This article first appeared on GuruFocus .
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Total Revenue:BRL12.8 billion, an 18.3% year-over-year increase.
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Mature Store Sales Growth:10.9% growth, 8 percentage points above the CMED index.
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Digital Revenue:Nearly BRL4 billion, a 55.2% year-over-year increase, with a 31% penetration rate.
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Adjusted EBITDA:BRL1 billion, an 18% growth with a stable margin of 8%.
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Adjusted Net Income:BRL432 million, representing 3.4% of gross revenue.
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Adjusted EBT:BRL542.7 million, a 33% year-over-year growth.
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Free Cash Flow:BRL550 million, with a total cash generation of BRL1.190 billion.
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Gross Margin:28.9% as a percentage of gross revenue.
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Selling Expenses:18.6% of revenue.
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Financial Leverage:Reduced from 1.3x to 0.8x EBITDA, with net debt decreasing from BRL3.99 billion to BRL3 billion.
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Store Count:3,687 units at the end of the quarter, with 76 opened and 3 closed.
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Market Share:19.7% national market share, a 170 bps increase year-over-year.
Release Date: August 05, 2026
For the complete transcript of the earnings call, please refer to the full earnings call transcript .
Positive Points
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Raia Drogasil SA ( RADLY ) delivered a robust 18.3% year-over-year revenue growth, reaching BRL12.8 billion, with mature stores growing 10.9%, significantly outpacing the CMED index and direct competitors.
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The company's digital channel is a major growth engine, with revenue surging 55.2% to nearly BRL4 billion, representing 31% of total sales and driven by a strong proprietary app that accounts for 80% of digital orders.
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Market share gains were substantial, with the company increasing its national share by 170 basis points to 19.7%, driven by expansion and outperformance across all regions of Brazil.
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Financial leverage improved significantly, with net debt reduced by approximately BRL1 billion, bringing leverage down to 0.8 times EBITDA from 1.3 times, while free cash flow generation was strong at BRL550 million.
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Management provided a detailed and reassuring outlook on the GLP-1 market, highlighting that price declines in semaglutide are being offset by volume increases and that the patent-protected tirzepatide segment remains a stable and significant growth opportunity.
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The company's expansion engine remains highly efficient, with an IRR consistently above 20% (closer to 25%), supported by a rigorous site-selection process and a growing footprint of 3,687 stores.
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Operational efficiency is improving, evidenced by a 40-basis-point reduction in G&A expenses and a 40-basis-point drop in financial expenses year-over-year, contributing to a stable 8% EBITDA margin.
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Customer loyalty and experience are at all-time highs, with a record NPS of 91 for physical stores and 81 for digital, supported by 53 million active customers and rapid delivery times (96% under 60 minutes).
Negative Points
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The company faces a challenging retail environment in Brazil, characterized by persistently high interest rates, which pressures smaller competitors but also impacts overall consumer spending and the cost of capital.
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Gross margin faced headwinds from a higher mix of GLP-1 sales and a lower CMED inflation adjustment, which were only partially offset by operational gains, keeping the gross margin at 28.9%.
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The average selling price for semaglutide, a key GLP-1 product, dropped by 22% in the quarter due to generic competition, creating uncertainty and requiring volume growth to offset the price decline.
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The company's tax burden increased significantly, with income taxes rising by BRL60 million year-over-year to BRL118 million, a direct result of higher pre-tax profits, which dampened net income growth.
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A significant portion of the company's store base (25%) is still maturing and not yet generating optimal revenue, which currently dilutes overall EBITDA margins and profitability.
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The digital channel's NPS of 81, while improved, still lags behind the exceptional 91 NPS of physical stores, indicating a persistent gap in customer experience that the company is working to close.
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The company's market share gains are expected to decelerate from the recent 170-basis-point increase as the GLP-1 base grows, making it harder to sustain such rapid outperformance.
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The informal and parallel markets for GLP-1 drugs remain a significant concern, posing a risk to public safety and potentially diverting sales away from the formal retail channel.
Q & A Highlights
Q: What is the outlook for GLP-1 margins and the impact of new generic semaglutide competition on the company's overall profitability? A: Renato Raduan, Vice President of Store Operations, Multichannel and Expansion, stated that GLP-1 margins have been stable at 17%-18% for the past 9-12 months. He noted that while semaglutide prices are dropping (22% average price decline offset by volume), tirzepatide remains "bulletproof" with its patent intact. GLP-1 represents about 12% of total revenue, with semaglutide contributing only ~2% of gross profit. Management believes competition will improve gross margins and that the "doomsday scenario" is overblown, as volume elasticity continues to offset price declines.
