Medios AG

Ladies and gentlemen, welcome to the conference call of Medios AT. At a 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 difficulties during the conference, please press 0 followed by the hash key for operator assistance. May I now hand you over to Claudia Nikolaos, Head of Investor and Public Relations and ESG Communications at Niklas.

Welcome everybody to our earnings call for the first half 2024. 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 Matthias Gärtner, our CFO Falk Neukirch, and our CIM Konstantin van Rietvoort. Matthias will start with an executive summary, followed by Falk, who will then provide details on the finances for the first half year 2024, and the guidance for 2024 as well. Finally, Matthias will comment on Neda's growth story, and after the presentations, we will begin the Q&A session. I would now like to hand over to Matthias.

Thank you, Claudia. Ladies and gentlemen, welcome to our conference call for the first half year of 24. Overall, we continue the solid business performance of the first quarter and are proud to include TATON for the first time for one month, June 24. The main highlights of the first six months 24 are shown on slide three. Let's start with the financials on group levels. We achieved revenue growth of more than 6% to €907 million, with a disproportionate EBITDA-free increase of around 7% to €31 million. We posted a strong operation cash flow of €34 million, compared to a minus €75 million gain period last year. We consolidated Saban in our new business segment international for the month of June. Initially, we had planned to include Saban already in May, but anyway, we are very happy with Saban. The June results were excellent, and we confirm our guidance 24. I will provide more insights on the financials later. The acquisition of Saban was an outstanding event for Meteos, and the highlight of H1-24. This is a milestone on our mission to create the European specialty pharma platform. But there are also other important events in the first half of the year. As announced at our last conference call in May, Konstantin Heinrichsrodin was appointed Chief International Markets and so a further member to the Executive Board effective on May 1st. Furthermore, the executive board contracts of Chief Operating Officer Myung Mila, Chief Innovation Officer Christoph Brutscheidt were extended ahead of schedule. And I'm happy that most recently also my contract was extended as well. Looking forward very much to continue working together as part of this experienced and successful executive team and as part of the whole METEOS team. Regarding our ESG activities, we continue to work on the implementation of the CSRD and EU taxonomy requirements. We have completed our double materiality analysis, which is now under auditor review. Consequently, our non-financial reporting 24 will be fully in line with these new standards. A further review of major NCI ratings was carried out in the first half of the year. Our rating remains stable at an impressive AA on the CCC to AAA scale. This demonstrates our continued commitment to ESG performance. We are pleased to welcome Luxembourg as a new maker and strategic shareholder. In June, they acquired 14.9% stake in Metos from the Metos founder and former CEO, Manfred Schneider, as part of a private placement. I would like to take this opportunity to thank Manfred on behalf of the whole Metos team for his many years of commitment to Metos. As founder and former CEO, he has had a strong influence on our company. With his clear vision and the right strategic decisions, he laid the foundation for the dynamic growth and ongoing success of the Metas Group. We believe that Luxembourg is a great partner not only to support the internationalization of our company, which has just begun. As a solid internationally experienced strategic investor with a well-founded network and know-how, Luxembourg can support us very well on our journey. Furthermore, we appointed Dr. Andreas Schmiede as Vice President Advanced Therapies to drive the business forward in this new field. Andreas holds a Ph.D. in biochemistry and has more than 25 years of professional experience in the fields of diagnostics, biotechnology, and biopharma. Most recently, he was Senior Director and Head of Strategic Business Development, Cell and Gene Therapies at Lonsa. And we are excited to be a member of the S-DAS Index again since July 2015. Finally, a few words on the acquisition of CEPAN from a few people. The DAS market leader with activities in Belgium and Spain as well. On slide 4, you can see an executive summary of CEPAN. This acquisition is the first milestone in our journey and vision to build the leading European specialty pharma platform. In addition, we get immediate market access to three European countries. The new makers group now has a leading position in compounding of specialty pharma in Europe. I will not comment further on CEPAN's operational activities as we already presented this and additional information on the acquisition our prior conference calls. Regarding the integration of Stepan, we only closed the transaction by the beginning of June, so we are only two months underway, but integration is well on track and performance looks promising. Our priority was on integrating Stepan's financials into our system and in the field of compliance and formal procedures. We have made significant progress there. When we look at synergies, we are mostly focusing on the cross-learning opportunities and best practices and knowledge sharing. Last, of course, the economies of scale that the combination will benefit from. First steps have been taken here, and we clearly see the potential benefits, but it is too soon to already see them reflected in these. But we can say that CEPAN is performing in line with our expectations. We implemented a third operational business segment internationally and we fully consolidated CEPAN for one month. During our last call, I stressed that the transaction is immediately EBITDA-aggressive and will increase our earnings margin from the very beginning. This is definitely the case, as reflected in our half-year figures. Pulse will provide more information later on. Briefly, on slide 5, you can see our German-wide network of around 850 specialized pharmacies that is now enlarged internationally by Stepan's network of around 3,300 partner pharmacies and more than 200 hospitals, as well as our 23 own pharmacies in the Netherlands. This is an excellent basis for our further European expansion and the realization of synergies and cross-selling opportunities. Furthermore, it will support the development of our activities in the field of advanced therapies. More information on the SEPAN transaction is provided in the appendix of the presentation. Now some comments on the financials for the first half year of 2024 as illustrated on slide 6 and 7. Slide 6 shows the quarter-on-quarter development of our two KGI's revenue and EBITDA freeing. whereas Q2 revenue was almost flat compared to the level of Q1-24 EBITDA-free and the respective margin grew disproportionately. This was already a result of Vipant's contribution for one month. And despite ongoing regulatory price adjustments in Germany, that further impacted our PST business. Moreover, H123 revenue included €6 million coming from Kölsch Blister that was sold in June 2023. Overall revenue in H124 grew by more than 6% and EBDA3 was even stronger with 7% growth compared to the first half year of 2023, as shown on slide 7. This growth was mainly attributable to inorganic growth represented by Satan. This is all from my side for the moment. I now hand over to Falk to provide more details on the financials for the first half year of 2024 and the guidance for 2024 as well. Falk.

