Redcare Pharmacy: A Market Divided Over Digital Health Ambitions

Redcare Pharmacy NL0012044747

Redcare Pharmacy continues to post impressive revenue expansion, yet its share price tells a story of persistent investor caution. The digital pharmacy group finds itself at a crossroads, where explosive growth in one segment is counterbalanced by margin pressures in another and a significant debt repayment. The core investment debate centers on the resilience of its business model in this complex environment.

The undeniable success story is Redcare's prescription (Rx) business, particularly in its home German market, driven by the national rollout of digital e-prescriptions. Operational metrics here are exceptionally strong, highlighting the company's deepening penetration in digital healthcare.

Key figures for 2025 underscore this momentum:
* German Rx Revenue: €503 million, representing a 98% year-on-year surge.
* Q4 2025 German Rx Revenue: €155 million, a 59% increase.
* DACH Region Rx Revenue: €1.0 billion, up from €750 million in 2024.
* Active Customers: 13.9 million, having grown by 1.4 million over the year.
* Net Promoter Score: Improved to 74 from 72.

This operational strength, marked by more customers, higher prescription volume, and improving customer loyalty, is the foundation of the bullish thesis. However, the critical question is whether this Rx growth can fully offset challenges elsewhere.

Revenue Growth Meets Market Disappointment

Preliminary group revenue for 2025 reached €2.9 billion, a notable 24% increase from the prior year's €2.4 billion. In the fourth quarter alone, sales rose to €794 million from €675 million.

Despite this top-line progress, the market reaction on January 7, 2026, was negative, with shares falling approximately 8%. The trigger was Q4 revenue missing analyst expectations by about 3%. This shortfall was attributed primarily to weaker-than-anticipated performance in the higher-margin non-prescription (OTC) segment during the traditionally strong year-end period. It signals rising competitive intensity and price pressure in the online OTC market—precisely where Redcare has historically enjoyed superior profitability.

Consequently, the market's focus has shifted from pure sales growth to the quality and profitability of those sales.

Financial Restructuring and the Upcoming Cash Outflow

Adding to the near-term headwinds is a final step in the company's 2025 debt restructuring. On January 21, 2026, Redcare is obligated to pay €64.5 million to holders of a convertible bond who exercised their put option.

This payment concludes a broader refinancing initiative that included:
* The issuance of a new €300 million convertible bond maturing in 2032.
* The repurchase of €157.9 million of an older 2021/2028 convertible bond.

Financially, the company appears prepared for this outflow. Liquidity stood at €265.6 million as of September 30, 2025, up from €177.6 million at the end of 2024. While the payment will reduce the cash balance, it is not expected to critically strain liquidity.

Skepticism Embodied: High Short Interest and Valuation

Market skepticism is quantifiable. Approximately 14% of Redcare's outstanding shares are currently sold short—an unusually high level for the German market. This substantial short interest reflects professional investors' concerns regarding margin sustainability, OTC segment competition, and the stock's risk-reward profile. Such a high short position can also amplify share price volatility in both directions.

This caution is mirrored in the valuation. With a current share price around €62.85, the stock trades roughly 55% below its 52-week high of €138.40. Based on 2025 revenues, the enterprise-value-to-sales multiple is approximately 0.56. This relatively low valuation for a high-growth company indicates the market is currently assigning significant weight to the associated risks.

Analyst opinions remain widely dispersed. Price targets range from €74 to €214, with a consensus average around €142.75. Six analysts currently rate the stock a 'Buy,' with no outright 'Sell' recommendations. A notable recent change came from UBS, which upgraded its rating from 'Sell' to 'Neutral,' albeit with a €74 price target that remains well below the consensus, suggesting a reduction—but not elimination—of pessimism.

The March Report: A Crucial Guidance Update

The next major catalyst for the stock is scheduled for March 4, 2026, when Redcare will publish its full annual report for 2025 and provide guidance for 2026. Investors will scrutinize three key areas:
1. Margin trajectory within the competitive non-prescription segment.
2. Progress on scaling the prescription business and its path to profitability.
3. Expected cash flow generation following the completion of the bond repayment.

The insights from this report will likely set the directional tone for the share price in the coming quarters, determining whether the current valuation is perceived as a compelling opportunity or a justified warning.

@ boerse-global.de | NL0012044747 REDCARE