Sigma Healthcare (ASX:SIG) half-year financial report highlights

Sigma Healthcare Limited (ASX:SIG) has reported a 66.9% decrease in Net Profit After Tax (NPAT) for the half-year ended 31 July 2024, down to $3.7 million from the prior corresponding period. The decrease in NPAT was primarily due to one-off costs incurred in relation to the Chemist Warehouse Group (CWG) merger proposal and upfront costs incurred in preparation for the commencement of the CWG supply contract. However, adjusting for these costs, Normalised NPAT increased by $10.3 million to $13.7 million. The Group's revenue rose by 9.4% to $1.84 billion, with the benefits of the new CWG supply contract beginning to flow through. Sigma Healthcare Limited has successfully onboarded and operationalised the new CWG 5-year supply contract, which is expected to contribute $3.0 billion in annualised revenue, with approximately $2.0 billion per annum in new revenue to the Group.

Executive commentary on Sigma Healthcare's half-year performance

Following a period of strong strategic execution, Sigma Healthcare Limited has a pipeline of growth in a competitive but defensive market segment. The revenue benefits of securing a new 5-year CWG supply contract have started to materialize, contributing to the 9.4% rise in Group revenue to $1.84 billion. The Company has efficiently absorbed the anticipated 40% increase in volume on an annualised basis and expects around 35% available capacity to absorb future growth ambitions without major capital investment. The performance across the logistics network was attributed to improved productivity through disciplined execution, resulting in reduced per unit operating costs. The Group's focus remains on growing its brands, diversifying its earnings, and implementing transformational change for the long-term benefit of the Company's shareholders.

Summary of Sigma Healthcare's half-year financial report and outlook

Sigma Healthcare Limited's half-year financial report reflects a period of strategic execution, marked by a 66.9% decrease in NPAT due to one-off costs related to the CWG merger proposal and upfront costs for the new CWG supply contract. However, adjusting for these costs, Normalised NPAT increased by $10.3 million to $13.7 million. The successful onboarding of the new CWG 5-year supply contract has contributed to the 9.4% rise in Group revenue to $1.84 billion. The Company anticipates around 35% available capacity to absorb future growth ambitions without major capital investment. With the volume growth in place to underpin the wholesaling business model, the focus remains on growing the brands, diversifying earnings, and implementing transformational change for the long-term benefit of the Company's shareholders. The Australian Competition and Consumer Commission (ACCC) has indicated 24 October 2024 as the possible date for an announcement on the proposed merger with CWG, and the Group continues to cooperate closely with the ACCC to address the matters raised in the Statement of Issues.