Ebos Group Limited

Thank you for standing by, and welcome to the EPOS Group Limited Fiscal Year 26 Half-Year Results Conference Call. At this time, all participants are in a listen-only mode. There will be a presentation followed by a question and an answer session. At which time, if you wish to ask the question, you will need to press star 1-1 on your telephone keypad. You can cancel your request by pressing star 1-1 again. We ask that you limit yourself to one question and one follow-up. I must advise you that this conference is being recorded today, the 25th of February, 2026. I would now like to hand the call over to your first speaker today, Mr. Martin Krauskopf, Chief Strategy and Corporate Development Officer, eBoost Group. Please go ahead, Martin.

Good morning, everyone, and thank you for your attendance today. My name is Martin Krauskopf, Chief Strategy and Corporate Development Officer. I'm joined today by Adam Hall, our Group CEO, and Alistair Gray, our Group CFO. Before commencing, I'd like to draw your attention to the disclaimer on page two of the presentation. The results are expressed in Australian dollars, unless otherwise noted, and the presentation refers to both statutory and underlying results. The commentary this morning is predominantly based on our underlying results, and a reconciliation is included in the appendix. I'll now hand over to Adam to take you through today's presentation. Thank you Mun.

I'm pleased to walk you through eBoss Group's half year 26 results and the momentum we're building for FY27 and beyond. I have three key themes I want to focus on today. First, our FY26 guidance is reaffirmed. We said at the start of the year that we expected cost stabilisation through the first half and that's exactly what we're seeing. the group underlying EBITDA increased $300 million, consistent with the guidance range we set, and 48% of the midpoint of the reaffirmed FY26 guidance range. Within that, healthcare EBITDA was up 1.3% to $254 million, driven by strong revenue growth and disciplined cost management, even with mixed pressure from continued growth in high-value medicines and the DC renewal program. Animal care overdraft grew 15.1% to $68 million, reflecting branded strength and new product innovation, as well as the contribution from recent acquisitions. Second, we've maintained our disciplined approach to capital allocation. The DC renewal program is progressing to plan. Kemp's Creek is our largest and most complex site in the program. We're pleased it's now fully operational and performing well, with productivity continuing to ramp up. The remaining Perth, HCL and Auckland OneLink sites are on track to come online in the coming months. Our balance sheet remains strong with leverage within our target range. With our current capital cycle coming to an end, leverage is expected to reduce in FY27 as EBITDA is expected to grow and CAPEX steps down by about 30%. We also deployed $70 million in the half in bolt-on acquisitions. strengthening medical technology and expanding our pharmacy reach with our majority investment in the MediAdvice pharmacy franchise. We're pleased with the early trading results on each of these, as well as their future prospects. And finally, my third and last focus area this morning is that we remain well positioned for FY27 and beyond. Our revenue momentum continues through network growth, innovation and regional expansion. Our margin outlook is positive, driven by the productivity uplift as the new DCs reach steady state, ongoing new products, and these synergistic acquisitions. From FY27, with peak investment behind us, cash flow is expected to improve. As I said, CapEx is expected to be around 30% lower, and DNA and interest normalizing on a more stable asset base would create the headroom to both delever and reinvest for growth. Let me turn to slide four and bring the numbers together for you at a glance. As I touched on earlier, Our FY26 EBITDA guidance of $615 to $635 million remains unchanged. I'll step through the detail in the next couple of slides. Our revenue grew 13% to $6.8 billion and a half, reflecting continued momentum across healthcare and animal care. We're seeing strong volume growth, sustained customer demand, and contributions from the investments we've made. Underlying EBITDA increased $300 million, up 3.2%, and underlying NPAT was $125 million, down slightly as expected, given the DC capital renewal program and the timing factors we've called out. At the statutory level, NPAT was also $125 million, which is up 13%. Our leverage sits at 2.2 times within our target range. This remains a comfortable position for us, especially as we reach the end of the current capital cycle, and as I said, CapEx steps down next year. Underlying EPS came in at 61.4 cents, reflecting the transitional impact of our current investment. And we're pleased that the board has maintained the interim dividend at New Zealand 57 cents, consistent with last year and supported by the underlying strength of our business. Finally, ROSI is 12.9%, impacted by the important investment in DC renewal program and driving ROSI remains a key priority for the entire team with a long-term target of 15%. Now let me turn to the operational performance behind those numbers on slide five. Community pharmacy had pleasing revenue growth, driven by demand for GLP-1s and high-value medicines. Retail pharmacy brands continue to expand the network and enhance in-store experience with more digital screens, more in-store care delivery, and healthy same-store trends. In institutional healthcare, we continue to broaden our offering in medicines and consumables, adding the latest high-value medicines and supporting ongoing growth across hospitals and specialist care. Medical technology also had another strong heart, supporting more than 4,000 spinal cases across ANZ, expanding into new therapy areas, and delivering strong growth in biologics through new solutions launched, as well as our expanded platform. Our contracts logistics business delivered excellent growth. Gore was up double digits, supported by new principal wins in both Australia and New Zealand, and the progressive uplifting capability and capacity from the DC Renewal Program, including