Table of Contents
What changed
Revenue grew 13.0% to NZD $6.8b, driven predominantly by Healthcare (93% of group sales), with Animal Care growing its share from 5.1% to 6.7% on the back of a 48% revenue uplift in that segment. EBITDA rose 9.7% to $302.7m, though the release characterises the underlying EBITDA figure as $300m, up 3.2%, which is the more relevant comparison once acquisition-related distortions are stripped out. PBT — the cleaner operating read — grew 4.4% to $162.7m.
NPAT of $124.8m appears stronger at 13.0% growth, but this was substantially assisted by the effective tax rate falling from 28.3% in HY25 to 22.2% in HY26. That eight-percentage-point gap accounts for most of the difference between 4.4% PBT growth and 13.0% NPAT growth.
The most material deterioration was in cash generation. Operating cash flow collapsed 75.5% to $46.6m from $189.8m, and with capex of $62.7m, pre-lease free cash flow turned negative at approximately -$16.1m versus $134.1m in the prior half. Trade receivables grew 17.3% to $1.67b, outpacing revenue growth of 13.0%, and inventories expanded 8.2% to $1.35b. Gross borrowings rose modestly to $1.37b; net debt on a cash-adjusted basis was approximately $1.12b.
The interim dividend was held flat at NZD 57.0 cents per share.
What matters
1. The cash conversion collapse is the dominant concern. Operating cash flow of $46.6m against EBITDA of $302.7m represents a cash conversion rate of approximately 15%, down from roughly 69% in HY25. With capex running ahead of operating cash flow, the business consumed rather than generated free cash in the half. The proximate cause appears to be working-capital build — receivables grew $246m and inventories grew $102m in absolute terms — but payables were not separately disclosed, making it impossible to complete a full working-capital bridge. Management references seasonality and strategic investment ramp-up, and the FY25 full-year result showed strong underlying free cash flow of $302m with 109% cash realisation, suggesting second-half recovery is achievable but the first-half position is unusually stretched.
2. The tax benefit is non-recurring in character. The effective tax rate of 22.2% versus 28.3% a year ago is the primary driver of NPAT growing three times faster than PBT. EBOS has not explained this rate reduction in the supplied excerpts. If the rate normalises in H2, NPAT growth for the full year will likely converge back toward PBT growth — in the low-to-mid single-digit range — which is materially below what the headline 13% NPAT number implies.
3. Underlying EBITDA growth of 3.2% signals that volume uplift is not yet translating to margin. Healthcare EBITDA grew 1.3% to $254m while Animal Care was stronger. The company attributes the modest EBITDA growth to commissioning of strategic investments, implying the new capacity is not yet generating full returns. The reaffirmed FY26 guidance and explicit guidance for H2 improvement position this as a timing issue rather than a structural one, but the H1 result on its own supports only a modest operating improvement narrative.
Expectations
EBOS has reaffirmed FY26 EBITDA guidance and explicitly flagged further EBITDA improvement in H2 FY26 as productivity, utilisation and demand improve. No specific dollar range for FY26 EBITDA was reproduced in the supplied excerpts, though the FY25 guidance range was $575m–$600m.
Using the FY25 precedent, the first half contributed approximately 49.6% of full-year EBITDA and 51.4% of full-year NPAT, meaning the business is only mildly second-half weighted. With HY26 EBITDA of $302.7m already declared, EBOS would need H2 to deliver roughly $283m or better to match FY25's full-year EBITDA of $555.6m, and would need meaningfully more than that to show material full-year growth consistent with guidance language.
The annualised HY26 revenue run-rate of approximately $13.5b sits about 10% above FY25's $12.3b, which is consistent with the ongoing strong growth narrative. However, the earnings leverage from that revenue growth is currently modest — PBT grew 4.4% on 13% revenue, implying significant margin dilution, which the company attributes to the investment phase. The key question is whether the H2 uplift guided to reflects genuine operating leverage or a partial normalisation of working capital timing.
Quality of result
The result quality is mixed and warrants caution on several fronts:
- NPAT growth is of lower quality than it appears. The 13.0% NPAT growth is substantially a tax artefact. PBT growth of 4.4% is the more reliable read of operating performance, and underlying NPAT from continuing operations actually fell 4.3% per the statutory disclosure.
- Underlying EBITDA growth of 3.2% — the company's own preferred measure — is modest relative to 13% revenue growth and reflects a period of investment spending rather than operational leverage.
