Merger Costs Cloud Sigma Healthcare’s Profit Despite EBIT Upgrade
Sigma Healthcare has raised its FY25 normalised EBIT guidance to $64-$70 million, driven by robust operational performance and the successful rollout of a key supply contract with Chemist Warehouse.
- FY25 normalised EBIT guidance upgraded to $64-$70 million
- Strong operational execution of Chemist Warehouse supply contract
- Previous guidance was $50-$60 million
- Statutory NPAT impacted by non-recurring merger-related costs
- Full audited results expected mid-March 2025
Upgraded Earnings Outlook
Sigma Healthcare Limited has announced a significant upgrade to its full year normalised EBIT guidance for the fiscal year ending 31 January 2025. The new range of $64 million to $70 million marks a notable increase from the $50 million to $60 million previously forecasted in September 2024. This upward revision reflects improved operational performance across the business.
Operational Strength and Contract Execution
Central to this positive update is the strong execution of the new supply contract with Chemist Warehouse, which commenced on 1 July 2024. Sigma’s ability to efficiently absorb volume growth under this contract has been a key driver behind the improved earnings outlook. This contract is a critical component of Sigma’s strategy to expand its market presence and leverage scale in the pharmaceutical distribution sector.
Merger Costs Cloud Statutory Profit
While the normalised EBIT guidance has been upgraded, Sigma cautions that statutory net profit after tax (NPAT) for FY25 will be significantly affected by non-recurring costs related to its ongoing merger activities. These include impacts from changes to existing performance rights, as approved at the recent Extraordinary General Meeting (EGM). Such one-off expenses are expected to weigh on the bottom line despite operational gains.
Looking Ahead to Full Results
Investors and analysts will be watching closely for the release of Sigma’s full year audited results, anticipated in mid-March 2025. The final numbers will provide clarity on the net impact of operational improvements versus merger-related costs, offering a more comprehensive view of the company’s financial health and strategic trajectory.
Overall, Sigma Healthcare’s upgraded guidance signals resilience and adaptability in a competitive healthcare distribution market, underscoring the company’s capacity to capitalize on new contracts and operational efficiencies even amid transformational corporate activity.
Bottom Line?
Sigma’s upgraded EBIT guidance highlights operational momentum, but merger costs keep investors cautious ahead of full-year results.
Questions in the middle?
- How will the non-recurring merger costs ultimately affect Sigma’s long-term profitability?
- What operational strategies enabled Sigma to absorb volume growth so effectively under the Chemist Warehouse contract?
- Could further contract wins or expansions drive additional upgrades in FY26 guidance?
