Brazil’s Pague Menos Posts 72% Profit Jump in Q4
Three Key Takeaways From Pague Menos Q4 2025 Results
Adjusted net income rose 72.2% year-on-year to R$ 132.7 million ($25.8M) in 4Q25, while full-year 2025 profit reached R$ 286.6 million ($55.7M), an 88.5% jump that reflects eight consecutive quarters of accelerating operational improvement since the Extrafarma integration closed.
Same-store sales accelerated to 18.6% in 4Q25 — well above CMED’s authorized price increase — with Black Friday execution driving a 24.1% surge in November store sales, while omnichannel revenue jumped 58% to R$ 906 million ($176M), reaching 21% of gross revenue.
Management is prioritizing logistics optimization in 2026, earmarking nearly one-third of capital expenditure for a new distribution center in Paraíba, after total capex surged 156% to R$ 261.4 million ($50.8M) in 2025 — signaling confidence in the chain’s structural earnings trajectory.
What Happened at Pague Menos in Q4 2025
What Happened
Pague Menos (PGMN3) closed 2025 with its strongest quarter yet, posting adjusted net income of R$ 132.7 million ($25.8M) in the fourth quarter — a 72.2% increase over the R$ 77.1 million ($15.0M) reported in 4Q24. The result capped a full year in which the pharmacy chain nearly doubled its bottom line, with annual adjusted profit reaching R$ 286.6 million ($55.7M), up 88.5% from R$ 152.0 million ($29.5M) in 2024.
Adjusted EBITDA came in at R$ 250.3 million ($48.6M) in the quarter, up 52.6% year-on-year, with the margin expanding 120 basis points to 5.8%. For the full year, EBITDA reached R$ 904.7 million ($175.7M), a 44.0% increase and the highest margin — 5.6% — in the company’s history.
Gross revenue hit R$ 4.3 billion ($835M) in 4Q25, an increase of 19.8%, bringing the annual total to R$ 16.0 billion ($3.1B) — a figure that represents 18.3% growth and marks the eighth consecutive quarter of double-digit top-line expansion. The results were released after market close on Friday, February 27.
Key Drivers Behind Pague Menos Q4 2025 Performance
Key Drivers
Store Productivity and Same-Store Sales Growth
Same-store sales growth accelerated to 18.6% in 4Q25, up from 17.1% in the prior-year quarter and ahead of the 17.9% full-year average. Average monthly sales per store reached R$ 855,000 ($166K), a 17.7% increase — more than five times the period’s inflation rate. The chain ended the year with 1,689 stores after 50 openings and 10 closures, a net addition of 40 units.
The November Black Friday push was particularly effective, with store sales jumping 24.1% that month alone — and 48% on a two-year stacked basis. Across the full year, the combination of 7.9% growth in customer visits and a 9.6% increase in average ticket drove the top-line momentum.
Digital and Omnichannel Expansion
Omnichannel sales totaled R$ 906 million ($176M) in 4Q25, growing 58% year-on-year and representing 21.0% of total gross revenue. For the full year, digital sales reached R$ 3.1 billion ($602M), a 55% increase. The contribution margin on digital channels improved by three percentage points during the year, reflecting better logistics efficiency and product mix optimization within the app-driven channel.
Market Share and Regional Positioning
National market share reached a record 6.9% in 4Q25 according to IQVIA data, with gains across all regions. The chain’s performance was especially strong in the Northeast, where share hit 22.2%. Pague Menos grew 7.5 percentage points above the market average in 2025, with notably less dependence on new store openings than its competitors — suggesting that productivity-driven gains are increasingly structural rather than expansion-fueled.
Pague Menos Q4 2025 Financial Detail
Financial Detail
Profitability and Margin Expansion
The EBITDA margin expanded to 5.8% in 4Q25 from 4.6% a year earlier, a gain of 120 basis points that reflects operating leverage on the strong top line, lower inventory losses following the completed Extrafarma integration, and better commercial terms with suppliers. The contribution margin reached 8.3% for the full year — a company record and a 90-basis-point improvement over 2024.
