H1 2026: Fidson sales are booming, but customers now owe N26 billion

Fidson Healthcare delivered another strong performance in the first half of 2026, with revenue rising 18.9% to N74.48 billion and profit after tax climbing 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, putting it on course for another strong year if the momentum is sustained.

The performance builds on an already strong 2025, when profit after tax more than doubled by about 126% to N9.88 billion, while earnings per share rose from N1.92 to N4.12.

Fidson subsequently increased its dividend to N1.50 per share from N1.00 in 2024. Also, Fidson’s share price has gone up 86.7% year-to-date.

But the company’s H1 2026 balance sheet reveals another side to that growth: 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.
• That means the amount outstanding from customers increased by N15.41 billion in just six months.

Selling on credit is not unusual for a pharmaceutical company supplying distributors and institutional customers. What makes Fidson’s position noteworthy is the speed of the increase.

The additional N15.41 billion owed by customers was almost twice the N7.72 billion profit after tax Fidson earned during the entire half-year and about 1.3 times its N11.70 billion pre-tax profit.

That matters because a company can recognise revenue and the resulting profit before the cash from those sales has actually been collected.

For now, the increase does not mean Fidson has N26.43 billion of bad debt. The notes to the unaudited half-year accounts state that trade receivables are expected to be fully collected within one year, while impairment recognized against the gross trade receivables stood at N492.84 million as of June 2026.

The bigger question is who funds the waiting period

The receivables build-up becomes more important when viewed alongside the amount of cash Fidson has tied up in the rest of its operating cycle.

At the end of June, Fidson was carrying N25.14 billion in inventories alongside N26.34 billion in trade and other receivables.

• Together, that represents about N51.48 billion sitting in products waiting to be sold or money waiting to be collected, and that is about 47% of the balance sheet size.

Suppliers provide some financing for that cycle. Trade and other payables increased to N17.48 billion from N6.63 billion at the end of 2025, meaning Fidson is also taking more credit from suppliers as the business expands.

• But the supplier credit does not appear sufficient on its own to finance the entire operating cycle.

Using average inventory, receivables, and payables balances for the period, Fidson held inventory for about 110 days before it was sold, while receivables took another 45 days to convert into cash.

• That gives the company an operating cycle of about 155 days, from holding inventory to collecting money from customers.
• Against this, trade and other payables provided roughly 51 days of financing.
• The result is an estimated cash conversion cycle of around 104 days.

Put simply, Fidson may spend roughly five months moving capital through inventory and customer collections, while suppliers finance only about two months of that period.

At roughly 104 days, Fidson’s estimated cash conversion cycle does not appear unusually long when compared with major international pharmaceutical manufacturers.

• Large generic-drug makers such as Cipla, Sun Pharmaceutical, and Dr. Reddy’s operate with considerably longer reported cash conversion cycles, while Hikma Pharmaceuticals reported working-capital days of 245 in 2025.

The issue for Fidson, therefore, is not necessarily that its operating cycle is inefficient; it is that considerably more money is now moving through that cycle.

More importantly, does Fidson have the financial capacity to keep funding that gap as the business grows? For now, the balance sheet and cashflow statements suggest that it does.

• Net cash generated from operating activities rose 67% to N28.09 billion in H1 2026 from N16.82 billion, despite the sharp increase in receivables during the period.
• That operating cash flow was more than 3.6 times the N7.72 billion profit after tax reported for the half year.
• The company ended June with N13.12 billion in cash and bank balances, up from N4.71 billion at the end of 2025, while current assets of N71.75 billion comfortably exceeded current liabilities of N42.38 billion.

That leaves Fidson with net working capital of about N29.36 billion and a current ratio of roughly 1.69 times.

But the bigger concern is not Fidson’s ability to finance working capital today, but what happens if the gap keeps expanding.

• Around 84% of its 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.
• That means a significant portion of the financing supporting the business has a relatively short maturity.

This is why the pace of customer collections matters even when Fidson currently has adequate liquidity.

If sales continue growing while receivables expand at a similar pace, more of the company’s capital will have to remain inside the operating cycle. If internal cash generation cannot keep pace, Fidson could have to rely more heavily on borrowing.

That would eventually reach the income statement. Higher borrowing could push finance costs above the N2.91 billion recorded in H1, reducing pre-tax profit and PAT.

A deterioration in collection quality could also result in larger impairment charges against receivables. Either way, the pressure ultimately reaches shareholders through earnings per share and dividends.

Fidson’s PAT rose 28.2% in H1, yet EPS slipped to 257 kobo from 263 kobo following the expansion of its share base.

With the company also having raised its dividend from N1.00 to N1.50 per share in 2025, sustaining dividend growth will require not only higher accounting profits but enough cash generation to fund the business and still leave room for distributions.

The market is still pricing Fidson for growth

Investors have strongly rewarded Fidson’s growth story. The stock is up 86.7% year-to-date to N93.55, valuing the company at about N280.65 billion, with a trailing P/E of roughly 20.3 times. Still, the shares are about 31.5% below their N136.50 52-week high, showing that the rally has not been without a significant pullback.

Sustaining that valuation will increasingly depend on converting growth into higher per-share earnings and cash returns.

That is where examining Fidson’s margin profile becomes relevant. Gross margin improved to 43.01% from 41.04%, but operating margin remained virtually flat at 19.31%, as administrative and distribution expenses grew much faster than revenue.

The bigger improvement came below operating profit, with a PBT margin rising to 15.71% from 14.35%, helped by an 87.5% decline in FX losses and lower finance costs.

If rising working-capital requirements lead to higher borrowing costs or larger receivables impairments, some of those gains could reverse, weakening PAT, EPS and ultimately dividend capacity.

The next test is whether Fidson can convert its growth into enough cash and per-share earnings to justify its valuation.