Redcare Phamacy Unsp/Adr

Good morning, everybody. Welcome from Zevenen, the Netherlands. It's 11 o'clock local time here. And Monica Ambrosi and myself are very happy to be able to share with you today's numbers. We will present them and it will be followed by a Q&A session, as always. Today, the first of August, is also the first official working day from Olaf Heinrich, the new CEO. And as of upcoming quarter three, Today, very happy that Monica is again here, just like past quarter. So presenting from here, indeed, the agenda is straightforward. It's the same structure as always, starting with the financial performance of quarter two and with that of the first half of 2023, an update on business and strategy, and then our outlook for the future. Financial performance and the Q3 Financial Highlights. Continued fast growth. And perhaps that's a little bit a soft title because actually our growth was 46% in Q2 and with that 34% over the first six months of this year compared to last year. If you go to an Apple and Apple comparison, Everything is still beyond 20%. The growth in Q2 was 25%, and with that, the first half of the year, 24%. The non-Rx growth, a KPI, for Redcliffe Pharmacy actually accelerated from the already above Free Organic without any acquisitions after six months. The driver of the increase is loyalty of our existing customers, but at the same time also an ever-increasing base of active customers. We as a company founded in 2001 were very happy with the milestone that we achieved in the second quarter of more than 10 million active customers. We gained this year alone, over the first six months, 0.8 million customers. Compared to the second quarter of last year, the increase was 1.5 million active customers, and we ended at an exact number of 10.1 at the end of June. Equally important, the Net Promoter Score indicator of customer satisfaction that we tracked carefully was ever higher. It was even above 70. While we are growing a shop apotheke really fast and continue to grow double digit and perhaps even increase our momentum, bullet number four is equally important. Major year over year Ibera improvement. We ended year two at a 3.2%, which was year over year and more on that later, an increase of 5.3 percentage points. And we ended the first half of the year at 2.8, which was a year For us, it's important also if you look at what, for example, DACH is reporting at the moment, even if you exclude mainly surface in both quarter one and quarter two, the DACH adjusted even a margin while growing 25% organically. And so a fast growth was already between five and 6%. So everything that we report today is for us a proof of our longer term and an adjusted EBITDA margin in the mid to longer term in excess of 8%. This is exactly what we are executing. Main service is included since middle May. We expect a full year impact this year for the seven and a half months of around 300 million and an EBITDA margin between 2% and 3%. The exact numbers for H1 were 60 million and both a net profit and an EBITDA of 1 million. The second tool Of course, a major contributor is the positive EBITDA, the adjusted EBITDA that we achieved. We also had the 29 million one-off related to the transaction with Kalenica. And there was also a part where you can see there was favorable timing and also some seasonality as to working capital movements, which will in part also most likely reverse in the second half of the year. Our estimate of what the second half of the year will bring, we were able to raise our guidance. Not our X, up from 10 to 20% to a growth of 20 to 30%, and an adjusted EBITDA margin raised to a range of a positive 1.5 to 3%, later more on the total guidance. Our fast sales growth continues. Over the six months, an increase of 33.8% for the total company, so 33.8% over the six months, 46% in the second quarter, and non-RAPs, fully organic, had a growth for the total group of 24.9%. The non-RAPs in DAG increased with 25.5%, and in international, Phamacy Unsp & Adr But how did we achieve those strong sales, Monika?

