EBOS Faces Transition Risks as CWA Contract Ends but Growth Persists
EBOS Group Limited posted a strong half-year performance with underlying EBITDA up 7.1% to $291 million, driven by growth in healthcare and animal care segments, while maintaining its interim dividend amid the loss of the Chemist Warehouse contract.
- Underlying EBITDA rose 7.1% to $291 million, excluding Chemist Warehouse Australia (CWA) contract
- Revenue increased 9.5% to $6.0 billion driven by healthcare and animal care segments
- Interim dividend maintained at NZ 57.0 cents per share
- Three strategic investments completed in Southeast Asia’s medical technology sector
- CEO transition announced with Adam Hall to succeed John Cullity mid-2025
Strong Underlying Growth Amid Contract Transition
EBOS Group Limited has reported a resilient half-year result for the six months ending December 2024, showcasing the strength of its diversified business model. The company’s underlying EBITDA climbed 7.1% to $291 million, reflecting solid operational execution despite the loss of the Chemist Warehouse Australia (CWA) distribution contract, which impacted statutory earnings.
Revenue rose 9.5% to nearly $6.0 billion, driven primarily by robust performances in the Healthcare and Animal Care segments. The company’s ability to grow underlying earnings while adjusting to the significant volume reduction from the CWA contract loss underscores its strategic agility and diversified revenue streams.
Healthcare and Animal Care Segments Lead Growth
The Healthcare segment generated $5.7 billion in revenue, up 9.7%, with underlying EBITDA increasing 7.0%. Growth was fueled by strong contributions from Community Pharmacy, TerryWhite Chemmart (TWC), and Institutional Healthcare businesses. Notably, TWC expanded its store network by 52 stores to 616, with like-for-like sales growth of 9.3%, reinforcing its market leadership.
Community Pharmacy revenue benefited from approximately $100 million in new wholesale customer revenue, annualizing to over $450 million, alongside accelerating sales of GLP-1 medicines as supply constraints ease. Institutional Healthcare saw a 9.7% revenue increase, supported by specialty medicines and medical technology growth, particularly in Southeast Asia.
The Animal Care segment also posted strong results, with revenue up 6.3% to $304 million and underlying EBITDA rising 7.2%. Growth was driven by the branded business, including Black Hawk and VitaPet, which maintained or expanded market share. New product launches and steady recovery in vet wholesale contributed to the segment’s positive momentum.
Strategic Investments and Operational Efficiencies
EBOS completed three strategic investments in Southeast Asia’s medical technology sector, including two bolt-on acquisitions and increasing its stake in Transmedic to 100%. These moves align with the company’s growth strategy in the region and add approximately $70 million in deployed capital.
Operationally, the group achieved $15 million in cost savings and improved net working capital, resulting in a $205 million underlying operating cash flow, up $90 million year-on-year. The company also refinanced its debt facilities, extending maturity and increasing liquidity, positioning it well for future growth and acquisitions.
Leadership Transition and Dividend Confidence
In a significant leadership update, CEO John Cullity announced his retirement effective 30 June 2025, with Adam Hall set to take over on 1 July. Hall brings extensive global experience in strategic growth and operational excellence, signaling continuity in EBOS’s growth trajectory.
The board declared an interim dividend of NZ 57.0 cents per share, unchanged from the prior year, reflecting confidence in the company’s outlook despite the transitional challenges. The dividend payout ratio stands at 77.3% on an underlying basis, supported by a Dividend Reinvestment Plan offering a 2.5% discount.
Outlook and Market Positioning
EBOS reiterated its full-year guidance for underlying EBITDA between $575 million and $600 million, implying growth of 5-10%. The company’s defensive sector positioning, scale, and diversified growth drivers underpin its resilience amid evolving market dynamics. The active pipeline of mergers and acquisitions suggests further expansion opportunities ahead.
With strong underlying growth, strategic investments, and a clear leadership succession plan, EBOS appears well positioned to navigate the post-CWA contract landscape and sustain its market momentum.
Bottom Line?
EBOS’s ability to grow underlying earnings and maintain dividends despite losing a major contract signals resilience, but the market will watch closely how new leadership and acquisitions shape its next phase.
Questions in the middle?
- How will the loss of the Chemist Warehouse contract affect long-term revenue stability?
- What impact will Adam Hall’s leadership have on EBOS’s strategic direction and M&A activity?
- Can the Southeast Asia investments deliver the anticipated growth to offset domestic market challenges?