Today announced negotiations to renew a supply contract for the Chemist Warehouse group had fallen through. While the contract still has another 12 months until expiry, Sigma has already identified that cost cutting will not cover the revenue loss associated with the Chemist Warehouse deal and coupled the announcement with a downgrade to their current financial year guidance (March year-end), reducing FY19 forecast EBIT from $90m to $75m – a nice ~17% downgrade – while forecasting FY20 to be between $40-$50m, ~50% below consensus at $96mil! Understandably the stock was whacked significantly today, falling 42% early. The biggest winner here has been New Zealand based health care service company Ebos Group (ASX.EBO) which has picked up the contract. Ebos shares are currently trading ~5% higher.
Sigma Health Ltd (SIG) Chart
