Sigma Healthcare Posts Robust EBIT Growth Post-Chemist Warehouse Merger

Sigma Healthcare delivers a strong trading update, showcasing 36% normalised EBIT growth for the nine months to March 2025, driven by its recent merger with Chemist Warehouse.

  • Normalised EBIT grew 36% for nine months to March 2025.
  • Chemist Warehouse merger, completed 12 February 2025, boosts scale.
  • Transaction costs of $42.4 million excluded from normalised EBIT.
  • FY25 results will consolidate Chemist Warehouse and Sigma financials.
  • Share price fell 4% on 6 May 2025 post-update.

 


Sigma Healthcare Limited (ASX:SIG) is a leading Australian healthcare company specialising in pharmaceutical wholesale, distribution, and retail franchising. Operating brands such as Amcal, Discount Drug Stores, and, following its recent merger, Chemist Warehouse, Sigma supports over 1,200 pharmacies nationwide. Listed on the Australian Securities Exchange, the company has strengthened its market position through strategic expansion and operational excellence.

Normalised EBIT Surges 36% in Nine Months

On 6 May 2025, Sigma Healthcare announced a 36% increase in normalised earnings before interest and tax (EBIT) for the nine months ending 31 March 2025, aligning with Chemist Warehouse Group’s first-half FY25 performance. Chemist Warehouse reported normalised EBIT of $446.1 million, up from $328.4 million in 1H FY24, driven by a 13% sales increase to $5.15 billion. Transaction costs of $42.4 million, including $34.3 million in Q3 FY25, were excluded from normalised figures. Pre-merger sales between Chemist Warehouse and Sigma, included in EBIT, will be eliminated as inter-company transactions in consolidated financials, impacting reported earnings.

Merger Creates $30 Billion Healthcare Powerhouse

The merger with Chemist Warehouse, finalised on 12 February 2025, has transformed Sigma into a healthcare giant with a market capitalisation exceeding $30 billion. Accounted for as a reverse acquisition, Chemist Warehouse is the accounting acquirer, with Sigma’s financials consolidated from the merger date. Sigma’s FY25 results, due in August 2025, will include 12 months of Chemist Warehouse’s financials and Sigma’s performance post-merger. The company is focused on integrating operations to unlock $60 million in annual cost synergies within four years.

Healthcare Sector Drives Resilience Amid Challenges

Sigma’s share price declined 4% on 6 May 2025, as investors adjusted to the elimination of inter-company sales and merger-related costs. The healthcare sector remains robust, supported by Australia’s ageing population and rising demand for pharmaceuticals. Sigma’s operational strength, demonstrated by managing a 40% volume increase from its Chemist Warehouse supply contract, positions it to capitalise on industry tailwinds. The company’s international presence, including new stores in Dubai, adds diversification.

New Stores and Synergies Fuel Expansion

Sigma is well-positioned for growth, with plans to open up to 30 new stores annually in Australia, driven by demand for affordable medications. International expansion, including recent Chemist Warehouse openings in Dubai, enhances revenue potential. With a projected free float market capitalisation of $4.1 billion, Sigma is a candidate for S&P/ASX 100 index inclusion, potentially attracting institutional investors. Operational synergies and a diversified earnings base further strengthen its outlook.

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