Redcare Phamacy Unsp/Adr

Good morning to everybody. Jasper and I, we welcome you to the Q3 earnings release of Shop Apotheke Europe. On the picture behind Jasper and me, you see of course our new facility, which by now is fully operational. Actually, you can see literally hundreds of solar panels on top of our roof. Later, we're going to share with you additional insights into our new facility. And actually, I mean this quite literally. But before we go there, we have some really exciting news to share with you. Last Thursday, on October the 28th, we received, we processed, and we filled the first electronic prescriptions from the Gematik ERX pilot in the Berlin-Brandenburg region. These were prescriptions from actual, from real customers. It wasn't a surprise to us, but it was still quite comforting to witness that these electronic prescriptions went smoothly through our end-to-end processes as we had anticipated. Let me go down, you know, for a moment. Let me go down history lane for a moment. And some of you might remember, might already know this little story. When Shop Apotheke Europe was set up, was founded 2020, years ago, exactly 20 years ago, one of the drivers for setting up Shop Apotheke was the presumed imminent introduction of electronic prescriptions in Germany. Well, you know, admittedly, it has taken a little bit longer than anticipated at the time. But finally, electronic prescriptions are reality. Electronic prescriptions have actually We are very well prepared and we are excited about the rollout of electronic prescriptions across Germany next year. Well, let me give you a quick update on electronic prescriptions, at least how we see it. The ERX pilot has been extended by the Gematik until the end of November to gain some additional experience to ensure that the systems, the processes will be ready for prime time when electronic prescriptions are rolled out nationwide early next year. In parallel, the ERX pilot has been scaling up. Finally, some might say, based on what we have learned from the Gematik and from others, with 40 to 50 pharmacies participating and 20 to 30 physicians participating in the ERX pilot right now. In furthermore, and I think that is also important to know more and more pharmacies and more and more physicians are meeting today or will meet by year end the technical requirements needed to issue electronic prescriptions. And this includes the ERX readiness of the most commonly used physician software systems. For 2022, we, and this is now, I'm speaking for Schock Apotheke, we are not assuming a big bang on the 1st of January, but we are projecting now internally a gradual but fast adoption of electronic prescriptions over the coming months. And our assumption is that by mid-year, the vast majority of prescriptions for publicly insured patients in Germany will indeed be issued electronically. Quite frankly, we have waited for many years for this to happen. Whether it now happens a couple of months earlier or later doesn't make a big difference for us. For us, for our customers, and I assume also for our long-term investors, it is key that electronic prescriptions have finally arrived. And as we said before, this really marks an important milestone for the digitalization of the health in Germany. As we mentioned, Shop Apotheke Europe is certainly ready to partake in this Well, not just our front and back end process are ready for electronic prescriptions. With our new facility, we also have the needed capacity to turn our growth ambitions in Germany, but also in all the other markets into reality and to secure our share of the e-prescription opportunity. You've heard before that in our new facility, with our new facility, we will be able to handle more than 100,000 customer orders per day. But to get a better feel for the new facility, let's have a closer look. It's now fully operational. Actually, over the last two to three months, some of you on the phone have actually taken a firsthand look at our new facility. Well, I guess to see that it really exists and it's probably fair to assume that we're going to host more visits by some of our investors and have some of the analysts over the coming months. The move from the old to the new facility was completed in early September. Actually, we're pretty much done by the end of September. The new facility is fully functional. Equally important is that we succeeded in bringing up our staffing levels. As a result, since September, we are no longer capacity constrained, which allows us, of course, to continue the Shop Apotheke Europe's Growth Story. Okay, let's shift gears and let's have a closer look at the business and financial performance over the first nine months of the year. By the end of September, our Shop Apotheke Europe, our sales had grown by around 10% and our sales had reached 772 million euros. DAF sales were up by four and a half percentage points, of course hampered by the absence of an RX bonus and our international business went up by 38%. When you look at our everything but RX growth rate over the first nine months of the year across all of our market, it stood at close to 22%. Our adjusted EBITDA for the first nine months stood at around 5 million euros. This translates into an adjusted EBITDA margin of 0.6%. The number of our active customers increased by almost a quarter over 1.4 million from 5.9 million at the end of September last year to 7.3 million this year. Since January alone, we have added around 1 million active customers despite the reduction of our marketing spending in June and in early July. Very encouraging for us is the quick recovery of our customer satisfaction with Shop Apotheke Europe. You'll see in a moment that our net promoter score recovered nicely after the dip mid-year in May, June, and early July. And since August, it had stayed at the targeted level of around 70. Over the first nine months, we generated an operating cash flow of around 28 million