Thank you, Matthias. Also welcome from my side. I will give you a more detailed overview on the financials for the first half year of 2024. The full financial statement can be found as always on our website. As already said by Matthias, the C-Line Group has been fully consolidated since the 1st of June and forms the new StagBand International, which is the third operational StagBand of Mises, a group besides pharmaceutical supply and patient-specific therapies. StagBand services mainly comprises our central functions. Against this background, the first six months and the second quarter financials are characterized by C-Line's strong contribution for one month. Let's start with Slide 9. All in all, we had a solid first half year 2024. Revenues increased by 6.3% to €907.3 million, mainly driven by the operational segment pharmaceutical supply and international. Growth profit increased to €60.4 million, with a higher growth profit margin of 6.7% compared to 6.4% in the previous year. The increase in gross profit was mainly contributed by PS SIGMENT and SIGMENT International. PSG gross profit decreased due to the already mentioned deconsolidation of Kölscher Blister, regulatory headwinds, and higher performance-based payments for additional compounding orders. The increase of personnel costs by 2.6 million, a plus of 14.9%, to 20.4 million euros, results from the consolidation of CIMAN, plus 2.2 million euros, as well as provisions for bonuses for the successful completion of the CIMAN acquisition. Other operating expenses increased by 4.7 million euros to 15.4 million euros. On this increase, 1.3 million euros were caused by CIMAN, The remaining amount was mainly due to higher legal and consulting costs, largely attributable to the acquisition process of CBAN, €2.1 million, and ERP implementation costs, €0.5 million, both extraordinary expenses, which were adjusted under EBITDA 3. A disproportionately higher EBITDA 3 of €31.1 million compared to €29 million, million euro resulted in an EBITDA green margin of 3.4%. As previously stated, the margin was burdened by various items such as regulatory price adjustments in Germany, as well as the increased contribution of the PSB. It was positively affected by the very good EBITDA green margin of the new segment international, but only for one month. It is agreed was adjusted by extraordinary expenses in the amount of €6.6 million compared to €3.1 million last year. This consists of €0.6 million for stock options, €2.1 million for M&A transaction costs due to the C1 acquisition, €3.3 million for performance-based payments for the acquisition of compounding volumes, and €0.5 million for ERP system implementations. Depreciation and amortization rose to 11.9 million euros. The increase of 1.4 million euros compared to previous year is attributable to the SEBAN group. The financial result of minus 2.5 million euros is 1.5 million euros below previous year and mainly includes accrued interest and costs for the financing of SEBAN acquisitions. We generated a strong operating cash flow of 34 million euros compared to previous year periods. This development mainly resulted from the positive operating results and actively managed working capital as a reporting base. Consequently, we posted a strong free cash flow before M&A expenditure of 32.3 million euros. Investing cash flow of around minus 220 million euros reflects primarily payments for the and the repayment of C-1 loans totaling at €225.1 million less cash of €6.2 million from C-1. Financing cash flow of €196.3 million reflects the drawing of the €200 million bridge loan for the C-1 exhibition less interest payments and payments for rental agreements. Cash and cash equivalents for roughly 82 million euros consisted mainly of unrestricted bank deposits. The equity ratio decreased from 78.8% by end of 2023 to 53.9% by the end of the first half of 2024, mainly caused by new debt for the acquisitions of SEMA. On slides 10 and 11, we provide a breakdown of the organic and inorganic growth by segment for the first six months of 2021. Inorganic growth reflects the contribution of CIMON for one month, fully allocated to the new segment, International. Let's go to slide 10. Revenue grew organically by €42.2 million or plus 4.9% entirely in the PS segment. Inorganic revenue growth amounted to €11.6 million or plus 1.4% due to the acquisition of C1. Slide 11 shows the organic and inorganic EBITDA pre-breakdown by segment for the first six months of 2024. EBITDA re-increased inorganically by €2.7 million or plus 9.3% fully dedicated to C1. The decline of organic growth was compensated by the strong contribution of the segment international. Increased personnel and other operating costs for central functions are reflected in the segment services. Let's go to slide 12, providing an overview on the segment. The 6.3% increase of group revenue is mainly driven by PS and to a lower extent by international services. The external revenue of the PR segment rose by 7.3% to around 788 million euro. External revenue generated by the PST segment decreased by 9.6% to 107.5 million euro, a decline of 11.4 million euro. Around 6 million of this decline are attributable to the sale of virtual crypto. As already mentioned, regulatory price adjustments as well as higher performance-related payments for the acquisition of compounding volumes had also a negative impact on revenue in the first six months. The international segment contributed €11.6 million. EBITDA III for the PF segment amounted to €22.9 million, a plus of €3 million or a plus of 15%. The EBITDA III for the PEC segment climbed by €1.6 million, to €10.9 million, 13.1% below previous year mainly due to the supply defects as I already mentioned. IBAN contributed with a very strong EBITDA fee of €2.6 million for June 24 and a margin of 23.2%. Slide 13 provides the status information on the debt financing. He financed the main part of the cash component for the SEVA acquisition in the amount of €235.3 billion by a bridge facility of €200 million. The bridge facility has common market interest rates. Furthermore, the syndicate loan over €75 million would be available for financing further from EG's working capital requirements restricted by a maximum debt leverage. Adding other debt items and considering the cash of about €80 million, the net debt amounts to approximately 150 million euros on June 30, 2024. The syndicate loan was not drawn on June 30, 2024. The bridge facility is planned to be replaced by a long-term debt facility based on an estimated future free cash flow less interest payment and amount of 30 to 40 million euros would be annually available for repayment of debt starting in 2025. Let's go to slide 15, providing our guidance for the full year 2024 for the media schools, including Cibam. We confirm our guidance for 2024, first announced on the 18th of March 2024. For 2024, we expect revenues to reach the range of €1.9 billion to €2.1 billion and in EBITDA-free, expected to be in the range of €82 million to €91 million. The EBITDA-free forecast is negatively impacted by The one month later than originally planned C-band transfer of control on June 1, 2024, and regulatory price adjustments in Germany. We expect EBITDA free growth to be at least 35%, with a substantially higher EBITDA free margin of around 4.2%. The EBITDA free guidance includes integration costs, but is adjusted for extraordinary expenses like M&A transaction costs, expenses for stock option programs, performance-based payments for compounding volumes, and implementation costs for an ERP system. A summary of our strategic priorities is outlined on slide 16. For this, I hand back to Matthias.