- Cash generation was deeply negative on a free cash flow basis. A negative pre-lease FCF of approximately -$16.1m against NPAT of $124.8m means the period's reported profits were not supported by cash. Working-capital build absorbed the cash, but without a full payables disclosure, the magnitude of the timing mismatch versus a structural deterioration in collection terms cannot be cleanly assessed.
- The dividend payout ratio against NPAT of approximately 93% (down from over 100% in HY25) was not covered by free cash flow and was effectively funded from borrowings in cash terms this half.
- The balance sheet leverage ratio improved slightly, with net debt/EBITDA at approximately 3.7x versus 3.9x a year ago, which is the one metric pointing to structural improvement rather than deterioration.
Unresolved
- What drove the tax rate reduction from 28.3% to 22.2%? If it reflects a genuine structural benefit (R&D credits, geographic mix, deferred tax releases), it could persist. If it is a one-half timing item, H2 will see a rate reversal that suppresses full-year NPAT growth well below the H1 trajectory.
- What caused the working-capital blow-out? Trade receivables grew 17.3% against 13% revenue growth, and payables were not disclosed. Whether this reflects new customer onboarding terms (EBOS noted ~$100m of new pharmacy wholesale revenue in HY25, with a $450m+ full-year annualised target), deliberate stocking ahead of supply tightness, or a softening in collection discipline is not determinable from the filing.
- What is the specific FY26 EBITDA guidance range? The reaffirmation is noted but the range was not reproduced in the supplied disclosure, making it impossible to assess how much H2 improvement is actually required to meet guidance versus exceeding the FY25 base.
- Animal Care margin compression. The segment's EBITDA margin appears to have declined versus HY25 even as revenue surged 48%, though measurement differences between EBITDA and EBIT across periods make this comparison imprecise.
This briefing cannot assess the timing or reversibility of the working-capital build without a full payables disclosure or management's underlying free cash flow reconciliation.
Key metrics
| Metric | HY26 | HY25 | Change |
|---|---|---|---|
| Revenue | $6767.7m | $5991.4m | +13.0% ↑ |
| EBITDA | $302.7m | $275.8m | +9.7% ↑ |
| Net profit after tax | $124.8m | $110.5m | +13.0% ↑ |
| Net cash inflow from operating activities | $46.6m | $189.8m | -75.5% ↓ |
| Interim dividend per share | 57.0c | 57.0c | flat |
| Total assets | $7588.1m | $6843.3m | +10.9% ↑ |
Source: annolyse.ai/briefings/ebo-hy26
Segment breakdown
| Segment | Current revenue | Prior revenue | Current result | Mix shift |
|---|---|---|---|---|
| Healthcare | $6316.7m | $5687.2m | $256.9m | -1.6pp |
| Animal Care | $451.0m | $304.2m | $67.5m | +1.6pp |
Source: annolyse.ai/briefings/ebo-hy26
Analytical metrics
| Metric | HY26 | HY25 | Context |
|---|---|---|---|
| PBT growth | +4.4% | — | cleaner earnings measure |
| Effective tax rate | 22.2% | 28.3% | — |
| OCF / EBITDA (cash conversion) | 15.4% | 68.8% | deteriorated |
| FCF pre-lease | −$16.1m | $134.1m | −$150.2m |
| FCF / NPAT | -12.9% | 121.4% | complementary conversion metric |
| Capex % revenue | 0.9% | 0.9% | — |
| Capex | −$62.7m | $55.8m | −$118.4m |
| Debtor days | 44.9 | 43.3 | +1.6 days |
| Inventory days | 36.3 | 37.9 | -1.6 days |
| Trade debtors | $1669.8m | $1423.7m | +$246.1m |
| Net debt | $1120.9m | $1064.7m | +$56.3m |
| Net debt / EBITDA | 3.71x | 3.86x | Strengthening |
| Gross borrowings | $1371.2m | $1302.6m | +$68.7m |
| Payout ratio vs NPAT | 93.3% | — | — |
| ROE (annualised) | 9.2% | 9.1% | Strengthening |
| HY25 share of FY25 revenue | 48.8% | — | Other half was 51.2% |
| HY25 share of FY25 EBITDA | 49.6% | — | Other half was 50.4% |
| HY25 share of FY25 NPAT | 51.4% | — | Other half was 48.6% |
| Profit from continuing operations | $124.8m | $111.7m | +$13.1m |
Source: annolyse.ai/briefings/ebo-hy26
This analysis was generated using Annolyse, an AI-powered tool that extracts and analyses NZX/ASX company announcements. The underlying data is extracted from official company filings and verified against source documents. This is general information only and does not constitute financial advice. The analysis may contain errors. Always read the original company filings and consult a licensed financial adviser before making investment decisions.