Thank you, Jasper. Indeed, as you mentioned in the highlights, the strong increase in some of our non-financial KPIs, including the promoter score and the active customer base, supported these strong results. We see that the active customer base increased by a constant 0.4 million for the past three quarters. taking us to an active customer base of 10.1 million by the end of June, which is an increase of 1.5 million over the same period last year. And over that period, the increase was seen across all of our countries. In terms of the measure of customer satisfaction, the Net Promoter Score, as you've already said, it's been at a high level of at or above 70. in the past quarter and also in the first half of the year. It was at 71. In fact, anything that is 60 or above when we talk about Net Promoter Score is extremely strong and a really strong indicator of very happy and satisfied customers. So the fact that for the past six quarters we have consistently been above 70 should speak for itself as to the strength of that. And then looking at the average shopping basket value, as in the first quarter, in the second quarter, there was an increase in that average of around one euro compared to the same period last year. Moving on to the total number of orders that were received and processed during the second quarter, it was again at a very high level. of 7.1 million, quite an increase over the same period of last year's, which was 5.8 million. And we, again, are seeing a continuation of this upward trend in this KPI. If we look at the share of repeat orders within the total, again, at a high of 84% for the third consecutive quarter. And again, it underlines how Phamacy Unsp& Very loyal customers that are extremely happy are supporting the strong results of the group. Phamacy Unsp& Yeah, thank you.

Great. So here all the numbers from sales up to and including the adjusted EBITDA and for reference and transparency sake also for reference to fully loaded EBITDA at the bottom. So the header of this slide is effectiveness, efficiency, I'm very happy that we included for the first time, as of the mid of May, also the sales and the total contribution of May service into the numbers. And please note that because of May service unit economics, which are prescription drug sales, so specialty RX sales with an attractive high average price and average order value, is below our average gross profit, but the inverse you see at the selling and other expenses as a percentage of sales. So some impact on lowering the total group gross profit margin, but at the same time also lowering, which is positive, the expenses as a percentage of sales. And actually, the impact on the adjusted EBITDA margin is negligible because the current performance of mainly service and the adjusted EBITDA margin of the Red Care Pharmacy businesses is roughly in the same ballpark, so on the logistic EBITDA margin having virtually no impact at the moment. So sales in the quarter from 287 million last year, an increase to 420 million this year, 46% up. In the first half of the year, we increased exactly with 200 million from 592 to 792 in increase The adjusted EBITDA margin increased at the same time in the second quarter from a minus 2.1% fully loaded adjusted EBITDA last year to a positive 3.2% this year and later in the riches we will dive a little bit deeper on the details. An increase of more than 5 percentage points. with already a strong quarter one. The total six months together with quarter two is leading to a change from last year minus 1.8 to a positive 2.8 this year, and that's up 4.6 percentage points. Panning the sales or multiplying the sales and the margin is bringing us to the adjusted EBITDA. Really noteworthy is that last year due to our adjusted EBITDA was minus six, This year it's plus 13, so that's an increase in one quarter year over year of 90 million while continuing to grow really fast. And in the first half of the year from minus 10 last year to a positive 20 million is a 32 million increase. And in reference to the fully loaded EBITDA, you actually see that the year over year increase is even more than from the adjusted EBITDA. And that's the fact that our adjustments have Phamacy Unsp & Adr Phamacy Unsp And over the first six months of 2022, our gross profit margin last year stood at 27.2. And we achieved an increase of in total 0.9 to 28.1. And this increase of 0.9 is basically the effect of an increased gross profit margin. And that's thanks to the hard work of our category management, our purchasing, our analytics, controlling, IT departments that all cooperated in improving the average margin and the total proposition to our customers with the most relevant and successful assortment. Total increase to 28.1, including Mayday service, is 26.5. The increase, if you go to the right side of the slide, of the Apple to Apple comparison of the gross profit margin in Q2 was 0.7, 27.8 to 28.5. And on this slide is the selling and distribution expenses as a percentage of sales. Last year, after six months, it was 25.7%. And on an Apple to Apple base, it improved year over year with, in total, 3.5 percentage points to 22.2. Three blocks are important here. Of course, it's clear that marketing as a percentage of sales is lower. I'm not saying marketing is lower, but as a percentage of sales. Please remember that last year we were also pushing really for returning to even faster sales growth. And this year we achieved a lot of sales growth. Equally important and making us very proud are the second and the third building blocks that you're seeing here. Because despite the fact that we are in an inflationary environment for labor and also for energy costs over the past years, you can see that the total of shipping and packaging was virtually equal to last year's percentage of sales on actually increased 0.1 percentage points. And you see that several initiatives and developments have worked together there. For example, you see that we work together with last mile service providers on pre-sorting the orders before we ship them to them. Phamacy Unsp & And you also see the benefits of us growing and the scale that we are achieving being successful across Europe. Phamacy Unsp & Also Monica already set the average basket value increase of a euro is helping to improve the numbers on this slide. Phamacy Unsp & Operational Labor same story is reflective of increased efficiency that we have been able to achieve in our logistics distribution centers all in all, an apple to apple increase. of 3.5% at this point. If you include mainly service, it's even 1.4% better, ending after six months at 20.8%. The 3.5% over the first six months is an increase in the second quarter of 4.3% at this point, what you see at the right side. There was a lot of margins, and if we then go to the cash flow side, please. We started the year on the 1st of January with 180 million of cash in cash equivalents. So that's in the definition of our cash, but also including short-term fixed deposits, for example. So the other financial assets. So we started with 180 million and we ended at 244 at the end of June. Building block number one of the four, the adjusted EBITDA of 22 million is resulting in a 90 million in flow of operating results over the first six months. Then a very positive working capital development of 58. But please note that the end of June was the favorable timing as to the payables position that we had both at the main service and at the core of shop apotheke. So a part of that will most likely reverse in the second half of the year. Phamacy Unsp & Adr Phamacy Unsp & Adr Switching from the finance to the general business and strategy updates, our highlights over the first six months. In quarter one already, we were promoted by MSCI to a triple A rating for our sustainability. So we already stood at a double A, a shop apotheker, but in quarter one, we were awarded with a triple A, which is the highest category that MSCI is applying. and with that we are according to their standards in the top four in our industry globally. So in the top four as to sustainability, social and governance. Also in this first half of the year, we rebranded Red Care Pharmacy after almost 20 years of shop apotheke to Red Care Pharmacy on the corporate level. We started a strategic partnership Phamacy Unsp & Adr We are happy that today is, as I said already, actually the first official working day of Olaf Heinrich as the new shop, red care pharmacy CEO. And also here, reflective of our valuation, we were promoted to the index. And then very important, the last bullet point, a bit more on that later. In June, and then later also a bit more in July, but on the 22nd of June, all the shareholders of Gematik, They announced the full support of making ERX the standard in Germany. On the 22nd of June, they said, now that there is the health card solution, we will support the doctors, the pharmacies when needed with the aim to have ERX available for everybody in Germany before the end of the year to be ready for the expected mandatory use of E-Script by the start of Monica.

