Raia Drogasil (RADL3) Q1 2025 earnings summary

Executive summary

• Gross revenue reached R$10.8 billion in 1Q25, up 10.8% year-over-year, but below targets due to calendar effects, one-off events, and market headwinds.

• Opened 75 new pharmacies (20% more than 1Q24), closed 4, ending with 3,301 units; digital sales grew 40% to R$2.2 billion, reaching 21.8% penetration, with 78% of digital sales via app.

• National market share increased by 0.4 pp to 16.6%, with gains in all regions, especially São Paulo and Southeast.

• Loyal customers (7 million) account for 70% of sales, with increased purchase frequency but lower average ticket as digital adoption rises.

• 25.6% of stores are still maturing, supporting future growth.

Financial highlights

• Adjusted EBITDA was R$644 million (6.0% margin), down 1.0 pp year-over-year; adjusted net income was R$177 million (1.6% margin), both margins contracted.

• Free cash flow was negative at R$123.8 million; total cash consumption was R$162.6 million.

• Gross margin was 26.6% (down 0.6 pp), mainly due to higher losses (shoplifting, especially in São Paulo), mix effect, and increased promotional investments.

• General & administrative expenses diluted to 2.8% of gross revenue, aided by corporate structure adjustments.

• Effective tax rate was 19.0%, mainly due to R$118.1 million provision in JSCP.

Outlook and guidance

• Guidance for 2025 maintained: 330–350 gross pharmacy openings.

• Management expects continued margin pressure in 2Q25 due to negative calendar effects and lower CMED adjustment, but aims to offset with targeted promotions and cost controls.

• Focus on execution improvements (in-store experience, pricing, promotions) and sustainable medium- and long-term growth.