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Investing.com -- Redcare Pharmacy (ETR:RDC) on Tuesday reported a stronger-than-expected second quarter, with adjusted EBITDA of €18.1 million, 15% above consensus, and a margin of 2.6%, surpassing the company’s full-year target range of 2% to 2.5%.
The higher profitability was attributed to a favorable shift in the company’s sales mix and a reduction in marketing expenses.
In the DACH region, adjusted EBITDA nearly doubled from the first quarter, reaching €20.1 million with a margin of 3.5%, up from 1.8%.
International operations posted €135 million in sales, flat compared to the previous quarter, and reported a negative adjusted EBITDA of €2 million.
Group net sales for the quarter were €709 million, representing a 27% increase from the same period last year.
Sales in the DACH region rose to €574 million, up 27% year over year, while international sales grew 26% to €135 million. Compared to the prior quarter, group revenue declined 1%.
German prescription drug sales totaled €114 million, up 125% year over year. Sequentially, Rx sales increased by €6 million and came in 4% below consensus estimates of €119 million.
Redcare’s share in the German Rx market remained flat at 0.87% from March to June. The number of active customers rose by 400,000 during the quarter to 13.5 million.
The company reiterated its full-year 2025 guidance, maintaining targets of over €3 billion in group sales, €500 million in German Rx sales, and more than €1.9 billion in non-Rx sales.
The adjusted EBITDA margin is forecast to remain between 2% and 2.5%, implying full-year adjusted EBITDA of approximately €68 million.
Based on performance in the first half of the year, Redcare would need to generate €278 million in German Rx sales and €971 million in non-Rx sales in the second half to meet guidance.
This would represent a 25% increase in German Rx sales compared to the first half and a 67% increase year over year.
Second-half adjusted EBITDA would need to reach about €42 million, implying a 2.6% margin, compared to consensus estimates of €37.2 million and a 2.4% margin. The first half recorded an adjusted EBITDA margin of 1.9%.
Free cash flow was negative €5 million in the second quarter, compared to €18 million in the first quarter.
The company reported a cash position of €315 million, up from €137 million at the end of December 2024.
Redcare continues to focus on scaling awareness of electronic prescriptions. A campaign offering €10 vouchers for prescriptions was introduced during the quarter following the removal of the Rx bonus ban in Germany. The company’s mid-term group margin target remains above 8%.
“Following the lifting of the Rx bonus ban in Germany we expect increased marketing campaigns to drive Rx sales in Q3 and beyond,” said analysts at Jefferies in a note.