DocMorris AG

Good morning, everyone, and welcome to our Q126 trading update. I'm Walter Hess, the CEO, and I'm joined today by our CFO, Danielle Wüst. In line with what we announced at the Fulia conference, we will provide transparent quarterly insights into our path to EBITDA breakeven, which is why we are hosting today's call. Just a few weeks ago, During our full year 25 results, we outlined our strategic evolution from an online pharmacy player to the leading digital and AI health platform, the engine for our profitable expansion at scale. Today, we will show you the facts that validate our successful development. Let's move straight to the Q1 highlights on the next slide. to demonstrate how well this engine is now accelerating. Overall, we achieved a strong revenue growth of 10.7% year over year. Our RX business showed outstanding momentum with a 30.4% growth year over year, alongside a strong 7.6% sequential growth compared to the previous quarter. The growth was fueled by accelerating month over month with a remarkable uptick in March, which also continues in April. Our high-margin digital services business continues to scale rapidly, achieving an impressive 63.1% growth rate while consistently increasing margins. In Q126, we successfully expanded our ecosystem platform, growing our active customer base by 1 million year-over-year, whereas 0.4 million in Q126 to a total of 12.6 million, which is a great achievement. And most importantly, and as you know, our main priority, we improved our adjusted EBITDA by 10 million Swiss francs year-over-year, to minus six million, proving we are on track to achieve our break-even target in the course of 2026. Let's move to slide number five now. The 30.4% year-over-year Rx growth clearly proves that our strategy to capture the potential of the Rx market is highly effective. It shows that the patients are more and more familiar with our digital services and increasingly value the comfort of home delivery. We saw a growth in Rx orders from month to month with a significant uptick in March, rounding off a very successful first quarter and also continuing into April. And this acceleration comes together with more and further optimized channel mix, which pleasingly increased ROAS return on advertising spend and decreased our customer acquisition costs even further. Ultimately, this is a strong start into the year and it demonstrates the growing stickiness of our health platform. Our non-Rx business remains a reliable driver of value, delivering continuous and profitable growth of 6.5% year-over-year to fuel our broader ecosystem. We managed our OTC and PPC business according to plan to a growth rate of 4.4%. Our digital services, including teleclinic, retail media and our marketplace, grew further by an outstanding 63.1%. These digital business lines are not just growing top line. They are delivering increasing margins and therefore a significant EVTA contribution. And on top of it, the strong platform performance and expansion also forms an excellent basis for our retail media business. And now I would like to hand over to Daniel.

Thank you, Volker, and also from my side, a very warm welcome to all the participants. Let's move to slide number seven, where you see the EVTA bridge, which we also provided to you during the full year figures in March. And I want to start with the following comments. We closed Q1 with an adjusted EBITDA, as Walter already said, with minus 6.3 million, representing a substantial improvement of almost 10 million, exactly 9.8 million compared to the quarter of last year. That's proving our continuous path to profitability. The charted EBTA margin improved by over 360 basis points from minus 5.7 to minus 2.1% in Q1 compared to the previous year's quarter. If you look at the chart and you see since Q1 25, we have seen an ongoing quarterly EBTA improvement driven by basically three factors, better operational performance, focus on marketing efficiency, Also very important to mention discipline cost management. Amongst other, you remember we have closed the holding logistics operations last year, and this year we have announced that the closing of Ritwigshofen, the Veras and the respective logistics operations which have already contributed substantially on the cost side, but will further contribute during 26. And I can also confirm that with the closure of Ludwigshafen, we are very well on track. We will see first positive operational effects in the second half of 26. On the You continue to be very transparent and you see this is minus 6.3 million into 126 in the chart on page seven that we expect we felt the quarter result almost on the same level for Q2. And then as already mentioned in March, we aim for getting close to EBTA rate even in Q3, and there'll be definitely EBITDA rate even in Q4. And I think that's what the management team is kind of aiming to achieve. All in all, our Q1 results demonstrate that our measures are working. and will further work because it's not yet done. And that DocMorris is very well on track to achieve EVTA rate even in the course of the year. We are relentlessly executing our plan with position knowing that our strategy, the evolution from a leading online pharmacy to a leading digital and AI health platform will pay off. With that, I would like to Let's go to slide number eight. There, nothing new. We backed by our strong Q1 performance and our current trading where we see an ongoing positive trend from March. We are fully confirming our short and midterm guidance as laid out from the full year presentation in March. That means we confirm our 26 adjusted EBITDA targets in a range of minus 10 to minus 25 million, strongly supported by the improvements, improvements we have already seen and delivered in Q1. We are confident to achieve EBITDA break even, even if it would be at the higher end of the guided external revenue growth guidance. And just for your memory, the guided mid-sender wages to low teens percentage range And as you have seen in Q1, we can deliver on the EBITDA target even if we are at the upper end of the overall revenue guidance. All in all, we firmly reiterate our commitment to reach an EBITDA rate even during 26 and achieving positive free cash flow in the course of 27. And with that, I hand over to Rod.

