Salus Group has published its half-year 2026 report, and the numbers give us a good reason to look at a company that deserves more attention than it usually gets. With a market capitalisation of roughly EUR 551m, Salus is one of the larger names on the Ljubljana Stock Exchange, it operates in a structurally interesting and highly regulated market, and its share has gained around 56% over the past twelve months. Despite all of that, it is rarely mentioned in Slovenian media or in the broader conversation about the Slovenian capital market. In this update, we will go through the results, the regulatory framework the company operates in, the acquisitions that have shaped the Group over the past year, and the corporate actions that followed.

Salus Group is the leading pharmaceutical wholesaler and distributor in Slovenia, and over the years it has built itself into a regional healthcare player across Central and Eastern Europe. The Group has been listed on the Ljubljana Stock Exchange for nearly three decades, and with subsidiaries across Croatia, Bosnia and Herzegovina, Serbia, North Macedonia, Albania, Montenegro, Lithuania and, as of July 2026, Czechia, it holds one of the broadest healthcare distribution footprints in the region.

It is worth separating the business into its parts, because they do not behave the same way. The first and largest is classic wholesale distribution of medicines and medical devices to pharmacies, hospitals, health centres, nursing homes and veterinary institutions. This is the volume engine, and it is also the most tightly regulated part of the Group, competing in Slovenia against Kemofarmacija, part of the German PHOENIX group, and LL Grosist. The second is Sanolabor, a network of specialised retail stores selling medical supplies and equipment. The third, and in our view the most interesting, is the commercial partnership business, where international pharmaceutical principals outsource market access, regulatory work, promotion, active selling and distribution to a local partner rather than building their own organisation in each small market. Margins here are structurally better than in pure wholesale, because the Group is being paid for a service rather than for moving a box at a capped markup.

That third segment is also where the growth opportunity in this sector has been demonstrated most clearly, and not by Salus. Swixx BioPharma, a privately held company operating the same commercial partnership model across CEE, was recognised by the Financial Times in its “Europe’s fastest-growing companies” ranking, placing 9th among all European companies in the Health Care & Life Sciences category in the 2024 FT/Statista list on the back of a 70.6% compound annual growth rate. That is the competitive benchmark, and it illustrates how much room this model has in the region compared with the regulated wholesale business that still forms the bulk of Salus’ revenue.

Turning to the results, the H1 2026 figures show growth across every line of the profit and loss account. Operating revenues rose 18.4% YoY to EUR 399.0m. EBITDA increased 21.6% YoY to EUR 16.9m, operating profit (EBIT) grew 24.5% YoY to EUR 12.5m, and net profit attributable to the owners of the parent rose 22.9% YoY to EUR 10.1m. Earnings per share came in at EUR 1.23, up from EUR 1.00 in the same period last year.

Salus key financials (H1 2023 – H1 2026, EURm)

Source: Salus, InterCapital Research

The broader growth trend is not a one-off, although the H1 2026 headline figures are partly supported by the consolidation of Farmadent and Gopharm. Measured against H1 2024, half-year revenue has compounded at roughly 11% a year, EBITDA at roughly 16%, and net profit at roughly 23%. On a full-year basis, the Group grew operating revenue 7.3% to EUR 696.2m in 2025, while EBITDA rose 13.4% to EUR 27.7m and net profit rose 30.3% to EUR 17.0m. In other words, the underlying direction remains unchanged: Salus has been growing for several years, with profitability consistently outpacing revenue growth.

Margins continued the improvement we noted in the previous update. The EBITDA margin expanded from 4.1% to 4.2%, the EBIT margin from 3.0% to 3.1%, and the net margin from 2.4% to 2.5%. Taken together with H1 2024, this is now a third consecutive year of margin expansion in a sector where the regulated wholesale markup has not moved since 2012.

It is worth putting the revenue growth in context. The acquisition of Farmadent and its subsidiary Gopharm was completed on 2 October 2025 for EUR 8.46m, with the company guiding that the two would lift annual Group revenue by approximately EUR 70m. Farmadent alone reported revenue of EUR 60.6m in 2024. Since the businesses were consolidated from the fourth quarter of 2025, they appear in full in the H1 2026 figures but not at all in the H1 2025 base. Stripping out an estimated half-year contribution, underlying growth works out at roughly 8% to 9%, still an acceleration from the 4.9% recorded a year earlier. Farmadent therefore explains a meaningful part of the headline acceleration, but not the underlying growth itself.

On the balance sheet, total assets grew to EUR 290.3m from EUR 253.6m at the end of 2025, an increase of 14.5% over six months. Net debt stood at EUR 34.1m at the end of June 2026, compared with EUR 16.5m a year earlier. Measured against annualised EBITDA, leverage sits at approximately 1.0x, or closer to 0.7x excluding lease liabilities, which remains a conservative level. Equity was broadly unchanged at EUR 92.5m, as the half-year profit was largely offset by the dividend paid during the period.

Salus margins (H1 2023 – H1 2026, EURm)

Source: Salus, InterCapital Research

The composition of that debt is what caught our attention. Practically the entire increase came at the short end: current financial liabilities rose to EUR 21.4m from EUR 7.3m at the end of 2025, while non-current financial liabilities actually declined slightly. Short-term borrowing of that kind is normally raised against working capital rather than against fixed investment, and the working capital movement in the period supports that reading. Trade receivables rose to EUR 115.1m from EUR 85.1m, growth of 35% against revenue growth of 18%, while merchandise inventories rose to EUR 92.8m from EUR 80.0m, broadly in line with sales. Stock, in other words, is not the issue, collection is. Against a backdrop of well-documented payment delays from Slovenian public hospitals, our reading is that receivables are simply not converting as quickly as they used to, and the Group has bridged the gap with short-term debt.