Thanks again, Jasper. So starting off with the change of the new name and the corporate brand in the second quarter. At the beginning of the quarter, the AGM, this change was approved and then it was successfully executed during the remainder of the quarter. The official launch of Red Care Pharmacy occurred on the 13th of June, when at the Frankfurt Stock Exchange, where we are listed, the ticker symbol changed to RDC to reflect our new name. And this was also marked by a bell ringing ceremony on the day. At the same time, our new corporate website was launched. And this website not only reflects the new name, but also this new brand identity and logo. And then also a highlight of June simultaneously, we were on the 19th of June to be precise, we were again promoted to the MDAX family of indices following the high evaluation of Redcliffe Pharmacy. Just to remind everybody about why the new name, why the new brand, it's because we feel that it is a bit of reflection of who we are and what we do. And it is also a reflection of our vision that we are guided by on a daily basis as a pharmacy, which is until every human has their health. And to make this vision more concrete, our role as the one-stop pharmacy is to guide people through their health. Now, we also want to reflect this focus that we have on care in our local brands, in our local shops, which is why from the beginning of September, starting with Germany and Austria, the new shop or the shops, the existing shops will receive a new brand identity. But of course, the names will remain the same. So shopapatiyaka.com will remain the same, but they will now better reflect the new brand identity with the new Phamacy Unsp & Adr