Yes, thank you, Daniel. So before we move to Q&A, I want to briefly address the upcoming annual general meeting and the future board composition proposals. Our board proposes three independent nominees, Thomas Bucher, Nicole Formen-Casillo and Dr. Thomas Reuter. Together with our existing board members, this composition brings targeted expertise across the areas most critical to further execute on our strategy. Management's clear preference is for continuity and stability. We are at the pivotal point in our development. Consistent, focused execution requires a board that is aligned, experienced and ready to act, not one in transition. proposed new nominees are fully independent and stand for the interests of all shareholders. We believe this is the right team to take DocMorris forward and we encourage shareholders to support these nominations at the AGM. Let me conclude the call with a clear message. Our vision of health in one click is not just a concept. It is fully operationalized through our integrated digital and AI health platform. However, a strategy is ultimately defined by its execution. Our Q1 results deliver strong proof that our market measures are working and DocMorris is firmly on track. We are not just making promises for the future, we are delivering today. This is clearly demonstrated by our strong Rx growth and the 63% expansion in digital services and our continuous EBITDA improvements. My clear statement to you is that the transition to a profitable digital health ecosystem is fully underway and is yielding tangible financial results. We have the right strategy, we are the right management team and the operational proof is in place. We are executing with absolute focus and we are pairing the necessary sense of urgency with a clear commitment to long-term value creation. And with that, we would like to move over to the Q&A part of this call.

Okay, ladies and gentlemen, if you would like to ask a question, please press star 9 and the pound key on your telephone keypad. If you would like to cancel or revoke your question, you can press star 3 and the pound key. You can also use the app dial-in function in the webcast if you would like to ask a question by phone. And we have already some questions. The first question comes from Mr. Koch from Deutsche Bank. Mr. Koch, your line is open.

Thank you for taking my questions. My first one is on RX. I'm encouraging to see that the growth rate has accelerated again in Q1. If I analyze your Q1 number, I'm already quite close to your full year guidance. So is there anything we should consider here, or is your full year guidance just a bit more conservative than in recent years? And then secondly, on profitability, could you confirm that the loss in Q3 is not expected to be higher than in Q1? And if so, the upper end of the EBDA loss range looks quite unlikely as well. Any comments here? And then lastly, are there any upcoming regulatory changes that we should keep in mind? There have been some headlines on the potential changes to the cold chain requirements, so any color here would be helpful.

Yeah, thank you, Jan, for your questions. Let me take the first and third question and then the second one I would like to hand over to Daniel. On the RX, what I just can confirm that we continuously improve the marketing mix, the performance of the marketing. And with that, we just see really good development. Yeah, so let's meet again in August and then I can further or we can further give you more details about the growth and then what you can expect also in the second half year and for the full year. About profitability, maybe Daniel?

I think that's always the backside of being very transparent and you take the right math or measuring up on the scale. I think it would be – if you already would know how Q2 would come in, especially on the bottom line, then my life would be much easier, and we would now go out and join with some notes, but on a more serious note. Definitely the aim for EBTA, quarterly EBTA in the NDRL of Q1 and knowing that Q1 and Q2 are usually the weakest quarters and this acceleration in Q3 and Q4. However, having said this, as Walt already mentioned, we see very good traction coming from March and also have been transferred into April, even that basically we had two slower weeks due to the Easter time and related vacation. And therefore, I would kind of confirm your view that you could assume that it will be roughly on the level of Q2. But of course, we have the management has a higher ambition to maybe improve it to the upper end of the midpoint of the shaded bar, which you see in the chart.

Okay, and then coming to your third question about the regulatory development, and you mentioned the cold chain. So as you all know, there is a draft of regulation which has been issued by the Ministry of Health. And now the EU Commission intervened and basically said that it's a violation of EU law again, we have to say. For us it's a positive signal because we see it equally and so now the ministry has to adjust this draft and it's really just a draft and it's only on the regulation level and so we see it as a really positive sign as I think also the market has seen.

Great, very helpful. Thank you.

You're welcome.

The next question is from Mr. Kunz from Research Partners. Mr. Kunz, your line is open.

