Redcare Phamacy Unsp/Adr

Yes, a very, very welcome to everybody. As you know, it's my first time as CEO of REDCA. And I'm really looking forward to having this meeting together with you. And I think the timing is perfect because we have great numbers on the one hand. We have also great development on the other hand. So looking forward to having a great Q3 presentation together with my colleague Jasper. So if we look into today's agenda, it's pretty straightforward. First, we would like to talk about financial performance and then give an update on business and strategy. And the focus here is on ERX and then outlook and guidance. Next slide. So if we talk about the financial performance, we can see in the nine month great development across the entire P&L. If we start on the sales side, we can see Phamacy Unsp&Adr Phamacy Unsp&Adr which shows Q3 has even been slightly better than the first half of the year. If we look into the non-Rx, we can see that's even a little bit higher. So we have 28% and 27% for the first nine months of the year. If we look into the development of the customers, I mean, we are gaining active customers. We have done this over the last, A couple of years, but also in this quarter, we gained 400,000 additional active customers, ending up now on 10.5 million active customers. If you look year on year, we have added 1.6 million active customers. And at the same time, we kept the Net Promoter Score above 70. But we are not only performing on the, let's say, customer or commercial side, but we are also happy to report Our adjusted EBITDA for Q3 is 3.2%, and year-to-date it's 2.9%, which is 4 percentage points up to the period last year. And also important to say, this happens across the entire components of the P&L. And of course, that leads to a solid cash position. We have for the first nine months of the year a free cash flow and a cash balance well above 200 million. We can confirm the raised guidance, which we raised already in the middle of this year, for the full year 2023. That means a non-array excess between 20 and 30%, net sales 1.7 to 1.8 billion, and adjusted EBITDA on 1.5% to 3%, and a free cash flow from minus 20 to plus 20 million. And I think Jasper will later elaborate a little bit more on that one. The last point I would like to make is on Mediservice. I mean, I mentioned that already earlier. It's our strategic partnership, and it's focused on this market, and here everything is on plan, and we are really happy about this development. If we can go to the next slide, please. Look, I mean, we have double digital growth across the group, as already mentioned. I mean, there are two things I would like to point out. If we take out the Mediservice, you can see that in DACH we have 24.4% sales, which I think is a really good number, outstanding number, and even being topped by our international sales showing 28.7%. If we can please go to the next slide. What we can see is the strong development on our number of active customers. I mean, 10.5 million is a really good starting point also when we think about going into the ERX. And what you can see is in the quarter after quarter, we are adding a substantial number of new customers and a number of active customers. It's 400,000 in this quarter, but also in the previous quarters had been a similar number. But it's not only building the customer file, it is also about having happy customers. And therefore, we are really very proud of our NPS. This is how we measure customer satisfaction Phamacy Unsp & Adr

