Redcare Phamacy Unsp/Adr

Yes, thank you very much and good morning to everybody. Also a very warm welcome from my side. Some of you who are joining via webcast probably just saw all commercials. On Rx we are currently running, so we thought this is a nice intro into the day. So let's have a look into the agenda of today. It's the standard agenda. First we start with financial performance, then a strategy update on 2024 and then outlook and guidance. If you look into the financial performance, we would like to start with some highlights. We continue our fast growth at 42%. Even if we exclude Mediservice, we are showing a growth above 20%. So to be more specific, it's 21%. We are also very happy to report strong growth on ERX. As you're all aware of, ERX became mandatory at the beginning of this year. And since then, we have seen really a great adaptation from a doctor's perspective. So more than 80% of the scripts being issued in Germany are already e-scripts. And since the launch of our carding solution on May 6th, we have seen a significant increase also in our ERX business, averaging to a quarterly growth of 37%. At the same time, we are also happy to show that our non-RX business across all countries continues to grow strong at 20%. Our strategy remains also to grow in this area. If we look into the EBITDA, we can show an improvement in Q2 compared to Q1. So we are showing a 2%, 2.7% adjusted EBITDA lifting the year-to-date margin to 2.4%. And as you all know, we started additional marketing activities at the beginning of this year because of the ERX opportunity in Germany. And it works out pretty well from a sales perspective, but we are also very happy to show that we have control of our margins. I think that is an important message. We also would like to send very good news also on the margin perspective. Let's now look into the different segments. The story is pretty much the same like it has been in Q1. We are growing strong in all of our segments. International, a little bit stronger than in the DACH region. On international, we showed 27% of growth, and in DACH, still very good growth of 18.1%. If we go to the next slide, you will see that this is also reflected in the development of our customer file. We are now at 11.6 million active customers, and we added in the last quarter 0.4 million. customers and you can see it's over the last year. I mean quarter after quarter we are adding a steady number of new active customers and this is a very sustainable development here at the same time. Also, our NPS remains very high. You're showing a 69 year for the first half year of 2024 only sliding down to what we saw last year being at 71. Also the AOV. has come up slightly. I mean, probably you would have expected it to be come up a little bit more because of the ERX. But please keep in mind, RX right now is only a small part of our business compared to our core non-RX business. Therefore, you can't see the impact right from the beginning on the AOB in a more significant way. If we go to the next slide, you can see I mean, this is a nice picture. I mean, we are now at 17 million orders in the first half of 2024 and as described in the Q1 meeting of this year, we did the step up at the beginning of the year and now we are simply following the pattern which you can see from the previous years. So always I'm very high in the Q1 and then a little bit slower in Q2. So looks all good and also the 87% from returning customers. Number is still in line with what we have seen in the past, showing that the quality of our customer file continues to be very good. And also shows that overall we are able to process the increased orders also from an operational perspective. So overall, very good picture. And now I would like to hand this over to Jasper.

