Sigma Healthcare (SIG) H1 2025 earnings summary

Executive summary

• Normalized revenue grew 17.3% in 1H25, driven by the new Chemist Warehouse (CW/CWG) supply contract and 13% like-for-like growth in Amcal and Discount Drug Stores brands.

• The business successfully onboarded the AUD 3 billion annualized CW contract, adding AUD 2 billion in new revenue, and maintained high service levels during the transition.

• Normalized EBIT rose 20.6% to AUD 18 million, and normalized NPAT increased over 300% to AUD 13.7 million; statutory NPAT fell 66.9% to AUD 3.7 million due to one-off merger and onboarding costs.

• The board declared an unfranked interim dividend of AUD 0.005 per share, payable 17 October 2024; Sigma was included in the ASX 200 index in May 2024.

• The proposed merger with CWG remains a key focus, with an ACCC decision expected 24 October 2024.

Financial highlights

• Sales revenue for 1H FY25 was AUD 1.84 billion, up 9.4% year-over-year; excluding divested hospital business, revenue rose 17.3%.

• Normalized EBIT was AUD 18 million (up 20.6%); statutory EBIT was AUD 6.9 million (down 69.4%) due to one-off costs.

• Normalized NPAT was AUD 13.7 million (up over 300%); statutory NPAT was AUD 3.7 million (down 66.9%).

• Gross profit increased by AUD 9.7 million (8.8%), but gross margin declined slightly from 6.6% to 6.5% due to higher PBS mix.

• Operating costs rose 10.4% due to AUD 11.2 million in one-off merger and onboarding costs.

Outlook and guidance

• Normalized EBIT for FY25 is anticipated to be between AUD 50 million and AUD 60 million; medium-term EBIT margin target is 1.5%-2.5%.

• Growth underpinned by the new 5-year CWG supply contract commenced 1 July 2024.

• Negotiations for a new industry funding agreement with the government may provide upside to guidance.

• Company anticipates 35% available capacity for future growth without major capital investment.

• Launch of approximately 220 private and exclusive label products expected in 2H25 to drive margin improvement.