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 the listen-only mode. After the presentation, there will be an opportunity to ask questions. If any participant has difficulties hearing the conference, please press zero, followed by the hash key for operator assistance. May I now hand you over to Claudia Nicolaus, Head of Investor and Public Relations and EFT Communications at Medios.

Welcome, everybody, to our earnings call for the first quarter of 2025. As always, all relevant documents can 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 Wiertner and our CFO Falk Neukirch. Matthias will start with an executive summary followed by Falk who will then provide details on the financials of the first quarter and the guidance for 2025. Finally Matthias will comment on a few items of MEDEOS forthcoming AGM on May 27 and after the presentation 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 quarter of 2025. Let me start with the latest news, published just yesterday evening. As stated in the announcements, I have decided to step down as CEO and not stand for another term of office. As agreed with the supervisory board, I will take care of the handover to a successor for smooth transition and will remain in office until December 31st, 2025, as the latest. Also, Miong Mila, our COO, has decided not to extend her contract and will leave on June 30th this year. A very part of the great development of Meteos that I was part of over the past 10 years. METEOS has developed from the start up into the market leader in specialty pharma in Germany and to one of the leading players in Europe with an accepted 2 billion Euro in sales in 2025. I am equally proud that we have built a highly competent international management team of 40 people. That gives me great confidence and optimism for Meteor's future and further sustainable growth. Now that this development and establishment phase has been completed, it is a logical time to place management responsibility for the next development crisis in new hands. I have known many of you for many years and look back on a great time and very good cooperation and conversations. Without you, the growth of NETOS would not have been possible. You as our investors and analysts have also significantly contributed to the growth and success of NETOS. I would like to express my sincere thanks for this. Thanks to NETOS' first quarter development. On slide 3, starting with an overview of the highlights and achievements of 2025. Overall, we had a successful quarter with a significant improvement in profitability. Revenue grew by 6.2% to almost 485 million euros and was driven by the international business segment. EBITDA-3 increased disproportionately by more than 50% to 23.1 million euros. All three urban agro-operational segments contributed to this strong EBITDA-free increase, including an organic EBITDA-free growth of 4.6%. International business, reflecting the state-run acquisitions, contributed significantly to the good business performance. Consequently, we substantially improved our EBITDA-free margin from 3.3% for the first quarter of 2024 to 4.8% for the first quarter 25. Furthermore, earnings per share increased by almost 60% in the first quarter to 25 cents. The decrease in the operational cash flow compared to the first quarter of 24 is due to changes in net working capital as of the reporting date. On the basis of these results, we fully confirm our guidance for the year 25. but will provide more insights on the financials later. We have also made progress in implementing our strategy. With the acquisition of CETAN, we created the European Specialty Pharma platform. The integration steps are close to being fully implemented. We will now shift our focus more and more towards commercial and business development opportunities. utilizing the strong and leading platforms of both Mateos and SEBAN. At the same time, SEBAN is also finalizing several standalone strategic and inter-integration projects. These originate from acquisitions SEBAN made before joining Mateos in June 24. The teams of both, SEBAN and Mateos, have dedicated significant efforts to delivering these projects and the integration methods, all while continuing to manage day-to-day business operations effectively. Having already realized the first synergies in the first quarter, we look forward to fully unlocking the synergies between the two companies. This process is strongly supported by our European platform, giving us a leading position in the specialty pharma compounding in Europe. This network is an excellent basis for further international expansion, the realization of synergies and cross-selling opportunities. Furthermore, it will support the development of our activities in the field of advanced therapies, the future of individualized medicine. Now some further comments on the financials for the first quarter of 2025. Slide 4 shows the quarter-on-quarter development of our two KPIs, revenue and EBITDA-free. In Q1, 25 EBITDA-free and the respective margin grew significantly compared to last year. We reached an EBITDA-free margin of 4.8%. This was driven by positive momentum from all operating segments. and our strategic focus on higher-margin products. As a result, we have already achieved the margin that we are targeting for the full year 2025. This positive development is also reflected on slide 5, illustrating the revenue and disproportionate EBITDA3 growth. Whereas revenue increased by 6.2%, EBITDA3 increased strongly by 52.9%. with a corresponding margin of 4.8% compared to 3.3% first quarter last year. This is fully in line with our strategy to focus on higher margin products to achieve an overall margin improvement. 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 quarter 25 and the guidance for 25.

