Fidson Healthcare delivered a strong financial performance in the first half of 2026. Revenue rose 18.9% to N74.48 billion, while profit after tax climbed 28.16% to N7.721 billion.

In just six months, the company generated about 62.6% of its entire 2025 revenue and 78.2% of the pre-tax profit recorded for the whole of last year. This builds on a strong 2025, when profit after tax more than doubled by about 126% to N9.88 billion and earnings per share rose from N1.92 to N4.12.

Following these results, Fidson increased its dividend to N1.50 per share from N1.00 in 2024. The company's share price has also gone up 86.7% year-to-date.

However, the H1 2026 balance sheet reveals that the amount owed by customers is rising much faster than sales. Gross trade receivables jumped 139.7% to N26.34 billion at the end of June from N11.02 billion in December 2025, representing an increase of N15.41 billion in six months.

This additional N15.41 billion owed by customers is almost twice the N7.72 billion profit after tax earned during the half-year and about 1.3 times its N11.70 billion pre-tax profit. Impairment recognized against the gross trade receivables stood at N492.84 million as of June 2026.

Rising Working Capital Demands

Fidson currently carries N25.14 billion in inventories alongside N26.34 billion in trade and other receivables. Together, this represents N51.48 billion sitting in products waiting to be sold or money waiting to be collected, which is about 47% of the total balance sheet size.

Suppliers provide some financing, as trade and other payables increased to N17.48 billion from N6.63 billion at the end of 2025. However, supplier credit does not appear sufficient to finance the entire operating cycle on its own.

Fidson held inventory for about 110 days before it was sold, while receivables took another 45 days to convert into cash. This gives the company an operating cycle of about 155 days, against roughly 51 days of financing provided by trade and other payables, resulting in an estimated cash conversion cycle of around 104 days.

This cash conversion cycle is not unusually long compared to international peers. Large generic-drug makers like Cipla, Sun Pharmaceutical, and Dr. Reddy's operate with longer cycles, while Hikma Pharmaceuticals reported working-capital days of 245 in 2025.

Liquidity and Debt Pressures

For now, Fidson has the financial capacity to fund this gap. Net cash generated from operating activities rose 67% to N28.09 billion in H1 2026 from N16.82 billion, which is more than 3.6 times the reported profit after tax.

The company ended June with N13.12 billion in cash and bank balances, up from N4.71 billion at the end of 2025. Current assets of N71.75 billion comfortably exceeded current liabilities of N42.38 billion, leaving net working capital at N29.36 billion and a current ratio of 1.69 times.

However, around 84% of Fidson's interest-bearing loans are classified as current, with N20.51 billion due within the short term compared with only N3.85 billion of non-current loans. If internal cash generation cannot keep pace with expanding receivables, Fidson may rely more heavily on borrowing, which could push finance costs above the N2.91 billion recorded in H1.

Furthermore, while PAT rose 28.2%, earnings per share slipped to 257 kobo from 263 kobo following the expansion of its share base.

Market Valuation and Margins

Investors have rewarded the company, pushing the stock up 86.7% year-to-date to N93.55, valuing the company at N280.65 billion with a trailing P/E of roughly 20.3 times. However, the shares remain 31.5% below their N136.50 52-week high.

Fidson's gross margin improved to 43.01% from 41.04%, but its operating margin remained virtually flat at 19.31% due to administrative and distribution expenses growing faster than revenue. The pre-tax profit margin rose to 15.71% from 14.35%, helped by an 87.5% decline in FX losses and lower finance costs.