Redcare Pharmacy Shares Plunge Amid Profit Warning and New Rivals

Europe's top online pharmacy slashes margin targets as dm and Rossmann attack its OTC market. Its prescription drug business remains a key strength.

Europe's leading online pharmacy is facing a severe sell-off. The company finds itself on the defensive, caught between a significant reduction in its medium-term profitability targets and the aggressive entry of two well-funded German drugstore chains into its core market.

A Sharp Downturn in Forecasts and Share Price

The immediate catalyst for the downturn was a stark guidance revision. Management slashed its medium-term target for the EBITDA margin from over 8% to just above 5%. This adjustment is attributed to a noticeable cooling in the over-the-counter (OTC) medication business. Growth in this segment is now projected to be only 8-10% in 2026, a dramatic slowdown from the 25% rate seen in 2023.

This profit warning has been reflected brutally in the share price. The stock has plummeted by more than 51% since the start of the year, trading just above its 52-week low of €32.24.

The Competitive Landscape Intensifies

The margin pressure stems from a fundamental shift in the competitive environment. The launch of dm's 'dm-med' platform in December 2025 was a game-changer. Now, competitor Rossmann is doubling down, declaring its own online pharmacy a key project for the current year. Rossmann plans to operate the service from the Netherlands, leveraging its app with approximately 11 million users as a primary access channel. Investors fear this dual assault could cause Redcare to lose significant market share in the lucrative OTC segment.

A Prescription for Resilience

One area remains temporarily shielded from this new competition. Rossmann has confirmed it will not offer prescription medications (Rx). Here, Redcare possesses a strong structural advantage. This segment recently surpassed the €1 billion revenue mark for the first time, jumping almost 43%. The German market, in particular, is benefiting from growing adoption of the digital prescription (E-Rezept). With its CardLink license valid until early 2027, management expects Rx revenues in Germany alone to exceed €670 million this year.

Strategic Investments and Key Dates

To withstand the competitive pressure, Redcare is making substantial investments in its infrastructure. A new logistics center in Plze?, Czech Republic, aims to increase annual shipping capacity by up to 15 million parcels. The downside is high capital expenditure, which recently totaled nearly €119 million. The company has labeled 2025 and 2026 as peak investment years.

The effectiveness of these operational measures will soon be tested against two key milestones:
* 06 May 2026: Publication of Q1 2026 results.
* 15 April 2026: Annual General Meeting, featuring a vote on a comprehensive management restructuring.

Interestingly, data from analytics firm Hazeltree indicates that institutional short sellers have recently reduced their positions by more than 10%. This suggests some professional market participants view the potential for further declines at the current price level as limited.