Redcare Phamacy Unsp/Adr

Good morning, everybody. Jasper and I would like to welcome you to the release of Shop Apotheke Europe's full Q3 financials. To start with the end in mind, against the backdrop, as we're all witnessing this, of difficult and challenging economic times and many uncertainties everybody is facing right now, I dare to say that Shop Apotheke delivered a solid which was fully in line with the guidance we had provided earlier this year. Talking about the guidance, Shop Apothekers management continues to stand behind this guidance and the guidance at the end of our call will be reiterated by Jasper one more time. Well, you see the usual agenda. We're going to start with a deep dive into our Q3 performance and then we just have literally a couple of charts on E-Prescriptions in Germany and Shop Apotheke's commitment to sustainable development. And at the very end, rest assured, we're going to have plenty of time to answer any questions that you might have. So let's start with a deep dive into Q3. At the start of the call, I mentioned that we delivered a successful quarter in line with our guidance. But before we go through the details, let me just take a step back and let me acknowledge that we did reach an important milestone just last week with half a million redeemed e-prescriptions in Germany. Not surprisingly, of course, as Shop Apotheke, we would like to see the growth happen at a much, much faster pace. But still, I think we need to acknowledge that just a couple of months ago, we reached the target that had been set out for the ERX test phase in Germany, which was 30,000 processed e-prescriptions. And as of last week, we surpassed the 500,000 mark. Right now, literally every single day, physicians are issuing, pharmacies are filling, and health insurers are reimbursing electronic prescriptions, thousands on a daily basis. So process-wise, certainly e-prescriptions are working smoothly. Shifting gears and looking at Shop Apotheke's performance in Q3, our sales growth went up to 20%. This compares to 15% in the second quarter and 7% in the fourth quarter. Non-AREX growth continued at an even faster pace. Looking at this on a year-to-date basis for the first nine months, we showed sales growth year-over-year of 13.5% and sales of 877 million euros. Our Q3 adjusted EBITDA came in at around 1% of net sales or 3 million euros. This is an improvement by 1.8 percentage points versus a year ago versus Q3 2021 and a very notable improvement versus the first half of this year and more on that from Jasper in a few moments. Our active customer base continued to grow at a rapid pace. We are approaching 9 million active customers. This is an increase by around 1 million customers since the beginning of this year. And more importantly, and this is one driver for our customer growth, of course, is the high customer satisfaction level at the NPS for the third quarter stood at 73%. to be precise. And shifting gears one more time, sustainability, sustainable development is very important to what we do at Shop Apotheke. At the end of September, we made the commitment to become net zero by 2040. So we are fully committed to bringing carbon emissions down to zero along the entire value chain by 2040. More about this also later in this presentation. So, looking at our two reporting segments I already mentioned on the left-hand side. Over the first nine months, Shop Apotheke's business continued to grow at double digits with 13.5 percentage points. Non-ARICs grew at a faster pace of around 18% and our sales over the first nine months of the year were close to 880 million euros. In the DACH region for the first nine months we generated top line sales of around 10%, non-ARICs grew by around 15% and our RX business for the first nine months declined by around 13%. The only driver, and you've heard this before, was still the RX bonus band. If you just look at the third quarter, our RX business didn't just stabilize, but it grew actually a little bit by 4% compared to our RX business in the third quarter, 21. And our international business grew at a faster pace, continued to be a growth driver for Shop Apotheke. Growth was approaching 30% and the total sales were close to 200 million euros. So before we now switch to our KPIs, we just want to take a moment to reflect on the position that Shop Apotheke has across the seven markets in which we operate today. In Belgium, Shop Apotheke is the undisputed market leader in the online pharmacy space with a wide and a growing margin versus the number two in the Belgian market. In Austria, Shop Appetike is the undisputed market leader in the online pharmacy space with an even wider margin versus the number two in the marketplace. And in Germany, Of course, Europe's biggest pharmacy market. We continue to be the largest and the most frequently visited pharmacy website in Germany. And I can say here again with a wide and a growing margin. In the other four markets in which we operate today, our business is indeed growing. But at the same time, we need to acknowledge we have not yet reached credible mass. We have not yet reached a market leading position. But rest assured, we are