Finnish healthcare small cap Oriola: Losses, new targets, and hints of big changes

Finnish pharmaceutical distributor Oriola – the former owner of Russia’s Stary Lekar pharmacy chain – has unveiled new financial targets through the end of the decade. The small-cap company aims to return to profitability and grow revenue by an average of 5% annually, even as its losses have continued to widen in recent years. Analysts interviewed by Oninvest do not exclude the possibility that the company’s recent moves point to strategic changes or a potential sale.

On April 28, Oriola announced new financial targets through 2029: revenue growth of at least 5% annually, a cost/net sales ratio below 75%, and dividends equal to two thirds of net profit, while noting that payouts will depend on the company’s performance in the previous year, as well as its financial position and business outlook.

“Net sales growth will come from a combination of services and products, with products expected to be the main growth driver,” CFO Mats Danielsson said in the company’s press release. Oriola did not disclose which products it was referring to or which business areas are expected to drive that growth.

The net loss for 2025 totaled EUR27.2 million, up 35% from a year earlier. The main driver is not its core operating business, according to Oninvest analyst Aldiyar Anuarbekov. The distribution segment, by contrast, improved: adjusted EBIT increased to EUR23.1 million versus EUR21.7 million a year earlier.

Oriola said in its annual report that its loss from the investment in Swedish Pharmacy Holding totaled EUR22.8 million, including its share of a EUR15.8 million goodwill impairment related to Swedish pharmacy chain Kronans Apotek. The write-down was linked to a longer-than-expected integration process and the transition to a unified ERP system.

“Kronans Apotek remains both the main drag on Oriola’s results and a potential catalyst. The integration of the joint venture was completed in 2025, and the management expects it to reach industry-level profitability by 2027. If that happens, Oriola’s consolidated result could turn positive,” Anuarbekov said.

In 2008, Oriola – then known as Oriola-KD – acquired a 75% stake in a Russian pharmaceutical business that combined distributor Moron and the Stary Lekar pharmacy chain, later increasing its ownership to 100%. As of 2007, Stary Lekar was Moscow’s third-largest pharmacy chain, with an estimated 5% market share, and Oriola described the acquisition as "a major strategic step forward for Oriola-KD in investing in Russia's fast-growing pharmaceutical retail and wholesale market."

The investment failed to meet expectations. In its 2011 annual report, Oriola said the Russian business generated an operating loss of EUR46 million, including a EUR33.4 million impairment of the Stary Lekar brand.

Three years later, Oriola sold the Russian operations to pharmacy chain 36.6 for just EUR56 million, excluding debt. In the company’s 2014 annual report, Oriola President and CEO Eero Hautaniemi said that despite the measures taken, the company had been unable to make its Russian business profitable and decided to sell the assets because of changes in the market environment and the profitability outlook for the coming years. He added that the transaction was completed under challenging market conditions and described its completion as a significant achievement.

Several developments may now point to preparations for a potential sale of the company. First, in January, the board announced a review of the long-term plan, financial targets, and capital allocation priorities. In English-language markets, the announcement of a review of strategic alternatives is often viewed as a recognized signal that a company may be preparing for a sale, according to research by Jenny Zha-Giedt, an associate professor of accounting at the George Washington University School of Business in Washington, D.C.

Such language can precede major strategic decisions, ranging from M&A transactions and asset sales to changes in capital structure or updates to a company’s development strategy, Anuarbekov said.

Second, Mats Danielsson was appointed CFO in September 2024. A release from his previous employer, ARE Oy, noted that in addition to overseeing finance, Danielsson was responsible for M&A. He also highlights his M&A experience on his LinkedIn profile.

Third, the company has been optimizing its portfolio. Last year, Oriola sold a low-margin Swedish dose-dispensing business while acquiring Denmark-based MedInfo to strengthen its medical services and healthcare advisory operations.

The fourth factor is Oriola’s investment in a new Finnish distribution center valued at EUR110-120 million. The project is being financed through a long-term lease rather than an outright purchase, despite the company holding EUR152 million in cash. Using a lease structure is standard practice because it avoids tying up capital in real estate and preserves financial flexibility, including for potential M&A transactions, Anuarbekov said.

The fifth factor is the company’s low valuation relative to annual revenue. Its enterprise value/sales ratio stands at around 0.05. Oriola’s market capitalization is EUR171.61 million, while it has EUR152 million in cash and EUR70 million in debt. As a result, an acquirer would effectively pay around EUR89 million for a business generating EUR1.9 billion in annual revenue, Anuarbekov estimates.

It is entirely possible that the company is preparing for a sale, or at least has already taken several steps that would make such a process easier, said Rauli Juva, an analyst at Finnish research outfit Inderes. He noted that Oriola owns a 50% stake in Kronans Apotek, a Swedish pharmacy joint venture, and said a logical first step would be to sell that stake. According to Juva, such a move would allow a potential buyer to acquire only the core distribution and wholesale business. Of course, someone could also acquire the entire company together with Kronans, the analyst added.

Oriola did not respond to Oninvest’s request for comment regarding preparations for a potential sale.

In late April, Oriola announced a share buyback program worth up to EUR1.5 million. The company plans to repurchase up to 1 million shares by August 31. Oriola said the buyback is intended to develop Oriola’s capital structure, to be used as a part of the company’s incentive schemes and to serve the interests of the company’s shareholder base.

On May 13, analysts at Evli upgraded Oriola shares to “buy” while maintaining a target price of EUR1.00 per share. Inderes reaffirmed its “accumulate” rating and target price of EUR1.10 per share on April 30.

Over the last year, Oriola shares have fallen around 20%. According to MarketScreener data, two analysts currently recommend buying the stock, with ratings of “buy” and “outperform,” while two others rate it a “hold.” There are no “sell” recommendations. The consensus target price stands at EUR1.03 per share, implying upside of 10.8% from the Tuesday closing price.

This text is for informational purposes only and does not constitute personalized investment advice.