EBOS Group (ASX: EBO) Targets Higher Cash Flow After $360m Upgrade

EBOS Group has completed its four-year distribution-centre renewal program after investing $360 million across its network. The healthcare and animal-care group expects lower capital spending to support stronger cash generation in FY27.

Revenue rose 9.9% to $13.49 billion in FY26. Underlying EBITDA increased 5% to $614 million, meeting the company’s revised guidance.

However, underlying net profit fell 3.1% to $250 million. Higher depreciation, amortisation and financing costs weighed on earnings after the investment cycle. Statutory net profit increased 4.7% to $225 million.

Revenue Growth Outpaces Profit

EBOS generated a $51 million underlying EBITDA uplift from operating growth. That was partly offset by $22 million of fuel and foreign-exchange headwinds.

The underlying EBITDA margin narrowed to 4.6% from 4.8%. Product mix and competition within community pharmacy contributed to the decline.

Depreciation and amortisation rose by $28 million to $148 million. Net finance costs increased by $13 million to $119 million.

Underlying earnings per share declined 7.3% to 121.7 cents. The final dividend was maintained at NZ61.5 cents per share, producing an 84.5% underlying profit payout ratio.

Healthcare and Animal Care

Healthcare revenue increased 8.5% to $12.58 billion, while underlying EBITDA rose 3.2% to $516 million. Demand for GLP-1 and other high-value medicines supported community pharmacy sales.

Contract logistics gross operating revenue climbed 13.1%. The new Perth facility is now operating, giving EBOS a national Australian healthcare logistics footprint.

Animal Care revenue jumped 34.6% to $907 million. The increase reflected wholesale expansion following the SVS acquisition and continued growth at Lyppard.

Animal Care underlying EBITDA rose 11.6% to $138 million. Branded revenue increased 6.7%, while wholesale revenue advanced 62.2%.

The group deployed $121 million across bolt-on acquisitions during FY26. These transactions expanded its medical technology, retail pharmacy, consumables and animal-care operations.

Cash Flow Reset

Underlying free cash flow fell to $241 million from $302 million. The prior year included a roughly $75 million working-capital benefit linked to the Chemist Warehouse Australia contract exit.

Reported free cash flow was $204 million. Excluding that prior-year benefit, the comparable FY25 figure was $197 million.

Capital expenditure totalled $145 million in FY26. EBOS expects this to fall to about $100 million in FY27 as the distribution investment program ends.

Leverage stood at 2.1 times EBITDA, within the target range of 1.7 to 2.3 times. EBOS also reported about $726 million of undrawn committed bank facilities.

FY27 Guidance

EBOS forecast underlying EBITDA of $635 million to $655 million for FY27. That represents mid-single-digit organic growth at the midpoint of the range.

Depreciation and amortisation are expected between $152 million and $162 million. Net finance costs are forecast at $138 million to $148 million.

The completion of the network program changes the earnings and cash-flow profile. Capital requirements are declining, although prior investment costs will continue flowing through depreciation and interest expenses during FY27.