The low points that you see there have to do with some vacations there. That's not really relevant there. What I wanted to point towards, but I saw it already covered in quite some elements reports this morning also, is as of the 1st of July, which is totally to the right of this graph, when the health card solution was introduced, you saw that the average of around 8,000 e-scripts submitted in total Germany increased despite the fact that also holiday is already a very significant increase of the uses of ERX. But of course, it's only scratching the surface of the total opportunity that's there in Germany. But it's a promising step in the right direction. It's also a clear reflection of the actions that have been taken by both the Ministry of Health, also in the draft law, and by the ,, which I alluded to already before. So nice increase, more to be expected most certainly in the second half of the year. Meili Service included in the numbers, as I said already, to remind you also here for the rationale of the deal. We are so happy with the deal that we are with a strong partner of Kaledica and now able to work together with Meili Service, who we are really seeing as having a loyal base of our X customers being experts and combining that with our expertise of being a pure e-commerce pharmacy player should lead to an even increasing proposition for our Swiss customers specifically. So really nice and we're getting started there in the cooperation in all kinds of aspects already. To be clear on the numbers, 300 million dish here, that's for seven and a half months, so even if you don't is included in our numbers and with an adjusted EBITDA margin at the moment between 2% and 3%. So very nice. One of the first things you could notice already is that at shop.ath.ch, our community service now, you see an increased assortment of Swiss-specific products. We go to the output and the guidance. It was already in our morning presentation But to make things clear and put it in total perspective. We as a company, we believe in the great opportunity of an online pharmacy in Europe, in the non-Rx part and in the Rx part. We also say that in our business, and we've stated that for years, we have a mid to longer-term adjusted even a margin guidance of in excess of 8%. And that is unchanged from So that's the point we are working towards. In the current year, we increased our guidance for non-ARICs, which was last year 90% of our total sales. So everything but ARICs, non-ARICs, to grow this year between 20 and 20, sorry, between 20 and 30%, quite much up from the 10 to 20% that we had as a challenge at the start of the year. With that total net sales of Shop Apothecary would enter between 1.7 and 1.8 billion in 2023. And the adjusted EBITDA margin already at the start of the year. We had the ambition for the first time in the history of the company achieve a positive adjusted EBITDA since the listing. We are increasing that now to a low point of 1.5 and a higher point of 3%. So between 1.5 and 3% of sales. and of course compared to the start of the year we will get more free cash flow because of main service we will get more free cash flow because of our higher sales and our increased margin but at the same time because the free cash flow definition is including in our case working capital fluctuations and the exact timing we didn't want to limit ourselves in and we want to be able to also in October, November, December, if needed, that we do what's best for the company in total. And that could be a certain timing as to inventories because of the dynamic situation And with that update of the guidance, we have come to the end of the presentation and we are ready to take the first questions, please.

Ladies and gentlemen, at this time we will begin the question and answer session. Please follow the registration link on the webcast page to receive dial-in numbers. Anyone who wishes to ask a question may press star followed by one on their touch-tone telephone. If you wish to remove yourself from the question queue, you may press star followed by two. In the interest of time, please limit yourself to two questions only. If you are using speaker equipment today, please lift the handset before making your selections. Anyone who has a question may press star followed by one at this time. One moment for the first question, please. And the first question comes from Alexander Thiel from Jefferies. Please go ahead.

Hi, Monika and Jasper. I hope you can hear me. Yep, clearly. Yep. OK, perfect. I would like to take my questions one by one. The first one is, it's very good to see that your efficiency and scale play out across all metrics. Could you talk a bit more about your future operating leverage that you see in the business for OTC and Rx?

