MELBOURNE: Sigma Healthcare Limited (ASX: SIG) is entering a new era of expansion and profitability following its merger with CW Group Holdings Limited, the parent company of Chemist Warehouse.
The deal, finalized on Feb. 12, positions the newly combined entity as Australia’s leading pharmaceutical wholesaler, distributor, and retail pharmacy franchisor.
The merger comes at a time when the pharmaceutical industry is grappling with regulatory changes, cost pressures, and shifting consumer demand. Despite these headwinds, Sigma reported a 45.7% surge in annual sales revenue to $4.8 billion, driven by its successful onboarding of Chemist Warehouse’s supply contract.
The company also secured a new five-year industry funding agreement with the Australian government, reinforcing its role in the distribution of medicines across the country. The Pharmaceutical Wholesaler Agreement, effective Jan. 1, is expected to yield material benefits from July 2026 onward, bolstering Sigma’s long-term earnings potential.
Efficiency Gains and Operational Synergies
Sigma’s distribution network has remained strong post-merger, consistently achieving a 99% average in Delivery in Full (DIF) and Dispatch on Time (DOT) metrics. This operational efficiency is key as the company integrates Chemist Warehouse’s high-volume retail operations into its supply chain.
The company also reported an 8.5% rise in like-for-like sales among its franchise pharmacy brands, driven by improved customer sentiment and stock availability. The Voice of Customer metric, which tracks client satisfaction, climbed 6.1% year-over-year.
While Sigma posted a statutory net loss after tax of $13.8 million, largely due to merger-related costs, its normalized EBIT grew 183.5% to $68.0 million—demonstrating strong underlying profitability. Analysts expect Sigma’s earnings to improve as it realizes cost synergies and scales operations under the new entity.
The company’s balance sheet remains solid, with Sigma terminating its $500 million debt facility and replacing it with a $1.5 billion syndicated facility maturing in 2028. This move provides ample liquidity to fund expansion initiatives, working capital requirements, and strategic investments.
Looking ahead, Sigma plans to align its financial reporting with Chemist Warehouse’s June 30 fiscal year-end, streamlining operations and enhancing investor transparency.
CEO Vikesh Ramsunder, who leads the merged group, says the combined business is primed for long-term success: “With our expanded scale, operational efficiencies, and enhanced market positioning, Sigma Healthcare is well-positioned to deliver sustained growth and value for our shareholders.”
The merger’s impact extends beyond Sigma, reshaping Australia’s pharmaceutical distribution landscape. With Chemist Warehouse’s retail strength complementing Sigma’s wholesale expertise, the integrated entity could pressure competitors and influence industry pricing dynamics.