Q2 2026 Raia Drogasil S/A Earnings Call (English, Portuguese) Transcript
Key Points
- 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.
- 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.
- 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.
- 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.
- 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.
- 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.
- 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.
- 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).
- 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.
- 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%.
- 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.
- 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.
- 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.
- 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.
- 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.
- 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.
Ladies and gentlemen, thank you for standing by, and welcome to RD Saude's second quarter of 2026 earnings call. The slide deck can be found at the company's Investor Relations website at ri.rdsaude.com.br. This conference replay will also be made available at the website. (Operator Instructions)
Before we begin, we would like to inform you that forward-looking statements are being made under the safe harbor of the Securities Litigation Reform Act of 1996. Forward-looking statements are based on the company's management's beliefs and assumptions, as well as on information currently available to the company.
Forward-looking statements do not guarantee performance. They involve risks, uncertainties, and assumptions as they refer to future events and therefore, depend on circumstances that may or may not occur. Investors should understand that overall economic conditions, the industry conditions, and other operating factors may affect the company's future results and lead to results that differ materially from those expressed in such forward-looking statements.
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