Redcare Pharmacy Faces Dual Challenges at the Start of 2026

Redcare Pharmacy begins the new year navigating significant headwinds from two distinct fronts. The company must contend with the formidable entry of a major new competitor into the German online pharmacy market while simultaneously managing a substantial bond repayment obligation due this month.

The competitive landscape intensified in mid-December 2025 with the official launch of dm-med, the online pharmacy arm of the German drugstore giant dm. The new service, shipping from a logistics center in the Czech Republic, offers approximately 2,500 over-the-counter (OTC) medications and 1,000 exclusive pharmacy-grade cosmetics.

dm brings considerable scale to this venture. The company has committed a multi-million euro investment, employs several hundred staff for the project, and leverages an existing infrastructure of nearly 4,200 retail stores and 12.5 million app users. In an interview with Handelsblatt, CEO Christoph Werner described the health initiative as the company's largest current undertaking.

Key competitive advantages for dm include:
* A well-established brand with strong customer loyalty.
* The ability to bundle orders with regular dm products to reduce shipping costs.
* Announced price advantages of 20-30% compared to traditional brick-and-mortar pharmacies.

This development poses a direct threat to Redcare's OTC segment. The company's adjusted EBITDA margin was a slim 2.4% in Q3 2025, indicating vulnerability to an aggressive price war that could further compress already narrow margins.

Solid Liquidity Amidst Debt Management

On the financial side, Redcare confirmed in mid-December that bondholders would exercise their right to redeem €64.5 million from the 2021/2028 convertible bond, with payment due on January 21, 2026.

Should investors sell immediately? Or is it worth buying Redcare Pharmacy?

The company had proactively restructured its debt in April 2025. It repurchased €157.9 million of the original €225 million bond and concurrently issued new convertible bonds worth €300 million, maturing in 2032. Following the upcoming January payment, only €2.6 million of the old bond will remain outstanding.

Redcare's liquidity position appears robust. As of the end of September 2025, the company held €265.6 million in cash and short-term financial investments (net of bank debt), a notable increase from the €177.6 million reported at the close of 2024.

Market Sentiment Remains Cautious

Redcare shares have declined approximately 50% over the past year. In Friday's trading, the stock closed at €66.65, roughly 11% above its 52-week low of €59.45 reached in November. A short interest of about 14% of outstanding shares signals persistent institutional skepticism.

While the consensus price target among analysts stands at €142.75, recent assessments have grown more conservative. UBS recently upgraded its rating from "Sell" to "Neutral," but with a target of just €74. Barclays maintains an "Overweight" rating with a €130 price objective.

Investors will gain clearer insight into the company's performance when full-year 2025 results are published on March 4, 2026. The report will reveal the growth trajectory of the higher-margin prescription business, driven by electronic prescriptions, and its capacity to offset mounting pressure in the OTC segment.