SIGMA Healthcare Limited remains committed to increasing the number of its member pharmacies and focusing on the ongoing merger proposal with Chemist Warehouse Group (PD 07 Dec 2023), as disclosed yesterday in its annual financial results for the full year ending 31 Jan '24.
CEO and Managing Director Vikesh Ramsunder (pictured) described the proposed merger as a "strategic move to diversify earnings, enhance growth opportunities, and provide better support to pharmacy owners".
"We are hopeful of a decision from the ACCC in the second half of the calendar year, which will precede a number of steps required to reach completion."
Analyst Brian Walker from the Retail Doctor Group said, "Chemist Warehouse is really transforming the way retail pharmacy is operating and is showing a strong margin, with 67% of their profits coming from front-of-shop and 33% from scripts, where usually scripts are the mainstay of any pharmacy".
"Sigma is looking to integrate with a vertical business that is valued at $9 billion, with Chemist Warehouse showing strong growth in market share."
Walker added that the industry should also be looking at ways to add protection for other community pharmacies as the proposed merger moves ahead.
Ramsunder commented in his presentation that momentum remains positive, with year-to-date sales up 6.6% for Sigma and the onboarding of the new Chemist Warehouse supply contract commencing on 01 Jul (PD 06 Jun 2023), which "brings more than $2 billion in new annualised revenue".
He expressed satisfaction with the outcomes achieved over the past two years, highlighting the positive impact on shareholder value and growing its Amcal pharmacies to 300 members, and Discount Drug Stores (DDS) to 150 (PD 20 Sep 2023).
"Our attention now turns to supporting our Amcal and DDS brand members to better service their customers, grow their business and their network," commented Ramsunder.
"This will be aided by a stronger balance sheet as a result of the equity raise concluded towards the end of the year, which will also go towards supporting the execution of our private and exclusive label growth," he said.
Furthermore, he explained that Sigma's successful execution of its simplification strategy and divestment of non-core assets has resulted in a leaner operating model, driving a 10.7% reduction in total operating costs.
The company ended the year with a net cash balance sheet of $356.5m, following an equity raise completed in Jan (PD 25 Jan). JG
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