Redcare Pharmacy Faces Twin Challenges in Pivotal Year

As Redcare Pharmacy approaches 2026, the company confronts two significant pressures: a substantial bond repayment and the entry of a formidable new competitor into its core market. With its share price struggling to find a floor after a steep decline this year, investors are questioning whether the business model can withstand the combined forces of debt management, increased competition, and the slower-than-expected rollout of Germany's e-prescription system.

The competitive landscape tightened considerably on December 16, 2025, when dm-drogerie markt launched its "dm-med" online pharmacy. This move, long anticipated by the market, directly targets Redcare's primary area of historical growth.

The new competitor's offering presents a clear challenge:
* A product range of approximately 2,500 over-the-counter (OTC) items.
* Direct competition in Redcare's core OTC business segment.
* A logistics operation based in Bor, Czech Republic, mirroring Redcare's own structural approach.

In a strategic countermove just days before the dm launch, Redcare activated its own high-capacity logistics center in the Czech Republic on December 11, 2025. This facility is designed to accelerate delivery times, particularly to Austria and Southern Germany, as the company aims to counter anticipated price pressure and service comparisons with greater efficiency and speed.

Bond Maturity Met with Ample Liquidity

On the financial front, Redcare must repay approximately €64.5 million on January 21, 2026. This obligation follows a notice from holders of its 2021/2028 convertible bond exercising their redemption right on December 19, 2025.

This payment is not an unexpected shock but the final step in an active debt restructuring undertaken in 2025:
* In April 2025, the company repurchased €157.9 million of convertible bonds via a tender offer.
* Concurrently, it placed a new €300 million convertible bond maturing in 2032.
* Following the January payment, only €2.6 million from the original 2021/2028 issuance will remain outstanding.

Liquidity metrics suggest the company is well-positioned for this outflow. As of September 30, 2025, Redcare held €265.6 million in cash and short-term financial investments, a significant increase from the €177.6 million reported at the end of 2024. This restructuring effectively extends debt maturities and provides greater financial flexibility for the coming years.

Divergent Analyst Views Amid Reduced Uncertainty

Equity researchers present a mixed outlook. UBS maintains a "Neutral" rating with a price target of €74 (as of December 17, 2025). Deutsche Bank is notably more bullish, reiterating a "Buy" recommendation with a €214 price target.

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

The UBS assessment is particularly insightful, suggesting that dm's market entry has actually removed a key overhang of uncertainty that had previously capped the share price. The analysts also note that Redcare was "significantly more active" than competitor DocMorris in the fourth quarter, potentially as a direct response to the new competitive threat.

Technical and Market Sentiment Remain Weak

Despite solid liquidity and strategic initiatives, share price performance reflects deep-seated skepticism. The stock currently trades around €64.50, having lost roughly half its value since the start of the year. On a twelve-month view, the decline exceeds 53%, ranking it among the weakest performers in the MDAX index.

Market participants attribute the persistent pressure to three main factors:
* Disappointment with the slow pace of Germany's e-prescription implementation.
* Additional competition from dm's entry into the online OTC market.
* A high short interest of nearly 14% of shares, which can exacerbate downward price moves.

From a chart perspective, the price is oscillating near a support zone between €63 and €64. It remains more than 50% below its 52-week high of €138.40. The Relative Strength Index (RSI) sits at 49, indicating a neutral stance far from clearly oversold or overbought territory.

Strategic Focus on E-Prescription and 2026 Growth

Redcare's strategy continues to emphasize prescription medications as its key differentiator against retail chains like dm, which are currently active only in the OTC segment. The mandatory introduction of the e-prescription system in Germany remains a central growth driver that dm's current model does not address.

Management has reaffirmed its 2025 guidance despite share price pressure and new competition:
* Revenue growth exceeding 25%.
* An adjusted EBITDA margin between 2.0% and 2.5%.

Entering 2026, Redcare appears to have its financial and operational house in order, having addressed the bond maturity, secured new financing until 2032, and expanded its logistics footprint. The critical test ahead is whether the company can successfully capitalize on the e-prescription opportunity in the Rx business while defending its OTC market position against a powerful new challenger—all under the watchful eyes of skeptical short-sellers and analysts.