than 16,200 B2B health care camps in the H1 FY '26. This reflects our strong field operations and upgraded back-end and administrative processes, enabling superior execution of our pharmaceutical partners. These investments position us well to continue delivering reliable, high-quality services at scale. Across the organization, we continue to invest in capability building, technology adoption, brand strengthening, field force expansion and operational discipline. These initiatives are timely and strategic, particularly as we support the pharma clients through the upcoming brand planning cycle. With a steady first half behind us, we enter the second half of FY '26 with confidence and clarity. The Indian pharma promotion landscape is evolving rapidly and the shift towards patient-centric engagement models is executing. Our long-standing relationship with marquee pharma companies and reputed device manufacturers position us well to capitalize on this dynamic environment. Looking ahead, we remain confident of sustaining our growth momentum through strategic partnerships, the expansions of our Patient Service Programs and the scaling of health care camps across therapeutic areas. With a capable team and a strong execution-focused approach, QMS is well positioned to leverage India's evolving health care landscape and deliver long-term value for all our stakeholders. Before I conclude, I would like to express my sincere gratitude to all our employees, partners, clients and shareholders for their continued trust and support. With that, I would like to hand the call back to the moderator for our question-and-answer session. Thank you.

[Operator Instructions] We take the first question from [ Sameera Mehta ], an individual investor.

Sir, I have 2 questions. My first question is, as mentioned earlier that the company is going to increase its stake in the Saarathi from 51% to 76%. So that acquisition has been completed, I know. But are those financial numbers included in the revenue of Q2 FY '26?

See, the acquisition just got over right now, okay? We got the -- the 26% numbers will come from the next quarter actually.

Okay, sir. And sir, what are the EBITDA margins in product segment and service segment?

[indiscernible] service EBITDA margin is around 20% to 22% and our product is around 10% to 12%.

We take the next question from [ Nish Shah ] from Stellar LLC.

Sir, my first question is a very different segment in the entire health care ecosystem. So can you please explain in detail about this industry market size and the target customers?

I would like to hand over the mic to Mohit, who is an executive patients [indiscernible] from Saarathi, he'll explain on this right now.

Yes. So I think first of all, it's the basic fundamental contextual patient support program is patient adherence to the therapy which is written by the doctors. So for example, when a patient walks into a doctor's chamber, the doctor writes a prescription to that patient depending on the disease after the diagnosis. And then the patient journey begins. And as you can understand, depending on the disease, that patient journey is lots of peaks and valleys depending on a disease. Let's take an example of diabetes. Now diabetes can have different ramifications of insulin dependent or a complication of diabetic retinopathy or nephropathy, et cetera. So when the patient has this journey, there are many milestones that the patient needs to achieve for him or her to have a compliant, adherent and treatment outcomes of reducing blood sugar, HbA1c and thereby diabetic complications. Patient support program actually bridges all this gap of the patient journey right after the prescription of the patient from the doctor. So we, in QMS and Saarathi coordinate these patient programs on behalf of the pharmaceutical companies. And these pharmaceutical companies run different types of patient support programs. There are some which are run on telephone, say, a nutritionist call. There are some which are run on field. So we do field counseling programs, early screening programs, et cetera. There are some which are more physical and digital in nature, where we have a lot of digital touch points, which we give it to the patients. So the entire objective of running patient program is to help patient to adhere to the treatment that the doctor has prescribed. And in that journey, help the patient to build on to better outcomes, treatment outcomes so that we can reduce the morbidity and mortality. Secondly, the other important piece of the patient program are the treatment outcomes. So whether the patients, for example, weight has been reduced or not, whether the patient's HbA1c has been reduced or not, et cetera, et cetera. So in this particular context, we have also tie up with most of the major labs across the country where we give diagnostic services to the patients at home or otherwise. And we also have point-of-care services, which helps the patients and the doctors for early diagnosis as well as at-home treatment so that the patients can avail the services and say that the HbA1c has reduced, say, from 8 to 7 or 7 to 6 in that patient support program. So if you look at the market, the overall pharmaceutical market, I'll just give a ballpark number, say it's [ 2 lakh crores ] or [ 2.5 lakh crores ] depending on the quarter that you are looking at. Generally in earlier days, 10% of the total market is the advertising spend from the pharmaceutical companies. And as we know that the top 5 to 6 pharmaceutical companies have market share of 50% to 70%. Now these are the top companies who are actually running these patient programs. And in last 2, 3 years, the shift has been there from a doctor spend predominantly to the patient spend. So if INR 100 is there, let's say, from an [ AdPro ] perspective from a pharmaceutical company, earlier, the company was spending, say, INR 90, INR 95 on the doctor. Now they are moving away and spending probably INR 20, INR 25 on the patient support programs, which gives them an edge in the market in terms of adherence as well as differentiation in the doctor's chamber as well as helps the patient to adhere, as I said, to the treatment and thereby improving the company's sales with the compliance that the doctor has written. So for us, it's important that we expand this market by having differentiated approach to these programs as well as provide innovative solutions, which is tech-enabled, which is digital tech-enabled, which is a lot of things that we are doing also with the financial access. A lot of multinational companies, as you might know, have a global floor pricing where affordability becomes a big problem. We are also tying up with the financial fintech companies where a lot of these types of loans are given to the patient to help them access to the treatment better. And also, we run a very large piece in the disease management program, which is known as PAP, the patient assistance programs in which, let's say, in oncology, which is high-end disease area, a lot of global floor pricing drugs are launched, say, 1 lakh treatment or a 2 lakh treatment. And these are all things which helps say, 2 plus 1, which is -- or 3 plus 1, which is given to the patient, and these are also things which helps improve the access to the patients. So with this, we feel that we provide a one-stop shop solution to the patient support programs as well as patient adherence programs to the companies as well as creating a niche for QMS in the market so that all the companies who are looking forward for such programs, we can give them support at one [indiscernible].