further cold chain storage. And finally, animal care again showed why it's such an important part of the group. Branded products performed well, particularly Blackhawk, Vitapet, and our Chunky Dog Roll in New Zealand, which was supported by new product development and compelling customer propositions. In VET wholesale, we continue to see share gains and solid progress integrating SVS, which is tracking as planned. Let me now speak to our guidance and how the half positions us for the full year on slide six. As I've mentioned a few times now, underlying EBITDA for the half was $300 million, and we remain on track for delivery of the full year guidance of $615 to $635 million. Underlying DNA came in at $67 million, which is in line with our expectations and it reflects the investments that I've referred to. Net finance costs were $58 million and our expectation is that we'll finish the year at the very top end of the guided range, reflecting the higher Australian cash rate, plus $1 to $2 million of additional funding costs associated with bringing new M&A into the fold. Our effective tax rate was 27.5% and in line. CapEx was $70 million for the half, and our full year view on CapEx is unchanged for the initial scope. The only adjustment this year is a workplace health and safety uplift to harmonize our approach to push through risk across our warehouse fleet. Bringing this together, all guidance metrics are marked as on track, and that's how we feel about the year. We've stabilized costs in the first half. We're seeing utilization improve. and we're reinforcing the operational momentum we need to deliver the full year result. If I look ahead to the next half and to 2027, I can summarize it on slide seven. Starting on the left, the second half of FY26 is very much about growth acceleration. We'll annualize the impact of the acquisitions we completed in the first half, and we expect ongoing growth in GLP-1s and high-value medicines. Retail pharmacy brands is expected to keep expanding the network and we're seeing more momentum in contract logistics with new principal wins. On margin, we're expecting continued productivity uplift as our new DCs ramp up and come online. Kemps Creek in particular is already showing productivity gains and our customers are excited for the new Perth HCL facility to come online. We're also benefiting from growth in higher margin businesses like medical technology. which have now fully integrated the Pacific Surgical and Malix acquisitions made last year. Interested DNA growth remains elevated in the second half as the current capital renewal cycle comes to an end. From a cash perspective, we're just a few months away from completing the peak investment phase in the next half. Working capital cadence should also begin to normalize as the transition activities ease. So for the second half specifically, we remain comfortable with the underlying EBITDA outcome of $315 to $335 million. Now the second column on this slide is about the ongoing growth momentum and improved cash flows. Revenue growth remains a key priority for the business. And the call-outs here are snippets of our divisional strategies, which I'll expand upon later, as well as forming the basis of our upcoming investor day. Margin improvement, should continue through FY27, as the DC network reaches steady state. This means better throughput, lower labor intensity, and more efficient logistics. We're also expecting to see mixed and CSO uplift benefits in community pharmacy, supported by disciplined commercial execution. On the P&L, we are also expecting that FY27 marks the point where D&A and interest begin to normalize. The heavy capital lifting is done, and we'll be operating on a more stable asset base. CapEx reduces by roughly 30%. That's a major shift and a key driver of improved cash flow. Together with EBITDA growth, this supports the leveraging and gives us the capacity to reinvest in high return opportunities in a disciplined way. Let's move now into the healthcare segment on slide nine, which delivered another solid and disciplined half. Revenue was up 11.1% and Gore grew 7.3%. which is a pleasing result reflecting new customer growth, ongoing demand for GLP-1 and high value medicines, expansion across retail pharmacy brands, continued growth in medical technology, and contributions from the acquisitions we completed last year. On margins, high value medicines continue to accelerate. There is a slide in the appendix that lays out the rapid rise in this category. Due to the higher revenue associated with high value medicines, There's an arithmetic decline in Gore percentage margin, but in an absolute sense, we gained Gore dollars. There's also been ongoing competition in community pharmacy through the half. These margin headwinds were partly offset by continued strength in medical technology and in the TWC network. A real highlight in the half was cost discipline. OpEx increased with volume, but importantly, OpEx as a percentage of revenue was flat to PCP and improved by 30 bps, compared to the second half of FY25. This is a pleasing result given we're still in the ramp up phase of the major facility at Kemps Creek. EBITDA increased 1.3% to $254 million. That reflects a very solid top line performance balanced against the temporary commissioning costs and competitive dynamics in community pharmacy. As we move through FY27, we're expecting the FY26 cost impacts to unwind and the productivity picture to strengthen. Let's move into community pharmacy detail on slide 10. Here, revenue grew 14.8%, and gore increased 7.5%. This was driven primarily by sustained demand for GLP-1s and high-value medicines, which continue to reshape volume and mix across the sector. The corollary of the demand growth of these medicines is that gore margin was lower, declining 60 basis points. When we set our FY26 guidance, we were clear that competition in the pharmacy wholesale market was likely to remain elevated. What's pleasing is that we've also retained key customer contracts in what is a competitive landscape. That reflects Symbian's service, the reliability of our network, and the service levels the team delivers. So despite the competitive settings, the fundamentals in the business remain