The Sigma Healthcare Ltd (ASX: SIG) share price has closed today's trading session slightly lower after it was announced that the company's CFO is resigning.
What did Sigma announce?
Sigma Healthcare announced earlier today that the company's CFO Iona MacPherson has resigned, effective immediately. According to the announcement, Ms MacPherson will depart the company by mutual agreement after occupying the position since November 2016.
The announcement acknowledged that the resignation of the company's CFO was bad timing, however management reassured investors that it will not impact Sigma's trading performance. Sigma's chief executive Mark Hopper reassured shareholders, stating:
Sales for December and early January have continued to be strong and we remain on target to meet our existing guidance of $46-47 million underlying EBITDA and to accelerate our growth through FY21.
Sigma has already started an external search for a new CFO. In the interim, former CFO and current retail pharmacy general manager Jeff Sells will step into the role. In response to the resignation news, the Sigma share price fell more than 2% in early trade, before recovering slightly at the end of today's trading session.
Why is this a bad time for the CFO to resign?
Sigma owns a portfolio of chemist retailing outlets including Amcal, Chemist King and the Discount Drug Store brand. The pharmacy operator failed to extend a supply contract with retail giant Chemist Warehouse in mid-2018. Since then, Sigma has been embarked on a costly restructuring of the company and has faced numerous tailwinds, which has seen its share price suffer.
The loss of the supply contract was reflected in Sigma's interim report last September. The company reported an 80% fall in interim profit of $2.55 million, whilst also announcing that it will slash 500 jobs.
Late last year, Sigma also rejected a takeover bid from Australian Pharmaceutical Industries Ltd (ASX: API). As a result, the company's share price suffered a further decline after API sold their 11% stake in Sigma.
In its bid to restructure the company, Sigma aims to deliver more than $100 million in efficiency gains after losing its supply contract. The company estimates that underlying EBITDA for FY20 will be at the low end of its previous guidance of between $55–60 million. Earnings for FY21 remain in line with previous guidance, with Sigma expecting at least 10% growth.
The Sigma share price closed down 0.85% at $0.58 per share.
