Redcare Pharmacy Shares Tumble Despite Strong Annual Performance

Investors delivered a harsh verdict on Redcare Pharmacy’s latest financial update, sending the online pharmacy’s stock price plunging nearly 30% in a single week. This dramatic sell-off occurred even as the company reported robust growth for the 2025 fiscal year, underscoring that future guidance can outweigh strong historical results.

A Year of Significant Expansion

The company demonstrated considerable operational strength in its recently concluded fiscal year. Group revenue surged by 24.1% to reach €2.9 billion. A standout performer was the prescription medication business, where Redcare surpassed the billion-euro revenue threshold for the first time. In its home German market alone, prescription sales nearly doubled to €503 million.

Profitability metrics showed even more dramatic improvement. Adjusted EBITDA jumped 72% to €57.4 million, representing a margin of 2.0%. The company’s active customer base expanded by 11% to 13.9 million users. Furthermore, the average order value increased from €60.98 to €65.98, a trend management attributed to effective cross-selling strategies and a rising proportion of prescription products in the sales mix.

Conservative Forecast Triggers Market Disappointment

The catalyst for the share price decline was the company’s outlook for 2026. Management projected revenue growth of only 13% to 15% for the coming year. Within that, growth in the over-the-counter (OTC) segment is expected to stabilize at 8% to 10%. On a positive note, the adjusted EBITDA margin is forecast to rise to at least 2.5%.

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

This conservative guidance fell short of market expectations. Company executives pointed to a challenging environment in the OTC sector but dismissed increased competition from drugstore chains as a primary factor. Market experts suggest the forecast primarily reflects moderated momentum in the non-prescription business segment.

Analyst Reactions and Revised Targets

In response to the update, several financial institutions made sharp reductions to their price targets for Redcare shares. Deutsche Bank slashed its target from €200 to €99, while Berenberg cut its target from €165 to €87.50. Notably, both firms maintained their “buy” recommendations on the stock.

Jefferies also reiterated a positive stance, confirming a €150 price target. Its analysts highlighted stable digital user numbers for e-prescriptions in February and noted operational progress in markets outside the DACH region (Germany, Austria, Switzerland), where the adjusted EBITDA margin showed improvement.

Looking further ahead, Redcare maintains a medium-term ambition of achieving an adjusted EBITDA margin exceeding 5%. The company identifies lower marketing expenditures and cost savings from automated logistics processes as key levers to reach this goal. Whether the current share price represents a bottom will depend on if the growth deceleration proves temporary or signals a more permanent, structural shift.