Thank you, Paul. Our growth strategy strongly advanced with PayPan. Its three pillars are outlined on this slide. In addition to strengthening our core business in Germany, IBAN will enable us to expand our operations into other European countries, again illustrated on slide 17. Also, we intend to further diversify our business model by entering the production of advanced therapies, meaning medicines based on genes, tissues, or cells. all expensive and complex therapies shown on slide 18. This is a very good fit for Meteos, as we are already a trusted partner for high-value drugs in Germany, and we will be one in our new European markets as well. Meteos aims to exploit the enormous potential of cutting-edge healthcare technologies in the field of advanced therapies, and thus generate additional added value for society. Just to mention the number of clinical trials currently going on in the field of advanced therapies, more than 1,600. We will use our state-of-the-art GMP labs in Germany and Europe as well as our expertise in compounding to make high-quality personalized therapies available to patients. To do so, we plan to collaborate with pharmaceutical and biotech companies, CMOs, CMOs, developers, patient organizations, and health insurers, the payers. We are blessed to support the German government's National Strategy for Genetic Therapies, that aims to make innovative treatment methods for rare and serious diseases more readily available in Germany as a business location. This initiative offers opportunities for us as a leading provider of specialty pharma solutions in Germany and improves patients' access to advanced therapies. This shows that there is a lot of potential ahead for Matheos. Our growth story is well on track. Thank you very much for your attention. Falk, Konstantin, and I am now available to answer your questions.