Thanks a lot, Olaf. Good morning also from my side and I'm very happy to present the numbers of the first six months of the year. This is the customary table as I always present during the quarters. So the first three columns is quarter over quarter and then it is the year to date results from sales up to and including the adjusted EBDA and the bottom line for completers sake the fully loaded EBDA. As the subheader of the slide is already saying, similar to the past quarters, the year-over-year comparisons are somewhat skewed because of May disservice, which has only consolidated since mid-May last year. So next quarter three will be the first apple to apple again. But actually in the next two slides, I will actually try to make as clear as possible what the underlying development is, excluding this impact. So to start at the top of this table, the sales were 420 million in the second quarter of last year, and we increased them to 461 million this year. And after six months last year, 792 million. And we ended this year at precisely 1,121,000,000. And it's an increase of 329 million in six months and a 41.5% growth. As Olaf rightfully said already at the start, roughly half of that is coming from the full consolidation of mani surface, but stripping that one out, there is still remaining 21% organic, fully organic growth of the total group. Then the gross margin and the expenses as percentage of sales are respectively significantly lower and significantly better. I will explain that on the next slides. So let's go to the adjusted EBDA margin, 2.7% in Q2, bringing the year to date to 2.4% versus last year's 2.8%. And multiplying this margin with the significantly increased sales is leading to the adjusted DBDA in absolute terms. This stood after six months last year at a positive 22 million, and it increased this year with 5 million to a positive 27 million. And then finally, as you can also see at the bottom line, actually our fully loaded EBDA did not increase with 5 million, but with 10 million because we have significantly fewer adjustments this year than we had last year, because last year there came an end to adjustments related to the acquisitions in 2021. And with that, we go to the gross margin slides. I would like to start at the middle of the slides, the two bars there in the center of the page. They show the declined gross margin that we just saw in the table from 26.5% last year to 23.4% now. However, to the right of the slides, to have apples and apples, so excluding the mixed impact of media service this and last year, you can actually see that the gross profit margin was roughly stable, 28.1 versus 20%. And under the hood of this 28%, a lot of interesting things are happening, of course. But in a summary to mention a couple of those developments, we achieved a continuous improvement of our purchasing conditions. We have several other positive impacts like more platform sales and own brands and very good mix in our baskets. and it also enabled us to continue having very sharp prices for our customers and also including more Rx sales. Finally, the two bars on the right, Q1 and Q2, actually there could be seasonality there, they're the same, but this is just to show you what the normalized going forward margin is more or less including major services. So stable gross margin that was and now we go to all the cost as a percentage of sales. So the SG&A as a percentage of sales. Also here to the middle, we see the improvement in the middle two bars of 2.7 percentage points as we also saw in the table. We are benefiting there from the inclusion of mainly surface. If you go to the apple and apple, we have to go to the right and you see it's more or less the same versus last year. slightly increased with some 20 basis points. Actually, a number that we are really happy with at the moment that we were able to achieve that. I mean, like in the whole economy, also outside our company, we have seen increases of minimum wage rates, general increases of wage rates, general inflation, but we really achieved significant efficiencies which have virtually is the same as last year. And besides offsetting the impacts that I talked already about, we also, of course, did this in Q1 and Q2, more marketing for RX, but with the scale and all the efficiencies that we achieved, we were able to keep this stable. A different slide than normally. Actually, I take the opportunity for a longer-term perspective here. It's the past 10 quarters on a row, our growth and our margin development. So let's start at the bottom of the page. With today's released numbers, we recorded the eighth consecutive quarter of a positive adjusted EBDA margin. But actually, it's also good to realize that the two EBDA margins to the left were also the result of our deliberate decisions back then to balance best growth and margins at that period. Because at the end, in the second half of 2021, and then what you see on the graph, the start of 2022, we deliberately decided actually to invest more to enter on the sweet spots of our marketing propositions. So the bars there are showing the EVDA margins. If you would have shown the EVDA in euros, it would have gone up, as we have seen in the table. But actually, now having discussed the lower part, the key reason for showing this graph is actually the combination of the margins below and the upper graph lines which represent our growth. The black line might perhaps appear at first sight to be a rather dull, rather horizontal line, but actually I find it a spectacular one because it is showing that for 10 consecutive quarters in a row we are achieving for our non-Rx business, which was last year around 1.5 billion growth of double digits between 15 and 25%. And by the way, we could have gone back more than 10 quarters, then you would have seen the same. We have virtually always been growing double digits there. So the black line showing continuous growth of our non-Rx business. And then the red line, that is our X business in Germany, And of course, we see there from quarter one to quarter two, an increase from 7% to 37% in the last quarter, which was the average of the quarter. So the key of this slide is actually that our focus, if you can go back on slide, please, still. So our focus on fast growth is not giving us, and has never given us any reason to not focus Phamacy Unsp & Adr Before. Phamacy Unsp Before. Phamacy Unsp Before. Phamacy Unsp Before. Phamacy Unsp Before. Phamacy Unsp Before. Phamacy Unsp and the very favourable working capital development is mainly the seasonal pattern where we end the year, a calendar year, generally at an elevated working capital needs position. And with that, to the 31 million of cash at the end. Jules, back to you. Thank you very much.

