Sigma’s Integration Push: Can It Sustain Growth and Manage Risks?

A Year Marked by Strategic Transformation

Sigma Healthcare Limited’s 2025 Annual General Meeting presentation paints a compelling picture of a company in the midst of a successful transformation. The merger with Chemist Warehouse, aimed at combining logistics expertise with pharmacy retail strength, has begun to deliver tangible shareholder and customer value. The company’s leadership highlighted a year of strong cash generation, improved working capital management, and a reinforced governance framework, all contributing to a solid foundation for future growth.

Financial Performance Surpasses Expectations

FY25 saw Sigma Healthcare achieve an impressive 82.3% increase in normalised revenue and a 41.4% rise in normalised EBIT, culminating in a pro-forma EBIT of $903.4 million. This growth was underpinned by a 29% increase in distribution volumes alongside an 11% reduction in costs per unit, demonstrating effective operational leverage. The company also maintained a disciplined capital approach, securing a $1.5 billion debt facility extending to 2028, with just over half drawn at year-end, providing ample financial flexibility.

Integration and Synergies Drive Future Outlook

Integration efforts remain a central focus, with the company announcing the closure of three distribution centres and the conversion of most 'My Chemist' stores to Amcal or DDS brands. The leadership structure has been unified, and a dedicated integration management office established to oversee these initiatives. Notably, Sigma upgraded its synergy target from $60 million to $100 million per annum over the next four years, with the bulk of benefits expected in years three and four, signaling confidence in the merger’s long-term value creation.

Retail Network Expansion and Trading Momentum

The retail footprint continues to expand, with 35 new Chemist Warehouse stores opened during FY25, maintaining a decade-long average. The first quarter of FY26 showed continued momentum, with network sales up 17.9% year-on-year and like-for-like sales growth of 14.7%. The company is also advancing its own and exclusive label brands, including the launch of Wagner generics, to support margin enhancement. Preparations for the critical Christmas trading period are well underway, reflecting operational readiness and confidence.

Governance and ESG Progress

Alongside financial and operational achievements, Sigma has strengthened its governance with robust related party transaction oversight and embedded ESG responsibilities within its Risk, Compliance and Sustainability Committee. The company released a standalone ESG report in May 2025 and is well advanced in preparing for mandatory climate reporting in FY26. Community support exceeded $8 million in FY25, underscoring Sigma’s commitment to social responsibility.