Thank you Matthias. Also a warm welcome from my side. I will give you a more detailed overview of the financials for the first quarter 25. You can of course find the full financial statement on our website. Let's go to slide 7. We started the financial year 25 with a strong first quarter, significantly influenced by the inorganic growth contribution of segment international business and the organic growth of the other operational segment. segments PS and PST. As a result, overall profitability increased clearly. Revenues rose by 6.2% to 484.7 million euros mainly driven by the operational segment international business. Gross profit of Nevis Group increased to 49.8 billion euros with a gross profit margin of 10.3% compared to 6.1% in the previous year. The rise in gross profit was mainly contributed by the IB segment with a gross profit of 19.3 million euros, containing an extraordinary profit of 1.4 million from the development of the pharmacy in Arnhem. The gross profit of the PST segment rose by 1.6 billion euros and reached a gross profit margin of 23.5% compared to 21% in the previous year period. This was caused by the elimination of performance-based payments for compounding orders but also a better product mix. The gross profit of the PST segment increased plus 1.2 million euros, reaching a gross profit margin of 3.8% compared to 3.4% in the previous year period, reflecting the focus on revenues with higher margins. The increase in personnel costs by minus 8.6 million euros to minus 17.2 million euros mainly results from the consolidation of Saban, contributing minus 8 million euros. Our operating expenses rose from minus 7.3 million euro to minus 10.8 million euro, an increase of minus 3.5 million euro, also attributed to CBA. The EBITDA free of 23.1 million euro compared to 15.1 million euro in the previous year and the increase of the EBITDA free margin to 4.8% were supported by the EBITDA contribution of SIGMENT ID, past our successful efforts to improve the margins also in the other operational segments by focusing on higher margin products and cost containment. ILIDA 3 was adjusted by extraordinary expenses in the amount of €1.3 million compared to €3.3 million last year. This consists of €1.1 million for ERP system implementation, €0.2 million expenses for stock options, €9,000 for M&A, In Q1 2025, there were no more performance-based payments for increased compounding volumes as in 2023 and 2024, which had a positive impact on profitability, especially in the PST segment, as already explained. Degradation and amortization rose by minus 4.3 million euros to minus 9.5 million euros. The increase is fully attributable to the C1 acquisitions The total amount for depreciation and amortization in Q125 are minus 6.1 million Euro attributable to the amortization of customer base, minus 1.4 million Euro attributable to lease assets and the remaining amount of almost minus 2 million Euro belongs to operational depreciation. 9 million euros decreased by minus 2.2 million euros and mainly includes interest expenses for the tranches utilized from the facilities of the existing syndicated loan which amounted to 184 million euros at the end of the reporting period. Because of the strong performance of all operations segments thus the described reduction in extraordinary expenses net earnings increased by 60% to €6.4 million, considering a tax ratio of 31.8%. That earnings per share for Q25 increased from €0.17 to €0.25, an increase of 47.1%. Due to the reporting date-related net working capital effects, the strong operational performance of Q25 is not fully reflected in the operating cash flow of 3.6 million euro. The pre-cash flow of 2.3 million euro is consequently also impacted by these networking capital effects. Investing cash flow of plus 0.4 million euro reflects APEX of minus 1.2 million euros and subsequent accrued purchase price payments for the acquisition of Seban of minus 1.5 million euros as well as cash inflows of 3 million euros from disposals of fixed assets and the sale of the pharmacy in another. Financing cash flow of minus 21 million euros in the first quarter of 2025 reflects the redemption of the syndicate loan in the amount of minus 16.3 million euros, thereof minus 6.25 million euros for the term loan and minus 10 million euros for the RCS. Interest payments of minus 3.4 million euros mainly for the syndicated loan facilities and redemption of lease liabilities in the amount of minus €1.3 million. Cash and cash equivalents of €89.2 million by the end of the reporting period consisted mainly of freely available bank deposits. The equity ratio increased from 54.6% at the end of December 24 to now 55.6%. On slide 8 and 9, we provide a breakdown of the organic and inorganic growth by segment for the first quarter 25. Side 8 shows that inorganic revenue growth amounted to 39.5 million euro or plus 8.7% fully dedicated to the segment international business. Organically revenue decreased by 11.1 million euro or minus 2.4% mainly caused by focusing on higher margins revenues in segment pharmaceutical supply. Slide 9 shows the organic and inorganic EBITDA breakdown by segment for the first quarter 25. EBITDA pre-increased inorganically by 7.3 million Euro or 48.3% fully dedicated to segment international business. Also, both pharmaceutical supply and Patient-specific therapies show organic earnings growth. The EBITDA redevelopment in segment services reflects the increased number of expected support members, but also the thoughtful structural expansion of the new strategic segment advanced therapies. Let's go to slide 10, providing an overview of the segments. 