Sigma Healthcare (ASX:SIG) underlying EBITDA up 14.7% in H1-22

Image depicting financial performance.

Highlights

  • Sigma Healthcare has shared its H1-22 results today.
  • SIG has reported growth in financial numbers despite ongoing COVID-19.
  • The share price of SIG has however, dipped over 3% on ASX.

Full line pharmacy wholesaler Sigma Healthcare Limited (ASX:SIG) announced today a robust set of results for H1-22. SIG’s community pharmacy brands delivered a high growth of 8.7%. As a result, SIG’s underlying EBITDA was up 14.7% in H1-22, to AU$39.2 million, which took the reported EBITDA to AU$17.7 million, up 42.9% pcp.

Key financial highlights-

  • Group Revenue in H1-22 was up 5.5% to AU$1.73 billion. Growth was driven by organic market growth across SIG’s pharmacy brands and network.
  • Wholesale sales were up 13.6%, including sales to chemist warehouse and like-for-like pharmacy sales in Sigma’s brands was up 8.7%.
  • SIG earned an underlying EBITDA of AU$39.2 million, up 14.7%, reflecting the higher revenue growth and the margin benefits from efficient operating platforms.
  • It reported a Net Profit after tax (NPAT) loss of AU$1.3 million, majorly due to changed accounting treatment for adopting SaaS accounting policy changes which require IFRS compliant organisations to expense SaaS arrangements, including capitalised work in progress.
  • However, the Underlying Net profit after tax (NPAT) was AU$14.1 million, up 23.7% compared to the previous year. It was majorly from positive sales growth and operational platform efficiency.
  • SIG reported a Net Debt for H1-22 at AU$82 million, below its initial expectations.
  • Maintaining its high dividend payout ratio, SIG board declared a dividend of 1 cent per share, payable on 8 October 2021.
  • The distribution represents a Dividend Payout Ratio of 75% on Underlying NPAT.

Alongside delivering strong numbers, Sigma continues to focus on business expansion to diversify earnings.

Its hospital revenue was up 8.9%, although impacted by COVID-19 restrictions and regulatory price erosion. Its medical consumables business saw high unrepeated demand, which it now seeks to build as a repeatable business. Despite challenges, its MPS medical packaging business won several tenders during the year, providing momentum until FY23.

In the last 18 months, Sigma has undertaken a major IT platform upgradation and implementation of SAP cloud-based ERP solution. The upgrade went live in late August. The new ERP will deliver significantly enhanced customer and supplier interfaces and improved data capabilities in the years ahead.

SIG’s board recently approved replacing its distribution center in Hobart, Tasmania, to enhance its logistics platform further. It will now be a leased facility, with a capex of under AU$5 million, expected to go live in Q3-22.

Meanwhile, SIG shares dipped 3.175% and are trading at AU$0.610 per share at 11:50 AM AEST.

What’s Next?

SIG has achieved strong growth in H1-22 despite a challenging pandemic and ongoing transformations. In addition, SIG’s restructuring and reinvestment have significantly improved efficiency, reflected in results. As a result, SIG expects its’ FY22 Underlying EBITDA growth to be around 5%. Other than this, SIG has plans to announce a new CEO in the near term and is also actively discussing several M&A opportunities.

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