The cash flow statement is consistent with this. The Group generated EUR 18.0m of cash from operations before working capital movements, but the EUR 22.8m absorbed by working capital left operating cash flow at negative EUR 7.4m for the period, compared with negative EUR 1.8m in H1 2025. Add the EUR 10.0m of dividends paid during the half, and the additional borrowing plausibly covered both. Whether any part of it is being positioned ahead of the acquisition pipeline we cannot tell from the accounts, since no cash was paid out for subsidiaries at Group level in the first half. Capital expenditure, meanwhile, remains modest at EUR 2.4m, or 0.6% of revenue, which is consistent with a business whose capital intensity sits in working capital rather than in fixed assets.

The mix effect we flagged last year is also now confirmed. The sales mix continues to shift toward more expensive products, and the level and amount of the wholesale margin derive to a greater extent from sales volumes than from product prices, while rising purchase and other costs cannot be passed on to selling prices. In practice this means that as biologics and innovative therapies take a larger share of the basket, revenue and the balance sheet grow faster than the gross margin that comes with them, which is precisely why revenue growth and cash generation have moved in different directions this period.

Salus balance sheet (EURm)

Source: Salus, InterCapital Research

The regulatory question we described last year as an open uncertainty has meanwhile been resolved, and in a direction that will change how public pharmacies buy medicines. To recap, since 1 January 2025 the procurement of medicines by public pharmacy institutions at the primary level of healthcare has been governed by the Pharmacy Practice Act rather than by public procurement rules. Under that framework, a public pharmacy institution must order from at least three wholesalers, and no single wholesaler may account for more than 70% of its annual turnover in medicines. The European Commission took the view that this arrangement was not compliant with Directive 2014/24/EU, issued a letter of formal notice in June 2025, and followed with a reasoned opinion on 30 January 2026, giving Slovenia two months to respond before the case could be referred to the Court of Justice of the European Union.

On 26 June 2026, the Government announced that it would establish a central purchasing body for the public procurement of medicines within the Healthcare Investment Office, repeal Article 14.a of the Pharmacy Practice Act, and reintroduce public procurement rules for the purchase of medicines. The reintroduction is envisaged as of 1 January 2027. The Group’s Slovenian companies state that they do not expect a deterioration in their position as a result of the change, while acknowledging that a moderate level of risk is present. Alongside this sit the two constraints the sector has lived with for years: a regulated wholesale margin unchanged for more than a decade against a rising cost base, and the payment discipline of Slovenian public hospitals, where despite state intervention measures and an extension of payment terms to a maximum of 60 days until the end of 2027, the level of overdue liabilities has not been fully eliminated.

If there is one thing the past twelve months have demonstrated, it is that Salus has turned acquisitions into a repeatable process rather than a series of one-off events. The Farmadent transaction we wrote about a year ago, when the outcome was still pending, has since been completed and consolidated together with Gopharm. It followed more than a decade of attempts and a failed approach as recently as January 2025, and at EUR 8.46m for a business generating over EUR 60m of revenue, the entry price was undemanding.

The pipeline has since expanded. On 4 June 2026, Salus signed an agreement to acquire a 100% equity interest in Farmedica, a Ljubljana-based trading company, for a purchase price of EUR 21.6m, implying an enterprise value of EUR 16.2m given EUR 5.4m of surplus cash held at the valuation date. Ninety percent of the price falls due on completion, with 10% retained for two years, and the seller is additionally entitled to contingent consideration linked to exceeding a target EBITDA in the twelve months following signing. The transaction is subject to approval by the competent competition authorities. In parallel, Sanolabor has submitted a binding offer for the equity interests in Omega, with an option to subsequently acquire up to 100%, and is currently in exclusive negotiations. In Croatia, Salus increased its stake in Medorion to 83% in July 2026 under the staged acquisition agreement signed in 2023, and on 28 July 2026 the Group registered Salus Prague, entering the Czech market. Taken together, these are the building blocks of a regional platform assembled through M&A: two signed or advanced transactions, a staged buy-out progressing on schedule, and a new market entered, all within a single half-year.

Beyond the operating result, the past year has also meaningfully changed the profile of the share itself. Last year’s capital increase from reserves and the 1:78 share split lifted the number of shares from just over 105,000 to 8.22m and was accompanied by a market-making agreement, with the explicit aim of improving liquidity and visibility on the Ljubljana Stock Exchange. That objective has been met: turnover in the share has improved materially, and the stock reached a further milestone this year when Salus was included in the SBITOP blue-chip index following the index revision in March 2026, placing it alongside the most liquid names on the exchange and broadening its reach among institutional investors, including index-tracking flows.

On the distribution side, the Company paid a gross dividend of EUR 1.20 per share for the 2025 financial year, split into an interim payment of EUR 0.60 in January 2026 and the remaining EUR 0.60 in April 2026. This compares with EUR 1.03 per share paid for the previous year, an increase of 16.5%.

Finally, the Group’s full-year 2026 plan envisages operating revenue of approximately EUR 812m, ordinary EBITDA of EUR 28m, operating profit from ordinary operations of EUR 19m, and net profit of EUR 15.5m. With EUR 399.0m of revenue and EUR 16.9m of EBITDA already delivered in the first half, the revenue plan looks broadly on track, while the profitability targets imply a slower second half, reflecting planned investment in technology infrastructure and warehouse capacity.