Okay, sir. Understood. So just a follow-up on this. You said the prescriptions you get from doctors. So let's say, once you get the prescription and you sign up with the customer, so you will be coordinating with the customer directly or the doctor or the hospital staff would be between us for point of contact?

Yes. So it depends. Generally, we follow up from the patient. So patient is given a toll-free number or a QR code or a missed call, we receive that in our back-end office and then we connect it to the patient, know the doctor's prescription and the journey begins from this.

Okay, sir, understood. So any other players currently in this segment?

We are probably the largest players. There are a few small players which are there in the market, but we are creating and shaping the market currently.

Okay. Got it. Sir, one more thing. Recently, there was an article from SEBI in the news about the IPO funds misallocation of something. So can you please provide some clarity on that point?

Yes. We read that article. But from our point of view, 2 years back also, we have updated all our details on the NSE Board also. Our auditors had approved it. We had forwarded to NSE that time. By this month of May, and we had certain clarifications from SEBI regarding that. We had 3 mails. We had gone -- fund that [indiscernible]. We answered these questions. After that, we have not got from any of them, many of them. Our auditors have approved it post after that also, when we applied to our right issues also after that, we got the permission for the right issue. So we have nothing to hide anything on this story. We have [indiscernible] that article has come. It has nothing to do, honestly speaking, other than that, yes, [ FOCL ] had -- was a merchant bank. I mean, to my own knowledge, it's -- that's it for us.

Okay. So there's no material impact on books as such?

No, nothing.

Okay. One more thing, sir, EBITDA margins have declined from as compared to last year quarter. So...

See, we've been invest -- there are 2 things. A, obviously, the pricing, a lot of camps pricing and all that have been rectified right now based on the volumes. So larger discounts have been given on that so that the volume increases. Second, we have invested a lot of things on our infrastructure right now and on the people and all if you see that. So these are the basic reasons for that.

So going forward, when do we see these things getting normalized?

In another year's time.

[Operator Instructions] Our next question is from [ Shotta Gandhi ] from Family Office.

So sir, I wanted to understand from a point of view of care vertical. So if you could walk us through how QMS defines its offerings in context of its broader health care model and specifically, how does point of care operate inside clinics of camps and what kind of screening, diagnostics of patient interactions happens there? And how this is contributing to our patient engagement and early intervention?

Yes. They achieved -- the points of care basically comes under our 2 categories, both into our product categories also and camps categories also. We have import to 3 brands actually right now under our -- we have a CDSCO license for HbA1c strips for lipid profile and for [ anti-proBiser ]. So these are the products which we import under our product. I mean we have -- as I said, we have the license, which is used. These are the HbA1c strips and the lipid profile strips, which are used in the doctor's clinics actually for screening the patients. Either the screening is done directly from the doctors on their point, they do it on their own, or second, when it is a part of our camp where we are doing a lot of other activities like we are doing a diet counseling or other diabetic retinopathy or other type of a test, we bundle these things together and we do that. So it's sold both as a product category also as a camps category.

