Chemist Warehouse Merger Drives 36% Normalised EBIT Growth for Sigma

Strong Earnings Momentum Post-Merger

Sigma Healthcare Limited has provided a trading update revealing that the combined group’s earnings before interest and tax (EBIT) growth remains robust following its merger with Chemist Warehouse Group (CWG) completed in February 2025. For the nine months ending 31 March 2025, the group’s unaudited Normalised EBIT growth broadly mirrors the 36% increase CWG reported for the first half of FY25 compared to the prior corresponding period.

This growth rate is notable given the scale and complexity of integrating two major players in the pharmaceutical distribution sector. The merger, structured as a reverse acquisition under Australian accounting standards, treats Chemist Warehouse as the accounting acquirer, consolidating Sigma’s results from the merger completion date.

Transaction Costs and Accounting Nuances

While the Normalised EBIT figures exclude merger-related transaction costs and intangible amortisation, these costs are material. Sigma has incurred $42.4 million in transaction costs to 31 March 2025, with the bulk ($34.3 million) recorded in the third quarter. These expenses reflect the significant legal, advisory, and integration efforts required to complete and consolidate the merger.

Importantly, transaction costs incurred by Sigma prior to the merger date will not be included in the FY25 consolidated financials, which may affect the final statutory earnings presentation. Investors should also note that some earnings included in Normalised EBIT derive from inter-company sales between CWG and Sigma, which will be eliminated upon consolidation.

Looking Ahead to Full Year Results

Sigma plans to release its statutory results for the full 12 months ending 30 June 2025 in August. These results will provide a clearer picture of the merger’s financial impact, including the full integration costs and any synergies realised. Given the strong Normalised EBIT growth reported so far, market expectations will be high for a positive earnings trajectory.

The update underscores the strategic rationale behind the merger, positioning the combined entity to leverage Chemist Warehouse’s scale and Sigma’s distribution capabilities. However, the true test will be how effectively the group manages integration challenges and sustains growth amid competitive pressures.