Redcare Pharmacy’s Q1 Prescription Boom and Short-Seller Pullback Leave the Stock in Limbo

Redcare Pharmacy deploys fully digital identity on German telematics network, posts 55% Rx revenue surge, yet stock trades 34% lower YTD amid short interest decline and neutral technicals.

Redcare Pharmacy has become the first pharmacy in Germany to deploy a fully digital identity on the country’s telematics infrastructure, replacing the physical institution card with a software-based solution developed alongside ehex and D-Trust, a unit of the Bundesdruckerei. The shift to HSM-B technology accelerates e-prescription processing and cuts costs – a meaningful operational upgrade for a company that already controls 67 percent of Germany’s online prescription market. That market is now delivering explosive growth, but the stock continues to trade near multi-year lows, creating a perplexing disconnect between fundamentals and valuation.

The first-quarter numbers underpinning that growth showed German prescription revenue surging 55 percent to €168 million, while group-wide Rx sales climbed 36 percent. Total group revenue rose 18.3 percent to €848 million, with the non-prescription German business recovering to 9.7 percent growth after a sluggish prior period. Adjusted EBITDA jumped 58 percent to €14.4 million, pushing the margin from 1.3 to 1.7 percent. The net loss, however, remained stubbornly flat at €10.5 million, virtually unchanged from a year earlier. The active customer base expanded by 1.1 million to 14.2 million, and the repeat order rate held at 90 percent.

Against this operational backdrop, the short-seller community has been quietly stepping back. Aggregate short interest has dropped to 77 percent of its peak level, according to Bundesanzeiger filings, with ten hedge funds reducing positions, two holding steady, and only one adding to its bet. The decline in short positions since the March lows amounts to 23 percent, a factor that contributed to the stock’s 55 percent rally off the €31.00 trough. Yet that rally has stalled. The shares broke below their 20-day moving average on May 19, closing at €47.60, and ended the week at €44.52 – down 2.1 percent on Friday alone. That leaves the stock 34 percent lower year-to-date and 65 percent below its 52-week high of €127.60.

Technical indicators offer little relief. The 50-day moving average sits at €42.84, providing a narrow floor, while the 200-day average at €61.91 represents a chasm of resistance. The relative strength index of 54.4 points to neutral territory – neither oversold nor overbought. Short-term, medium-term and long-term trends all remain downward, according to chartists, and the recent break of the 20-day line has snuffed out the recovery that briefly pushed the stock up nearly 17 percent over a 30-day stretch.

Management has confirmed its full-year guidance: group revenue growth of 13 to 15 percent, German Rx sales above €670 million, and an adjusted EBITDA margin of at least 2.5 percent. That margin target is modest compared with earlier ambitions. The company has designated 2026 as the peak of its investment cycle, with a new logistics centre in Pilsen set to add 15 million parcels of annual capacity and an automation project at the Sevenum site. The medium-term margin goal has already been trimmed from over 8 percent to more than 5 percent – a significant recalibration that weighs on the equity story. Cash reserves fell from €203.5 million to €135 million, partly due to the repayment of €64.5 million in convertible bonds.

Analyst opinion remains broadly constructive, though the target range is unusually wide. Seven of nine covering analysts recommend buying the stock, two say hold, and none advocate selling. The average price target hovers around €95, with Jefferies at the high end at €150, citing e-prescription momentum and the customer base, while UBS stands at €74, warning of a slowdown in the core OTC business. Deutsche Bank, Berenberg and Baader Bank all reiterated buy ratings after the first-quarter release.

Competitive pressure is mounting in the OTC segment, where dm launched its dm-med marketplace in December 2025. A key defensive moat remains Redcare’s dominant 67 percent share of the online prescription channel – reinforced by Rossmann’s confirmation that it will not sell prescription drugs. Meanwhile, the bricks-and-mortar pharmacy network continues to shrink: at the end of 2025 Germany had 16,601 pharmacies, 440 fewer than a year earlier and roughly 20 percent less than in 2013.

The international segment had a weak start to the year, but management attributed this to one-off effects and said the division would have broken even in the first quarter without those items, leaving the full-year outlook unchanged. The half-year results due in late July will be the next major test, showing whether the margin trajectory is on track. For now, Redcare Pharmacy’s stock is caught between two forces: a genuine operational acceleration and the heavy drag of an investment cycle that investors are still pricing in. Neither has gained the upper hand.