Good morning all together. I have just one question regarding digital services. If I calculate that correctly, you had a growth rate of 110% in Q3 and then 95% in Q4. Now you have 63% in Q1. And this is a rather steep deceleration. Is there something we have to think about that it's going further down in the coming quarters or if it's going to stabilize? You have your guidance or your inofficial guidance of mid double digit percent change for the whole year, which would translate to, I guess, 40 to 60%.

Thank you, Mr. Kuhn, for the question. I think your calculations of the last year on the quarterly development are, let's say, more or less right. And as mentioned, we indicated when we guided for digital services that we are aiming for mid-double-digit growth, which we will also translate into 40 to 60. And with the, we are now at the operand, and I think in relation to teleclinic there, the teleclinic was slightly below the average, but we have kind of disclosed for Q1. But as mentioned, you have to remember that last year teleclinic has won the TK tender, which is by far the biggest insurer in Germany. And there you have seen a huge increase in volume starting in December, but mainly in Q1. And you can expect and assume that there will be kind of a leveling out, i.e. that the base effect will then, from Q2 onwards, play in favor of teleclinic. And having said this, teleclinic has several where we expect to get the feedback rather than sooner than later, and which could then also basically, if they would go into the right direction, give some additional top line growth, which was not reflected in the initial guidance, which we had put out in March. I think just to add there, I think top line growth is one, and we also explained in March that we always have years with high growth, but let's say stable profitability margin development, which was last year, because the growth was three digits, but the margins more or less were stable. And this year, and that's deliberately DBC already in the Q1, that the growth is a little bit lower, but the margin has substantially improved and we expect that this will continue during the year. Meaning that we are not talking kind of a three, but rather kind of a four as the first number in the margin profile.

Okay, but all in all, you're quite confident that the growth rate in digital services in the next few quarters, they stabilize somewhere in this double-digit percentage range, mid-double-digit percentage range, and then not kind of constantly going backwards?

No, no, I think we hope it will be the other way around, but let's see. But we are very confident that this 40 to 60 is for the time being at the wide range and not any adjustments to the downside are definitely not a topic for this year. Okay, thanks a lot.

You're welcome. Thank you very much, Mr. Kunz. Ladies and gentlemen, I'd like to remind you that you can ask questions verbally. To do so, please press star, nine, and the pound key on your telephone keypad. And the next question comes from Guillaume Jalon. I hope I pronounced your name correctly, from Barclays. The floor is yours.

Hi, morning, everyone. So, yeah, I have one question, maybe on the non-IRX and OTC side. So, yeah, could you give us a bit more color on what you're currently seeing in German OTC? And so your peers have flagged some softness in the market, which was seen in Q4. They reapplied it in Q1. It seems that OTC has slowed in Q1 for Doc Morris. So I'm keen to hear a bit more, like, on the consumer demand and if you've seen any changes on the competitive intensity. Thank you.

Thank you, Guillaume. Happy to answer that one. So we see that the market is going on more or less the same level and pace as also the Q4. For us it's important. We have a plan to grow mid single digit with OTC and BPC and this is the level where we manage growth in that part. And yeah, so as you might remember, Generating OTC growth would not be really difficult so we could grow further but it comes with a price and our priority is very clearly on profitability. And this is why we decided also to soft guide OTC on mid-single-digit what works well in Q1 and also in Q2 that start in April.

And then regarding, sorry, Rossmann and Diem, any change here in terms of competition?

Sorry, I didn't understand your question.

Have you seen any switch in competition from Rossmann and Diem in the market, in the OTC side?

No, we don't feel additional competition at all.

Thank you. Just to make it very clear, I think on the OTC, we have compared from Q4 to Q1 this year. We have not changed anything. We have exactly the same amount of marketing spend, marketing ratio, and everything. And that's the reason you do not have to ask us why in Q4 we all of a sudden got to a double-digit OTC growth, but I think that was somehow exceptional. Q1 is really according to plan and budget and to guidance which we provided this meeting with Richard and this is 4.6% we are perfectly on track in this respect. Understood.

Okay, so if there are no further questions,

Yes, one more question. It just came in. I'd like to interrupt you. So the next question is from Gianmarco Vero. The floor is yours. Yeah, all the way. Okay. Yeah, we can't hear you, Mr. Vero. I'm sorry.

Okay. But we can answer your question off the call at any time. So we are, of course, available. Okay, so let's end this call. Thank you very much for taking part, for spending the time. I just can confirm we are really well on track. The management, the company needs stability and consistency, and we are strongly executing and fully focused on delivering the guidance that we have promised to you and to the market. I wish you a wonderful day. and looking forward seeing you and meeting you in August latest. Thanks a lot. Thank you.