The arithmetic is jarring. Redcare Pharmacy’s revenue jumped 18% to €849.5 million in the first quarter, with its German prescription business surging 55%, and the group is guiding for double-digit top-line growth in 2026 alongside an operating margin of at least 2.5%. Yet the shares changed hands at €50.85 recently, a 24% drop since January and a full 50% lower than a year ago. The market is clearly pricing in risks that go well beyond the income statement.
Some of that pessimism is being unwound at the margins. Two prominent hedge funds have trimmed their bearish bets: AHL Partners lowered its net short position to 0.79% of share capital, while D. E. Shaw edged its own down to 3.38%. The combined disclosed short interest from these two players now sits at just over 4%, still above the BaFin reporting threshold but a notable retreat. The reduction helped fuel a 17.4% rally over the past seven trading days, lifting the stock above its 50-day moving average. Nevertheless, the overall short interest in the free float remains elevated at 9.88%, well above the 12-month average of 6.32%, suggesting the majority of bears are staying put.
What has them digging in is a regulatory tug-of-war. On 22 May 2026, the Bundestag passed the Apothekenversorgung-Weiterentwicklungsgesetz with the backing of the CDU/CSU and SPD. The law will allow certain prescription drugs to be dispensed without a formal script—for chronic follow-up treatments or mild acute conditions—and Redcare, which already processes 67% of all electronic prescriptions in Germany, stands to benefit from the expanded volumes. The Bundesrat is expected to vote on the bill in mid-June.
Yet a separate draft amendment to the Apothekenbetriebsordnung threatens to neutralise that advantage. It would impose strict temperature logging, extensive contractual obligations, and proof-of-delivery requirements on mail-order pharmacies. Chief executive Olaf Heinrich has called the proposals a “systemic breach” that would amount to a “ban on mail-order through the back door.” With more than 26 million patients in Germany currently using online pharmacies, the stakes could hardly be higher.
Should investors sell immediately? Or is it worth buying Redcare Pharmacy?
Legal headaches add to the pile. A final ruling from the Cologne district court found that a Facebook advertisement run by Shop Apotheke, one of Redcare’s main platforms, was misleading. The Apothekerkammer Nordrhein had brought the case, and Shop Apotheke accepted the verdict without appeal. While the platform can continue to fill e‑prescriptions, it must now operate within tighter advertising boundaries.
The real strain, however, is coming from the over-the-counter side of the business. Redcare’s gross margin slipped to 21.0% in the first quarter from 23.3% a year earlier, driven by fierce OTC competition, a growing mix of lower-margin prescription sales, and a prescription bonus introduced in September 2025. Drugstore chains dm and Rossmann are both building their own digital dispensaries—dm-med and a Rossmann online pharmacy—directly targeting Redcare’s core OTC market. In response, the company is pouring investment into a new logistics centre in Pilsen, Czech Republic, that will add 15 million parcels in annual capacity. The half-year numbers due at the end of July will show whether management’s promised second-quarter momentum is actually filtering through to margins.
Against this backdrop, analysts remain deeply split. Deutsche Bank Research reiterated a “Buy” rating with a €99 price target after the dbAccess European Champions Conference. Jefferies is even more bullish, sticking with “Buy” and a €150 target, citing e‑prescription growth and a large customer base. UBS, however, cut its price target to €74, warning of a slowdown in the non‑prescription segment. The chasm between €74 and €150 reflects how wide the disagreement is over which regulatory scenario—and which margin trajectory—will ultimately prevail. For now, the bears still have the upper hand, but the hedge fund reductions suggest some of them are beginning to hedge.
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