Egm in the X-ray: Erfo, revenue up 64% in Q1 thanks to Fit & Go

Since the maximum share of the payment that could be paid in shares was 23.5% of the total, but the actual share was 7%, this once again demonstrates (if proof were needed) the difficulty for companies in Euronext Growth Milan to use their own shares for M& A transactions. Moreover, none of the 1,150,000 'Erfo 2022 - 2025' warrants were exercised, as the share price never reached the prices of the relevant exercise periods (EUR 2.55, EUR 3 and EUR 3.375 per share in June 2023, 2024 and 2025, respectively).

The remaining 49% of Fit & Go may be acquired in 2028 on the basis of the company's average ebit in the financial years 2025 - 2027 and its net financial position as of 31/12/2027. Also in this case the payment may be partly in shares up to a maximum of 30% of the total and the Erfo shares will be valued at the arithmetic average of the 90 days prior to the possible exercise of the option.

However, Erfo in 2024, in the presence of revenue growth of 2% to EUR 5.8m, saw ebitda fall by 23% to EUR 1.2m (excluding non-recurring expenses of EUR 181,000, the adjusted figure fell by 12% to EUR 1.4m), ebit by 37% to EUR 524,000, and net profit by 40% to EUR 354,000. Prudently, the company did not distribute any dividends (the parent company had shown a net profit of EUR 0.4m); the amount of dividends for the 2023 financial year (the only one distributed so far) had been around EUR 554,000, almost corresponding to the entire profit of the parent company.

The reduction in margins in 2024 was caused not only by the above-mentioned non-recurring expenses, but also by a 22% jump, to EUR 1.26 million, in labour costs caused by the expansion of the structure (employees increased from 33 to 41) and higher marketing costs.

In order to increase profitability, however, Erfo is focusing above all on product innovation: October 2024 saw the birth of the Erfo Cosmetics brand, which for the time being consists of two body gels that are sold in the group's centres, and in May 2025 Osteo-Therapy,the first supplement for dental use intended (and clinically tested) to accelerate the osseointegration process after the placement of dental implants. It is the first fruit of the Platform project launched in 2022 in partnership with the Campus Bio-Medico University of Rome. In June 2024, the Plants project was approved by Mimit, which, with funding for Erfo of EUR 583,000, aims by 2027 to produce plant-based nutraceutical products for the prevention and treatment of symptoms of osteopenia and/or sarcopenia (bone and muscle degeneration often linked to ageing).

Pending the eventual results of this project, Erfo is to concentrate on introducing Osteo-Therapy (already on sale online) to dental practices and on starting the production of fitness supplements that can be offered by the Fit & Go network. Erfo also plans to expand internationalisation through its franchising networks (for now, 84% of revenues are generated in Italy), and at the moment the markets concerned are France and Belgium, but there is also interest in Eastern Europe. In 2020, a Diètnatural pilot centre was opened in Spain, but so far this market has not been exploited.

Erfo has the opportunity to distinguish itself in the national supplements sector (5.2 billion in value in 2024, +5.5% compared to 2023, the first market in Europe) both thanks to its broad product offering and its original distribution strategy (almost 80% of supplements are sold through the Pharmacies and Parapharmacies channel and other important shares are the prerogative of large-scale distribution). However, penetration in the dental practice channel (and possibly medical/geriatric for products that may derive from the Plant project) will require even greater commercial efforts than the current situation. Easier might be the development of the cosmetics line for which the use of the e-commerce channel should be less costly than the introduction in parapharmacies and large-scale retail trade.

It has been said that Erfo is a benefit company; it does not draw up sustainability reports for the time being, also due to its small size, but it does include sustainability issues in its annual report and draws up the obligatory annual impact report. The laboratory is powered by energy produced by a photovoltaic system and most product packaging is made of recycled PET, while Fsc-certified cardboard is used for printed communication.

As is the case for many companies in Euronext Growth Milan, the free float is low (in this case about 20.5% of the share capital); and given the need to establish itself in a highly competitive market, even with innovative products and a peculiar distribution approach, the level of investment in research and development and marketing will certainly have to remain high. It would be an ideal stock for institutional investors in the medium term, if there were a sufficient number of securities available.