Redcare Pharmacy Caught Between Political Winds and Short Sellers’ Fury

Germany's online drugstore navigates pharmacy reform uncertainty and rising short interest at 8.66%, with stock down 35.8% YTD and analysts divided on outlook.

Redcare Pharmacy finds itself squeezed from two directions at once. In Berlin, a pharmacy reform cleared the Bundestag on May 22, bringing both promise and peril for the online drugstore. On the trading floor, short sellers are piling in, pushing the disclosed short interest to 8.66% of share capital — well above the 12-month average of 6.32%. The stock closed at €43.14 on Thursday, leaving it down 35.8% year to date and 63.25% lower than a year ago.

The reform, passed with the votes of the CDU/CSU and SPD, aims to shore up Germany’s bricks-and-mortar pharmacy network. Pharmacies will take on new roles in prevention and diagnostics, including blood pressure and diabetes checks, tetanus and TBE vaccinations, and blood draws. More significantly for Redcare, certain prescription drugs could be dispensed without a formal doctor’s note for chronic follow-up care and acute minor illnesses. That could funnel volume into the digital channel — a positive, given that Redcare already handles 67% of Germany’s e-prescription market. But the Bundesrat can still summon a mediation committee, and earlier drafts proposed tighter rules on shipping contracts, documentation, and temperature controls for drug transport. If those resurface, the cost burden could erase any demand boost.

Operationally, the company is expanding. First?quarter revenue jumped 18.4% to €849.5 million from €717.3 million a year earlier, and management reiterated its full?year sales growth target of 13% to 15%. The net loss narrowed slightly to €10.5 million from €10.8 million. Yet the adjusted EBITDA margin came in at just 1.7%, far from the full?year goal of at least 2.5%. CFO Olaf Heinrich pointed to a gross margin decline from 23.3% to 21.0% in Q1, driven by stiffer OTC competition, a rising share of prescription products, and a Rx bonus programme launched in September 2025.

Analysts remain split on the stock. Deutsche Bank Research kept its “Buy” rating and €99 price target after attending the dbAccess European Champions Conference in Frankfurt. Analyst Jan Koch noted that management reaffirmed its annual guidance and that second?quarter trends support the outlook. Jefferies is even more bullish, holding a “Buy” with a €150 target, citing e?prescription growth and a broad customer base. On the other side, UBS cut its price target to €74, warning that Redcare’s core OTC business is slowing down. The wide spread — from €74 to €150 — reflects the market’s uncertainty about how the regulatory landscape will settle.

That uncertainty is feeding the short?seller camp. D.E. Shaw & Co. leads with a disclosed short position of 3.46% of share capital, followed by JPMorgan Asset Management (UK) at 1.58%, Two Sigma Investments at 1.27%, AHL Partners at 0.99%, Jupiter Asset Management at 0.71%, and PDT Partners at 0.65%. The total disclosed shorts now represent 9.88% of the free float, far above the 12?month average of 6.32%.

Meanwhile, Redcare is investing heavily for the future. A new logistics centre is under construction in Pilsen, and automation work is under way at its Sevenum facility. The company has scaled back its medium?term margin ambition from over 8% to more than 5%, acknowledging the higher cost base required to serve seven European markets profitably. Cash fell to €135.0 million by the end of March after the group spent €64.5 million on buying back convertible bonds during the quarter.

The stock now trades just 0.2% above its 50?day moving average — a sign that any bounce may be short?lived — while still sitting 29.4% below the 200?day average. That leaves chart watchers suspecting a possible base but no durable uptrend.

All eyes now turn to the half?year report due on July 29. It will show whether the first?quarter momentum has carried into the second quarter and, more importantly, whether the political outcome from the Bundesrat tilts the playing field in Redcare’s favour. Until that dual verdict is in, the stock looks to remain stuck between the bulls and the short sellers.