Swedencare AB Publ (0ABG) Posts 4% Q2 Revenue Growth and Enhanced Operating Cash Flow Amid Strategic European Expansion

Swedencare’s Position in Premium Pet Healthcare and Global Reach

Headquartered in Malmö, Swedencare is a Swedish-listed premium pet healthcare company developing, producing, and distributing products for cats, dogs, and horses across about 70 countries. Operating through subsidiaries in nine countries and partnerships with online retailers, pet stores, veterinarians, and FDMC channels, the company is listed on NASDAQ First North Growth Market and trades on OTCQX® Best Market. Swedencare’s portfolio includes established brands such as NaturVet®, Innovet (celebrating 30 years), Pet MD®, Rx Vitamins®, nutravet®, Rileys®, and ProDen PlaqueOff®, enabling it to serve diverse customer segments and geographies. This broad brand and channel diversification supports sustained growth and profitability despite volatile market conditions.

The company’s extensive product range positions it to benefit from the global rise in pet ownership and increased spending on premium pet healthcare solutions.

Q2 Revenue Growth and Currency-Adjusted Performance

Swedencare reported Q2 net revenue of 670.0 MSEK, a 4% increase from 646.7 MSEK in Q2 2025. Organic, currency-adjusted growth was 7%, reflecting solid underlying momentum. The CEO noted that a stronger Swedish krona negatively impacted reported sales but had limited effect on earnings due to balanced local revenue and cost structures. For H1 2026, net revenue rose 3% to 1,320.3 MSEK from 1,287.8 MSEK in H1 2025, with organic currency-adjusted growth of 9%. While this outpaced market growth, it fell short of the company's double-digit growth target, mainly due to a delayed launch by a new FDMC customer.

North America experienced a 3% decline in organic growth in Q2, attributed to the delayed FDMC customer launch. Management anticipates a stronger H2 2026 driven by improved online sales, increasing big box retail volumes, and expanded veterinary partnerships, signaling confidence in underlying demand despite short-term setbacks.

Profitability and Earnings Improvement

Operational EBITDA increased 5% to 129.4 MSEK in Q2 2026 from 122.9 MSEK in Q2 2025, with the EBITDA margin rising slightly to 19.3%. Operational EBIT declined 2% to 103.0 MSEK, with the EBIT margin compressing to 15.4% due to higher depreciation and amortization, likely linked to capital investments and acquisitions. Profit after tax turned positive at 23.7 MSEK compared to a 6.9 MSEK loss in Q2 2025, with earnings per share improving to 0.15 SEK from negative 0.04 SEK. For H1 2026, profit after tax surged 145% to 41.5 MSEK from 16.9 MSEK, and earnings per share doubled to 0.26 SEK, reflecting enhanced financial and operational leverage as the company scales.

Operating Cash Flow and Capital Management

Operating cash flow more than doubled to 78.2 MSEK in Q2 2026 from 32.8 MSEK in Q2 2025, totaling 143.5 MSEK for H1 2026 versus 129.6 MSEK in H1 2025. This improved cash generation supports investments in production capacity, dividend payments, and debt reduction. Cash on hand stood at 85.4 MSEK as of 30 June 2026, down from 124.0 MSEK a year earlier, reflecting cash deployment for acquisitions and distributions. Net debt to rolling twelve-month operational EBITDA (proforma, IFRS 16 adjusted) was 3.1x, up from 2.9x, primarily due to an anticipated earn-out payment in April 2027 related to the Summit Vet acquisition. This leverage increase relates to contingent liabilities rather than core business deterioration.

Summit Vet Acquisition and Subsidiary Growth

Summit Vet, Swedencare’s latest major acquisition, grew over 20% during the period while maintaining strong profitability. The company accounted for an expected earn-out payment due in April 2027. The acquisition’s successful integration highlights Swedencare’s capability to enhance operational performance post-acquisition. The broader subsidiary network across nine countries enhances geographic diversification and market penetration. The company also hosted its first Capital Markets Day in Stockholm on 2 June 2026, signaling increased investor engagement and management’s confidence in strategic execution.

ProDen PlaqueOff® Drives Exceptional Global Growth

ProDen PlaqueOff®, Swedencare’s leading oral health brand for pets, achieved over 30% organic growth in Q2 2026, expanding across all business segments. The export business managed from Malmö showed particular strength, underscoring the brand’s international market penetration. Asian markets, especially China, demonstrated robust demand, with China emerging as the largest market without a direct subsidiary, indicating effective distributor partnerships and strong regional appeal.

NaturVet® Reorganisation and European Market Entry

NaturVet® experienced a softer Q2, partly due to cautious US consumers impacted by fuel prices and economic uncertainty. The company completed a major sales department reorganisation for NaturVet, refocusing on sales, partnerships, and new product launches to address prior underperformance. Swedencare also launched NaturVet in Europe and finalized an Amazon transfer for European markets, facilitating direct-to-consumer sales and expanding the brand’s geographic footprint.

Robust Growth in European and Production Segments

The Europe and production segments delivered strong organic growth of 19% and 25%, respectively, in Q2 2026. Despite weaker-than-expected dermatology demand, production in the EU/UK and Pharma sectors saw high demand from existing and new customers. Swedencare is expanding production capacity and organizational resources to meet this increased demand, with notable contributions from the UK, Italy, Nordics, and export markets. This contrasts with North America’s negative growth, highlighting geographic momentum differences.

North America Performance and Outlook

North America’s 3% organic decline in Q2 was mainly due to delayed FDMC customer deliveries, a timing issue rather than demand weakness. Management expects stronger H2 2026 performance driven by online sales growth, increased big box retail volumes, and larger veterinary partnerships. The company continues to see significant potential in FDMC/Big Box and online channels, though North America remains a key risk area if anticipated channel acceleration does not materialize.

Certified Adviser Appointment and Governance Update

Swedencare appointed Svensk Kapitalmarknadsgranskning AB as its Certified Adviser on NASDAQ First North Growth Market, effective 1 October 2026. This regulatory role supports compliance and guidance for listed companies. The announcement does not detail reasons for the change or previous adviser identity. The transition is orderly and unlikely to impact investor perception unless signaling broader governance changes. Management remains accessible for inquiries regarding the company’s strategic direction and results.

Profitability and Strategic Priorities for H2 2026

The CEO outlined priorities for the second half of 2026: accelerating growth in key channels, leveraging increased demand in production and pharma, gradually improving profitability, and maintaining strong cash flow. Investments in production capacity and organizational expansion may temporarily pressure margins but are expected to generate returns over time. Management expressed confidence that these initiatives provide a solid foundation for long-term value creation for shareholders, customers, and employees. The company also maintained dividend payments in H1 2026, balancing growth investment with shareholder returns.