Phamacy Unsp& Yeah, it's, it's, it's often also used as a sort of jargon had the company is aiming for scale or etc advantages of scale, but in our Phamacy Unsp& In our language. This is to us very concrete. It basically is that our fixed costs increase significantly less than at our sales are increasing. Phamacy Unsp& And and that's what we always expected and have been seeing over the past years also. And now we do good sales development increasingly so So scale is very clear. There are all kinds of costs, and whether it's marketing related or it's head office related, that will scale when you achieve fast sales growth. So that's there. And in efficiency, there are several things, but the one I would like to point out is that our two distribution centers are really running very well at the moment. Robust quality, quick delivery to the customers, and also in all kinds of other areas where we try to, while staying as a company as flexible as possible, to adopt our propositions as much as possible if that's needed. We try to also keep simple our operations, keep centralized what can be centralized. And if it's needed, we localize. But by keeping things simple and centralized, you also achieve efficiencies. And sometimes for that, you have to make some investments, which we did over the past years. with our guidance in the coming years to never be a straight line, but the direction where we're going is as clear as has always been.

Okay, that's understood. My second question is on your cross-margin bridge that you show on page 10. Just from my understanding, the 28.1% is excluding Mediservice, so is it calculated excluding the 60 million sales? Phamacy Unsp & We can calculate basically the joint venture cost margin. Phamacy Unsp & And also, what is your expectation for the cross margin for the full year with a full six months contribution of of maybe service. Thank you.

Yeah. Yeah. Phamacy Unsp & First, I can confirm. It's exactly what you're saying. So the 28.1% is is the core business of shop uptake. Phamacy Unsp & And that's the, the year to year increase of I say it now by heart 0.9% Phamacy Unsp & Adr It depends on how fast the oil parts of us are growing, how fast they are growing, but that's an indication of what the impact is also going forward.

Okay, that's understood. Maybe a last one on the free cash flow. I understand that you didn't change the guidance and you gave the reason for that, but could you comment on the working capital needs for needy service? Do you also expect some kind of inventory stack up in the fourth quarter?

I'm inclined towards saying, okay, we never comment on the individual operations, but in this case, I can only comment that I think there is less of seasonality at MediService than we are seeing in our own B2C business. Yeah, because it's more related to chronically ill patients, that's more stable towards over the year, except for holiday periods and the month, and each month, but not like what we traditionally pre-COVID used to see in some of our major markets with the cold and flu season as more in the first quarter of the year, what you are referring to. And we need inventories for that at the end of quarter four. So I think directionally you should expect less or not at all that seasonality for the many service business.

Okay, thank you.

Thank you, Alexander.

And the next question comes from Aisha Noor from Morgan Stanley. Please go ahead.

Good morning, Jasper. Thanks for taking the question. The first one is just on the complaint you filed with the EU Commission with your peer against use of VGK. How successful do you think you can be in this court appeal, given your mixed success with regulators in the past? And what are you hoping is the ideal outcome here? And my second question is, kind of related to the question around profitability over the midterm. Do you have any outdated thoughts around this over 8% margin expectations? I think you previously mentioned that the Mediservice business should maintain a lower margin versus the core in spite of the good unit economics. So the 8% would imply your ex-Mediservice could deliver upwards of 10% EBITDA margin over the midterm. Is this the right way to think about it? Or do you think you can improve Mediservice profitability over time as well?

Thank you. Yeah, thanks. Yeah, two very relevant questions. Thank you. The second one, yes, I can confirm. That's exactly how you look at it. The only thing I can add there, it's a little bit mathematical, what you're doing now, talking about the main service impact, because actually from the main service corporation, we also will have an improved SHOPCH performance and overall the cross-fertilization. So there could be a quite different margin profile of main service going forward. But apart from that, what you are stating, that we will compensate the lower than 8% margin in the core of many services, that is fully correct, Aisha. So with that to the first one, the complaint. Yeah, Monica, I will also take this one, but that adds a few . It's in the basis very simple. It is a core principle. the German people to select the pharmacy of their choice. Now there is a new methodology in addition to the already existing paper printout of the QR code of the Gimmatic app, and that's the health card. So that's also possible to use as a patient in Germany. But technical experts say it's not at all difficult to also use this card easily with your smartphone and order online. Order online to a physical pharmacy that you don't have to go to the pharmacy first before and you can only pick it up or to an online pharmacy. And that last part is however at the moment not included. At the moment it's only that you have to walk with your card to the pharmacy in order to get your prescriptions. Method number one and number two stay in place. But we basically say this is not the best solution for the people in Germany. You also want to open up the health card solution for easy Phamacy Unsp & Ordering online and that's now the online method is discriminated versus the physical methods with the with the cards and that's what we that's what we emphasized in in asking for an adjustment of that in the in the respective law.

