Sigma Healthcare Limited - 1H25 Results Announcement
SIGMA HEALTHCARE LIMITED (SIG) Share Update September 2024 Tuesday 24th
Sigma Healthcare Announces Strong 1H25 Results with Significant Revenue and NPAT Growth
Sigma Healthcare Limited has reported impressive financial results for the first half of 2025, showcasing substantial growth in revenue and net profit after tax (NPAT). The company's strategic initiatives and operational efficiencies have contributed to these remarkable outcomes.
Instant Summary:
- 17.3% growth in normalised revenue.
- 303.6% increase in normalised NPAT.
- 2.4% increase in costs.
- Inclusion in ASX200 Index in May 2024.
- Interim unfranked dividend of $0.005 per share declared.
Financial Performance
Sigma Healthcare Limited has reported a 17.3% increase in normalised revenue for the first half of 2025, driven by the onboarding of the Chemist Warehouse Group (CWG) supply contract and a 13.0% like-for-like revenue growth across its Amcal and DDS brands. The company also achieved a remarkable 303.6% increase in normalised NPAT.
The operating leverage was impressive, with Sigma seamlessly absorbing a 57% volume growth in July while containing costs. The company maintained strong customer service metrics, with Delivery in Full (DIF) exceeding 99% and stock availability reaching 94.5%.
Operational Highlights
Sigma's strategic execution has been a key driver of its improved performance and cost discipline. The proposed merger with CWG is expected to bring transformational change if approved. The company has also been included in the ASX200 Index as of May 2024, and the Board has declared an interim unfranked dividend of $0.005 per share, payable on 17 October 2024.
Balance Sheet and Cash Flow
The balance sheet remains strong, with Sigma maintaining a net cash position of $234 million. Total inventory increased by $151 million, reflecting the inventory build required for the new supply contract. The company refinanced $500 million of debt facilities maturing in 2026, providing financial flexibility for future growth.
Operating cash flow was down due to investment in inventory for the new CWG Supply Contract and timing of upfront costs. However, Sigma invested $4.2 million over the last 12 months to increase physical and ERP IT system capacity, with no further major capex required.
Merger Proposal with Chemist Warehouse Group
The proposed merger with CWG, announced on 11 December 2023, aims to create a leading pharmaceutical wholesaler, distributor, and retail pharmacy franchisor. The ACCC's decision on the merger is expected on 24 October 2024. If approved, the merger will require shareholder and court approval to complete.
Outlook
Sigma's growth is underpinned by the new 5-year CWG supply contract that commenced on 1 July 2024. The company retains approximately 35% available wholesale capacity to support growth with limited capital expenditure. Sigma expects to deliver FY25 Normalised EBIT of between $50 million and $60 million and maintains its medium-term EBIT margin target of 1.5% to 2.5%.
The strong financial performance and strategic initiatives are likely to positively impact Sigma Healthcare's stock price. The significant revenue and NPAT growth, coupled with the inclusion in the ASX200 Index, will boost investor confidence. The proposed merger with CWG, if approved, could further enhance the company's market position and drive long-term growth.
Investor Reaction:
Analysts are expected to react positively to Sigma's strong financial results and strategic initiatives. The substantial revenue and NPAT growth, along with the proposed merger with CWG, are likely to be seen as positive developments. However, some caution may be exercised due to the pending ACCC decision on the merger.
Conclusion:
Investors should keep a close eye on Sigma Healthcare's upcoming developments, particularly the ACCC's decision on the proposed merger with CWG. The company's strong financial performance and strategic initiatives indicate a positive outlook. Investors are encouraged to monitor Sigma's progress and consider the potential long-term benefits of its growth strategies.