Sigma Healthcare (SIG) H1 2025 earnings summary

Executive summary

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

• The business efficiently absorbed a significant volume increase, maintaining high service levels and flat warehouse costs, with delivery in full above 99% and stock availability at 94.5%.

• Normalised EBIT rose 20.6% to $18.0 million, and normalised NPAT surged 303.6% to $13.7 million; statutory NPAT was $3.7 million, impacted by one-off merger and onboarding costs.

• The board declared an unfranked interim dividend of $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 by 24 October 2024.

Financial highlights

• Sales revenue for 1H25 was $1.84 billion, up 9.4% year-over-year; normalised revenue rose 17.3% excluding divested hospital business.

• Gross profit increased by 8.8% to $119.9 million, but gross margin declined slightly from 6.6% to 6.5% due to higher PBS mix.

• Normalised EBIT was $18.0 million (up 20.6%); statutory EBIT was $6.9 million (down 69.4% due to one-off costs).

• Normalised NPAT was $13.7 million (up 303.6%); statutory NPAT was $3.7 million (down 66.9%).

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

Outlook and guidance

• Normalised EBIT for FY25 is anticipated to be between $50 million and $60 million, with positive momentum in the second half.

• Medium-term EBIT margin target remains at 1.5%–2.5%.

• Company retains 35% available capacity in wholesale to support future growth without major capital investment.

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

• Merger with CWG remains a transformational focus, with ACCC decision pending.