Thanks a lot, Olaf. So with all those new active customers, how many orders did we do? Well, at the right side of this graph, you see that in total we processed, in quarter three, 7 million orders. And 7 million orders is 1.4 higher than the 5.6 million orders that we did last year. Of course, you see in the graph for all the year the typical seasonality of an online pharmacy, or at least of us, where you see a very strong quarter one and quarter four, and you see Phamacy Unsp& So 7 million orders that we processed were actually, despite the already mentioned significant gain of active customers that ODAF talked about already, but we're coming from 86% and that was an increase compared to the most recent quarters. 86% was coming from returning customers, a reflection of apparently we do something that satisfies our customers. You can go to the next slide, please. Because with all those orders, what are the numbers? To not repeat what Olaf said already at the start, I would like to begin with the sales in Q3. So we increased our sales to 476 million exactly in Q3 this year, which was an increase of 67.1%. Then immediately going to the adjusted EBITDA margin, because the full consolidation of the service, which is impacting both the gross profit margin and adjusted selling and distribution expenses. And I will talk about that later. But first, go to the adjusted EBITDA margin, because they are actually the impact of major service is only small. Actually, there is a smaller downward impact of major service because major service is operating at an adjusted EBITDA margin and even margin between two and 3%. So actually, despite the fact that there's the full consolidation 4 in Q3 last year to 3.2 this year. And if we then go to the year-to-date number, the adjusted IBRA was minus 1% after nine months last year and is plus 2.9, so an increase of indeed four percentage points year over year. Then going to the absolute adjusted IBRA, so one line lower, last year Q3, 1 million, This year, 15 million, an increase of, it's saying here, 14 million routers. Last year, the first nine months, minus nine, an increase of 37, sorry, an increase to 37 of 46 million adjusted EBITDA. To us, this is the most important line as to profitability, the adjusted EBITDA, but for full clarity's sake, there's also the fully loaded EBITDA as the bottom line of this table, and there you actually Phamacy Unsp & And that's because of the rapidly phasing out of the bookings because of the non applicability of either is free related to the business acquisitions, we did in 2021. Phamacy Unsp & I see the footnote it's a business acquisition 2022 but it should be 2021 so just a significant improvement very significant improvement and a fully loaded even even 10 million more improvements. Then in the gross profit margin and SMD, and later more details about the drivers, but SQ3 is the first quarter where May deserves is fully consolidated. And you see that our gross profit margin is standing at 23% for the total group, which is 5 percentage points lower than last year. And the SMD is standing at 70%, which is 7%, 7.3% even better than last year. So all in all, adjusted EBITDA minus 1% last year after 9 months and plus 2.9% this year, year-to-date. Please to the next one. One additional slide here, not only talking about the year-to-date numbers that I already just set for the total group from minus 1 to plus 2.9%, but also this slide to emphasize the segment that we report on always and all the details are also in the interim report as always. The DAF segment 1.4 to 5.2 and actually if you would strip out maybe services will be even above 6% so growing organically 24% in DACH non-organically 67% in DACH but we're also improving our margin by four percentage points there and what is also something that makes us happy as a company at the moment is the execution of our We are growing fast. And in the Netherlands, Belgium, and France, and Italy combined, we actually halved our negative EBITDA margin. They are 40% lower adjusted EBITDA margin negative than the year before from rounded minus 10% to minus 6%. Quickly to the next slide, please. That's the gross profit margin bridge. In black, there are the numbers as I showed already in the table and are any financial statements. So the gross profit margin after nine months at 25.2. No, sorry, I have to say, yeah, 25.2, it's in the P&L. And 23%, I quoted that number already in the third quarter. But then looking at the underlying developments of the excluding mainly service business, and you see that we improved from last year after nine months, 27.4. We say again, we were able to report improvements in our gross profit margin because on an Apple to Apple base, we are 80 basis points better. And that is driven mainly by improving the product mix of the products that we are selling to our consumers. And the development in Q3 is comparable to the year to date number. So gross profit margin improvement. Let's go to the next slide. The same setup here with the reported number in black So marketing improving lower as a percentage of sales compared to last year. But then the other two blocks are also really noteworthy to point out. So despite the inflationary pressure on gas on increasing labor costs, you see actually that we succeeded to have a lower last mile cost as a percentage of sales as a total company and also lower operational labor as a percentage of sales compared to last year. Very happy with the developments here. So that makes me come to the next slide, which is the cash flow bridge. As always, this is including everything, also short-term deposits, et cetera. So cash and cash equivalents. If you look it up in the balance sheet, it's in cash. And it is 95% of the other financial assets. But this is cash. At the start of the year, we had 180. And at the end of quarter, we increased this by 46 million to 226 million. That's the numbers. And I'm happy to hand it over back to you, Olaf. Thank you very much.

