By Brazil Stock Guide – RD Saúde (RADL3 BZ; RADLY US) reported a 23.4% increase in second-quarter adjusted net income from continuing operations, as surging digital sales, market-share gains and strong demand for GLP-1 drugs helped Brazil’s largest drugstore chain sustain growth.
Adjusted net income excluding the discontinued operations of specialty-pharmacy business 4Bio reached R$ 424.4 million, up from R$ 344 million a year earlier. The corresponding net margin widened by 0.1 percentage point to 3.3%.
Consolidated adjusted net income, which included one month of 4Bio operations compared with three months a year earlier, rose 7.4% to R$ 432.7 million. The consolidated margin narrowed by 0.3 percentage point to 3.4%. Reported net income increased 9.8% to R$ 440 million.
Gross revenue climbed 18.3% to R$ 12.78 billion. Mature-store sales grew 10.9%, exceeding Brazil’s regulated 2.8% drug-price adjustment by 8.1 percentage points and 12-month inflation by 6.3 points. Total same-store sales increased 12.5%.
GLP-1 drugs reshape the sales mix
Sales of brand-name medicines jumped 24.3%, led by GLP-1 products used to treat diabetes and obesity. RD Saúde said launches in the category have made the drugs more accessible, with higher volumes offsetting declines in average prices.
Generic drug sales rose 14.5%, over-the-counter medicines advanced 13% and personal-care products grew 13.8%.
The stronger contribution from GLP-1 drugs came with a trade-off: the products carry structurally lower margins. Gross margin slipped by 0.1 percentage point to 28.9%, also reflecting a smaller inventory gain following a lower annual drug-price adjustment.
Those pressures were largely offset by improved commercial terms and easier comparisons with higher inventory losses in the year-earlier period.
Adjusted EBITDA rose 17.9% to R$ 1.02 billion, with the margin holding steady at 8% on the company’s pre-IFRS 16 reporting basis.
Selling expenses increased to 18.6% of revenue from 18.4%, reflecting higher personnel, last-mile delivery and third-party service costs. General and administrative expenses, however, fell to 2.4% of revenue from 2.7% as sales growth generated operating leverage.
Digital sales reach 31% of revenue
Digital revenue surged 52.2% to R$ 3.94 billion, increasing its share of retail sales to 31% from 24.1% a year earlier.
The company’s apps accounted for 83% of digital revenue, up 4 percentage points, after app-based sales grew 60%. Proprietary channels represented 94% of online sales, while 96% of digital orders were delivered or collected within 60 minutes.
RD Saúde’s national market share rose by 1.7 percentage points to 19.7%, with gains across every region. Its share reached 34.3% in São Paulo, its largest market, compared with 32% a year earlier.
The company said it also gained share when GLP-1 products were excluded, suggesting that its expansion was not solely driven by the fast-growing drug category.
Cash generation strengthens
Free cash flow swung to a positive R$ 550 million from a R$ 60.8 million outflow a year earlier. Operating cash flow increased to R$ 879.4 million from R$ 254.8 million as the cash conversion cycle improved by 10.7 days to 51.7 days.
Capital expenditure totaled R$ 329.4 million, including R$ 144.3 million for new stores, R$ 85.3 million for renovations and maintenance and R$ 74.1 million for technology.
Total cash generation reached R$ 1.19 billion when the effects of the 4Bio disposal were included.
Adjusted net debt fell to R$ 3 billion, bringing leverage down to 0.8 times trailing adjusted EBITDA from 1.3 times a year earlier. RD Saúde attributed 0.3 turn of the reduction to recurring cash generation and 0.2 turn to the sale of 4Bio.
Store-opening target maintained
RD Saúde ended June with 3,687 pharmacies after opening 76 stores and closing three during the quarter. It opened 329 units over the past 12 months, expanding its presence to 684 cities across every Brazilian state.
The company reaffirmed its plan to open between 330 and 350 stores in 2026. About 25% of its network is still in the maturation phase, providing a potential source of future revenue and profitability as those locations approach their third year of operation.
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