Redcare Pharmacy Faces Dual Challenges as Key Payment and New Rival Emerge

Redcare Pharmacy NL0012044747

Redcare Pharmacy enters the new year contending with a significant share price decline from the previous year and intensifying competitive pressures. The company must navigate a substantial upcoming bond repayment while simultaneously responding to the market entry of a formidable new competitor. Its ability to leverage financial flexibility and operational momentum to defend its market position will be critical.

Market experts hold widely divergent views on Redcare's prospects, highlighting the uncertainty surrounding its competitive standing. A summary of current price targets illustrates this split:

• UBS maintains a "Neutral" rating with a 74 Euro target.
• Deutsche Bank advocates a "Buy" with a 214 Euro target.
• Barclays rates the stock "Overweight" with a 130 Euro target.
• Berenberg also recommends "Buy," targeting 165 Euro.

The average 12-month price target stands at approximately 143 Euro, suggesting notable upside potential from recent levels around 65 Euro. However, the broad range of estimates underscores the clear execution risks the company faces.

Major Bond Repayment Nears Completion

A key balance sheet event is scheduled for January 21: Redcare will repay 64.5 million Euros on a convertible bond following creditors exercising their put options. This payment concludes a comprehensive refinancing initiative undertaken to reorganize the capital structure for 2025.

The series of transactions included:
* The repurchase of 157.9 million Euros of the original 2021/2028 convertible bond in April 2025.
* The issuance of a new 300 million Euro convertible bond maturing in 2032.
* A residual 2.6 million Euros of the old bond remaining outstanding post-January.

These moves extend the maturity profile of the company's debt by six years to 2032, providing appreciable financial breathing room.

Strong Liquidity Provides a Cushion

Despite the imminent outflow, Redcare's liquidity position appears solid. As of September 30, 2025, the company held cash and short-term financial investments totaling 265.6 million Euros. This represents an increase of nearly 50% from the 177.6 million Euros reported at the end of 2024.

This substantial buffer is expected to facilitate the bond repayment without disrupting ongoing operations or planned investments.

dm-drogerie markt Launches Competitive Threat

On December 16, 2025, the retail giant dm-drogerie markt launched its online pharmacy, "dm-med," operated from a logistics center in the Czech Republic. The move directly targets Redcare's core business in over-the-counter (OTC) medications and pharmacy-exclusive cosmetics.

The entry of a financially robust competitor with high brand recognition and a vast existing customer base has the potential to significantly alter market dynamics. In response, Redcare has initiated several countermeasures:
* Commissioning a new high-performance logistics center in the Czech Republic on December 11, 2025.
* Enabling faster delivery times to Austria and Southern Germany.
* Placing greater strategic emphasis on the prescription medication (Rx) segment, where dm is not active.

The company is thus seeking to fortify its position through logistics quality and a focus on the Rx business.

Operational Growth Momentum Continues

Recent financial results demonstrate robust operational performance despite weak share price action. Third-quarter 2025 revenue reached 719 million Euros, a 25% increase year-over-year. Growth was particularly dynamic in the German Rx business, where sales surged by 82%.

The adjusted EBITDA margin stood at 2.4%. The company reported 13.7 million active customers across seven European countries, supported by an assortment of over 250,000 products.

Upcoming Catalysts and Strategic Priorities

The next major milestone is March 4, when Redcare will publish its full 2025 annual report and provide guidance for the current year. This disclosure will be crucial for assessing how profit margins are evolving within the more competitive environment.

Furthermore, the newly appointed Chief Financial Officer, Hendrik Krampe, who joined Redcare from Amazon on December 1, 2025, will be in focus. His priorities for capital allocation and strategic response to dm's market entry are expected to play a pivotal role in the equity's future valuation.