The margin trajectory confirms that the post-Extrafarma efficiency gains — which totaled R$ 267 million ($51.8M) in annualized synergies at the completion of integration — continue to compound. The 88.5% annual profit growth on 18.3% revenue growth illustrates the powerful operating leverage at work.
Cash Flow and Balance Sheet Deleveraging
Free cash flow reached R$ 212.3 million ($41.2M) for the full year, up 61.3% from 2024, supported by improved working capital management in the fourth quarter and strong operational cash generation. Net debt to adjusted EBITDA fell to 2.0x at year-end, down 0.8x from the 2.8x reported in 4Q24 and dramatically lower than the 5.6x peak registered in 1Q23.
The deleveraging was aided by the R$ 243.5 million ($47.3M) follow-on equity offering completed in early October 2025 at R$ 5.51 per share. The debt profile also improved during the year, with a longer average maturity and reduced short-term concentration.
Capital Expenditure and Logistics Investment
Total capex jumped to R$ 261.4 million ($50.8M) in 2025, a 156% increase from R$ 102.2 million ($19.8M) in 2024. The company allocated nearly one-third of its 2026 investment budget to a new distribution center in Paraíba, which management described as a priority for logistics network optimization. The capex inflection — after two years of restrained spending during the Extrafarma integration — signals a shift toward growth-oriented investment now that leverage is approaching more comfortable levels.
Pague Menos Management Signals and Strategy Outlook
Management identified logistics network optimization as the top strategic priority for 2026, committing nearly a third of the capex budget to building a new distribution center in Paraíba. This is a notable shift: after two years of defensive capital allocation focused on integration and deleveraging, the company is now pivoting to infrastructure investment designed to support further productivity gains across its 1,689-store footprint.
The health hub strategy continues to expand. Pague Menos ended 2025 with 1,181 pharmaceutical consultation rooms, up 8.7% during the year, and recorded 5.5 million patient visits. The vaccination vertical registered a revenue increase exceeding 500% for the full year, establishing in-store health services as a significant traffic driver and competitive moat in the North and Northeast.
CFO Luiz Novais signaled at the 3Q25 conference call that the company would remain conservative on capital allocation in 2026 to continue reducing leverage, noting that 2.0x remains elevated for a company operating in a 15% interest-rate environment. The follow-on proceeds are accelerating deleveraging, but organic cash generation is also contributing meaningfully.
What to Watch Next for Pague Menos
What to Watch Next
The GLP-1 catalyst is approaching a potential inflection point. The Ozempic patent in Brazil is set to expire in the first half of 2026, and domestic laboratories including EMS, Hypera, CIMED, and Biomm are preparing generic semaglutida launches. XP estimates GLP-1 drugs are already adding approximately 3 percentage points to pharmacy market growth, with penetration around 8% in the second half of 2025 — and generic availability could meaningfully accelerate that trend.
Pague Menos appears well positioned for this wave. Analysts note the company has strong availability of GLP-1 medications across all mapped states, and its pricing positioning in the popular-market segment could drive disproportionate volume gains as generics widen access. The XP target of R$ 925,000 in monthly sales per store by end-2026 — versus the R$ 855,000 achieved in 4Q25 — implies continued same-store acceleration.
The new Paraíba distribution center and the continued deleveraging path will be the operational focus. If leverage can reach approximately 1.5x by mid-2026, it would materially reduce financing costs and potentially open space for more aggressive store openings or shareholder returns in subsequent periods.