euros. And Jasper is going to share more in a couple of minutes about the drivers behind our cash flow development. And more important, as of September the 30th, our cash balance was in excess of 300 million euros. Well, last not least, and again, we love to talk about it, after the end of the quarter in October, on October the 28th, electronic prescriptions had finally arrived at Shop Apotheke Europe. Let's have a closer look at our two reporting segments. As we mentioned before, DAF region up by around five percentage points. The growth rate was, of course, pulled down by the 31% reduction of our RX business, triggered by the absence of the RX bonus. Our non-RX business in the DAF region went up by We see market in Germany covering both the offline and the online segments over the first nine months of the year actually declined slightly versus a year ago. Our international business grew by almost 40% and sales were in excess of 150 million euros. Shifting to some of our KPIs on the next chart. Um, the number of active customers, our net promoter score and our average order value as I, as we mentioned already, uh, active customer count went up by 24% to 7.3 million our Net Promoter Score over the first nine months was at 68, of course, pulled down by the lower NPS around mid-year. And our average order value over the first nine months was 62 euros compared to 66 euros a year ago. This decrease can be exclusively attributed to the lower share of RX orders, which, as you know, carry a higher AOV. For the first nine months of 2020, when you look at our non-RX basket across all of our markets, or no, I have to be precise, not across all of our markets, in every single market, the non-RX basket value went up compared to a year ago, which of course is a good development. Well, I don't have to say too much about our NPS chart. I think it speaks for itself. You see the dip in the second half of the second quarter when we were capacity constrained. And as a result of this, we experienced extended delivery times. But again, encouraging is the quick recovery of our NPS in the month of July. And since then, it has pretty much held steady of around 70. As mentioned before, since December, we are no longer capacity constrained. The cutoff of this chart is the end of September, but I can confirm that the NPS has held steady in the month of October as well. Well, how is our web traffic developed over the last few months? You see here the bold yellow, not yellow, the green line, which shows the total number of web visits across all of our websites. You see the low point with around 5 million visits per week around mid-year. But since then, our web traffic has again increased steadily and in the last few weeks of September the web visits exceeded Phamacy Unsp & Adr Well, before I hand over to Jasper to walk you through the drivers behind our numbers and especially behind our financials, let me support, let me substantiate the web traffic numbers we just shared with you with some of the external data points. What you see here is the data from similar web for the month of September. Shopapotheke.com was the most popular online pharmacy in Germany, and on the next chart pointing in a similar direction, Google Analytics report that over the last 90 days, Shop Apotheke was the most searched pharmacy brand in Germany. Putting all of this together, looking at our weekly order volumes, which have been growing steadily over the last few months. Looking at our web traffic, looking at the recovery of our NPS, and knowing that we're no longer capacity constrained, this all prepares us to get back onto the growth trajectory that, quite frankly, you have come to expect from Shop Apotheke. And with this, Jesper, you'll take it from here.

Thank you Stefan for that and good morning to everybody on the call. Looking at this slide, this slide shows the number of orders in thousands. Phamacy Unsp & Adr So for example, in Q1 2021, we did 5.1 million orders, which was 1 million up from the year before, which was then in Q1 2020 around 4.2 million orders, and which was then also 1 million up from the year before that year, Q1 2019. The graph also makes clear that we have a seasonality throughout our calendar years. Q2 and Q3 are lower, and we tend to set records in Q1 and in Q4 in absolute terms. Nevertheless, the slide also shows that the decline in Q2 and Q3 this year is greater than it was in the past years. have solved and our decision to subsequently hold back on marketing in the middle of the year. In Q4 2020, thus last year, we have set our records for 2020. This year, there is a challenge looking at the base of last year. But in addition, we are, of course, coming from a low point of Q3. totally ready and set and on track for the upcoming quarter four to set new records, not only having more orders than we did last year, but we are also aiming to do more orders in Q4 this year than that we did in Q1 at the start of this year. So all in all, looking at this slide, we processed more than 14 million orders year to date. and we are ready to set new records in the current fourth quarter. Next slide, please. So what did all those orders bring us in terms of financials? On this slide, as always, the customary one-pager overview of the operating results P&L items from sales up to including EBITDA for quarter three and the first nine months of the year. The sales in Q3 ended at 337.9 million. This included the slowdown in June and July and in August, but still, all in the end, we were almost on last year's level with a minus 0.3% in Q3. This number brought us to a total of Phamacy Unsp & Adr At the same time, selling and distribution increased in the quarter a bit over five percentage points and year to date a bit over four percentage points. Also here I have a bridge in a couple of moments, but the main elements here I can tell you already is related to marketing and the absence of our X volume that we faced this