Sigma Healthcare Shares Drop 8.76% with Shocking Half-Year Results

Sigma Healthcare Limited [ASX:SIG] saw a significant decrease in its share price today. At time of writing, Sigma shares are trading at 52 cents — an 8.76% decrease from yesterday’s trading price.

What’s even more distressing is that this decline is coming immediately after an impressive 5% climb in share price from Tuesday’s figures.

In fact, Sigma has pretty much maintained an upward trend — or at least stability — since mid-August.

So what has brought down the largest full-line pharmacy wholesaler in Australia in just 24 hours?

Well, early this morning, Sigma had released their half-year results for FY18 on the ASX. And it looks like…

The figures say it all

To sum it up briefly, Sigma’s financial results are trending…down.

The company reported revenue of $1.96 billion, which is 2% down from previous figures. EBITDA and NPAT results also show a negative progression, down 32.6% and 50.6% respectively.

Even underlying figures — while not as severe a drop — still show significant decreases from 2017 figures. Underlying NPAT rests at $19.9 million, reflecting a 31.2% decrease.

The company believe the low EBITDA is reflective of a one-off redundancy and restructure costs.

As for the lowered sales revenue, Sigma claim this is ‘largely impacted by the decline in low margin Hepatitis C medications’. Moreover, the move of codeine-based products from over-the-counter availability to prescription-only supply would likely have contributed to these poor sales figures.

CEO and Managing Director Mark Hooper acknowledges these troubling half year results:

The twin impacts of ongoing PBS pricing reform and the continuation of manufacturer exclusive direct distribution continue to weigh on the industry and our results. Whilst we are encouraged by engagement with government, resolution and certainty is needed more than ever.

And yet, Sigma are convinced they are on track to meet FY19 guidance…

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The road ahead for Sigma

Other than sales, all other revenue has been trending up 24% from the prior financial period.

On 2 July, Sigma announced that the proposed MyChemist/Chemist Warehouse Group Agreement could not be reached, and that the existing agreement will cease on 30 June next year.

Hooper says, ‘this decision will free up over $300 million in working capital and provides us with an important pivot point to re-shape and grow the Sigma business.’

And today, the company announced they have appointed Accenture — a global management consulting firm — to ‘…provide execution support on a major business re-engineering and cost reduction program.’

Hooper is counting on these changes to help keep the company on track of the underlying EBIT of $75 million for FY19.

Investors will hope that the company bounces back from this recent hurdle in the near future.

Regards,

Ryan Clarkson-Ledward,
For Markets & Money

PS: While there’s still potential for Sigma to turn their shares back towards an upward climb, this is providing the market remains hungry for their services. But this may not be the case, with a potential ‘Global Financial Crisis 2018. Financial expert Vern Gowdie explores why he believes a credit collapse could occur in 2018, and how you could protect your assets. Click here for free action plan.


Ryan Clarkson-Ledward is a junior analyst for Markets & Money. Ryan has degrees in both communication and international business. His priority is bringing you the latest price updates on stocks through ASX updates, as well as supporting Sam Volkering with background research. As part of the team at Markets & Money his aim is to provide unbiased and relevant news for readers. Ryan’s work with Sam is designed to provide research that complements Sam’s analysis for small-cap and technology stocks. Together, their objective is to break through all the jargon and give you the hard facts to inform your investment decision-making. Ryan writes for:


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