Pague Menos Key Figures Q4 2025 vs Q4 2024
| Metric | 4Q25 | 4Q24 | Δ YoY |
|---|---|---|---|
| Gross Revenue | R$ 4.3 B | R$ 3.6 B | +19.8% |
| Same-Store Sales (SSS) | 18.6% | 17.1% | +1.5 pp |
| Adj. EBITDA | R$ 250.3 M | R$ 164.0 M | +52.6% |
| EBITDA Margin | 5.8% | 4.6% | +1.2 pp |
| Adj. Net Income | R$ 132.7 M | R$ 77.1 M | +72.2% |
| Avg. Monthly Sales/Store | R$ 855 K | R$ 726 K | +17.7% |
| Net Debt / EBITDA | 2.0x | 2.8x | −0.8x |
| Store Count | 1,689 | 1,649 | +40 |
Pague Menos Full-Year 2025 vs 2024
| Metric | FY 2025 | FY 2024 | Δ YoY |
|---|---|---|---|
| Gross Revenue | R$ 16.0 B | R$ 13.5 B | +18.3% |
| Adj. EBITDA | R$ 904.7 M | R$ 628.3 M | +44.0% |
| EBITDA Margin | 5.6% | 4.7% | +0.9 pp |
| Adj. Net Income | R$ 286.6 M | R$ 152.0 M | +88.5% |
| Free Cash Flow | R$ 212.3 M | R$ 131.6 M | +61.3% |
| Capital Expenditure | R$ 261.4 M | R$ 102.2 M | +155.8% |
| Digital Sales (Full Year) | R$ 3.1 B | R$ 2.0 B | +55.0% |
| Consultation Rooms | 1,181 | 1,086 | +8.7% |
Risk Factors for Pague Menos
Risks
Leverage remains elevated relative to peers. At 2.0x net debt to EBITDA, Pague Menos is still the most leveraged listed pharmacy chain in Brazil — Genial noted in its 4Q24 report that RaiaDrogasil operates at 0.9x and Panvel at 1.1x. In a country with the Selic rate at approximately 15%, every incremental turn of leverage carries meaningful financing cost. The CFO himself acknowledged that 2.0x is still high for this rate environment.
The competitive landscape is intensifying. RaiaDrogasil — the national market leader at 16.8% share — is expanding aggressively into popular-market formats that overlap with Pague Menos’s core positioning, while Grupo DPSP maintains a strong presence. The 6.9% national share, while a record, still leaves Pague Menos exposed to price wars and margin compression if larger players accelerate their push into the North and Northeast.
Regulatory and fiscal factors could weigh on forward margins. The 2025 CMED price adjustment was lower than inflation, and any unfavorable outcome in the annual pricing formula — or loss of state-level tax benefits — would compress the gross margin. Additionally, extended payment cycles on Farmácia Popular government-subsidized medications (approximately 45 days) can pressure working capital, as evidenced in prior quarters when the program’s share of sales expanded rapidly.
Brazilian Pharmacy Retail Sector Context
Pague Menos is Brazil’s third-largest pharmacy chain by number of stores and the leading drugstore brand in the North and Northeast regions. Founded in 1981 in Fortaleza, Ceará, the company operates 1,689 stores across all 26 states and the Federal District under the Pague Menos and Extrafarma banners, employing approximately 27,000 people. Its positioning as a health hub for Brazil’s expanding middle class differentiates it from RaiaDrogasil’s historically higher-income focus.
The Brazilian pharmaceutical retail market generated approximately R$ 103 billion through Abrafarma-associated chains in 2024, growing 14.2% year-on-year. The sector remains highly fragmented despite consolidation: the three largest listed players — RaiaDrogasil, Grupo DPSP, and Pague Menos — together hold roughly 30% of the formal market. Population aging, rising chronic disease prevalence, and the penetration of pharmacy-based health services all provide structural tailwinds.
Pague Menos completed the integration of Extrafarma — acquired from Ultrapar in 2022 for an adjusted R$ 737.8 million ($143M) — by the end of 2024, converting 125 stores to the Pague Menos banner and capturing R$ 267 million in annualized synergies. The company went public in 2020, raising R$ 746.9 million. Shares trade on the B3 under ticker PGMN3 and have appreciated approximately 158% over the past twelve months. XP Investimentos holds a Buy recommendation with a price target of R$ 9.00 per share.