Medios AG

Ladies and gentlemen, welcome to the conference call of Medios AG. At our customer's request, this conference will be recorded. As a reminder, all participants will be in a listen-only mode. After the presentation, there will be an opportunity to ask questions. If any participant has difficulty hearing conference, please press star key followed by the zero for operator assistance. May I now hand over to Claudia Nicolaus, Head of Investor and Public Relations at Medios.

Welcome everybody to our conference call on our results for the first three months of this year. As always, all relevant documents can also be downloaded from our investor relations website. Additionally, this presentation can be followed in parallel via the internet link provided to you in the invitation. Today with me is our CEO and CFO Matthias Gerner. He will guide us through the presentation and will be available to answer your questions. I would now like to hand over to Matthias.

Okay, thank you Claudia and also a warm welcome from my side. Thank you for attending this call and also thank you for your interest in nature. I am very happy to tell you that we had a very good start in the year. with a record quarter in MAKERS history following an already very successful fourth quarter 2020. I will start with the highlights for the first month of this year, followed by some comments on our financials and on our outlook for 2021. I will also be referring to the slides of the presentation. Let's start with the highlights of our operations and financials outlined on slide 3. Given the record quarter, it is needless to mention that our growth strategy is on track. Both segments reported sales and earnings growth with improved margins. We realized first synergy effects for both of our latest acquisitions, mainly in purchasing and logistics. Also, we are starting to exploit the cross-selling potential within our extended partner network of now more than 500 specialized pharmacies. The acquisition of Grana Pharma is already paying off, as demonstrated by the positive development of our financials. Furthermore, we expanded our product portfolio, whereof the indication hemophilia the most important. Meanwhile, we became a leader in this attractive market of around 5000 patients in Germany. At the beginning of the year, we started setting up our new lab in the new building within the complex where our wholesale business is already located. With this, we will be able to up to triple our production capacity. in the mid-term and realize further synergies by concentrating logistics and warehousing at one site. We should be able to start production in the fourth quarter of this year. We advance the digitalization internally and to support our partner network by further developing the innovative MediaConnect online platform, a crucial element in our growth. This platform connects doctors, health insurance companies, and specialized partner pharmacies with each other and serves as an ordering, billing, and settlement portal. The number of users, as well as the number of ordering and billing processes carried out on MakersConnect is constantly increasing, already more than 12,000 transactions per month. This is partly due to the introduction of the software in other federal states in addition to Berlin. We also advance the establishment of an e-prescription-capable platform that offers added value for doctors, health insurance companies, specialized partner pharmacies, and patients. This allows these aforementioned stakeholders and methods to benefit patients from the increasing digitalization in the healthcare system. The message is unchanged. We are well prepared for the mandatory start of the e-prescription in January 2020 in Germany. No surprise that the focus of our M&A is on the compounding business and digitalization. Our growth plans are safeguarded by our strong financial background. I also want to point out that in Q1 we improved our cash conversion and achieved a strong operating cash flow. Also a new record number for METO. I'll give you more details about that later on. So let's switch to slide 4. An overview on the financials. As I said, Q1 was a record quarter. Overall, our financial position remains strong. We handled the challenges caused by the COVID-19 pandemic very well and are seeing already the effects of the KANA acquisition. Our KPI doubled or almost doubled. Revenue increased 94%, EBITDA pre 107% and EBC3 91%. Driven by inorganic growth of our wholesale business, including especially Kana Pharma, but also Calcioplista and Amophilia for all three months. Both segments, pharmaceutical supply and patient-specific therapies, contributed to revenue and earnings. Financials were persistently negatively affected by COVID-19, but on a significant lower level. We have adapted to the situation and are coping well. I can only repeat what I stressed during our last call. We do not know how long this quota system will be in place. The Federal Institute declared as long as the COVID pandemic persists, the quota will remain. Slide 5 provides the revenue and EBITDA pre-breakdown per segment. Pharmaceutical supply generated 95% of revenues and 76% of EBDA spree. Our target is still to grow the share of the higher margin segment patient-specific therapies, the compounding activities. I will now provide a short update on our ESG strategy and what has been done so far, illustrated on slide 6. We describe the work we are doing in connection with environmental, social and governance ESG in a dedicated voluntary report. This non-financial consolidated statement is included in our annual report and posted on our website. Furthermore, we joined the world's largest responsible corporate governance initiative, the United Nations Global Compact, in March. Therewith, we have committed to extend universal principles in the areas of human rights, labor, the environment, and anti-corruption. But we still have a lot ahead of us. Sustainability will be an integrated part in our corporate strategy. So, we have already started to develop a comprehensive ESG strategy for meteors. In addition, we will shortly implement ESG targets in our streaming narration system for the Executive Board that will be presented at our forthcoming AGM on the 10th of June. A further resolution at the AGM will also be on the extension of our Supervisory Board from three to four members, and then to implement new committees. an audit committee, as well as a nomination and remuneration committee. These measures will further improve the governance at Mayfield. During the last month, we received first ESP ratings from some institutions, as well as from investors representing good or at least average scores. We will be able to advance on ESG issues and thus also improve our ratings in the future. This is the clear aim. Our conclusion, ESG is of top priority for us. We will keep you posted about Meteor's ESG development. I will now comment on the financials and on our outlook for 2021, starting with slide 8. covering the figures for the first three months of this year. A full set of financial figures can be found in the quarterly statement 21 on our website and in the appendix of this presentation as well. If not explicitly mentioned otherwise, I will refer to the first quarter figures on 21 compared to Q1 2020. Once again, Q1 of 2021 is the best quarter we've ever had, driven by the