Redcare Pharmacy Faces Core Business Challenge from Retail Giants

Redcare Pharmacy slashes profit targets as brick-and-mortar rivals dm and Rossmann attack its core OTC business online, sending shares to a 52-week low.

Once a market darling, Redcare Pharmacy is navigating a significantly altered competitive landscape. The company's management has been compelled to issue a stark downward revision to its profit forecasts, despite reporting robust revenue growth last year. This strategic pivot comes in direct response to the aggressive entry of major brick-and-mortar drugstore chains into the online pharmacy sector, where they are directly targeting the lucrative over-the-counter (OTC) medicines business that forms a core part of Redcare's operations.

The fundamental market shift is reflected sharply in the company's share price performance. On Thursday, the stock declined to a new 52-week low of €31.88, extending its year-to-date loss to more than 52 percent.

Profitability Pressures Mount

The central issue for the online pharmacy is not a lack of growth. In 2025, the group's revenue actually increased by 24.1 percent to €2.94 billion. Instead, investor concern is squarely focused on future profitability. Management has slashed its medium-term target for the adjusted EBITDA margin from over eight percent to just more than five percent. Furthermore, for growth in the OTC segment, CEO Olaf Heinrich now anticipates an increase of only eight to ten percent, a substantial reduction from the previous 16 percent expectation.

This strategic recalibration is driven by intense new competitive pressure. Since December 2025, the drugstore chain dm has been selling approximately 2,500 non-prescription products via its "dm-med" platform. Competitor Rossmann is now following suit. Rossmann plans to operate its new service from the Netherlands, launching a direct assault on Redcare's home market. A key lever for this move is the Rossmann app, which boasts a user base of around 11 million.

A Prescription for Defense

Redcare retains one crucial structural advantage. The highly regulated market for prescription medications (Rx) remains, for now, untouched by this new competition, as Rossmann has explicitly ruled out entering this segment. Here, Redcare commands a dominant 67 percent market share. Bolstered by its CardLink license, which is valid until January 2027, the company forecasts Rx revenues exceeding €670 million for the current 2026 financial year. This division now constitutes the primary defensive line against the mounting price pressure in the OTC sector.

New Leadership for a New Era

In reaction to the changing market dynamics, Redcare is restructuring its senior leadership. Hendrik Krampe is set to be officially confirmed as the new Chief Financial Officer at the Annual General Meeting on April 15, 2026. He brings precisely the e-commerce expertise Redcare needs to defend its market position, with eight years of experience serving as Finance Director for Amazon's European marketplace business.

The first major test for the company's adjusted strategy will come on May 6 with the release of first-quarter results. Management must then demonstrate that the strength of the Rx business can offset the emerging weaknesses in the OTC segment. Achieving the targeted 2026 adjusted EBITDA margin of 2.5 percent represents the absolute minimum requirement to begin restoring shattered investor confidence.