So now we would like to talk about business and strategy update. As I said earlier, a quick update on the branding, but then the majority of the focus should be on the e-script. Can please go to the next slide? I mean, as you know, we successfully relaunched the brand on the corporate level. So the Red Cap Pharmacy brand, and we received a lot of positive feedback from all of the stakeholders. And as a consequence, we have done this now also on our workshops in Germany and Austria, incorporating a new look and feel, and at the same time keeping the local hero names. And overall, we see there's also a positive feedback from our customers. And you saw the sales development in Q3. So overall, it looks very well. It was very well received from our customers. If you can please go to the next slide. Yeah, I would like to highlight two points. The one thing is we see an increased acceptance among healthcare professionals in Germany. on the e-script. This is pretty clear. Numbers are going up. And the second message is e-scripts will be mandatory beginning of January 2024. So those are two really great messages. Let's look a little bit more into the details. I mean, we saw that the number of scripts being issued by doctors are going up. Last week, we even had more than 100,000 scripts on one day. But to me, more or at least equally important is that the number of doctors Phamacy Unsp & Adr So, but really great development on the doctor's side. And then the second topic, e-scripts being mandatory. I think it's important to point this out. We don't need any further regulation or something like this. So this is based on the PDSG from 2021 and has been reinstated by the Ministry of Health. Beginning of next year, e-scripts are mandatory in Germany. So that's very good news overall, if we look into the market. If we can please go to the next slide, let's see what that means to our business model. Yes, you know there are different ways to redeem an e-script. We have on the one hand the Ematic app. It's a digital solution, but it has one hurdle. You need to have the EGK, which is the German physical health care card, plus your PIN. And as we all know, almost nobody has the thing. So it's an option, but it's a limited one. And then the second way to get it, it's really the paper printout. So you receive the printout from the doctor, and then you can use the QR code. And that's what you can do currently. Scan it into our app, and then we can fill the script. It's a non-digital solution. It happens on the request of the patient, but it works today. And then there's a third one. which we call the EGK plug-in solution. How does it work? I mean, the patient after having been at the doctor has to go physically into the pharmacy and to present the same card they are using at the doctor's site and have to plug it in into the card reader of the local pharmacy. Here you don't need a PIN and therefore that's a pretty good way to do the business for brick-and-mortar pharmacies. The only thing, it is discriminatory for online pharmacies because, as you can imagine, I mean, you cannot plug in this card, you can't send in the card to us, something like this. So, at the end of the day, this solution clearly takes away the patient choice, the freedom of choice on a pharmacy level. And as you know, that is a fundamental in Germany, but also in most of the European countries, that's the free choice of pharmacy. Phamacy Unsp&Adr to the pharmacy or if you live in rural areas I mean sometimes it's 10 kilometers or more to find a way to the pharmacy so it's really taking away freedom of choice and that is something of course which is not acceptable but the good news is if we please turn to the next page we have developed a solution for that a fully digital solution so we call it the EGK mobile solution which is the digital twin of the plug-in solution for brick-and-mortar pharmacies. How does this work? So you download the app for pharmacy, can be a brick-and-mortar pharmacy, but of course can also be an online pharmacy. Then you present the same physical card in front of your mobile. The mobile is reading that card via NFC technology. And then the pharmacy sees all of the scripts in the app. And then you can, as a customer, you can then choose different services. If you're with an online pharmacy, you can see in terms of if you would like to add something to the basket or different delivery options. If it's a brick and mortar pharmacy, you can look into is the product available or agree on a pickup or something like this. And overall, this is a solution which works for doctors. This is a solution which works for pharmacies, for all pharmacies. And of course, it's a solution which works for consumers. because by the end of the day it's the real first application or let's say use case of the eScript in Germany which is full digital and has added value. If you think about what I explained earlier, if you're immobile or if you're old or elderly or you live in rural areas, you can call your doctor. The doctor can, let's say in the case of a repeat script, the doctor can issue the eScript either without seeing you or by having a video chat with you, then the script is on the e-server and then you can just attach the card to your smartphone and then you can choose all of the options. Delivery from brick and mortar pharmacies, as well as our services as online pharmacies. It's a full digital way and works for everybody. I think this will really help also the acceptance on the e-script in Germany. Let's have a look into the status. Where are we right now on this? The good news is no statutory changes are needed. I mean, this can all happen within the existing legal framework. We are in ongoing talks with Gematik, the Ministry of Health and other stakeholders on data security, for example. And by the end of the day, this is supposed to be a product of Gematik. From a technology perspective, we are ready. But again, we are in talks with Gematik. So purpose is that this becomes an official Gematik product. If we think about timing, our target launch date is the end of this year. And why is that? Because beginning of next year, eScript is going to be mandatory in Germany. And this is a discriminatory freeway for patients to act in the German market. Phamacy Unsp & Adr