integration of Gama Pharma since the beginning of this year. Furthermore, our figures were less affected by the pandemic than in the previous quarters. Meteos KPIs doubled or nearly doubled due to organic and inorganic growth. It is worth to mention that personnel and other expenses have only risen disproportionately due to the lean structure of Kana Pharma. In addition to the new employees from Kölsch Blister and Kana Pharma, new colleagues came on board to prepare for future growth. For example, to be ready for the mandatory heat prescriptions from January 22 onwards. Not to mention the expansion of our compounding business, which I had already commented on. So, the number of employees has grown from 191 in the first quarter 20 to now 307. Of the new employees, around 80 came from the acquisitions. Please keep in mind that the post-detail DNA are mainly a result of the homogenization of Kranach's customer list for the first time shown in the appendix. amounting to 2.1 million euros for the first quarter, of which 1.98 million euros are dedicated to Kana and will be eventually amortized over a period of eight years. In the course of the initial consolidation, we have examined in detail and gained more insight. EBT-3 and EBT-4. EBITDA3 were adjusted by extraordinary expenses for stock options M&A and for amortization of the customer base, mainly for Ghana. A respective breakdown is outlined in the quarterly statement as well. The operating cash flow substantially improved by 31.8 million up to 21.4 million euros. a consequence of higher earnings and an improved working capital. Inventories have already been reduced significantly and the cash position has been raised accordingly. Financial cash flow increased to 5.6 million euros, representing the positive balance from the further utilization of the credit lines and the settlement of financial liabilities to the former owner of Kranach Pharma. The rise of cash flow from investment activities from minus 2 million euros to more than 27 million euros is the result of cash inflows from the Kranach acquisition. More details can be found in the appendix of this presentation. These effects on cash flows led to a corresponding increase of cash and cash equivalents from just under 20 at year-end 2020 to around 74 million euros as of March 31, 2021. On slide 9, we provide a revenue breakdown of organic and inorganic growth by segment. The message is clear. Third quarter revenue is driven by the almost 87% external growth of our segment pharmaceutical supply including Ghana Pharma of the overall growth of 94% compared to the very strong first quarter of 2020. This growth is strongly supported by synergy effects being mainly realized by Ghana Pharma such as benefits from a greatly enlarged network of specialized pharmacies and respective cross-selling opportunities, a proof of a successful acquisition and integration. Let's switch to slide 10, outlining revenue and earnings by segments. As just said, revenue growth was driven by pharmaceutical supplies, reporting more than doubled revenues of around 300 million euros. And again, Earnings of the segment were less impacted by higher procurement prices as in during previous quarters. We posted lower cost of goods storage ratios for both operational segments, along with margin improvements year on year as a result of KVANA's good cost structure and higher margin portfolio compared with MESO. Let's switch to slide 11. providing an overview of our currently available funds as at March 31st, which amount to around 105 million euros, reflecting a contract signed for syndicated loans in March 2020 with the amount of 62.5 million euros, thereof we use 31.5 million so far in relation to the acquisition of Kana Pharma. Liquidity of around 74 million euros, representing a strong third quarter with a substantially improved operating cash flow, as well as a lower working capital following the successful launch of the new Indication Immobilier. In line with our growth strategy, we will use these funds for organic growth and potential acquisitions as well. Up to 10 million Euro will be invested to build up additional laboratories in the already rented new building in Berlin and we will pursue our M&A strategy looking for attractive targets mainly in the compounding business and or the area of digitalization. We confirm our forecast provided at the end of March as shown on slide 13 And 40. The 2021 financial year, we expect to exceed the 1 billion mark, a new record, and generate revenues of approximately 1.15 billion to 1.2 billion euros. This is plus 84 to 92% compared to 2020. And an EBITDA of 38 to 39 million euros, a plus of 152 to 159% compared to 2020. And an EBITDA of 31 million to 32 million euros, which corresponds to a plus of 158 to 166% compared to 2020. Percentage-wise, earnings are expected to increase disproportionately. So the EBIT margin will improve significantly to 2.7% in 2021 after 1.9% in 2020. And this guidance already includes ongoing uncertainty due to the corona situation, extraordinary expenses because of the mandatory implementation of the e-description, as of January 22, as well as significant investments into the expansion of our production capacities in Berlin. We are very confident that all these investments will pay off in 2022 and the years beyond. Ladies and gentlemen, as you can see, our growth model of majors is intact. We will continue where we left off at the end of 2020 and built on the successful business performance of the first quarter of 2021. We are very well prepared to continue our successful and sustainable growth story. We are convinced of the mid- and long-term growth potential also driven by the two acquisitions, and this, of course, at higher margins, than in an exceptional year 2020. As stressed before, our growth strategy remains unchanged and its implementation will further advance. I have explained why we are well positioned to drive future growth, not only for 2021. Now a brief summary of our growth initiatives outlined on slide 15. The conclusion is unchanged for us. The growth story of Metos continues. First, we will drive organic growth by expanding our compounding business. The new building gives us the potential to triple our production capacities in the future by exploiting the blistering business with high future potential and synergy effects. By expanding our partner network of specialized pharmacies and extending business with already existing specialized partner pharmacies. By taking on new business opportunities in relation to the e-prescription as of January 22. By further market penetration through the innovative digital platform Meteos Connect. And by further expanding and diversifying the indication area. And second, we will try growth via M&A, focusing on the compounding business as well as potentially on digitalization. Ladies and gentlemen, this completes our presentation. Thank you very much for your attention.

Okay. Thank you very much for joining us for this conference call. We look forward to speaking to you at upcoming investor conferences. still virtual, and you will hear from us at our next conference call. If there are any follow-up questions, please just drop an email or give us a call. We wish you a pleasant and nice afternoon, and goodbye.

Bye-bye. Thank you.

Ladies and gentlemen, thank you for your attendance. This call has been concluded. You may disconnect.