working on that. So I already referenced our KPIs starting on the left hand side. 8.9 million active customers, customers who have placed at least one order over the last 12 months by the end of September. An increase by 1.6 million versus September last year by 1 million versus January this year. And in Q3 alone, we added around 1.3 million active customers. Our net promoter score remained at a high level of 73. We succeeded in maintaining very competitive order delivery times and we're also very well positioned across the whole range of delivery options and we're going to talk more about this in a moment and the last KPI that we want to share. Our average order value was pretty much stable. We saw really just a marginal drop from around 61 euros a year ago in Q3 2021 to around 60 euros this year. I already mentioned that our RX business has stabilized and as a result of this our average order value has stabilized as well. So I mentioned when I referenced our customer satisfaction level that we are very well positioned across the whole range of order delivery options. I'm starting on the left here. Of course, today, the vast majority of the orders that are placed by our customers are placed through the Shop Apotheke webshop. Phamacy Unsp & Adr If a customer has an expectation to receive the order on the same day the order was placed, of course we cannot do this for all the markets or the metro areas in which we operate from our facility here in the Netherlands. So we do this through our Shop Apotheke Now program by collaborating closely with selected local partner pharmacies. And lastly, the latest addition to the Shop Apotheke family, First A. If a customer has a need to get an order delivered even faster, we can do this through First A in the metropolitan areas and then delivery would be in one hour or less. Okay, shifting to our web traffic. You are familiar with this picture, but we have added one indicator to illustrate a little bit better the underlying trends. So you see the blue bars, you see the green line, and then you see the, and this is new, the dotted red line. I'm going to walk you through all of these indicators one by one, starting with the blue bars. The blue bars indicate the traffic growth across all of our webshops and across all of our apps compared to the exact same week a year ago. At the end of Q2, At the beginning of Q3, you almost see a prototypical peak. Of course, this has to be seen against a backdrop of very low traffic levels. At the same period last year, for those of you who have been following Shop Apotheker for quote some time, at that time, A year ago we had to drastically reduce our performance marketing activities because we had constrained logistics capacities. Of course we are recycling this time now with very low traffic and as a result of this you see the peak towards the end Q3 you see that our web traffic growth level out between at between 10 to 20 percent and that is pretty much in line or pretty close to our top line development. The green line shows the total, the absolute number of weekly visits to our websites, to our app. And what you see here is an elevated level in Q1. Not a surprise, not a surprise to you because Q1 and also Q4 are the busiest periods for any online pharmacy. And then we see a little bit of a leveling off in Q2 and Q3, but of course we have looked at this in detail. This is purely driven by seasonality. And to take out seasonality a little bit of what we are sharing with you, we have added the red dotted line. The red dotted line shows you the rolling average weekly visits over the last 52 weeks. So in other words, we added up the weekly visits over the last 52 weeks and then we divided this number simply by 52. You see a steady increase. And again, that is once again broadly in line with the top line growth that we have seen. A moment ago, I mentioned to you that shopapotheke.com was the most popular pharmacy website in Germany. Well, I have to admit, I didn't tell you the whole story because you've already come to expect from shopapotheke.com being the most frequently visited pharmacy website in Germany. But in September, according to similar web, shopapotheke.com was actually the most popular, meaning the most frequently visited health website in Germany. Ahead of websites that offer general medical advice or the Robert Koch Institute, which of course was very popular during the COVID pandemic, or websites that offer appoint services. So in September, Shop Apotheke was the most frequently visited health website in Germany. We just want to illustrate that Schopp Apotheke in Germany, not just in Germany, but here we're talking about Germany, continues to expand and to solidify its position in the German healthcare arena. And the last chart I want to share with you before I hand over to Jasper to walk you through the Q3 numbers. According to Google Analytics, shopapotheke.com was also the most searched pharmacy brand in Germany. We're saying here by far, and I know it sounds like a broken record, but shopapotheke held the spot by a wide and a growing margin versus the number two in the marketplace. And with this, Jasper, I'll hand it over to you.