We are at the same time then here actually having the guidance for our current business, which is still excluding ERIX. So ERIX is at the doorstep, but in the current year, we actually are also delivering numbers that we are very proud of to present to you. On August 1st, we increased our guidance for the year 2023 significantly and with the numbers of today, it will be no surprise that we reconfirm those numbers. But to give a little bit of additional color, the non-Rx growth we raised from 10% to 20% is old news to 20% to 30%, and we are nicely, totally on the midpoint of that performance over there. If we go to the total sales, where we have the guidance, have a guidance of 1.7 to 1.8 billion, with the visibility we have at the moment, we have the expectation that we will end at the very upper end of this guidance that we provided between 1.5% and 3% we have in total and actually we expect to end here also for the full year on the upper end of this guidance. Pre-cash flow the midpoint around zero with the range because there are always significant fluctuations also working capital because we want to anticipate on stocking inventories when we think that is a good moment we have the winter before at the end of the year with free cash flow, all I can say is that it is unlikely that we will end at the lower end of the guidance. Okay, having sat and confirmed this guidance for actually the full year, I always repeat that, and perhaps also with the indication of the numbers that we are achieving in DACH, it's giving you increasing comfort that we above 8%. That's actually everything on the numbers, I think, in the update. Yes. So are there any questions?

Our first question comes from Alexander Thiel with Jefferies. Please go ahead.

Hi, Olaf and Jasper. Good to see you. I hope you can hear me. A couple of questions left from my side. I would like to take them one by one. My first one is on the current run rate of the OTC business. Is there any reason this should be lower in the fourth quarter? I mean, you already indicated you will be at the upper end of your guidance, but the fourth quarter is usually your strongest quarter. And attached to that, looking at the gross margin run rate in the third quarter, is this the new run rate going forward where we see now a full kind of consolidation of midi service for a full quarter? And also, in your financial income, there was a one-off effect, if you can touch on that for the first question. Thank you.

Good morning again, Alex. Thanks for your question. Yeah, a strong quarter in Q4 in absolute terms, but last year also. So actually, no impact on the growth percentage. Overall, top and bottom line, where we stand after nine months, we are not aware of any significant Phamacy Unsp & Adr The gross profit margin, indeed, if you take out some seasonality, which generally is more or less rounding, then quarter three is the first quarter with the full impact of main service. So actually those not only gross margin, but also expenses set of sales are a good point, I think, to take as a base and then to build upon that one. Then you talked about the one of any financial expenses, indeed. Phamacy Unsp & Yeah, it was not an highlight to us, despite it is a significant gain of more than 12 million to me that is that is actually mainly accounting. It's a non cash impact, but in the in this quarter we had a trigger to re evaluate our Phamacy Unsp & Conditional Phamacy Unsp & liability there. related to the acquisition of Copulse and at the moment we released the discounted earn out. So basically saying at this moment we don't expect that we need to pay an earn out related to Copulse. Of course there is also a trigger to look at the total Copulse acquisition and we carefully did an impairment test and everything related to the assets we have and then we clearly come to a value which is higher than that we have in our books at the moment. Phamacy Unsp&Adr Phamacy Unsp&Adr

that you would also roll out the solution without the approval of the BMG. Now with an official gematic product, it sounds pretty good in my opinion, finding a solution with the BMG.

Maybe you can talk about... Well, I mean, I understand the question, but on the other hand, I would like to not really give any details into ongoing discussions with the Ministry of Health, because that's not simply the way it works. But again, I can try to reinstate, I mean, those talks are very positive, because on the hematic side, but also with other stakeholders, they see the advantage of that solution. But again, by the end of the day, the idea is that this becomes a product following those and are in contact with the different stakeholders. And that's actually all I can say at this moment in time. Sorry for that.

All right. Thank you. Back into the queue.

Our next question comes from Chris John with HSBC. Please go ahead.

