Sigma Healthcare (ASX:SIG) has posted its latest full year results flagging a revenue decrease of -9% – but a $2B tailwind is expected as it merges with Chemist Warehouse.
On July 1 of this year, Chemist Warehouse’s existing supply deals will transfer to Sigma, which the latter expects to generate some A$2B in revenue.
The company was much discussed in late 2023 after it was revealed it had entered into a merger with privately held Chemist Warehouse Group (CWG).
CWG had been looking to list for quite some time and identified Sigma as the perfect vehicle with the right assets into which the national pharmacy retailer could slot neatly.
Currently, that merger remains the subject of an ACCC consultation process, but is widely expected to go ahead – especially because interest that the merger generated put Sigma back on the map (despite it already being a major player in health.)
Sigma might find itself the less popular cousin at the party once it does merge with CWG, though.
The merger is widely viewed as ‘Chemist Warehouse IPO,’ if you will, and not as a strategic merger that makes Sigma the main keystone.
Despite a decline in revenue of -9%, the company saw earnings before costs rise 62.7% to $31.4M and posted NPAT of $12.7M.
Following an equity raise Sigma holds $356M in cash.
But the real boon for the company is Chemist Warehouse’s supply contract(s) – shareholders will need to wait until FY25 to gorge on the numbers that deal provides.
The company pointed to a fall in RAT sales as a reason behind the revenue decline – perhaps the best way to measure if we really are in a post-COVID world.
SIG last traded at $1.22.