Thank you very much, Stefan, and good morning to everybody who's joining the call today. On this graph, it's the number of orders per quarter for 2020, 2021, and then the three quarters of the current year, 2022. In the last quarter, quarter three, we processed in total 5.4 million orders, which is an increase of one million compared to the third quarter of last year. The third quarter was somewhat soft, but still, of course, it's a significant increase. And also, if you would compare the current third quarter to two years ago, so quarter three of 2020, which was still the first and the full corona year, the increase from four to 5.4 is an increase of 1.4 million orders that we process or an increase of 35%. are able to welcome a lot of returning customers. And actually, the number that Stefan just quoted, the 0.3 million new active customers to our base, is a number that we are internally very proud of. But despite the fact of adding those new customers, this quarter we had a total of 85% of the total sales that were from loyal customers, returning customers, to our website. Not only to our website, to place an order. To the next slide, please. What this means for our numbers. This is the table going from sales up to and including the adjusted EBDA. But before I talk about the table in the footnote, we make very clear what the adjustments are and equal to what you have seen in the past three quarters. And equally, I explained it. The adjustments increased year over year significantly. only due to the accounting of 2021 business acquisition that we do as of quarter four of 2021. Apart from that, the other two customary items in the adjustments are related to stock options and a very small amount related to external The key thing of those adjustments is that they are all for the majority, the far majority, non-cash items. So of course our P&L reflects the correct and the best representation of the financial results. But if you look at the EBITDA, EBIT and net income, actually the adjusted EBITDA Phamacy Unsp & Adr and the nine month of this year, but later I have also bridges in explaining the latter two. In quarter three 2021, we hit a total 238 million and this year that increased by 19.6% to 284 million. We achieved that with a significantly increased gross profit margin that was year over year, three percentage points higher. of last year is actually impacted by a non-repeat of some negatives related to the corona assortment last year. And apart from that, we continue to see and benefit from better sourcing conditions and more media income. So three percentage points up compared to last year, but also 0.9 percentage points better than the first six months of this year. Then to the selling and distribution as a percentage of sales. This quarter it ended at 23.8% with an increase of 1.1% this point to the same quarter last year. And that is mainly as a percent of sales and this increase compared to last year is mainly last mile and the remainder is from IT and labor. And the interesting thing is compared to last year, We see of course inflation in cost. Our operational cost as a percentage of sales were lower than last year and marketing did not increase. So there's a lot of words. So let me summarize it again. The increase compared to last year is mainly because of last mile cost that increased and actually our operational performance that we can influence was even better than last year. And then a very important number on the S&D as a percentage of sales is the 1.7 percentage point is an improvement compared to the first six months of this year. Admin is basically hovering around 3.2 to 3.3 percentage of sales. Adding up all the numbers I just mentioned, last year Q3 was a minus 0.9% margin. This year is a plus 0.9%. It's an increase of 1.8 percentage points from minus two to plus three. It's an increase of five million. And moreover, this margin of this quarter The gross profit margin. On this slide, you see the increase of the gross profit margin from 25.4% after nine months last year to 27.4% this year. Number one of the building blocks is improvements in sourcing. Number two is a small number for the impact of net pricing and product mix after nine months. Roughly half is coming from net pricing and half is coming from an increased impact of our platform business models. Then there is mix mainly DRX OTC mix and the remaining relatively large block is again mainly related to the non-repeat of negatives related to corona that we saw in last year. To the right side again After 9 months but from the end of Q2 to Q3 there was an increase of the gross profit margin of 0.9%. Next please. Then the selling and distribution cost as a percentage of sales. Before I walk you through the changes I think it's also very relevant to take a helicopter view because actually from our perspective is quite a while ago. Imagine, for example, in Q1 2021, it was still in the full corona period. There was much more paper Rx. We hadn't MetApp in the Netherlands yet. Our core business still needed to move to the new distribution center, and we hadn't even the distribution center in Italy yet that we opened in the past quarter. But still, these are the numbers of the nine months of this year compared to the nine months of last year, but many things have happened since. If we start with marketing, marketing is generally our decision how fast we want to grow, balancing sales and margins. But in this comparison, as you see here, it's also relevant to note that quarter one 2021 still had a lot of paper. Our eggs did have a lot of corona and in quarter two, as Steven also just mentioned, we reduced our marketing because of our capacity constraints back then. More substantial remarks I can make on the shipping, which is the next one, because we Phamacy Unsp and we grow international even faster than we grow in the operational labor in this comparison minus 0.2 but as I already pre announced in quarter two and luckily we were able to realize it if you look at quarter three versus quarter three Related to IT. Most important to mention here on this slide is that compared to the cost as a percentage of sales after six months, which stood at 25.5, we lowered our cost by 1.7%. We increased our focus on efficiency and we also took out cost in order to achieve these numbers. What does it mean for our cash? We ended in our balance with cash and cash to be precise. And after the nine months of this year, you see the first two blocks together is that our operating cash flow was basically a black zero. It was 0.3 million. And then we invested for 44 million, which includes acquisitions, the opening of our distribution center in Italy, but it mainly relates to the core of our business, and that is investments in IT. The financing here is half interest and half related.