Yes. Thanks, everyone, for taking my question. So first, coming back to the EGK NFC solution, I understand that this is the same solution that Doc Morris has. Do you have to pay them anything for the use or is that not going to be a topic? That's my first question. And then on the Phamacy Unsp-Adr Phamacy Unsp-Adr Phamacy Unsp-Adr Phamacy Unsp-Adr Phamacy Unsp-Adr Phamacy Unsp-Adr Phamacy Unsp-Adr

Maybe if I can start on the first question. I mean, I don't know anything about the DocMorris product. I mean, you clearly have to ask DocMorris. I mean, what we have is an initiative of the European Association of E-Pharmacies. And within this body, we are trying to convince the Ministry of Health of this EGK mobile solution. And here we are making, I think, very good progress. Phamacy Unsp& How and that is supposed to be a solution, which then becomes a product, hopefully, and then can work for all of the pharmacies for online pharmacies as well as for brick and mortar pharmacies. Phamacy Unsp& So, and then how the individual individual setup looks like on our side or on the dog Morris side. I mean, the most I can't Phamacy Unsp& Tell anything about and on our side and we are currently working on how We want to incorporate this solution into our product. We are already testing this. It looks pretty good. But again, the approach towards the Ministry of Health and Gematik is an approach via the association. And it's an ongoing process. And second question, I would like to hand over to Jasper. OK.

Yeah, perfectly answered. The whole acquisition and the whole business case of first aid later in NK2 called PULSE is totally related to ERIX. And the fact that ERIX did in the end not become the nationwide standard as of the 1st of January 2022, and at the moment it's starting to increase significantly as Olaf said, but we are not on the level that we expected, that is all what was triggering and reassessment of the earn out.

Great, thank you.

Our next question comes from Isaiah Noor with Morgan Stanley. Please go ahead.

Good morning, Olaf and Jesper. Thanks for taking the question. My first one is Mediservice. Given the sales results year-to-date are trending a bit better than past our expectations and you've now had a few more months to work with this organization, Do you have any new thoughts as to how the growth outlook for this business could be for, if not next year, then maybe the mid-term? And are you happy with the prior assumption for the previous business because of single-digit growth rates? Or could we be looking at something higher for the mid-term? I'll leave for that until the next one.

Yeah, OK. Ayesha, there are Phamacy Unsp& Two things with Magiserve. There's the Magiserve's current business, which is a nicely profitable, reputable, very good Rx business that they're having. And there's the business that we expect from the cooperation from us being even more B2C in our proposition that we have in Switzerland. Phamacy Unsp& At the moment, we don't have any guidance on Magiserve besides the current We expect from the second part of our cooperation, so combining their expertise, especially our expertise in the B2C marketing, that that can lead to very nice results in the future. That's what we expect, but we don't have any guidance there, so I cannot share it at the moment, but there's a solid business We are combining that and in the new situation, we also have new opportunities to grow there and that will be included probably in spring 2024 guidance for that year.

Okay, that's very helpful. Thanks. And then the second question was also on the NFC-EGK solution. How coordinated is this effort across the industry and are you working on some standards as to how the solution will have and what gives you the confidence in this 31st December launch date, are you expecting some sort of approval, a sign-off, or an announcement? Just trying to understand, given it's a new solution, how confirmed is that date?

Well, I think that's a very good question. I mean, look, this solution, again, I mean, I was trying to explain it earlier. This is not our solution or DocMor's solution, something like this. By the end of the day, we hope that this becomes a product of Gematik. Gematik has tons of other products. So that means also Gematik defines the rules together with the other stakeholders, for example, on data security. And other stakeholders are involved as well. And here we try to work together with Gematik, try to give some input on technology, for example. But by the end of the day, we hope that this becomes a product of Gematik, which can be used not only for online pharmacies, but also brick and mortar pharmacies can have an app and customers can attach the EGK to that one. So therefore, that is pretty much the story on that one. And as you can imagine, Gematik, as well as the Ministry of Health and other stakeholders, They are working on a lot of products. So there is a pipeline like in all of other technology companies as well. Nevertheless, we think that we will have this ready by the end of the year. And what makes me feel so comfortable is that beginning of next year, ERX will be mandatory. And without that solution, the online pharmacies, also German online pharmacies, will be discriminated. And therefore, we feel comfortable that this product will be ready by the end of December. Internally, in terms of developing the technology we need based on the standards and which have been set by the market, internally, we are fine and we feel very comfortable with the 31st of December.

