Announcement today from Sigma Healthcare (ASX:SIG) that they have been awarded the Chemist Warehouse Supply Contract starting July 1 2024 and running for 4 years.

This contract was previously supplied by EBOS group and generated around $1.9b of revenue per annum (Unsure if this figure is NZD or AUD). Total revenue that EBOS generated in FY22 was around $10.7b.

EBOS have stated that they still have multiple other growth opportunities including in Institutional Health Care distribution as well as Animal Care. But obviously the loss of this contact is going to be a hit to both the top and bottom line.

Shares are taking a hit today as a result of this announcement. Previously I thought that the price was a bit too high given the competitive nature of the pharmacy distribution industry and the announcement today clearly shows the risks involved with such a business. With the price coming down, it makes things a little more interesting although I will probably wait for some more clarity as to how this loss of contract is going to affect the business as a whole.

Sigma announcement here

EBOS announcement here

Disc: Not held.