As we mentioned at the beginning of the call, this time we keep the strategy or the general business update pretty brief. We are focusing on e-prescriptions and then we're going to say something about sustainable development at Shop Apotheke. So starting of course with e-prescriptions, that's top of mind not just for you but for all of us. On the left-hand side, you see the graph. We are seeing a steady growth in the number of e-prescriptions. In this case, it's e-prescriptions filled by pharmacies. In parallel, that's something you're not seeing on this chart, but we're also seeing a steady growth of doctors that are issuing e-prescriptions. Last week, I just want to re-emphasize this again because we think it's really an important milestone. We passed half a million mark of e-prescriptions. At the same time, of course, we need to acknowledge if we would love to see the graph on the left-hand side to grow at a much, much faster pace or we would like to see an even steeper curve. Exactly today, I think two weeks ago, we went to a physician office in the Westfalen-Lippe region to see firsthand how are e-prescriptions working on a day-to-day basis. And we talked to a physician. She issues on average 150 to 200 e-prescriptions every single day. She does not issue paper prescriptions anymore. According to what she showed us, what she told us, e-prescriptions for her are working very smoothly. Patients, once they get used to them, they like them, and it did not just bring disruption, it did not just not bring disruption to her office, but it actually helped her to further enhance internal workflows or processes. For example, there is no physician assistant that has to run anymore after the doctor in order to capture a signature. So for her, e-prescriptions are working very, very smoothly. We at Shop Apotheke together with many other participants of course we try to convince more and more physicians of the benefits once you have adopted e-scripts of the benefits of electronic prescriptions and we are talking to regulators We're talking to the Gammatic. We're talking to a lot of other market participants in order to address some data privacy concerns that have been raised, but also to address questions that have been raised by physicians in terms of, again, what does this mean for their practices and for their day-to-day processes. These discussions, the discussions with all different types of market participants, they are literally going on on a day-to-day basis. I personally was in Berlin for a couple of meetings last week. I will again be there the week after next week. But this is of course not just done by me. A lot of individuals at Shop Apotheke are totally focused on making e-prescriptions a success. At the same time I cannot disclose exactly what we have proposed to the various players in this discussion right now. What I can tell you is when we outline the proposals that we have made, again, in order to address some of the concerns that have been raised over the last few months. I think the proposals are very well received, but I would, quite frankly, I think I would jeopardize the success of these conversations if I disclose too many details in public right now. Well, in closing, when we look at e-prescriptions, they are working smoothly. We are confident that they will continue to penetrate the RX market in Germany, will continue to see a steady increase of e-prescriptions, and we remain confident that e-prescriptions will be a very significant catalyst for shop apothecus growth going forward. Well, without any doubt, eat prescriptions and you can talk to anybody at Shop Apotheke and I'm pretty confident you will get a very similar answer. They are the top, top, top priority for everybody at Shop Apotheke. At the same time, we have some other priorities as well and one of the other priorities is our commitment towards sustainable development. At the end of September, Shop Apotheke Europe joined the growing number of large and small companies to commit to becoming net zero by 2040. We are fully committed to decarbonizing our entire value chain and to make sure that that we can, sorry, that we succeed in decoupling our business growth from our emissions. So in 18 years, in 2040, Shop Apotheke Europe will be a very, very different company from what it is today. Will be much, much larger, but our business growth will be decoupled from emissions, which will simply be zero by 2050. Well, we're not just talking about 2040. Our Sustainable Development Initiative was started two years ago in 2020 and we have already achieved some very tangible, some very hard benefits. We had in 2020, we had set out a target for ourselves to reduce Scope 1 and Scope 2 carbon emissions by 80% by 2025. As of the end of September, we can say with a lot of confidence and a little bit pride that we have already achieved Phamacy Unsp & Adr that we continue to establish ambitious internal goals, to continue to make progress and to rigorously also monitor our progress against these goals. We have compiled, reviewed and discussed our first very, very comprehensive ecological balance sheet for the first time based on the numbers for the first six months of the year. Going forward, this ecological balance sheet or sustainable development will be part of how we operate Shop Apotheke. It will become part of our forecasting processes. It will become part of our annual planning processes. It will become part of how we do things at Shop Apotheke. So I hope I succeeded in conveying to you that sustainable development for Shop Apotheke, it's not an empty shell. It's something that's very close to our heart. and it will continue to impact, it already has, and it will continue to impact how we do things at Shop Apotheke Europe. With this, Jasper, I think you'll close.