Raia Drogasil (RADL3) Q2 2024 earnings summary

Executive summary

• Gross revenue reached R$10.4 billion in 2Q24, up 15.4% year-over-year, with 70 new pharmacy openings and 4 closures, totaling 3,076 units and mature-store growth of 6.7%.

• Digital sales surged 43.9% to R$1.7 billion, reaching 17.8% retail penetration, with app orders comprising 67–73% of digital sales.

• Adjusted EBITDA rose 7.4% to R$824.4 million (margin 7.9%), and adjusted net income increased 2.1% to R$356.6 million (margin 3.4%).

• Market share increased to 15.7% nationally (+0.5 pp), with gains in all regions and 601 cities served.

• Customer loyalty and frequency increased, with 48.8–49 million active customers and 7 million loyal customers making 29.4 annual purchases on average.

Financial highlights

• Gross margin was 28.2%, down 0.6 pp year-over-year due to lower inflationary gains and new tax impacts.

• Free cash flow was negative R$303.4 million, with total cash consumption of R$583.2 million, reflecting seasonal working capital needs.

• Leverage stood at 1.3x adjusted EBITDA, in line with seasonal trends.

• 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.

Outlook and guidance

• Guidance for 280–300 new pharmacy openings per year in 2024 and 2025 is maintained, with focus on geographic and demographic diversification.

• 25.9% of pharmacies are still maturing, supporting future revenue and profitability growth.

• Expansion continues with 71% of new openings outside São Paulo.

• 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.