Redcare Pharmacy: Strong Prescription Growth Overshadowed by Wider Challenges

Redcare Pharmacy NL0012044747

Shares in Redcare Pharmacy came under significant pressure following a preliminary trading update, despite the company posting robust growth in its core electronic prescription business. The market's negative reaction was triggered by an unexpected slowdown in the higher-margin non-prescription segment during a seasonally strong period. Investor nerves were further frayed by an approaching substantial convertible bond repayment.

On January 7, the company released preliminary revenue figures for 2025. While the full-year picture appeared solid, a closer look at the fourth quarter revealed underlying concerns that sparked a sell-off. The stock declined approximately 8% on the day of the announcement.

For the full 2025 fiscal year, group revenue advanced by 24% to reach 2.9 billion euros. However, fourth-quarter sales of 794 million euros fell short of market expectations by about 3%. The primary source of disappointment was the performance of the Non-Rx (over-the-counter) product division.

Over-the-Counter Segment Disappoints

The weakness in the non-prescription business is particularly notable because it occurred during the peak flu season, a period typically associated with stronger consumer health spending. In the final quarter, revenue growth in this segment slowed to just 9%, missing consensus estimates by a significant 9-percentage-point margin. This shortfall in a traditionally profitable area has raised questions about competitive pressures and margin sustainability.

A Strategic Bright Spot in E-Prescriptions

In stark contrast, Redcare's strategic focus on digital prescriptions in Germany continues to yield exceptional results, validating its operational direction.

Key performance metrics for the German prescription (Rx) business include:
* Full-Year 2025 German Rx Revenue: 503 million euros, representing growth of 98%.
* Q4 2025 German Rx Revenue: 155 million euros, an increase of 59% year-over-year.

These figures demonstrate the company's successful establishment of a leading position in the emerging German e-prescription market. The growth narrative in the prescription segment is fundamentally intact and proceeding as planned, though it is currently being overshadowed by broader concerns.

Financial Pressures and Market Sentiment

Beyond operational metrics, Redcare's financial situation is contributing to market anxiety. Approximately 14% of the company's outstanding shares are held in short positions—a notably high level for the German market. This indicates sustained skepticism among professional investors regarding margin risks and intense competition in the online non-prescription commerce space.

A near-term liquidity event is also drawing focus. On January 21, 2026, the company is due to make a payment of 64.5 million euros to holders of a convertible bond who have exercised their put option. This repayment represents the final step of a larger debt restructuring undertaken in 2025 and places additional strain on cash reserves.

The prevailing uncertainty is clearly reflected in the share price. The stock closed at 64.50 euros on Friday, trading approximately 53% below its 52-week high of 138.40 euros. Over a twelve-month period, the decline totals more than 46%, with the price hovering just above its recent annual low.

Conclusion: Strategic Validation Meets Execution Concerns

The overall picture for Redcare Pharmacy is mixed. Operationally, the explosive growth in German e-prescriptions confirms the soundness of its strategic pivot. Yet, the pronounced miss in the non-prescription segment has exposed how sensitive the market is to weaknesses in the profitable core commerce business. This sensitivity is amplified by the high level of short interest and the imminent bond repayment. For the coming quarters, the critical challenge will be whether management can translate prescription momentum into more stable overall financial performance and rebuild financial flexibility following the January 21 payment deadline.