Redcare Pharmacy’s Prescription Surge Tests Margins as Executive Exit Rattles Confidence

Redcare Pharmacy posts record Q1 revenue of €849.5M, but adjusted EBITDA margin falls short at 1.7% vs 2.0% forecast, amid CCO departure and OTC recovery hopes.

The first quarter of 2026 delivered a tale of two narratives for Redcare Pharmacy. While the online pharmacy posted record revenues, a disappointing profit margin and an unexpected boardroom departure have left investors weighing the company’s long-term trajectory.

Revenue Hits New Highs, But Profitability Falls Short

Redcare generated group revenue of €849.5 million in the three months to March 31, a year-on-year increase of 18.4% that landed almost exactly in line with analyst forecasts. The headline number masked a more sobering reality beneath the surface, however. Adjusted EBITDA climbed 58% to €14.4 million, but that figure undershot the consensus estimate of €16.4 million by roughly 12%. The adjusted EBITDA margin improved to 1.7% — still short of the 2.0% analysts had pencilled in.

The divergence between top-line momentum and bottom-line performance stems largely from a structural shift in the company’s business mix. Prescription drug sales in Germany surged 55% to €168 million, now accounting for 37% of group revenue compared with 33% a year earlier. That expansion, fuelled by the growing adoption of electronic prescriptions and an improved user experience — the net promoter score for e-prescriptions hit 76 — is squeezing gross margins. The gross margin fell from 23.3% to 21%, weighed down not only by the higher prescription share but also by the Rx bonus model introduced in September 2025. Efficiency gains in marketing partially offset the damage, with adjusted selling and distribution costs dropping from 19.4% to 16.8% of revenue.

CCO Exit Adds to Uncertainty

The earnings release lands during a turbulent period for the company’s leadership. Late April saw chief commercial officer Dirk Brüse step down for personal reasons, removing a key architect of Redcare’s European expansion. CEO Olaf Heinrich has taken over the role on an interim basis. The departure comes as the company has designated 2026 as its peak investment year, with a new logistics hub in Pilsen, Czech Republic, set to dramatically expand capacity. Newly appointed finance chief Hendrik Krampe, who joined from Amazon in April, now faces the task of demonstrating how these capital outlays will affect free cash flow.

OTC Recovery Offers a Counterweight

The non-prescription business in Germany is showing signs of a meaningful turnaround. Growth accelerated from 5% in the final quarter of 2025 to 9% in the first quarter of 2026, and early April data points to an 11% pace. This recovery in higher-margin over-the-counter sales could prove crucial to bridging the gap between current profitability and the full-year target.

Management reaffirmed its 2026 guidance, projecting revenue growth of 13% to 15%, German prescription volumes above €670 million, and an adjusted EBITDA margin of at least 2.5%. Whether the first-quarter margin shortfall can be recouped by year-end hinges largely on how quickly the OTC segment continues to rebound.

Structural Tailwinds and Competitive Pressure

Redcare continues to benefit from the steady decline of brick-and-mortar pharmacies in Germany. By the end of 2025, just 16,601 physical pharmacies remained in the country, with each closure potentially funnelling more prescription volume into digital channels. The company commands a 67% share of the online prescription market.

Political developments could provide additional impetus. A government-appointed finance commission has proposed doubling patient co-payments, a move that would likely push price-sensitive customers toward online providers. In the OTC space, however, competition is intensifying. Drugstore chains dm and Rossmann are building their own health platforms, though they have steered clear of the tightly regulated prescription market.

A Divided Analyst Community

The stock, which traded around €49 at the time of writing, has recovered significantly from its late-March low of €31 but remains well below levels seen 12 months ago. The wide dispersion in analyst price targets — ranging from €40 at Kepler Capital to €150 at Jefferies — underscores the deep uncertainty about whether revenue growth can ultimately translate into sustainable margins.

The company ended the quarter with 14.2 million active customers, adding 1.1 million over the past year. It also retired €64.5 million in convertible bonds early, leaving cash reserves of €135 million as of March 31. The full quarterly report, due for release today, will provide the granular detail investors need to assess whether the operational trajectory supports management’s ambitious full-year targets.