Great, thank you.

And the next question comes from both from Bada Bank, please go ahead.

Thank you for taking my question. Congratulations to us on the impressive results. I would also like to ask two questions. We'll start with the gross profit follow up. Thanks for building the bridge here in your presentation. But more general question, what would you say is the data of the Eric's product gross margin versus the non-Eric's product gross margin, or in other words, which impact should we calculate on the gross margin, given that the ERIC share should increase going forward. So a bit more your thoughts on that would be helpful. Thank you. And a second question is on the private labels. RedCarrot is now the new name of the group, but it's also the umbrella name of your private label assortment. I know this is still Phamacy Unsp-Adr

Yeah, Rx and OTC have a quite different profile in unit economics. If you summarize it and make it simple, generally with Rx you earn more euros for euro cents bottom line. So Rx is having attractive unit economics. But because of the relatively high value of Rx, gross profit margin as a percentage of sales is generally somewhat lower than OTC is. But at the same time, your expenses will also be leveraged by the higher sales. So that's basically what it is. So if there is a significant increase of our X, it will mathematically lead to a lower gross profit margin as a percentage of sales in our total numbers. It will also improve our expenses If you want to make a scenario of our future, you always have to take those two into account. And then the growth on Rx and the growth of non-Rx. And then the sum of the two is what the company is looking like. Yeah. Yeah. But it is how it is. Yeah.

And the second part of the question I think was related to Red Care as a private label.

Yeah. Yeah, thanks for that indeed. We have, by the way, we have four private labels, DoDry, BeaVita, Skintish, and RedCare. RedCare is really a core private label for the core of our proposition as a pharmacy. I think if you want to be a very successful retailer that we are totally convinced that besides the very strong A, B, and C brands that we are having and that we are known for, it's also important to have a strong Phamacy Unsp & Adr

Thank you, and I apologize for the bad line. Sorry. Thank you.

Thank you for the questions.

So the next question comes from Christian Saales from Hauk Auf Euser Investment Banking. Please go ahead.

Good morning also from my side, and congrats to the fantastic results this morning. Just one question left from my side, and this is on marketing. So the marketing ratio is grouped by almost 300 basis points year-over-year in the first half. So my question would be how much of this is really driven by the relative weakness of your competitors? And should we expect a sequential increase in marketing costs again in the second half? And then the second question on this topic, what would you say, how aggressive are you already promoting the ERX at the moment? And should we expect another rebound in marketing spending also going forward in 2024 when the ERX is going to be mandatory? Thank you.

Yeah, thank you. I think in looking at the yearly improvement, you could also say perhaps we are at a more normalized level now compared to the more situation where we were pushing last year in marketing. That's also explaining, I think it's reflective of our customer base and reflective of the strength of our propositions that we're having, that you're seeing improvements there. There's also momentum on the market. I don't comment, and I hope you understand, on competitive developments, I can only tell you that we had double digit growth in each of our seven countries. We improved our margins and also marketing as a percentage of sales. I would say by heart also each of the seven countries, but at least in our main markets for sure. So if it would have had any impact, then I mean, on total level of shop upper taker, that's not even that relevant. And this will also not impact or change in the second half of the year, but still we look at it always, what is the best thing to do? So it could very well be that in October or November we increase marketing or decrease, etc. What is key to understand is we did not reduce our marketing, but our marketing as a percentage of sales improved. On promoting ERX, that's too much forward-looking for me. It depends too much on the scenario and we have all kinds of scenarios that could take place. Does the end consumer understand? Is the government informing? Do we need to inform? It is all kinds of possibilities that I would say we are already so marketing driven as a company and specialized there that it will largely also be a shift of our current marketing instead of an add-on. And I think the building of trust for non-RX customers and the loyalty that we are seeing and the return rates, as Monica talked about, They are actually all also, let's say, nice starting points for when there is a possibility to finally easily also order the prescription medications in a way that is nice for the patients in Germany.