That's great. Thank you so much.

Our next question comes from Volker Boss with Father Bank. Please go ahead.

Hello, first of all, welcome to Olaf and all the best for your position, Olaf. First question would be, in case that the script is going to be up from January 24 on what we all hope, what does it mean on your planning in regard to marketing costs in percentage of sales, for example, could you give us a bit of Phamacy Unsp & Guideline how to look at marketing costs going forward in the case that the script is going. Phamacy Unsp & Going to come and the second question is the national business and focus is more that we can, however, is there any highlight on country specific development and you got to save. Phamacy Unsp & Or margin improvement which you could share us to get a bit more granularity of the international performance.

Maybe should I take the first question? Okay, yeah. I mean, the answer to the first question is very simple. I mean, I think we will see a pretty steep increase in the number of e-scripts, not only in the remaining part of the year, but also then once the e-script becomes mandatory. And then, of course, it's about the question how to approach that market. And we have a solid customer base. We talked about our 10.5 million active customers. We have a huge marketing budget, which we have already. So we are already in the market running campaigns. Right now, more focused on OTC. Then probably later, we'll be more on Rx. But how the specific go-to-market strategy is going to look like, we can of course not disclose this today to you. That doesn't really make a lot of sense. So we first need to see how the market is developing. We are able to react in a very fast way. We have a lot of marketing budget out there. We have existing customers, but the rest we really need to see and we'll not disclose in this meeting and will probably be then part of the guidance for next year. Phamacy Unsp& Sorry that you can't get more details into the market strategy on DRX and on the second question. Yeah, I would like to have this clear. Yeah.

So yeah. Yeah. The state of question you want to know something nice about one of the countries. You also know, we steer our business and we report in two segments. We don't talk about individual countries, but well, you were answering I thought the two things that I can still add some color there. And First of all, it's very nice in quarter two, we said that we didn't make this statement in quarter three, but it's the same. We have been growing double digits in all of our seven countries. So sometimes you say, yeah, but in this country, they're a competitor or et cetera. In all our countries, we have been growing double digits also in the first quarter. So that's something I would like to add. And then something else, which is, I think that's a 21, because I recently had a presentation where I presented that. Our brand, we are by far the market leader in Belgium with our brand PharmaLine there. There was a survey and actually 93% of the Belgian people apparently know the name PharmaLine and we won a prize with that, that our brand recognition was that high. So there was something nice about Belgium and I think in the end I heard that one out of the four households of people

Okay, thank you very much and all the best.

Our next question comes from Ian Kosh with Deutsche Bank. Please go ahead.

Hi, Olaf. Hi, Jasper. Thanks for taking my questions. My first one is a big-picture question for Olaf. You have been with the company now for three months. In your view, what is RedCare doing very good already, and where do you see some improvement potential? And then secondly, on the EGK NFT solution once again, I understand that you are essentially waiting for an approval of the Gimmatix. Phamacy Unsp& But in case that the gematic would take too long to launch an own product, could you implement the solution in your app without a product from the gematic Phamacy Unsp& Well, okay.

Yeah. Well, very good question. So, so the first question to me is, it's always, it's really difficult to answer because of course I do not really want to talk about the past and therefore comparison are always difficult. Phamacy Unsp & Well, my, my, my, my first impression is really, I mean, but you can also see it in the number. It's a great company and I'm, I'm really happy that I have the opportunity to work together with this company and to lead the company into the future. So that is actually all I can say at the current moment. You know, the times are interesting and that's also the reason why I returned. Phamacy Unsp & This great company on no TCB PC also an international, but we have also the ERX opportunity ahead of us so Phamacy Unsp & Maybe in a year from now. So we have, we have a better view and then maybe I could give some more insights into this one. And then when they on the second question. Phamacy Unsp & Yes, of course. I mean, I understand your question, but I mean we are really working hard in a very constructive and good way to try to implement this solution. And so far, we are confident that we can reach the milestone 31st of December. And to discuss other options, I would prefer to follow plan A rather than plan B. So therefore, we are putting all of our focus into this one. And then, of course, like always in life, you need to look into the options you have available. And our product works right now. There are so many things then we can do, but I mean, that's again, that's only Plan B and we clearly focus on Plan A and are confident that we will have a solution up and running. I hope that answers your question at least to a certain extent.

