This article first appeared on GuruFocus .
Release Date: August 26, 2026
For the complete transcript of the earnings call, please refer to the full earnings call transcript .
Positive Points
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Underlying revenue grew 6.7% after normalizing for exited contracts and FX, with organic growth strong across most channels.
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Successfully completed the 3-2-1 strategy, including merging all Australian businesses onto JDE and realizing all committed synergies.
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Won the Australian Defence Force contract, which will fully contribute from FY27, and secured other new contracts across business units.
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Completed six acquisitions in FY26, expanding into dental and Asian markets (Malaysia, Singapore, Hong Kong, Indonesia), broadening geographic and product reach.
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Operating cash flow improved significantly to $29.1 million, up 317% year-over-year, and net debt remained within target at 2.5x.
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Contract logistics and clinical manufacturing delivered strong revenue and margin growth, with new contracts like Quadell Ortho set to scale in FY27.
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Announced a share buyback for FY27, reflecting confidence in the business and a view that the share price is undervalued.
Negative Points
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Statutory net loss of $16 million due to a $38 million provision for the Infinity debt write-down, which remains an overhang.
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Elevated fuel costs due to Middle East conflict impacted logistics and are expected to continue into the first half of FY27.
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Higher-than-desired inventory levels at year-end due to supply chain challenges and commitments to suppliers, increasing working capital.
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Foreign exchange headwinds, particularly from New Zealand, Thailand, and Korea, negatively impacted revenue and margins.
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No dividend declared for FY26, which may disappoint income-focused investors, though a review is planned for the first half of FY27.
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Net debt increased to 2.5x due to heavy CapEx and acquisitions, limiting near-term financial flexibility.
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Uncertainty around the duration of fuel cost pressures and the final outcome of the Infinity administration process.
Q & A Highlights
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Q: Can you provide more detail on the clinical manufacturing business and the new Japan contract with Quadell Ortho, including its value and scope? A: Carmen Riley (CEO and Managing Director) stated that while the contract value is commercially confidential, it is a multi-year, multi-product agreement with Quadell Ortho. The partnership involves Quadell Ortho closing some facilities and establishing a footprint in Australia with potential expansion into the APAC region. The contract will scale up year-on-year as they roll out specific products and portfolios across different geographical regions.
Q: Regarding the FY27 outlook, how will the acquisitions completed in FY26 annualize into FY27, and what can we expect their contribution to be? A: Brendan Pentland (CFO) explained that the contribution from acquisitions will be higher in FY27 due to timing. For example, Somnatech was acquired mid-December, so FY27 will include a further five and a half months, and Pacific Medical will contribute an additional seven months. Most acquisitions were completed in the second half of FY26, so their full-year impact will be realized in FY27.
Q: How should we think about the fuel and offsite storage costs in the EBITDA bridge, and will they dissipate into FY27? A: Carmen Riley (CEO and Managing Director) noted that offsite storage costs, largely driven by the delayed Brisbane site, are expected to unwind in FY27. Fuel costs, however, remain uncertain due to the Middle East conflict. The company is cautious about providing an outlook due to this volatility but will provide a full update at the AGM based on Q1 results. She emphasized not wanting to disrupt customers and suppliers, hoping the situation is short-term.
Q: With net debt at 2.5 times, where do you see the balance sheet settling in FY27, and is there a goal to reduce gearing? A: Carmen Riley (CEO and Managing Director) stated she is comfortable with the current gearing level of around 2.5 times and does not want to set a target to reduce it to 2 times, especially given the current market conditions and the desire to continue investing in the right areas.
Q: Regarding the new pharmacy wholesaler agreement (CSO), do you have an estimate of the market share uplift you will see this year? A: Carmen Riley (CEO and Managing Director) said the modeling is in line with expectations after the first CSO payment came through, which was a relief. However, with only one month of trading data, she is not ready to provide a specific number and will wait to see how it extrapolates over the year.
Q: Given the active acquisition year, how are you positioned to fund future acquisitions, and will you use debt or issue more equity? A: Carmen Riley (CEO and Managing Director) indicated that if the right acquisition came along, they would use debt facilities rather than raise equity, as they see acquisitions adding long-term value for shareholders. She expects the pace of acquisitions to settle down, but they would use existing facilities for any new opportunities.
Q: Can you provide the full-year impact of the six acquisitions completed in FY26 on a pro forma basis? A: Brendan Pentland (CFO) and Carmen Riley (CEO and Managing Director) were cautious about providing a specific number. They noted that the acquisitions are delivering on their results as per the 4E, but they want to get through the first quarter of FY27 before giving a clearer number to the market to ensure accuracy.
Q: The pro forma EBITDA implied by the net debt figure is higher than the reported number. Is there anything significant to pull out of that pro forma number to guide FY27 forecasts? A: Brendan Pentland (CFO) clarified that the gearing calculation includes the full last 12 months of acquired businesses. Carmen Riley (CEO and Managing Director) confirmed there are no major items, such as the Ramsay contract, that would significantly distort the pro forma number as a guide for FY27.
Q: Can you provide more color on the share buyback, including the number of shares authorized and your intention to execute it? A: Carmen Riley (CEO and Managing Director) explained that the buyback is part of a step-by-step approach. Initially, shares will be bought for the employee incentive plan (LTI) rather than issuing new shares. Under general rules, they can buy up to 10% of shares, but this doesn't mean they will buy all of that. The execution will depend on trading performance, the half-year results, and the dividend policy.
Q: Operating cash flow improved significantly but is still below EBITDA. Do you expect cash conversion to improve to a high percentage of EBITDA over time? A: Carmen Riley (CEO and Managing Director) confirmed that cash conversion will improve without a doubt. Brendan Pentland (CFO) added that the FY26 figure included a corporate tax refund in the second half, and the company is working hard on working capital management to improve cash flow.
For the complete transcript of the earnings call, please refer to the full earnings call transcript .
