Green Cross Health Posts 28% Profit Rise Amid Digital Push and PHO Launch

Profit Growth Fueled by Medical Funding and Pharmacy Expansion

Green Cross Health (NZX:GXH) reported a 28% jump in net profit attributable to shareholders to NZD 20.4 million for the year ended 31 March 2026, alongside a 4% rise in operating revenue to NZD 546 million. Operating profit climbed 17% to NZD 45.3 million, reflecting gains in both its pharmacy and medical divisions.

The medical division was a standout, with revenue up 8% to NZD 165.8 million and operating profit surging 33% to NZD 26 million. This was largely driven by government funding uplifts including incentive payments linked to national immunisation targets, as well as operational improvements. The division now serves New Zealand’s largest enrolled patient base, with 413,000 across 65 medical centres.

Pharmacy Revenue Growth Masks Margin Compression

Pharmacy revenue grew 2% to NZD 380.2 million, supported by increased dispensing of high-value, low-margin medicines such as the weight loss drug Wegovy and new funded cancer treatments. However, this led to compressed dispensary margins. Pharmacy operating profit rose 4% to NZD 22.2 million, with 38 million prescription items dispensed across the Unichem and Life Pharmacy networks.

Green Cross Health has expanded its Care & Advice Health Hub model to 170 sites nationwide, broadening clinical services and vaccinations, which increased slightly to over 330,000. The launch of a new integrated pharmacy app and online booking system during the year aims to enhance patient engagement and operational efficiency.

Preparing for PHO Launch and Potential Medical Division Sale

One of the year’s strategic milestones is the establishment of a new Primary Health Organisation, Community Care Limited, approved by Health New Zealand and set to commence operations on 1 July 2026. This move will bring funding and decision-making closer to frontline care, with Jessica White appointed as Head of Community Care to oversee the transition.

Meanwhile, Green Cross Health confirmed it is in discussions with third parties regarding a potential sale of its medical division. Details remain limited, and the company has committed to keeping shareholders updated in line with disclosure obligations. This process adds a layer of uncertainty to the outlook for the medical segment, which remains core to the group’s operations and growth.

Operationally, the group invested NZD 11.3 million including store refurbishments and robotics to improve pharmacy efficiency, and major upgrades to The Doctors New Lynn and Mount Wellington Family Health Centre to increase capacity and modernise clinical environments.

Dividend and Financial Position

The Board declared a final dividend of 5.50 cents per share, payable on 22 June 2026. The company maintains a strong balance sheet with a net cash position of NZD 8.6 million and a low gearing ratio of 9.4%. Operating cash flow increased modestly to NZD 54.6 million, supporting ongoing investments and debt repayments.

Green Cross Health’s digital initiatives and expanded clinical services position it well to capitalise on the government’s recent extension of pharmacy services from June 2026, which allows pharmacists to treat common health conditions. However, margin pressures in pharmacy and the uncertain outcome of the medical division sale warrant close attention.

The ongoing rollout of the Care & Advice Health Hubs and the PHO launch will be key operational focuses in the year ahead, alongside advocating for improved funding arrangements and public awareness of pharmacists’ clinical roles.

Investors should watch how the Medical division sale discussions evolve and how the new PHO impacts patient care delivery and financial performance. The company’s ability to maintain margin discipline amid changing product mixes and government policy shifts will also be pivotal.

These developments build on the company’s earlier confirmation of talks on the medical division sale, which highlighted the scale and strategic importance of that segment within the group’s portfolio discussions on Medical division sale.