It does, it does. Thank you.

Our next question comes from Gerhard Orgon as with Berenberg. Yeah, good morning.

I also have two questions, please. The first question on your cash flow. It looks like after nine months you're running well ahead of the free cash flow guidance for this year, partly because of this big increase in payables in Q2 already. Maybe you can come back to that and explain whether you expect any of this to reverse in Q4 or not. And the second question is, you said that Mediservice is slightly impacting your group margin on the negative side. So is this a seasonality, or is it around 3%? Is it just a tiny, small impact, or is it something that we should take into account seasonally at Mediservice?

Hey, morning, Gerrit. Good to hear you. Free cash flow guidance, according to our definition, free cash flow year-to-date stands at a positive 27 million. But we will indeed have seasonality. I mean, I cannot predict the future, but we always have a very strong cash flow in quarter one and always everything else remaining the same. We have stocking up of inventories to be ready for January and February in the fourth quarter. So free cash flow will most likely in the quarter itself in Q4 be negative and bringing the 27 million slightly down. So that's where we stand. So we are happy with the free cash flow guidance there. Phamacy Unsp& Maybe Phamacy Unsp& Yeah, okay. Yeah, maybe major is our X. So what is what you see in a P&L is actually nothing different from what will happen when we have our X business. So we have euros very nice growth margin each time that we sell the package with our X. Mathematically, the gross profit margin as a percentage of sales is lower. Luckily, there's the positive flip side, but also your costs are lower as a percentage of sales. And that's all what there is with Maviservice. So it's a very good business because the average order value is very high. But as a consequence of the very high average order value, the margin as a percentage of sales is relatively low, but not in euros. And that's Maviservice. And I'm not aware of anything one-off in their numbers that is not happening in Q3. It is what it is. And we are very happy with the strategic partnership that we have there now already. And it's only one and a half quarters that we are cooperating.

Thank you.

Our next question comes from Christian Salih of Halkhausen Investment Banking. Please go ahead.

Hey, everyone.

Two questions left from my side. First of all, on your EBITDA margin guidance. In the first nine months, you generated 2.9% EBITDA, adjusted EBITDA margin. But still, you didn't raise your guidance, at least to the upper half. So should we expect any negative impact on the margin side in Q4, or is that just conservatism from your side? And then secondly, on marketing costs. So a big chunk of the margin improvement in Q3, but also in the first nine months, is driven by more efficient marketing. Could you please talk about the reasons for this and how much of this improvement is basically also supported by the weakness of your major competitor? Thank you.

Thanks for the impressive compliment, Christian, on the adjusted EBITDA. But I repeat a little bit what I said a couple of minutes ago. In this 2.9 year-to-date adjusted EBITDA margin, there are no significant one-off impacts that we are aware of, and we also don't foresee any one-offs at the moment in quarter four. So that's what it is. But with our visibility that we have on the fourth quarter results, we say we will end most likely in the margin range that we get from on the adjusted EBITDA margin, but not that we want to do there something else than we did in the other borders. Marketing. Yeah, now marketing is the only thing I can comment on there. I think everything that we explained and also all of this related to our proposition, loyal customers, happy customers, improvements we made in our last model performance. So across the whole P&L, I think that is leading to customer satisfaction to say that last year there was a significant amount of marketing as a percentage of sales that we needed specifically in quarter one and quarter two. And we are also citing that now, which is in part explaining that we are at a lower level at the moment.

