Pague Menos decepciona na receita, mas compensa no EBITDA e lucro

Pague Menos reported a slowdown in revenue in the third quarter, which fell short of consensus, but it compensated with significant profitability gains – resulting in the company's highest profit margin in its history for the period. Despite a 13.9% increase in revenue in the third quarter of 2024 and a 17.9% growth in the same quarter last year, Pague Menos' revenue decelerated to 6.9%, with same-store sales at 5.6%.

Revenue of R$4.4 billion was 0.7% below consensus, while same-store sales (SSS) fell 0.5 points. CEO Jonas Marques told Brazil Journal that weaker revenue was due to the strong base comparison and the loss of momentum from GLP-1 drugs, which had sustained growth but started decelerating in the second quarter. "When a category drives consumption so strongly, it also carries other categories," said Jonas.

"But now, nearly one and a half years into the category in Brazil, it has become more stable, with a smaller growth rate. This reduces growth for the category and others as well." The executive noted that when Mounjaro was launched in Brazil in May 2025, Pague Menos was the first network to sell the drug, which was sold primarily in three networks for a period as the manufacturer had limited stock.

"This led to a market share of about 15% in GLP-1, which was double our usual market share. When Eli Lilly started having stock and selling to all networks at the beginning of this year, our share fell to about 9%, contributing to the deceleration we've seen." Another factor pressuring the top line was the performance of over-the-counter (OTC) medications, which grew only 2.5% in the quarter.

The weak result was partly due to positive news for Brazilians: respiratory infections were milder this year compared to previous years. "This deceleration was equal across the market because demand for respiratory medications fell," said CFO Luiz Novaes. Despite the weaker revenue, Pague Menos managed to gain market share nationally.

According to IQVIA data, which measures sector growth using the 'comparable price' methodology, the pharmacy sector grew 9.1% in the quarter, while Pague Menos grew 9.6%. The company's growth was less dependent on new stores and more concentrated on same-store sales than its competitors. The positive highlight for the quarter was profitability.

Jonas said the company had already been on a strong base, doubling EBITDA in the last two years, but still managed to grow 7.1% in the quarter, delivering an EBITDA of R$279 million – 1% above consensus. Net profit was R$96 million, 2.4% above analyst projections, with a profit margin of 2.1%, the highest in the company's history for a third quarter.

CEO Jonas attributed the improvement to efficiency gains Pague Menos has extracted through contract reviews, including savings in procurement expenses. Operating cash flow was another surprising positive. Pague Menos generated R$165 million in the quarter, nearly three times more than the same period last year, bringing the total for the last twelve months to R$690 million.

The company maintained stable leverage at 1.8x EBITDA. In the quarter, Pague Menos opened 14 stores and expects to open another 25 this quarter, totaling about 50 openings this year. For the coming year, the CEO said the budget had not been defined – the company decided to stretch the timing to gain more clarity on the economic outlook – and Pague Menos would work with a wider opening range to maintain flexibility.

"The most important and sensitive component for us is the perspective on interest rates. If interest rates return to an upward curve or fall less than we expect, it puts additional pressure and we may need to preserve more cash than we are already preserving," said the CFO. "We want to reduce leverage even more, so if interest rates don't drop, we may need to open fewer stores and hold investments."