All right. Thank you very much.

All the best. Thank you.

The next question comes from Olivier Calvet from CreditSys. Please go ahead.

Yes, good morning, Asper and Monica. I have a couple of questions on profitability, please. Just, you know, you've given us the new EBDA guide for this year. So firstly, you know, it would be useful given the integration of many services to get kind of the building blocks or how you think about building blocks of that guidance. So where should we expect gross margin, SMG and admin as a percentage of sales? I mean, would you be comfortable with 26%, below 21% and below 3% would be the first one?

Phamacy Unsp & Now it's clear we want to have the flexibility there and that's too much in the details also for us to disclose and we are giving top line. Phamacy Unsp & And media guidance and even pre cash flow guidance as a company, but what we do in between we don't give guidance on yeah.

Okay, fair enough. And then I just wanted to follow up but, you know, similar question to be honest, but, you know, maybe you can add a bit of color there on maybe an updated answer on the building blocks of your long term guidance now with Mediservice. I mean, would you be comfortable quantifying anything on gross margin S&D admin or not at all?

I think that is too much for today's calls, but it's also not that difficult. And I've shared that and also other colleagues of the company in many occasions. But I think perhaps the best answer to your question is if you already look at what at the moment, 80% of our sales are coming from DACH. DACH is growing over 30% or over 25% on our organic base. So very much growth also. growth investments we are having in DAG at the moment still. And now already we are operating there in an adjusted EBITDA margin between 5% and 6%. And I would say that should give quite a lot of comfort about limits to low-income guidance. I think that's really the best answer, I would say. And also, if you look at our international segment, where our growth accelerated to 28%, last year it was a minus 10% adjusted EBITDA margin in Q2. It's now a minus 5%, so it was halving there. So you see the same thing happening there. So what are the building blocks? The building blocks are the same as what we achieve now year over year. It's across the entire P&L where you will both see you need to select the most effective investments that you're making, focus on efficiency, on a good gross profit margin, and efficient use of your costs and scale and loyalty.

OK, that makes sense. And then just the last one on, you know, how you're thinking about the phasing of e-scripts this year. I mean, there's been a couple of questions on this, but your EBITDA guidance implies you have some wiggle room in terms of marketing investments in H2. So I'm just wondering if you think we should expect those, whether concentrated in Q4 or already in Q3?

Yeah, Monique, I also take these questions, again, financial questions. So, yeah. Sorry. In answering your question, we are not aware in Q1 or Q2 that there were any significant negative or positive non-recurring elements there. The result that we reported in Q1 and Q2 is the result as it is. And what we are now doing is that we are significantly upgrading our guidance with a low point of 0.5 down to a low point of 1.5. And there is, as you can see in the number, Flexibility. Perhaps we need flexibility to better execute. Perhaps there's something happening on the market that we need. It's a dynamic market still. The overall world is dynamic and that should be looked at in the range that we are given for the second half of the year. So the key point is we increased our expectations for the year. It's a clearly positive number and we want some room just to reflect the dynamics of our business and also keeping the flexibility if we need any flexibility. But it's not that we are aware of certain cost increases that will, for sure, bring the current margin down.

And the next question comes from Jan Koch from Deutsche Bank. Please go ahead.