So now we are in the strategy session, so I would like to give an update. If we can go to the next slide to me. The header is already saying everything. That's the story. This is just the beginning of a new digital era. I mean, since generations, especially chronically ill patients, when it comes down to script business, they always had, let's say, a non-digital journey with their pharmacy whenever they were looking for pharmacy services. And now with CartLink, it's the first time that the Rx process becomes fully digital. And we have received really great feedback from both existing customers, but also new customers. And now it's really about us. It's about RedCare with all of the, let's say the value that this company presents, that is the people, the technology, the customer, the customers we already have. It's about us now to develop products and services to make use of this digital era. CardLink to us is just the beginning and we are really looking forward entering into this digital era. If we can go to the next slide, I think we also need to look into the redemption options. I mean, this slide somehow you are familiar with, but we added, as you can see on the right hand side, we added a fifth channel. So because since June of this year, customers can also redeem their scripts via the apps of the insurance companies. So now we have five ways how you can redeem key scripts. What does this mean for Redcar customers? For Redcar customers, they can still place their orders directly with us. Directly with us means they can use our app with a calling solution and then place the order in our app, but they can also use a paper printout if they get a paper printout from the doctor or if they request a paper printout and then they can use our own channels like our web or our app where we have the scan functionality in that channel. And that is how they can do the shopping with us. And at the same time, they now have additional channels like the Gematik app or the insurance app. So they can also find us in those apps because by law, we are also listed in those channels. The barriers to entry are different for the different redemption options. So if you look into the EGK plug-in, so a solution for brick-and-mortar and the card-link solution. Here you can simply use the German healthcare card without a PIN. For the other channels like Ematic app and insurance app, you need either a digital ID or the EGK card plus a PIN. And we all know the distribution of digital IDs and also EGK plus PIN remains very low in Germany. So overall, a lot of options for our customers. If we go to the next slide, we would like to one more time explain how simply CardLink works. It is really as simple as paying by card. You simply open up our app, click on the CardLink button, and then you have to receive the SMS code, present the card, the smartphone is reading the card, and then all of the orders will show up in the basket. Phamacy Unsp & Adr Phamacy Unsp&Adr Our major value proposition and therefore to us it's important that we have a very competitive product in the market and I would like to point out some of the highlights of our product. So first of all, 24 seven so sounds so easy, but what we have actually actually experienced is that a lot of customers are placing their order either on Saturday or on Sunday. So we saw the same kind of pattern in the non Rx business. Phamacy Unsp & Adr if you are a chronically ill patient and you receive a script from the doctor and show up in the pharmacy. In a lot of cases, the product is not available. So you show up and then the pharmacist tells you, sorry, right now it's not available. In our app, you can simply attach the card, use the scan functionality, and then we show you in real time if the product is available and if the product is not available, how long it does take us. It takes us to organize the product and then when we can send the product to you. So it's a real-time, fully digital information and that adds a huge value, especially if you're a chronically ill patient. Next thing is the preferred medicine choice. I mean, the way it works in the German system is a doctor prescribing a product or an ingredient and then based on the contract your payer or your insurance company has set up there is might be a portfolio approach or portfolio availability so that means the payer is reimbursing maybe three different products if we talk about a generic product so then they offer from three different brands the choice and what you can do as a customer in our app you can select on your own so that means you're in control You're empowered and you can decide which brand you want to choose. And you can do this in real time. And then you also get the information if there's a change in co-payment or not. So in total, we are really using the advantages of having a fully digital journey compared to having a not digital journey. And the last thing I would like to point out is we are always talking about scan functionality at NFC. I mean, NFC has been around for quite a long time, but what we really have established here is that this product is not just an NFC scan functionality. I mean, it has an approval from Gematik. It also has an approval in terms of data security from the BSI and the BFDE. So, I mean, this is not just a scan functionality. It follows the highest standards in terms of data security, which are So overall, it's really a great product and it's a major step forward, especially for chronically ill patients. If we go to the next slide, let's talk a little bit about the future potential. And I think what we should do is just to stay with the facts. What we can see here is, I mean, we just want to remind you of that. We are talking about a 55 billion market. So the RX market in Germany is a 55 billion market. And we have increased our market share since January from 0.27% to 0.45% by the end of June. So if you consider that June number as our run rate and calculate a 12-month sales level out of that, we would end up on 250 million euros. compared to the 151 of 2023. So with the achievement on the market share, we already have a significant higher share in sales level than we had prior to the launch of the Carling solution. If you add one percentage point of the market, that would lead to an additional 550 million in sales, and that shows you how significant this opportunity is and what just one percentage point market share can move in terms of sales level. On a more strategic level, of course, I think it's fair to say that we cannot predict the future. Now, we certainly have to do the job to educate the customers, to communicate about the solution, and to initiate change of behavior. And we have done this in the past. When we talk about the non-RX business, we have done this very successfully. And now it's our job to also do this for the ERX. But again, This journey only started a couple of weeks ago, so we have to see going into the future what is going to happen. And by having said this, I think we should move on in the agenda. And next one is outlook and guidance. And I would like to hand this over again to Jasper. Yeah, thanks again.