So I assumed these devices and consumables deployed at point of care clinically, are the same which we give to pharma companies and hospitals?

No. See, I mean -- sorry, I didn't understand your question. Can you repeat this?

So basically, I was just trying to understand the product types which we are using in point of care, are these same which we are selling to pharma companies and hospitals? Or these are different from those?

Yes and no, actually.

Some are the same, some are different depending on the need of the company. So for example, a diabetic retinopathy device might be different in a pharmaceutical company versus the camps depending on what kind of camps that we are doing. So some can be the same, some can be very different.

Okay. Okay. Understood. And sir, extending our discussion on point of care. So recently, in presentation, I saw you guys have held around 16,200 B2B health camps in the first half. And I guess it's a very significant operational footprint for a company. So can you elaborate a little bit more on the execution backbone that allows you to deliver at this scale? For example, how your field forces are...

We have 120 sales officers who are across 5,000 postal codes -- catering to 5,000 postal codes across the country, okay? Now each of my person carries all these diabetic equipment, HbA1c, BMD machines and all the [indiscernible] depending upon the number of camps which we do. And we have a portal on which the pharma companies, medical blog, the portal books at camp. And our immediately relevant field officer goes and [indiscernible] camps in the doctor clinic actually. It is how the system works. The medical rep does not have to come back to us and asking us whether this data is available. He can just go on that system and he can just block these camps straight away. And we have 120 people across the country doing these camps actually. Plus we have our free network -- dietitian network of almost around 900 dietitians who are working with us on freelancer basis actually. So this is a small operational system that we operate upon right now. Coming in this few years -- I mean, coming in this few weeks' time, we are increasing this number of people also right now in that field force.

Okay. And sir, I just wanted to understand, we have done around 16,000 in last 6 months. And currently, if you can throw some light on what's the current monthly run rate or how many camps we are holding each month? And what...

I can give you -- these figures are around 2,500 to 3,000 camps per month actually.

Okay. So additional 18,000, 19,000 are we expecting...

We expect at least to retain the same number, 16,200 numbers at least. So we expect to close at around that same number, [ 16,000 ] camps aprox.

Our next question is from [ Roha Ghandi ], an investor.

So I wanted to know like there's been a decline in quarter-on-quarter revenue dip. So I wanted to understand the reason behind the scene.

Not a decline in our revenue actually [indiscernible] in the sense...

Q1 to Q2. I mean...

It's the same number actually, which we are talking about. Maybe the number of camps must have gone postponed to next quarter that way or some of the orders must have gone to next quarter, I mean, that way. Otherwise, we'll be working consistently on the same thing.

So if you see our financials for the last couple of years, if you go quarter-wise, normally, Q1 is on the higher side. Q2, Q3 tend to drop a little bit and then we pick up in our highest quarter is Q4. This is a trend that's been repeating itself over the last 5 years. This is because the pharmaceutical companies tend to engage their campaigns at the -- in the first quarter. And in the fourth quarter, then utilizing their marketing budgets to the point of efficacy. So this is why you will always -- if you look at all our numbers, this is following that same trend. However, if you compare Q2 FY '26 to last year, there's a significant increase in the turnover.

Okay. Yes, sure. I wanted to understand that there has been a little bit of margin drop as well year-on-year given the -- like we are investing in people, technology and our expansion in the field. So I wanted to understand like will the margins be improving from here on? Or will it be like sustainable on this level?

Margins drop basically, as I already answered in the previous, somebody asked me, it is, yes, there has been certain pricing discount structures on the number of camps from the companies which we are going. So there is some price rationalization on the camps happening right now. And then we have invested heavily on the new people and new infrastructure, which we are going. So going by next year onwards, we should see a stability on that actually, of this.

Okay. And last question, could you just give a breakdown of the margin profile between the 2 verticals that is service and the product business?

The margin breakdown for products is approximately 10% to 12%, as we stated earlier. And services, we can take between 20% to 25%.

[Operator Instructions] We move to the next question from [ Raj Doshi ], an individual investor. There seems to be no response from this connection. We will therefore move to our next participant that is Shotta Gandhi from Family Office.