Q: Can you provide more color on the strong cash conversion and supplier dynamics, particularly regarding the ICMS-ST tax changes? A: Flavio Correia, Investor Relations Officer, explained that the company gained 11 days in its cash cycle, with half coming from the ICMS-ST tax substitution change in Sao Paulo. The tax will now be paid at point of sale rather than purchase, creating a structural, recurring benefit of approximately 6 days in the cash cycle. The other half comes from commercial negotiations with suppliers. This is not a one-off effect and should be maintained going forward, making cash conversion easier in future periods.
Q: What is the company's capital allocation strategy given the reduced leverage of 0.8x EBITDA? A: Raduan stated that the company is deliberately deleveraging to create investment capacity while interest rates remain high. They will not accelerate organic expansion beyond the ~10% annual pace to maintain quality and returns. Management continuously evaluates buybacks and dividends but emphasizes that deleveraging at a time of high capital costs contributes to end results. The company maintains flexibility to allocate capital to projects with attractive returns.
Q: What percentage of new GLP-1 clients are new to the category versus migrating from existing products? A: Raduan shared preliminary data showing that over 60% of clients purchasing Ozivy (the new generic semaglutide from EMS) are completely new to the GLP-1 category. There is very little migration from tirzepatide to semaglutide despite price differences. However, management cautioned that these are early figures and the full picture will take time to develop as prescriptions cycle through and patients complete existing treatments.
Q: How is the company addressing the informal/parallel market for GLP-1 products, and what is the market share outlook? A: Raduan noted that the informal market for tirzepatide may be larger than the formal market in units. The company is running awareness campaigns on digital channels about the risks of unapproved medications and working with Abrafarma on industry-wide efforts. Flavio Correia added that Brazil has no informal market for any other molecule, making GLP-1 abnormal. As supply increases (5 new semaglutide products approved, 7 more expected by year-end), prices should decline and the informal market should normalize, benefiting formal retailers like RD.
Q: What are the main drivers of the company's continued market share gains, and can this pace be sustained? A: Raduan attributed the 170 bps market share gain to multiple factors: superior store expansion quality, digital channel strength, better customer experience (NPS of 91), and lower stockout levels. He noted that GLP-1 contributes less than 50% of the share gain. While the pace may moderate as the base grows, the structural advantagesincluding the digital fortress built on physical infrastructureshould sustain above-market growth. The company now has 13% share in the Northeast, 12% in the South, and 14% in the Southeast, with significant room to grow toward the 25% achieved in the Midwest.
Q: What is the company's strategy for capturing value beyond GLP-1 medications, such as complementary products and services? A: Raduan explained that GLP-1 is part of a broader care journey. The company is developing internal solutions and partnerships to serve patients throughout their weight loss journey, including monitoring side effects, complementary products, and progressive loyalty discounts. The new flagship store (Raia Conceito) features a robust supplement section and health monitoring devices. Management views this as part of their role as healthcare providers building a healthier society.
Q: How should we think about margin vectors going forward, particularly regarding gross margin and SG&A expenses? A: Flavio Correia indicated there is room for marginal gross margin improvement through pricing projects (with Simon-Kucher), commercial restructuring, and supplier relationships. However, the biggest levers are SG&A optimization, including AI adoption to dilute G&A expenses without increasing headcount. He emphasized that the 10% annual expansion consumes profitabilityif expansion stopped, EBITDA would grow by 50-100 bps more. As the store base matures and expansion pace normalizes, profitability should improve structurally.
Q: What is the outlook for tirzepatide pricing and the impact of combo promotions on demand? A: Raduan stated that tirzepatide average prices are declining modestly (4-5%) but volume more than offsets this. The company has not seen a "hangover" effect from combo promotions that require month-long purchases. Flavio Correia added that the formal GLP-1 market is only ~1 million boxes per month against a population of 70-80 million potential users, indicating massive room for growth. The company focuses on aggregate contribution rather than unit economics, believing volume will continue to offset price declines.
Q: What is the profitability outlook for new stores, and what drives the strong IRR performance? A: Flavio Correia highlighted that the company's IRR is historically above 20% and now closer to 25%. This is driven by an "airtight" location selection process refined over years, combined with logistics strength, commercial execution, and the contribution of GLP-1 sales. Approximately 25% of the store base is still maturing, and as these stores reach optimal revenue generation, EBITDA margins should improve. The company maintains this IRR even in smaller towns and new regions, demonstrating the replicability of their model.
For the complete transcript of the earnings call, please refer to the full earnings call transcript .