6.2% increasing food revenue is mainly driven by international business and to a lower extent by PSP. The external revenue of the PS segment decreased by 2.9% to about 389.2 million euro. This was mainly a result of replacing products with lower margins by products with higher margins. External revenue generated by the PST segment increased by 1.3% to 55.8 million euros. The IB segment contributed 39.5 million euros. External revenue inorganically in first quarter, 25. EBITDA pre for the PF segment amounted to 11.8 million euros, a plus of 0.8 million euros, or plus 7%. EBITDA pre for the PST segment increased by around €0.4 million to €6.3 million or a plus of 6.4%. IV contributed with a strong EBITDA pre of €7.3 million for the first quarter 2025 and a margin of 18.4%. Slide 11 provides status information on debt financing. The bridge financed the main part of the cash component of the second acquisition by a bridge facility of €200 million and prepaid the bridge facility by a syndicated loan facility in the total amount of €225 million consisting of two charges in November 24. The term loan facility of €125 million with a term of five years repayment started in March 25 with a repayment of €6.25 million. 5 million euros and a revolving credit facility of 100 million euros also with a term of five years. The RPS has a term extension option of up to two years and a set-up option for a further 50 million to finance future growth. Based on estimated future cash flows, an amount of 30 to 40 million euros annually would be available for repayment of the debt. At the end of the reporting period, the total loan amount drawn under the syndicated loan agreement amounts to €184 million, €119 million under the term facility and €65 million under the RCS facility. Overall, we are confident about the business development over the next month and confirm our guidance for the full year 2025. The guidance includes C1 for 12 months as shown on slide 13. Our guidance parameters are revenue and EBITDA-free. For 2025, we expect revenues to reach approximately 2 billion euros, reflecting growth of around 6%. EBITDA-free is expected to grow by around 21.5% to around 96 million euros. Organic growth should be in the mid-single-digit percentage range. Both parameters reflect an EBITDA-free margin of approximately 4.8%. The EBITDA pre-guidance is adjusted for extraordinary expenses like M&A related costs, expenses for PROC options and implementation costs for an ERP system. This is all for my side. I hand back to Matthias who will comment on selected items of our ACM. Thank you, Paul.

Please allow me to say a few words on the upcoming ACM which will take place on May 27th. The HUM invitation was published on April 14 jointly with the respective documents. In advance, we would like to explain selected items on this year's agenda, namely Agenda Items 7 to 9. Let's start with the Agenda Item 7, Adjusted Compensation System for the Executive Board. The Supervisory Board has revised the remuneration system for the Executive Board and further develop the short-term incentives in a targeted manner. In future, operating cash flow will replace the previous target figure of inorganic growth, M&A. A step that aligns the incentive structure of executive board remuneration more closely with predictable operational performance indicators. Together with the greater reasoning of EBITDA-free growth and margin, From previously 20% up to now 30%, the remuneration system has thus been aligned with the Middles Group's strategy. Side 15 shows the revised allocation. The increased rate for EBITDA-related metrics underscores our focus on profitability and operational efficiency. while revenue remains relevant but is now complemented by quality and margin-driven indicators. Replacing M&A with a cash flow metric reflects our evolution from growth primarily driven by acquisitions to disciplined cash-generating operations. We are confident that this updated STI framework better supports sustainable corporate performance while also reflecting investor expectations. Item 8 is presented on slide 16 and describes the new stock option plan 25 and the creation of respective conditional capital 25-2. The Executive Board and Supervisor Board proposed the introduction of a new 25 stock option plan to retain qualified employees and executives in the long term and give them a sustainable share in the company's success. And, of course, to attract new talent. Up to almost 900,000 new shares from a newly created conditional capital 25-1 are to be made available for this purpose. The performance target for exercising the options with a share price of €17 with an exercise price of €15. Please note that the total costs for stock option programs remain limited to a maximum of 10% of share capital. A clear commitment to discipline and responsibility in the use of capital measures. And finally, I want to comment on AGM item 9, new authorization to issue convertible bonds with the option of excluding subscription rights outlined on slide 17. For this purpose, new conditional capital 25 is to be created, corresponding to around 10% of the current share capital. This measure serves the purpose of making targeted use of financing opportunities on the capital markets, for example, to support investments and acquisitions or to internationalize our business model. Here, too, we are committed to a shareholder-friendly approach, with the proposed offsetting against the authorized capital 24-1 we are ensuring that no more than 10% of new shares can be issued from capital measures with the exception of subscription rights, regardless of whether new shares are created through the utilization of authorized capital or from convertible instruments. Frankly note that this agenda item has already been proposed for resolution at last year's AGM. We would be delighted if you would approve the proposed agenda item. If you have any questions in advance of our AGM, please do not hesitate to contact us. Thank you for your attention. Falk and I are now available to answer your questions.