So I just wanted to understand on a very broader view, if you can outline what your key short-term priorities are for the next couple of years, maybe 3 to 4 years. And in terms of both fundamental execution and financial outcomes, what you're expecting maybe in 3 years, where you are wishing to go? And at the same time, if these 3 years are okay, but in the long term, maybe in the 10 years, 12 years, where do you see this company to be?

Yes. So I think -- thanks. This is a good question. So first of all, our key priorities for next 1 or 2 years is, first, the integration of QMS and Saarathi with respect to what we want to achieve not only from an innovation perspective, but also from a differentiation perspective. The second will be to expand our market base in the patient support programs, both in terms of depth and width with the value addition and the services that we have been building since last couple of years. And third will be continuing to grow our B2B business in different geographies and expand the screening camp business in different geographies so that we can gain economies of scale and have a broader pan-India reach, both in terms of differentiation in the therapy areas as well as in the innovation in the diagnostics and the point-of-care space. So I think these are the 3 broad things that we want to do in the next 2 to 3 years. In terms of long term, I think what we want to do is we want to make sure that QMS becomes a one-stop shop solution for all the pre-diagnosis, early diagnosis, point of care, early screening, marketing activities for all the pharmaceutical companies, which is even the second tier and the third tier pharmaceutical companies. Second most important thing is that we want to also become leader in launching the brands with the multinational companies are coming to the country. So we can help them in market access. We can help them in making sure that they penetrate to a broader geography and to the patients and help them to capture the market and the disease area in probably first 1 or 2 years rather than waiting for 5 to 10 years. Because then by then, we will have built up the expertise on different therapy areas as well as on the access programs that we are now working in. And third, we will also try and go to different international forums and geographies, which will start from Asia Pac. And we have a decent amount of understanding as well as the research that we have done. But probably once the 3 things that I told you in the beginning, first 2 years will be over, we'll then do a pilot and see how we expand in the broader Asia Pac market because most of these countries are now mimicking the Indian health care, like, for example, Vietnam, Cambodia, et cetera. And in next 5 to 10 years, these are the markets that will help us to grow both from the international footprint perspective, but also from the innovation and what we want to draw with the multinational companies. So I think these are the broader short-term and long-term perspectives that we look in next 2 to 3 years as well as 10 to 12 years.

Understood, sir. That's a great reason. But again, you mentioned a lot of things that you wish to do in the coming few years in 5 to 10 years. But what do you think from a point of view where you'll have to build the capabilities for all of this to be in the top company, top leader, top industry? So what all things do you think company needs to do in case you have to build all these capabilities?

So I think 3 main things are people, product and infra. In terms of people, Mahesh has already mentioned that we have not only skilled people, but also improving on the training and the capabilities with respect to talent hiring, talent retention as well as attraction. Second is the infrastructure that we said, both from the office infrastructure as well as the back-end infrastructure. So we will integrate a large team now as we speak of more than 150 to 200 seats counseling center that we have in Saarathi and QMS running probably the largest program in the industry. And the third is the innovation, health tech as well as technology piece, which is, as you know, because of the advent of AI, it will make larger inroads in the health care segment. And we want to keep pace with that by offering innovative solutions, which is both digitally as well as technically sound to help address the unmet need in the Indian health care market.

Okay. Understood. And sir, you just mentioned AI. So have we started integrating AI into our processes systems...

Yes. The answer to that is yes, it's still a long journey. As you can understand, AI as a broad scope. Right now, we have started both from a point of view of the analytics with respect to our camps that we are doing as well as CRM. But having said that, there are a lot of other things that we want to stack up with AI in future with respect to what treatments work, which geographies have disease areas, what kind of demographics India had, which type of patient program works. So we will become probably one of the largest custodians of data of these patient support programs in next 5 to 10 years with the help of AI. And the analytics that we will generate will help drive this market's future in the health care segment.

Correct. Correct. Because I saw massively, you will be doing 32,000 camps and across them, you will be having a lot of data. So managing that data and using for future plans, it will be a great help, I feel. And that's a great thing to initiate. And also something on the number side, if you can give. So currently, we are doing INR 150 crores, INR 160 crores annually on a [indiscernible] [ INR 156 crores ] we did last year. So what's our vision in the next 3 years, maybe FY '28, where we want to go and...

