EBOS Group "Health check sees growth delayed to FY28" (Buy) Curley

Research evidence excerpt

EBOS Group "Health check sees growth delayed to FY28" (Buy) Curley

EBOS Group UBS Research

earnings changes & valuation update

We have lowered FY29e EBITDA by 5% mainly reflecting to three key issues impacting

EBO's Healthcare operations:

Slower Australian Pharmacy revenue growth: The recent Australian Federal

Budget points to Pharmaceutical benefits, services and supply spend increasing

from A$20.9bn in FY25 to A$21.7bn in FY29, and relatively flat spend from FY26

to FY29. While the government did announce additional PBS spending of A$5.9bn

over 5 years on new high value medicines (mainly section 100), this looks to be

mostly countered by lower spending on existing medicines through cheaper

generic alternatives. This should be partly countered by high growth in private

medicine spend from wider of use of GLP-1 (A$0.9bn in FY25). We have lowered

our FY29e Australian Pharmacy revenue for by 3% with revised 3-year CAGR of

1% pa.

Lower Australia Pharmacy GOR margin: Our analysis points to a smaller

funding benefit from the new Pharmaceutical Wholesaler Agreement in FY27. This

reflects a headwind from a lower wholesale mark-up (relative to offsetting lift in

CSO funding) driven by a fast shift towards high value medicines since FY25. This

has been partly countered by a higher inflation adjustment of CSO from FY28. In

addition, greater wholesaler competition post Sigma/CW merger has resulted in

slightly greater volume rebates, sign-off payments and better credit terms

provided to pharmacy operators. We have lowered our FY29e Australia Pharmacy

GOR margin by 10bp to 8.6%.

Removal of CW NZ distribution contract: EBO currently provides distribution

services to CW in NZ covering both front of shop products and medicines. We