And though it is a repetition, actually, I'm very happy to be able to repeat our guidance for the current year. We still expect a growth of around 30 to 40%, which is total growth, including everything ending up at sales of around 2.3 to 2.5 billion for the total group. Our current largest share of our sales is coming from non-RX and we expect that to continue to grow double digit between 15 and 25%. may serve as part of our group as of last year. We expect to grow by mid-single digits. And the total group adjusted EVDA at a positive between 2% and 4%. And actually, as Olaf just explained, great opportunity ahead of us. We're working on it every day and every hour. We're looking forward to it. We get energy from it. But it is clear that our X is far too dynamic to give you guidance for the current year on it, but it precisely will be. Actually, that's the total guidance for the year. And with that, I think it's time for Q&A. And the first one is coming by phone, I think. OK, I give it to you, operator, please.

Ladies and gentlemen, we will now begin the question and answer session. Anyone who wishes to ask a question may press star and 1 on their touch-tone telephone. You will hear a tone to confirm that you have entered the queue. If you wish to remove yourself from the question queue, you may press star and 2. Participants are requested to use only handsets while asking a question. If you are watching the webcast, you can click the question mark icon and type in your question in the text field. In the interest of time, please limit yourself to two questions only. Anyone who has a question may press star and 1 at this time. One moment for the first question, please. And the first question comes from Christopher Jonan from HSBC. Please go ahead.

Yes, thanks for taking my questions. So first, could you help us understand a little bit the customer mix within the current RX orders? So I'm trying to get a better understanding on how many more PKV versus GKV orders have been going through your system in the second quarter, just also to understand how the relative performance was to your closest peer. And if you could give us a little bit of color on where your Phamacy Unsp&AOV within the current RX order stance, that would also help. And then, so I'll take that as one question. And then the second question on the running quarter. I think you mentioned a couple of weeks ago that the exit rate was somewhere for RX in the range of 80%. Can you just give us a little bit more color on how July fared, given we are nearly done? Thank you very much. Yes, but do you want to take it?

Yeah, you call the rates? Yes, I call it. PKV, GKV, so for the English speakers, private and publicly insured. All I can say there is that I think that privately, that's at the moment not digital. So that's the sort of stable development and the growth is coming from the publicly insured, from the 50 million of the 55 billion market. So things continuing like that, if the future is, as I think most of us believe it will be, than the share of GKV public will significantly increase over PKV in our numbers. The AOV of RX, we get a lot of questions on that, but I can be very simple on that. Yes, the RX order is significantly higher than our OTC order is. It is a double of that. And more precise, I don't want to give it that number. So a good, nice, large basket. That is 80% started to live their own life. I think it's important to stick to the facts there. So everything that has been stated, and that's important, I think, we realized in Q2 a 36.6% growth, rounded 37. That 37% is a growth that accelerated at the moment that we have put the product life that Olaf just explained. The NFC solution and the attractive customer journey. That we put life. in the mid of the quarter. So the 37% is, of course, the average of a lower start of the quarter and a higher end of the quarter. But what exactly the end is, it's undisclosed, what we are seeing there. But it is higher than the 37.

I think it's fair to say, I mean, we had 6% growth in Q1. And there wasn't really a reason why that should change in April. So therefore, somebody can do a calculation, but we do not really give any more details into that one. Exactly. Yeah.

OK, clear. Thank you.