From the product side of business, we expect a growth of around 10% to 12%. That means the industry is growing around 10% to 12% the pharma industry. We expect that same type of a growth. But yes, obviously, our significant growth will obviously come from our Patient Service Programs, which we anticipate that we grow at least double digit number actually more than the product service, around 20%, 25% approximately that. So that's the number -- that percentage which we are looking at actually.

And if you can throw some light on the margin front, it will be great for us to value the company.

Margins -- definitely, we would -- from current what stage we are, we'll be definitely improving our margins that goes without saying. That is for sure. And a lot of other investments which we've been doing right now in infrastructure, people and all, the results will start showing in from the next year onwards actually. So definitely, we can assure you that yes, there will be a better percentage increase in the margins actually.

So can we see margins in the range -- it's totally up to you if you want to give this number around 20% going forward?

I wouldn't be able to comment on that. That is super confidential.

[Operator Instructions] We take the next question from Nish Shah of Stellar LLC.

So with respect to the vision you shared the earlier participant, so my question is where do we see QMS positioning itself? Are we increasingly becoming a specialized service provider device player? Or we would like to indicate in [indiscernible] platform?

So we are already positioning ourselves in that category mission thing. I think we tried specifying that differentiation and innovation in some of the answers earlier given. But having said that, what we want to do also, as I mentioned, is that a lot of innovation which is happening in the tech area, we want to adopt that and make sure that while we move forward with respect to the numbers, with respect to the data, the reach, the penetration, we also give the innovative solutions being one of the leaders in the market, which probably the companies do not envisage at this point of time. So I think those are things that we want to position ourselves as we already have so many years of data and so many years of experience with the large pharmaceutical companies, including Mahesh, who's been there in the market for the last 30 years. I think these are very, very strong for us not only with respect to the experience that we have, but also to understand what are the unmet need and therefore, position ourselves as one of the key innovators and differentiators in the health care market.

Okay, sir. Understood. Sir, as you said also for the service sector, you would like to grow by 20-odd percent double the product side. So what do we see going forward, let's say, for FY '27, FY '28? What would be our service sector share in the overall revenue?

I've already given you my percentage breakup of revenue actually. This year probably would be around approximately around INR 50 crores with the approximately on the service side of what we end this year. In the half year, approximately the service side is roughly around INR 26-odd crores right now for what we have done. So based on that, I think you can work out actually the figures technically speaking on that.

Okay, sir, so this is for this year. Next year going forward, I was asking, let's say, for FY '27?

I told you I've been growing at my product side, we will be growing around 10% to 12%. And services double the growth actually that way.

Okay. Got it, sir. So also, if you could throw some light on the [ homelight ] program, which you are running.

I'm running the program of Lupin, which we are servicing that program.

Okay. So I think, sir, what is the tariff we cover [indiscernible] and what is the patient...

Yes. So I think what we are doing in HumRahi is probably one of the -- as I told you, one of the largest programs that we are running. That's a hypertension program. So it is for blood pressure, it's for lipid lowering. It's basically cardiovascular, including diabetes. So a lot of comorbidities, which are there with patients who have been history of diabetes or hypertension. We have been counseling these patients over a period of last many years. And this is one of the largest program -- organized program, if I may say so, in mass disease specialty that we are running since last couple of years. And as we speak, we are going to augment this program in HumRahi 2.0, where these are things which are important from a point of view of a company because it's been technically very, very innovative program that we have been running in the last 2 years.

Okay. So HumRahi 2.0 will also be for Lupin?

Yes, obviously.

Okay. And any other program we are running or I mean...

There are more than around 16 programs right now which Saarathi is running on its own actually at this moment. And there are a lot under pipeline discussions going around right now. As I said, the space is just opening up right now. So I mean this time is basically the pharmaceutical planning and time right now. All the conclusions should start coming up by the month of February, March.

Thank you. As there are no further questions from the participants, I now hand the floor back to the management for closing remarks. Over to you, sir.

Thank you. Thank you once again for your trust in us and for being a part of our journey. We look forward to sharing our success with you in the next earnings calls. In case you have any other queries post this call or anything else remains unanswered from our side, you may please connect to our IR team. Thank you again. Have a good day.

Thank you very much. Ladies and gentlemen, on behalf of Stellar IR Advisors, that concludes today's conference. You may now click on the Leave icon to exit meeting. Thank you for your participation.