Sigma Healthcare: Smooth Transition of Supply Contract With Chemist Warehouse

Sigma’s new Chemist Warehouse supply contract is progressing smoother than expected. Management lifted Sigma’s underlying EBIT guidance range for fiscal 2025 by 22% at the midpoint to AUD 64 million to AUD 70 million. This was largely due to minimal teething issues when commencing the new CW supply contract on July 1, 2024, and reflective of Sigma’s ability to efficiently absorb volume growth. We already assumed logistics and distribution of the new contract would eventually run at full efficiency, albeit on a longer timeline of roughly a year. Our long-term estimates are largely unchanged. We forecast Sigma’s legacy business excluding CW to grow underlying EBIT by a four-year compound annual growth rate of 18% to AUD 127 million by fiscal 2029.