The Sigma Healthcare Ltd (ASX: SIG) share price surged 6% to $3 per share after the pharmacy network owner issued a trading update on Friday.
The ASX 200 healthcare stock is currently 5.4% higher at $2.99.
Let's check out the details of the trading update.
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Sigma share price rips on upgraded FY25 guidance
Sigma has upgraded its full-year normalised EBIT guidance range for the year ending 31 January 2025 to $64 million to $70 million.
This is up from the previous guidance of $50 million to $60 million issued last September.
The company said the upgrade was due to improved operational performance.
This includes the "strong execution" of the new Chemist Warehouse supply contract that commenced on 1 July last year.
Sigma Healthcare said this proved its ability to efficiently absorb volume growth ahead of its merger with Chemist Warehouse, which is expected to be completed next week.
The company also said its FY25 statutory net profit after tax (NPAT) would be significantly impacted by non-recurring merger costs.
These costs include the impacts of changes to existing performance rights as approved at the recent extraordinary general meeting.
Sigma expects to release its full-year audited FY25 results in the middle of next month.
What's happening with the Chemist Warehouse merger?
Sigma shareholders voted overwhelmingly in favour of the proposed merger with CW Group Holdings Limited last Wednesday. The yes vote was 99.86%.
Shareholders elected four Chemist Warehouse executives to the Sigma Healthcare board.
They are co-founder and board chair Jack Gance, CEO Mario Verrocchi, chief property officer Damien Gance, and chief people officer Danielle Di Pilla.
The board of Chemist Warehouse held its own vote on the same day, and the merger received 99.23% support.
On Monday, Sigma Healthcare announced that the Federal Court of Australia had approved the parties' scheme of arrangement.
Chemist Warehouse lodged the court order with the Australian Securities and Investments Commission (ASIC) the following day, making the scheme legally effective.
The two parties expect to formally complete the deal next Wednesday, 12 February.
Shareholders will receive their scheme consideration on this date.
New Sigma shares issued under the scheme are expected to commence trading on a normal settlement basis on 13 February.
Is it too late to buy Sigma Healthcare shares?
The Sigma share price has risen by 295% since the proposed merger was announced on 11 December 2023.
Excitement about the merger was the key reason that Sigma was the No. 1 ASX 200 healthcare share for price growth in 2024.
After all this price growth, some analysts recommend that investors take some profits.
The consensus recommendation on the CommSec trading platform is a moderate sell.
Of the eight analysts rating Sigma Healthcare shares, four say the stock is a strong sell, and one says it's a moderate sell.
Two analysts say investors should hold the stock, and one says it's a strong buy.
