Finnish small-cap Oriola: losses, new targets and a hint of big changes

Finnish pharmaceutical distributor Oriola - the former owner of the Russian pharmacy chain Stary Lekar - has unveiled new financial targets for the rest of the decade. The small-cap expects to reach profitability and increase revenue by an average of 5% per year, although its losses have only increased in recent years. Analysts surveyed by Oninvest do not rule out that the company's recent moves may indicate preparations for strategic changes or a deal.

On April 28, Oriola announced new financial targets through 2029: revenue growth of at least 5% per year, a reduction in the cost to revenue ratio below 75% and a dividend of 2/3 of net income, stipulating that the amount will depend on the company's performance in the previous year as well as its financial position and business prospects.

"Growth will be driven by a combination of services and products, with products being the main driver," Oriola's CFO Mats Danielsson said in a statement. At the same time, Oriola did not disclose which products it is talking about and at the expense of which areas it expects to ensure this growth.

The company's net loss for 2025 amounted to €27.2 million - 35% more than a year earlier. The main source of Oriola's losses is not its core operating business, notes Oninvest analyst Aldiyar Anuarbekov. The company's distribution business, on the contrary, showed improvement: adjusted earnings before interest and taxes (EBIT) rose to €23.1 million against €21.7 million a year earlier.

Oriola said in the report that its loss on its investment in Swedish Pharmacy Holding amounted to €22.8 million, including its share of a €15.8 million write-down of goodwill (the premium paid on the purchase of a business in excess of its net asset value) of Swedish pharmacy chain Kronans Apotek. The write-down was due to the longer-than-expected integration of the chain and the transition to a single ERP system.

"Kronans Apotek remains the main ballast and at the same time a potential catalyst for Oriola: the integration of the joint venture is completed in 2025, management expects to reach the industry level of profitability - by 2027. If this happens, Oriola's consolidated result could become positive," says Aldiyar Anuarbekov.

In 2008, Oriola (then known as Oriola-KD) acquired 75% of the Russian pharmaceutical business, which included pharmaceutical distributor Moron and pharmacy chain Stary Lekar, and later increased its stake to 100%. As of 2007, Stary Lekar was the third largest pharmacy chain in Moscow with a market share of about 5% and Oriola called the deal "an important strategic step to enter the fast-growing Russian pharmaceutical market".

However, expectations were not met. Already in its 2011 financial statements, Oriola reported that the operating loss of its Russian business amounted to €46 million, of which €33.4 million was due to the impairment of the Stary Lekar brand.

Three years later, Oriola sold the Russian business for just €56 million (excluding debt) to the 36.6 pharmacy chain. "Despite our efforts and measures taken, we were not able to make the business in Russia profitable. Given the changes in the market environment and the profitability outlook for the coming years, we have decided to sell the Russian assets," Oriola president Eero Hautaniemi admitted in the 2014 annual report. He noted that the transaction had to be conducted in difficult market conditions and its completion is a "significant achievement".

Several facts now simultaneously point to possible preparations for a sale of the company. First, in January 2026, the board of directors announced a "review of its long-term plan, financial objectives and capital allocation priorities." Typically, announcing a "review of strategic options" is a recognized "code" in the English-speaking market for preparing to sell a company, Jenny Ja-Giedt, an associate professor of accounting at George Washington University's School of Business, points out in her research.

Such formulations can precede important strategic decisions - from M&A deals to asset sales, changes in capital structure or updating the company's development strategy, agrees Aldiyar Anuarbekov.

Secondly, a new CFO, Mats Danielsson, was appointed earlier in September 2024. In a release from the previous employer ARE Oy about Danielsson's appointment, it was stated that in addition to the company's financial management, he is responsible for the M&A area. The financier also writes about his experience in M&A on his LinkedIn profile.

Thirdly, the company is "optimizing its portfolio": last year Oriola sold its low-margin Swedish packaging business, but acquired a small company in Denmark, MedInfo, to strengthen its advisory/healthcare business.

The fourth factor is that the company has invested in a new distribution center in Finland at a cost of €110-120 million. The money is coming through long-term leasing rather than purchase, despite €152 million in cash on hand. Choosing leasing is standard practice - it gives the opportunity not to freeze capital in real estate and maintain financial flexibility, including for possible M&A, explains Anuarbekov.

The fifth factor against the background of the others is the low ratio of the company's value to its annual revenue - the enterprise value/sales ratio is about 0.05. The company's market capitalization is €171.61 million, it has €152 million in cash and €70 million in debt on its balance sheet - as a result, the buyer will actually pay about €89 million for a business with revenues of €1.9 billion, Aldiyar Anuarbekov estimates.

It is quite possible that the company is preparing for a sale, or at least has already made several steps that would simplify the process, agrees Rauli Juva, an analyst at Finnish analytics platform Inderes. He notes that Oriola has a 50 percent stake in Swedish pharmacy joint venture Kronans, so the logical first step would be to sell that very stake. According to the expert, this would allow a potential buyer to acquire only the key distribution and wholesale business. "Of course, someone could also buy the whole company together with Kronans," the analyst admits.

Oriola did not respond to Oninvest's inquiry about preparations for a potential sale.

At the end of April 2026, the company announced a share buyback program of up to €1.5 million. Oriola plans to buy back up to 1 million shares between now and August 31, 2026. The company said the buyback is aimed at "optimizing the capital structure, providing long-term employee incentive programs and creating additional value for shareholders."

On Ma 13, analysts at Evli Bank upgraded their rating on Oriola to Buy, maintaining a target price of €1. An analyst at Inderes Investment Portal on April 30 reiterated Accumulate (buy) rating for the company's securities and target of €1.1.

Over the past year, Oriola's stock price has declined by almost 20%. According to Market Screener, now the company's shares are advised to buy by two analysts (Buy and Outperform ratings), and two more - to hold them (Hold). There are no sell recommendations. The consensus forecast is €1.03, suggesting a potential upside of 10.8% from the closing price on June 2.

Does not constitute individualized investment advice.