year. The administrative costs If you compare it to last year, there's a little bit of an apple and an orange in it because roughly half of the percentage of the deterioration versus last year is from the inclusion of the business acquisitions of MedApp and SmartPatient. And the remainder that you're seeing there that is reflective of our investments in a solid and in the right foundation to be ready for the great growth opportunities we're seeing in Germany and across Europe. Also, the percentage in 2021 is, of course, impacted by lower than originally anticipated sales in Q2 and Q3. But all the numbers I have been discussing until now, if you add it up, we had in Q3 an adjusted EBITDA of minus 2.2 million, which brought us at a year to date positive 4.7 million. Next slide, please. So here the bridge from the gross profit margin. And let's start with the third building block, the 1.3% positive impact. This is country and RxOTC mix. Country meaning that our countries with a higher gross profit margin have been growing faster. And RxOTC mix is the impact of selling less Rx and a fast growth of OTC. And then going to other Phamacy Unsp and the net pricing of minus 0.3 that is the impact of lower prices compared to last year in part offset by the fact that we don't pay a bonus on RX anymore. So all in all 22.3 to 25.4% year to date an increase of the gross profit margin of 3.1 percentage points. Phamacy Unsp & Adr Phamacy Unsp & Adr as a percentage of sales. Again, I repeat, we think this is a temporary situation with ERX around the corner. So number one, looking at this graph, is the impact of RX. Number two, in this case, is actually the fact that our international businesses are growing even faster than our DAG region was doing. That's having an impact in this case. In 2021, we have been operating two logistic facilities until September 3rd, while last year we were only operating one logistic facility. And those elements, if you strike that out from this bridge here, that actually what is remaining is the fact that marketing increased somewhat versus last year. Well, that is this year we invest more coming out of the low point from the year compared to the exceptional year last year. App. So the key point here is that the underlying business model metrics here are solid and are developing very well. Next slide, please. Starting here with the column at the right of the slide. So you talked about it already, Stefan. We ended with a cash balance. That's cash including the liquid. All our financial assets are well above 300 million. And then going to the left again, Phamacy Unsp. This year, we are still operating at an operating results and operating cash flow of a black zero at 1,000,000 positive. Phamacy Unsp. We generated there after nine months, but you also see a 27,000,000 positive impact from favorable working capital changes. It is not just popping rating cash flow. Then going to the investments, investments were in 2021 on an elevated level because besides the regular investments in IT, we have had two business acquisitions, SmartPatient and MedApp, and we also finalized our project, Fendo 2020, the move of our logistics center. Phamacy Unsp And I want to take the opportunity also to give the compliments to all the parties involved there and also to the GAMATIC and the government working on this new infrastructure, which are much safer and better and faster customer journey. This is a good moment to look back at our longer term perspective. And today we want to reiterate our longer term guidance is referring to the fact that we are not just an online pharmacy retailer, but that we are an e-pharmacy platform which enables us to go even beyond the positive 6% in the longer term. If we go from the longer term profitability guidance to the small short term guidance for 2021, of course we have only October we just finished, we have November and December left, Phamacy Unsp Adr Phamacy Unsp and that's narrowing down of the 10 to 15%. And the main reason for that is, first of all, there's no help from the OTC market in Germany. The OTC market, as Stefan also just said already, is actually the total market of an online combined. OTC is slightly down here Number two, we are coming from a low point in Q3, and we are rapidly recovering. We're delivering very solid weeks, but it takes us a little bit longer, and that's why we remain in the range of 10% to 15% growth, but we think it's going to be close to 10%. So that on the sales. Then the adjusted EBITDA margin. Actually, we're year to date at the positive 4.7 million. Why is quarter four then predicted to be negative? The reason is not cost increases. The only reason why we are guiding for this is that we want to have the flexibility to continue to invest in our growth momentum that we have achieved now in September and October. We have growth momentum with good, fast growth in traffic, high customer satisfaction, being back on growth despite the challenging to continue to invest in marketing and our overall proposition. And we think that's the best decision to bring us in the best position, making clear to also specifically in Germany, the customer that we are the leading online pharmacy brand in Germany. Then to Capex, excluding acquisition spot on our earlier guidance is gonna be around 45 million. And with that, So we have that situation again. Here are the numbers. And please don't forget to mute the webcast when you are using your phone.

Thank you, ladies and gentlemen. If you would like to ask a question via the telephone, please signal by pressing star 1 on your telephone keypad. If you're using a speakerphone, please make sure your mute function is turned off to allow your signal to reach our equipment. Once again, that is Star 1 to ask a question today. We will pause for just a moment to allow everyone an opportunity to signal for questions. Our first question today comes from Alexander Thiel from Jefferies. Please go ahead.