Novolog Navigates Post-Crisis Recovery and Investor Potential

Novolog, a major Israeli healthcare services company specializing in logistics, pharmaceutical distribution, and home care, faced a significant operational crisis in early 2025 following the implementation of a new SAP ERP system in its logistics division. This upgrade, intended to enhance operations, instead led to distribution difficulties, supply gaps, and substantial financial damage, reducing net profit from 41 million shekels in 2024 to just 4.5 million shekels in 2025. Despite the profit drop, the company's Adjusted EBITDA remained relatively stable, indicating the core business was not fundamentally broken.

The first half of 2026 showed signs of stabilization but not a full turnaround, with net profit at only 0.7 million shekels. However, the second quarter of 2026 demonstrated improvement, with revenue, gross profit, and Adjusted EBITDA all increasing. The company also maintains a strong balance sheet with significant cash reserves and no substantial debt, providing financial flexibility for recovery.

Amidst these operational challenges, a control battle ensued in the summer of 2026. Movement Group, led by Eli Dahan, offered to invest 100 million shekels for a 21.34% stake, which would have diluted the Posies family's control. In response, the Posies family aggressively increased their stake to 44.9% by acquiring an additional 18.2% for approximately 91 million shekels, establishing a price reference of 98 agorot per share.

Following the consolidation of control, the Posies family initiated significant management changes. Oded Posies became Chairman, new directors with financial and management expertise were appointed, and the CEO and CFO were replaced. The new CEO, Ze'ev Manzur, is tasked with improving the efficiency and profitability of the core logistics operations. The company's strategy now focuses on operational and financial efficiency, alongside expanding its logistics activities.

Novolog's business model is evolving beyond traditional distribution. Its healthcare services division saw revenue and Adjusted EBITDA grow significantly in the second quarter, and its digital health segment also showed positive trends. This diversification suggests that the company's turnaround may not solely depend on the logistics division's recovery. The company also benefits from specialized subsidiaries like Trialog, a leader in clinical trial logistics, and Mediplast, which provides sterilization services for medical equipment, both of which remained profitable through the crisis.

Looking ahead, Novolog's potential lies in improving the profitability of its logistics division, which is key to its recovery. While the company is still recovering from the SAP crisis and undergoing management changes, its strong balance sheet and diversified business segments offer a foundation for growth. Investors are watching closely to see if the new management can restore profitability and leverage the company's modern SAP system and specialized subsidiaries to achieve sustainable success.