Yes. Hi, Monika. Thanks for all my questions. My first question is on your DAF segment. What were the biggest contributors to the strong sales performance in this segment in Q2? Was it a further increase in the online penetration, further market share gains, or a normalization of the LRG business following subdued demand in recent years? And in relation to this, the second question is on your new non-ARIC sales guidance. What gives you the confidence that you can keep the strong sales momentum in H2, given that your comms are getting tougher, at least in the flu business? And then finally, on your underlying gross profit, you mentioned that your underlying margin benefited from 120 basis points due to a more favorable product margin. Does this include any price increases from your side?

Phamacy Unsp, yeah, not only it's an international, which is our case, the Netherlands, Belgium, France and Italy. So in all seven countries we were growing and certainly the first question significantly north of 20% in the second quarter. I think you can only achieve a growth and the overall P&L numbers as It's a sort of momentum in DAG. There's nothing peculiar and it's across the countries in DAG that we are seeing there. As to market share numbers, I prefer to not comment on that because there are no official numbers, though there are some indications what the total market did which could lead to certain conclusions, but it's still, it's no factual information for me. So I can only look at our own numbers and in our own numbers, We are seeing that we are continuing to increase our base of active customers in Germany, that the customers are very satisfied and that we have a great share of loyalty. And that's what I'm seeing in our numbers. And that's also actually making the bridge to your second question. What is giving us the confidence? Well, it's exactly that. It's the way how we look at what the customer behavior is, how the reactions are to our proposition and to our marketing that we are applying. and we try to then make the scenario of the second half of the year and including that estimates we felt comfortable about the race of the full year guidance. Or in other words, to make it more simple, we don't see any slowdown at the moment or any one of events like there was a big season. But it was at least not the driver for our performance there. It was overall. As to the product margin, can you please remind me what the question was, the third one?

Yeah, sure. So you mentioned that your underlying growth margin benefited.

Yeah, that allows me to comment on that. If I'm reading in the newspapers or with some more specialized Phamacy Unsp & Adr Phamacy Unsp-Adr

Hello, Monica. Hello, Jasper. Just one follow-up question. Hello. Just one follow-up question on the appeal you filed. Did I understand that from your answer correctly that you stated that there are technical experts who suggest it would be easily implementable for online pharmacies to have access via the electronic health card? Did I understand that correctly?

The core of the complaint is that we now say, hey, with method number one and method number two, you can clearly choose whatever pharmacy you want to go to as a customer, as a patient in Germany. That's clear. Now there's a third methodology, and that is the health cards. But in the health cards, it is not made possible that you can also easily order online. So you have to walk to a pharmacy. with that. And what I understood from the experts, we cannot do that alone, because that is, of course, the technical infrastructure that is by the government and by the GAMATIC, that it is not the most challenging and rocket science part to also make that possible. So technically, it is possible, but I cannot tell you how much effort that will be or not. It is not like, hey, this is not possible because technically it's not possible. It's at the moment something that is not in scope, and we think together with some other industry leaders. We think, taking the perspective, this is not what is in line with the law, where there should be free choice for the end patient in Germany to select whatever pharmacy they want to go to, whether it's off or online.

All right. Thank you.

And the next question comes from Chris Yonen from HSBC. Please go ahead.

Yes, thanks for taking my question. A quick one on ERX. I assume you would not want to comment on how many scripts you have processed in Germany. I'm just curious if you can say, for example, in July or in the recent weeks, if your own trends are sort of similar to the moving average you have shown on whatever chart, 19, it is as far as the growth is concerned.

Yeah. Phamacy Unsp& I don't want to answer on that, Chris.

Thank you. Phamacy Unsp& In the interest of time, we have to stop the Q&A session and hand back to Jasper Ehrenhorst.

Yeah, thank you all very much. Thank you, Monica. Thank you for all the listeners for your questions. Again, I repeat how happy we are to be able to report on behalf of the entire company, Red Care Pharmacy, today's numbers to you. Thanks a lot for your very high interest for Red Care Pharmacy. And with that, I would like to close and looking forward to stay in touch with all of you. Have a nice day.