You're welcome. And the next question comes from Volker Bosse from Baader Bank. Please go ahead.

Volker Bosse, Baader Bank. Congratulations on the great results. I would have to question first on your impressive customer trend. You're steadily winning new customers, as you showed us. My question with you would be, do you also see that you all win new customers via the AirX offer? So are you able to win new customers via AirX products you never shopped at? and how do you see the cross-selling potential? So if a customer buys for the first time an Eryx product, does he also put a non-Eryx product on top to it to make the basket even larger? So your experience here would be my first question. And the second question would be on the redemption options which you showed us on page 17. Thanks for the details. My question would be on the insurance app option. How does that process work and how do you benefit from the insurer app? So basically, how do you receive the e-strips orders via the insurer app? Thank you.

Do you want to take the first one and I take the second one? Yes, Volker, thanks. Yeah, absolutely. We see new customers coming to us for the first time. And I leave it only directional. So we have seen new customers who never shopped with Shop Appletaker, RedCare before. We have seen converted OTC and BPC customers trying RX for the first time. And we have seen paper RX customers shifting to ERX. I prefer to not further precise it. 100,000 of customers, 0.4 million. That cannot be the magnitude that was where the needle of the new RX customers moved it because we did in the end only achieve 50 million of sales in the second quarter.

Cross-selling potential you do first? Yes, of course. So cross-selling potential, of course, there is a cross-selling potential and we see this already. So customers who are ordering RX are also ordering OTC with us. But of course, that is one part of our strategy, and I described earlier the product. I mean, one of the core features of the product is that we have a one-click solution. That means the customer usually also, if you look into a brick and mortar situation, if a customer enters a pharmacy with a script, usually they also have a need for OTC and BPC. And of course, that is also what we try to foster in our app. The second question on the redemption ways, I will give it a try, but it comes a little bit more detailed. So please try to follow me on this one. So, I mean, the one thing is on the insurance app, and that's what I pointed out, it's not so easy for a customer to use the insurance app to redeem an e-script because the authentication is either digital ID or EGK plus PIN. and the total number of digital IDs in Germany right now is at 1.3 million. You can see this and there's a schematic dashboard and it's not really growing. So we are only talking about a small portion of the population, but let's assume you have that digital ID or the EGK plus PIN and then you access your insurance app. Then within the insurance app, there's a section, it's called ERX or I want to retrieve my script And within this section, all of the pharmacies are listed discriminatory free and that is the basis for that, the legal basis for that is the Digital Act or Digital Gazettes which passed in February of this year. So that means all of the pharmacies are in that payer app. So that means if a customer from Red Care or a shop apotheke wants to find us in that app, They can use the digital ID, enter the insurance app, and then select us out of the list of all of the pharmacies which are listed. Again, by law, all of the pharmacies have to be listed. So that's the way it works. But I mean, that's only one part of the story. The second part of the story is, I mean, I always call it something like a black hole or let's say, a product which is not on the level what we have in our app because what happens is the customers then just saying I want to select this one pharmacy maybe the Redcar pharmacy and then we receive this as an order it's a digital order coming in but the customer in the app of the insurance in the insurance app does not have the opportunity to use all of the other stuff I described earlier in the product so there's no availability shown no Phamacy Unsp or anything like this payment option. All of that is not available in that app of the insurance company. We simply get an order which is forwarded into our order system. So therefore the product itself is not on the level than it is if you shop with us on our app. And that is a similar situation on the Gematik app. The Gematik app also has All of the pharmacies are listed, but again, you can only forward it into a pharmacy without having all of the features I described earlier for our app. I hope that's understandable because you really have to be in the details, but those are the differences on the redemption rates.

Thank you. That was a good explanation and very helpful. Thanks a lot and all the best.

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

Good morning and thanks for taking my questions. I would like to come back to the RX growth rate. I understand that you don't want to speak about specific numbers for July, but could you confirm that you did not lose any market share in the German RX market in July? Phamacy Unsp& And then, secondly, could you elaborate a bit on the sequential margin improvement for the group in Q2 and specifically for your international business? Phamacy Unsp& On the international business, is that purely a volume leverage or have you shifted some of your marketing budget from international to the German Rx business?

