Redcare Pharmacy's Prescription for Profitability Takes Hold

Shares of Redcare Pharmacy surged more than 14% on April 8, propelled by first-quarter results that handily beat analyst forecasts. The strong performance, particularly in its core prescription business, has injected fresh confidence into the stock's recent recovery, which has seen it climb roughly 22% over the past two weeks to stabilize near the €40 mark.

The company's revenue for the first quarter of 2026 jumped 18.3% to €848 million, surpassing the consensus estimate of €837 million. The standout performer was the German prescription (Rx) segment, where revenue soared 55% to €168 million, exceeding expectations of €162 million. This builds on a transformative 2025, where the company's total Rx revenue first crossed the €1 billion threshold, with German prescription sales nearly doubling.

Beyond prescriptions, the German non-Rx business showed marked improvement, growing 9.7% to €287 million. This represents an acceleration from the 5.4% growth recorded in the prior quarter. The company's active customer base expanded to 14.2 million, an 8% increase year-over-year.

Should investors sell immediately? Or is it worth buying Redcare Pharmacy?

Bolstered by these figures, Redcare reaffirmed its full-year 2026 guidance, a move that helped alleviate investor concerns stemming from a cautiously worded outlook published in March. The company is targeting overall revenue growth of 13-15% for the year. A central pillar of this plan is achieving German prescription revenue of over €670 million.

The path to sustainable profitability is now a key focus. Management aims to lift its adjusted EBITDA margin from 2.0% last year to at least 2.5% in 2026. This improvement is expected to be driven by scaling effects and a planned reduction in capital expenditures, which are projected to fall below 2% of revenue after 2026. The medium-term ambition is even clearer: reaching a 5% EBITDA margin within the next three years.

Analyst sentiment reflects a debate over the pace of this margin expansion. The Deutsche Bank recently initiated coverage with a "Buy" rating, echoing the bullish stance of Jefferies, which maintains a €150 price target. Other institutions have average twelve-month targets ranging between €88 and €98. However, not all are convinced; UBS retains a "Neutral" rating with a €74 price target, highlighting ongoing concerns about high customer acquisition costs.

With the next quarterly report due on May 6, investors will be watching to see if the powerful prescription momentum can be sustained. While the non-Rx segment is projected to grow 8-10% this year, the company's fate—and its journey toward its mid-term profitability threshold—is firmly hitched to the high-margin prescription business. The stock's recent gains still leave it far from its 52-week high of €136.20, underscoring the significant ground Redcare must still cover to win back the market's full confidence.

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Redcare Pharmacy Stock: New Analysis - 12 April

Fresh Redcare Pharmacy information released. What's the impact for investors? Our latest independent report examines recent figures and market trends.

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