Empreendimentos Pague Menos S.A

What it is

Pague Menos is a Brazilian pharmacy retailer headquartered in Fortaleza, Ceará, and is ranked the second-largest chain in its sector in the country by the national pharmacy-chain association ABRAFARMA. It is the first pharmacy chain to hold a physical presence in every Brazilian state and the federal district.

The company was founded in 1981 in the Carlito Pamplona neighbourhood of Fortaleza, and by 1985 it had pioneered the drugstore format in Brazil — adding hygiene, beauty, and convenience goods alongside medicines in a self-service model. In 2021 it made its largest acquisition, buying the Extrafarma chain for R$737m (≈ US$143m at the exchange rate then), which vaulted it to its current number-two position nationally.

Who owns it

The single largest shareholder is Francisco Deusmar Queirós, the founder, with roughly 33% of the shares. Insiders collectively hold 56.1% and institutions 27.4%, leaving a free float of roughly 16.5% — meaning the founder retains firm control (EODHD data; our calculation).

Private equity fund General Atlantic made a strategic investment of R$600m (US$117 mn) in Pague Menos, acquiring a 17% stake, and the firm drove meaningful improvements in governance and management professionalism at the company. General Atlantic’s current residual stake is not separately disclosed in available sources.

Who runs it

Jonas Marques serves as CEO and Vice-President of Operations, with Luiz Renato Novais as Chief Financial and Investor Relations Officer. Marques was elected to the role effective January 2025.

The money, in plain words

Sales have grown from R$11.2bn (US$2.2 bn) in 2023 to R$14.9bn (US$2.9 bn) in FY2025 — a rise of 33% in two years — and the trailing twelve-month figure now stands at R$15.3bn (≈ US$2.98bn) (our calculation). The company keeps about 2 cents of profit from every real of sales — a net margin of 2.0% — which is thin but typical of high-volume, price-competitive pharmacy retail.

For every real shareholders have put in, the company earns about 10 back a year — a return on equity of 10.1%, recovering from near-zero in 2023. The main shadow on the balance sheet is debt: the company carries R$3.7bn (US$718 mn) in borrowings against only R$186m (US$36 mn) in cash, leaving net debt of R$3.5bn (≈ US$681m), roughly 1.1× total equity (our calculation).

At a price-to-earnings ratio of 7.46×, the market is pricing in continued recovery but not yet betting on an acceleration. A dividend yield of 6.94% — nearly R$7 back in income for every R$100 invested at current prices — rewards patient holders while the turnaround plays out.

What it is doing now

Two and a half years ago the chain was carrying debt at more than four times its operating cash flow, with sluggish inventory in stores and eroded margins; today it is seen as the most consistent turnaround in Brazilian pharmacy retail. Its debt relative to operating cash flow has fallen from 2.8× to 1.9×, and ratings agency Fitch revised the company’s outlook to positive.

The immediate priority is paying down debt rather than aggressive expansion: only one new store opened in Q1 2026, against thirty in all of 2025, which management describes as a year of modest expansion. Strategy is focused on repeat customers who need continuous medication, its own-label products, digital channels, generics, in-store vaccination rooms, and cost reduction.

What to watch

• Debt trajectory. Net debt of R$3.5bn (US$680 mn) is the central risk; how fast the company can bring it below 1.5× operating cash flow will determine when faster expansion resumes.
• Margin expansion. Gross margin reached 29.4% in the most recent quarter, up 0.7 percentage points year-on-year, driven partly by a one-off pricing effect — sustaining that gain as the one-off fades is the test.
• Founder concentration. With Francisco Deusmar Queirós controlling roughly a third of the company, any strategic shift — or succession — rests largely with one person.
• Competitive pressure. Pague Menos is Brazil’s second-largest pharmacy chain, trailing market leader RaiaDrogasil, which has deeper pockets for both price and store-opening wars.

This is news, not investment advice.