Unfortunately for its shareholders, the Sigma Healthcare Ltd (ASX: SIG) share price has sunk lower once again.
This morning the pharmacy chain operator and distributor's shares fell within a whisker of their multi-year low to 77 cents.
At the time of writing they have recovered slightly, but are still down 3.5% to 79 cents.
Why are its shares lower today?
As well as general weakness in the retail sector today, Sigma's shares have come under pressure following the release of another trading update.
And like the ones before it, this wasn't a positive update.
According to today's update, Sigma has been told by pharmaceutical giant Astra Zeneca that it will exclusively distribute a portion of its products direct to pharmacies effective from 1 November 2017.
Management estimates that these products account for approximately 1% of Sigma's sales currently and is actively reviewing a number of options to offset its impact to earnings.
What now?
While the potential loss of 1% of its sales isn't huge in the grand scheme of things, it is worth remembering that there is a real chance that Sigma will have a major gap in its earnings in the future.
Although its dispute with the My Chemist/Chemist Warehouse Group (MC/CW) has now been resolved, I don't believe it is the last we will hear on the matter.
In fact, I wouldn't at all be surprised if MC/CW pulled the plug on its current supply agreement when it comes to an end in June 2019.
Earlier this year Citi estimated that the loss of the contract would cause a 33% drop in sales in the second-half of FY 2020.
That certainly would be hard to overcome and the loss of Astra Zeneca only adds to its woes.
All in all, I would suggest investors continue to give Sigma a wide berth until the situation becomes clearer. In the meantime, I would sooner invest in healthcare shares such as Ramsay Health Care Limited (ASX: RHC) or Nanosonics Ltd. (ASX: NAN) instead.