Maybe I can add a little bit to this. I mean, and we saw this also in the numbers. The net promoter score is pretty high. And the higher the net promoter score, the better the customer satisfaction is. And we can clearly see a direct link to the repeat rates. So that means customers are happy and are returning. We saw this earlier in the repeat order rate. I think it was even at 885 or something like this. So really high number in terms of repeat orders. Customers are very satisfied. And again, there's a strong correlation between a very high net promoter score and a good share of returning customers. So it looks overall, but that's what Jasper already pointed out. The product we have is great. And we can see that it's driven by very happy customers. And because of that, we probably don't need to invest so much in marketing than having lots of happy customers.

And the last one then to add to that is that you clearly see, Christian, the impact of skill. So pure skill, higher skills. Because we're not reducing our marketing. It's better. Excellent. Thank you very much. All the best.

Our next question comes from Felix Jonathan Dano with Bankhaus Metzeler. Please go ahead.

Thanks very much for taking my questions and welcome to Red Care, Olaf. The first question relates to Q4. Perhaps you could comment on how Q4 started and whether you could get some insights on the demand that you're seeing in the DACH and the international region. And then the second question relates to the ways of redemption for the E-Script. So as you showed very, very nicely in the presentation, there are three ways of redemption. Could you provide us with a breakdown of the percentage of the three ways of redemption? So how much percentage of people are using the paper print? How many are using the Gammatic app and how many are using the Elektronische Gesundheitskarte? Thanks very much.

Would you like to start on the first one?

2nd, completely for you.

Uh, yeah, thanks. Uh, no, nothing to comment on the start of Q4. There's nothing worth mentioning there.

And to give an answer on the 2nd, 1, as, as you said, I pointed on the 3 different options. And if you look into the history of why we have a delay in the Easter, especially on the doctor's side, then we all know that the doctors don't like. They print out solutions so much. That was one of the main reasons why we had a delay in the introduction of the Eastwood. The other was that especially the systems in the doctors places were not ready to support technology. But nevertheless, I mean, we see since the introduction of the EGK plug-in solution that this is somehow the preferred solution of the doctors. And therefore we see, I mean, that the number of scripts are going up. Doesn't mean that the patient cannot have the QR code, so you always have the right to ask for the QR code, but since the introduction of the GK plugin, we saw a significant increase in number of scripts. I have seen a Gematik presentation where they are talking about that the majority is Phamacy Unsp & Adr Phamacy Unsp

Our next question comes from Sven Sauer with Kepler Schaffro. Please go ahead.

Hello, gentlemen. Thank you. I only have one question left. I was just wondering how this new solution that you have presented goes hand in hand with the complaint that was filed against the European Commission. If I remember correctly, it was also linked to the allegation that the EGK redemption is discriminatory. And this, of course, if this would be approved, this would improve that allegation or alleviate it. So I was wondering if you could provide some comments on this, if you will continue with this complaint or if it will be pulled back.

I mean, I think that's a good question. That is something we have to determine throughout the way. I mean, we have to make sure that the online pharmacies are not discriminated. That is our job. And part of that is, of course, the legal part. And we are working on European law. We are working on the fundamentals of Europe. And therefore, we approach the European Commission to really say, look at this. We have issues on the bonus. And we think we will have issues going forward if this EGK plug-in solution will actually then start to be used. So therefore, that's why we filed a complaint. We need to keep all of our options open. But how we want to handle that complaint, we then have to evaluate going forward. So far, again, I can say we are in very positive and constructive discussions with the Ministry of Health. But nevertheless, I mean, we need to ensure that we keep all of our rights. And that's why we filed a complaint. We have so far not received any feedback, so therefore give us some more time, and with time we will find solutions.

Thank you.

There are no further questions at this time. I hand back to Olaf Kainrich for closing comments. Please go ahead, sir.

Well, yes, thank you very much. First of all, thank you very much for all of the great questions. So I think it has been great discussions. You guys are really also into the details, understanding the business model. That also helps us, that's what I can say. So very, very good discussions. Thank you very much. And again, I think we have, especially when we talk about ERX, a good time ahead of us, and I'm looking forward Having working together with the company on this endeavor. Thank you very much for joining.