Sigma Healthcare Surges with $100M Synergy Boost After Chemist Warehouse Merger

A Year of Transformation

In February 2025, Sigma Healthcare and Chemist Warehouse completed a merger that has reshaped the Australian pharmacy landscape. This union combined Sigma’s logistics and wholesale expertise with Chemist Warehouse’s retail and marketing prowess, creating a powerhouse in pharmaceutical wholesaling and retail franchising. The first full financial year post-merger has delivered results that not only met but exceeded initial expectations, signaling a promising future for the combined entity.

Financial Performance and Synergy Upside

The FY25 financials reveal a striking 82% increase in revenue to $6 billion, driven by market share gains and the integration of Sigma’s wholesale business. Normalised earnings before interest and tax (EBIT) rose 41% to $835 million, while net profit after tax climbed 40% to $579 million. These robust figures underpin the company’s upgraded synergy target, now set at $100 million per annum, almost double the $60 million initially forecast. This upgrade reflects deeper integration insights and operational efficiencies identified since the merger.

Balance Sheet Strength and Capital Management

Despite the scale of the merger, Sigma has managed to reduce net debt to $752 million, comfortably below the projected $1 to $1.3 billion range. Supported by a $1.5 billion debt facility, the company maintains significant financial flexibility to pursue growth opportunities. The strong cash flow generation and relatively low capital expenditure requirements have been key to this deleveraging, with further working capital improvements expected as integration progresses.

Integration Progress and Operational Highlights

Integration efforts have been methodical, balancing the distinct cultures and operational models of the two businesses. Key milestones include consolidating support centres into Preston, converting “My Chemist” stores to Amcal and Discount Drug Stores brands, and announcing the closure of select distribution centres with volume absorption planned by end of 2026. The Chemist Warehouse network demonstrated strong momentum with like-for-like sales growth exceeding 11% in FY25 and an impressive 17.9% sales increase in Q1 FY26, boosted by new store openings and product launches such as the Wagner generics range.

Governance and ESG Commitments

The newly formed board, while not fully aligned with all shareholder expectations on independence and diversity, brings the necessary expertise to steer the merged entity through its integration and growth phases. Governance frameworks, particularly around related party transactions, have been strengthened to ensure transparency and fairness. On the sustainability front, Sigma has laid the groundwork for mandatory climate reporting, established a Risk, Compliance and Sustainability Committee, and maintained strong community engagement with over $8 million in charitable support.

Looking Ahead

With a market capitalisation now around $35 billion, placing Sigma among the ASX’s top 20 companies, the outlook is optimistic. The company plans to continue expanding its store network domestically and internationally, deepen its own and exclusive product offerings, and steadily realise synergy benefits over the coming years. The integration journey remains a priority, with the promise of incremental margin improvements and sustained growth.