Rekah Follow-up: Derech Chaim, the Top Two Customers, and Channel Bargaining Power

The main article already framed the right starting point: Derech Chaim buys Rekah continuity, but not necessarily better economics. This follow-up pushes that point one step further and isolates a narrower question: what does the new contract really say about Rekah's bargaining power inside the channel. That question matters now because in the same period in which the Clalit agreement was renewed for 6 years with a 4-year extension option, the group's top two customers already accounted for 39.7% of sales.

That combination is the heart of the story. One large customer stayed. But the agreement was renewed without a material change in terms, and exposure to the top two customers still rose. The reasonable analytical read is that Rekah's channel power is real, but it is showing up first in continuity, shelf presence, and service quality. It is much less clearly showing up in better economics.

Three points matter up front:

• Derech Chaim removes a continuity risk. It does not open a new pricing chapter. That is exactly what the phrase "without a material change in the existing terms" means.
• Concentration rose inside a shrinking revenue base. The top two customers were 35.5% of sales in 2024 and 39.7% in 2025.
• The depth of the relationship still does not translate into fully hard contractual visibility. The Maccabi and Meuhedet arrangements are framework agreements rather than binding backlog before purchase orders are issued, and the binding 2026 backlog was lower at the end of 2025 than it was at the end of 2024.

The contract came back. The power balance did not obviously move

The January 2026 immediate report gives the market what it needed after a pressured year-end: Vitamed and Clalit are staying together. The agreement runs for 6 years, with a Clalit option to extend for another 4 years. That is important, because it removes the risk of losing a meaningful activity line inside core products and keeps Derech Chaim in place as a commercial anchor.

But the same disclosure also makes it hard to treat the renewal as proof of stronger bargaining power. The company explicitly says there was no material change in the existing terms. If the balance of power had really shifted in Rekah's favor, one possible signal would have been better economics, a different commercial structure, or at least some sign that the customer had to pay up to secure continuity. That is not what was disclosed.

That does not make the renewal negative. On the contrary, it removes a real continuity risk that could have weighed heavily on 2026. But it does define what was solved and what was not. The continuity question was solved. The pricing-power question was not. In channel terms, Rekah proved that it is a supplier the customer wants to keep. It has not yet proved that it is a supplier that can dictate meaningfully better terms.

That point matters even more because the company itself describes a market in which HMO relationships are tender-based, price remains part of the game, and most agreements are relatively short in duration with extension options. In that kind of setting, even a long relationship does not eliminate the buyer's purchasing power.

Concentration increased, and the issue is now broader than one contract

This is where the 2025 numbers turn Derech Chaim from a continuity story into a channel-structure story. The major-customer table shows that the top two customers generated ILS 119.5 million, or 39.7% of sales, versus ILS 114.2 million and 35.5% in 2024. One customer fell to 17.3% of sales, but the other rose to 22.4%. In other words, total concentration increased even without both customers rising together at the same pace.

The implication is important. If concentration had risen only because total sales expanded sharply, one could also read it as deeper penetration. In practice, consolidated revenue fell to ILS 301.0 million from ILS 321.7 million. That means the move to 39.7% says something less comfortable: a larger share of revenue now rests on fewer shoulders, inside a business whose total base actually shrank.

Another detail matters. The company does not identify in the major-customer note which of the two large customers is Clalit. That matters because the story is no longer equivalent to Derech Chaim alone. Derech Chaim is the most visible event thread. But the dependence structure is built on at least two major revenue pipes, not one.

The segment note adds one more important layer: it confirms that in 2025 the group had two external customers, each individually above 10% of sales. So this is not just a concentration issue at the combined level. Each of the two customers is now large enough on its own to influence how the business is read.

The clean conclusion is that Derech Chaim may have removed the risk of losing one anchor customer, but it did not reduce channel dependence. In some ways it sharpens it: Rekah remains inside the relationship, but inside a channel where very large buyers still carry unusual weight.

Rekah is strong in service. That is still not the same as pricing power

To understand why the contract was renewed but the terms did not materially change, it helps to separate two types of power. The first is service power. The second is pricing power. Rekah shows the first one very clearly.

In the marketing and distribution section, the company describes a full operating layer: Ophir offers third-party suppliers marketing, sales, call center, storage, and distribution; it maintains daily customer contact through sales reps and phone teams; orders flow directly into the systems; and in most parts of the country delivery is typically made within 24 hours. That is not a marginal capability. It is a real execution muscle.

The way the company describes promotions is also telling. It talks about discounted prices and convenient credit terms to customers, but says these campaigns are run back-to-back with suppliers, without a material change in gross margin. That is a small sentence with a large implication: the channel can drive volume, but it does not automatically create a margin premium for itself.

The segment split sharpens the point further. Note 26 makes clear that Derech Chaim sits inside the core-products segment, not inside the distribution segment. The distribution segment itself is the third-party service layer and the logistics complement. In other words, if channel power is supposed to create real incremental value, it ultimately has to show up in the economics of core products rather than stay trapped in the supporting infrastructure.

And that is where the numbers remain weak. In 2025 core products generated ILS 208.2 million of revenue, down 8.4%, and the segment operating loss deepened to ILS 12.1 million. At the same time, the distribution segment generated ILS 75.8 million and returned to a small operating profit of ILS 1.5 million. That is the key point: Rekah has a channel that can preserve service levels, access, and shelf presence. It still has not shown that this same channel can convert itself into stronger economics in the main engine where Derech Chaim actually sits.

Put simply, Rekah currently looks stronger at being a supplier that is operationally hard to replace than at being one that can materially improve price or commercial terms. That is a real advantage, but it is a defensive advantage. It protects continuity and volume. It does not automatically expand Rekah's share of the economics.

Even contractual visibility is not getting more rigid

The backlog section adds another reason for caution. The company explains that the agreements with Maccabi and Meuhedet are framework agreements: they define product types, prices, and supply periods, but actual supply is made through purchase orders, so future revenue from those agreements is not counted as binding backlog. Management says the realization rate is high, but that is still not the same thing as hard backlog already sitting on the books.

Even inside the binding backlog there is no improvement. At the end of 2025, 2026 backlog with Clalit, Leumit, Teva, and Sarel stood at ILS 47.2 million, versus ILS 53.5 million at the end of 2024. The decline appeared in every quarter of 2026.

This point needs to be handled carefully. Derech Chaim was renewed only in January 2026, after the balance-sheet date, so the year-end 2025 backlog does not by itself reflect the full contribution of the renewal. But even with that caveat, the broader picture remains clear: the depth of the channel relationship is still not translating into broader hard visibility.

That matters because bargaining power does not have to show up only in price. It can also show up in commitment length, binding scope, or the ability to convert a framework relationship into something more contractually secure. For now there is no strong signal of that kind. There is continuity. There is not yet clear evidence of economic upgrading.

Bottom line

Derech Chaim solved a continuity problem for Rekah. It did not settle the power question inside the channel. When the top two customers already account for nearly 40% of sales, when the key agreement is renewed on broadly unchanged terms, and when next-year binding visibility has not widened, the right conclusion is that Rekah operates inside a channel that is operationally strong but economically demanding.

That is not a semantic distinction. It determines how 2026 should be read. If the company wants to prove that its channel power is more than a good service system, it will have to show one of three things: better profitability in core products under the same commercial infrastructure, a broader product basket sold into the major customers without another rise in concentration, or stronger contractual visibility that gives the customer relationships harder economic weight. Until one of those signs appears, Derech Chaim will remain primarily an insurance policy against customer loss, not proof that the channel power balance has moved in Rekah's favor.