Ocado Group has revealed a significant deal for its Ocado Intelligent Automation (OIA) division to deliver automated fulfilment technology to a distribution site for McKesson Canada, a leader in diversified healthcare and the largest pharmaceutical distributor in Canada. This marks Ocado’s first venture in offering its warehouse fulfilment technology outside of grocery retail, including the long-term provision of AI-powered software applications necessary for operating this technology.

Tim Steiner, CEO of Ocado Group, commented on this milestone: “Today represents a new and exciting milestone as we bring the amazing benefits of Ocado’s technology to the healthcare distribution and logistics sector. Our technology is ideally suited to supply chains that require dense storage, highly accurate inventory management, and secure stock control. It has been proven over 20 years in one of the most complex supply chain environments, online grocery, and we’re now bringing our experience and IP to more sectors. We are very pleased to be expanding in Canada.”

Expected Financial Impact

Ocado will receive upfront fees during the construction process, with the final payment due upon final installation. Additionally, an ongoing annual fee will be charged for servicing and maintaining the technology.

The transaction’s impact on Ocado’s cash flow and earnings in the current financial year is expected to be minimal. This capital-light deal will be cash neutral throughout the development phase and is projected to become cash and EBITDA positive in FY25, following the completion of the installation and the recognition of income, costs, and profit.

This strategic move by Ocado Group signifies a notable expansion into new sectors, leveraging their proven technology in the complex online grocery supply chain to now enhance the efficiency of healthcare logistics with McKesson Canada.

  Canada, McKesson, Ocado Group, Tim Steiner