Raia Drogasil (RADL3) Q2 2024 earnings summary

Executive summary

• Achieved gross revenue of R$10.4 billion in Q2 2024, up 15.4% year-over-year, with 3,076 pharmacies and 70 new openings, and market share rising to 15.7% nationally (+0.5 pp), with gains in all regions.

• Digital revenue reached R$1.7 billion, up 43.9%, representing 17.8% of retail revenue, with app orders comprising 67–73% of digital sales.

• Adjusted EBITDA was R$824.4 million, up 7.4% year-over-year, with a margin of 7.9%; adjusted net income was R$356.9 million (3.4% margin), up 2.1%.

• Free cash flow was negative R$303.4 million, reflecting seasonal working capital needs.

• Performed 1.9 million health services and operated 2,100 health hubs.

Financial highlights

• Gross margin was 28.2%, down 0.6 percentage points year-over-year, pressured by lower inventory inflation gains, CMED, and PIS/COFINS tax changes.

• Selling expenses were 17.2% of gross revenue, up 0.1 pp year-over-year, mainly due to personnel and distribution center costs.

• G&A expenses were 3.1% of gross revenue, with a 0.1 pp dilution year-to-date.

• Contribution margin was 11.0% in Q2 2024, down 0.7 pp year-over-year.

• Effective tax rate was 22.2% of EBT in Q2 2024, up due to new subsidy taxation.

Outlook and guidance

• Guidance for 280–300 new pharmacy openings per year in 2024 and 2025 is maintained, with 25.9% of pharmacies still maturing.

• Expect continued market share gains and digital growth, with digital revenue on track for R$6 billion in 2024.

• Margins expected to remain stable, with further G&A dilution and selling expense efficiency as mature store growth continues.