solid, and we feel well positioned ahead of the CSO uplift, which is just a few months away. Turning now to retail pharmacy brands on slide 11, this was another standout performer in the heart. The network continues to grow, and same store performance remains strong. Across the Terry White Kenmart network, sales reached $1.5 billion. That's up 9.8% on the prior half. What's particularly pleasing is the like-for-like growth of 8.8%, showing that existing stores are performing strongly and consistently. There are other pharmacy networks with other value propositions, but it's clearly that the TWC care-focused proposition is one that customers love. Dispensary sales were a real highlight, up 11.5% with like-for-like growth of 10.4%. This is a very strong signal of customer trust, pharmacist engagement, and the strength of our care-focused model. During the half, we also acquired a majority interest in MediAdvice, a pharmacy management group with around 80 pharmacies in New South Wales. They are a terrific set of pharmacists who have a similar set of values to TWC. We bring them enhanced expertise in merchandising, in-store and out-of-store media. We're pleased that one additional store joined post-acquisition as well in Tasmania. I should add those 80 pharmacies are predominantly in New South Wales. When you add everything together, our retail pharmacy networks now include 782 stores and we grew by 89 net new stores and a half. A big part of what differentiates us is our role in community care. Terry White Chem Mart delivered a 20% growth in flu vaccinations and now has 104 pharmacist prescribers across the network. That represents about a third of all full-scope pharmacist prescribers in Australia. It's an important capability for us and it continues to grow. Our consumer brands also had a very good half. The range now includes over 300 products and our value-focused offering continues to resonate strongly with customers, especially as households look for dependable, high-quality options. On the digital side, we're seeing great traction. The TWC Connect Retail Media Program ramped up significantly with 200 new screens installed across 100 pharmacies, and our digital engagement continues to grow. We saw 817,000 online transactions in the half, up about 39% over the prior comparable period. Overall, retail pharmacy brands continues to be a real strength for eBoss. Let's turn now to institutional healthcare on slide 12, which delivered a solid result for the half. Here revenue grew 3.4% to just over $2.2 billion, with gore up 5.8%. Gore margin expanded 30 basis points to 15.6%, reflecting the growth in medical technology. And in medical technology, revenue was up 12.1%, supported by sustained momentum across spine and implant channels, urology, neurosurgery, and neurovascular procedures. And acquisitions played a strategic role, which I'll talk about shortly. We also saw resilient demand for capital equipment in ANZ, even as some markets in Southeast Asia saw softer capital sales. Biologics continued to grow well. Our Allograft solutions have seen strong organic demand, and we're now building momentum in the United States through the Origin platform. On the medicines and consumables side, revenue grew 2%, with high-value hospital medicines contributing positively. Offset by softer conditions in consumables during the half, this is what we've been seeing across the sector and aligns with our expectations. We've also continued to strengthen the division through selective acquisitions. Alpha XRT expanded our presence in radiation oncology and precision surgical deepened our spine offering in the New South Wales Central Coast region. Together with organic growth, these bolt-ons broaden our footprint and enhance the clinical capability that we bring to surgeons and patients. Let's turn next to contract logistics on slide 13, which delivered a very strong performance to the heart. Here, Gore grew 13.5%, reflecting strong principal wins across both Australia and New Zealand. This is a business where our investment in infrastructure and systems is really showing up in customer outcomes. We're demonstrating reliability, speed, temperature control, and healthcare-specific compliance, which are all differentiators for us. In Australia, Gore was up 26.3%, driven by meaningful net new principal wins, a further expansion of our cold chain storage, which remains a critical capability, and ongoing investment in our DC footprint and systems. In New Zealand, we also had a very strong half. We also secured new principal wins, supported by the capabilities we built into the network, including our unique temperature-controlled unloading facility, which continues to resonate with customers. Let's now turn to animal care on slide 15, which delivered another strong half and continues to be one of the group's most exciting growth engines. Here, revenue was up 48.3% to $451 million, reflecting the combination of strong branded performance and the contribution from SVS. Even if we strip out SVS, revenue grew 5.5%, which shows the underlying momentum in the portfolio. On the branded side, revenue grew 5.8%, supported by successful new product development, including the new Blackhawk freeze-dried and air-dried ranges, which are performing ahead of expectations. Blackhawk and Vitapet both continue to gain incremental shares, and we're seeing good traction across multiple channels. Our dog roll categories also performed well, led by the Chunky brand, as our consumers are looking to feed their dog quality, nutritious, affordable food. Wholesale revenue doubled in the half, and Gore grew by 17% as we integrated SVS, and we're also seeing share growth across the part. SVS is performing as expected. It's added scale to our portfolio and strengthened our offer to veterinary customers. It's worth noting that this acquisition has changed the margin profile of the animal care business, limiting the direct comparability to H1 of 25. EBITDA grew 15.1% to 68 million, supported by acquisitions those share gains, and innovative new product development, which is enhanced by our in-house manufacturing capabilities. I'm now going to hand over to the EBOS CFO, Alistair Gray, to talk through the financials in more detail.