When we pre-discussed this yesterday and today, we only focused on the first six months. So Jan, we cannot say anything on the Rx developments later this year. I mean, it's just a few weeks out and we are looking forward to Q3 and Q4 when we can give a new update. Thanks for the compliment on the margin developments there. No, international, yeah, in the end, I mean, it's a small word, but it's very important in our business model. In the end, it is scale that you're seeing there in international, why we are having better margins there. Because actually we are growing very fast, as Ola presented already. We are actually gaining market share in our major countries there. We have market leading positions already in our largest countries there. And that is leading indeed to a combination growth and improving margins after you've achieved a certain scale in market leadership.

Okay, great. Thank you.

And the next question comes from Olivia, Olivia Calvet from UBS. Please go ahead.

Yes, thanks. Morning again. Yes, good morning, Olaf. Two points I'd like to ask you about ideally. The first on Rx, the second on profitability and cash flow. First on RX, I just wanted to understand a little bit better the starting point you're using for midi service. You know, when you talk about the mid single digit growth, obviously there's some currency effect there. I think if I look at what you've done in Q1 and Q2, rather going towards a 480 million euros run rate for a full year, is that about where you see it land this year? That would be... So for Mediservice on RX Steel, I was wondering also about the, you know, the average basket. So, I mean, it's up 1.4% quarter on quarter. Could you qualitatively comment on whether your RX basket is up higher than the 36.6% growth you showed in the quarter? And then, yeah, maybe I take the cash flow and profitability separately.

Do you want to take this? Yeah, I think so. Yes. Yeah. And the only RX we might need to clarify. Yeah, exactly. Yeah. You also didn't get it for me.

Okay. Yeah. Yeah. Yeah. On many servers. No, we don't have specific guidance there. I mean, there's also impact of of RX that you rightfully say can be positive. That can be negative. We gave relatively clear guidance there because we said there is less seasonality in many servers than there is in our overall non-RX business as a company. Last year, we did 370 million with Maidy service in seven and a half months. So 370 divided by seven and a half months times 12 is more or less giving the number of last year. And we say amid single digit growth. And that's the number. Phamacy Unsp& You asked me the question if I can confirm what your exact outcome is there, but this is what it is because it's also up to you what the exact number is of the mid single digit growth and what the FX is. On the RX, there was something about the basket, but I did not fully get your question, Olivier. Could you please repeat? Yes, sure.

The average basket RX and non-RX together is up about 1.4% quarter on quarter. I see also obviously the RX sales up 36% year on year. I'm just trying to understand if you can comment on the growth rate without giving a number on your RX basket specifically.

Yes, mathematically it has a positive impact, but still it's only 50 million of the total of 560 million, so it's a minor impact. The RX basket is clearly much larger than our OTC basket, so it will have an impact, but actually what you're seeing in the increasing basket as Olaf presented is actually that we are able with our propositions across the group Phamacy Unsp & Adr

And to add to this, of course, the Rx basket is significantly higher than the non-Rx basket. So it's only a question of time to get to a different mix situation here, and then you will see the impact.

Okay. And just a final one on the Rx side, so on the basket. When I think about the 36% year-on-year growth, should I think that most of this is driven by the volumes of prescriptions you are getting or by the price aspect due to your average basket in Rx being possibly higher than last year? That's what I was kind of trying to get at.

It's more than explained by volume.

OK, fair enough.

And then so on. Yeah.

This is definitely not by basket. It's definitely not by basket. It's really by volume.

And then on profitability and cash flow, I just wanted to make sure I get things right. You're slightly below free cash flow levels shown last year. I think there's a working capital effect that was pretty significant last year as well. I think from your comments, I'm gathering that you're expecting a normalization of the working capital situation in the second half. Can you just talk a little bit about the sequential development besides this of free cash flow this year? Phamacy Unsp & And I also wanted to understand if you had any initial thoughts on the capital structure given you've got to put on the convertible bond coming in January 2026 just wanted to gather your thoughts there.

Yeah, absolutely. We don't have any guidance on the free cash flow, so it is the numbers as we reported it last year. We have proven that we have the ambition to be there neutral and we had a slight positive free cash flow generation. Our business model is more or less the same, but we have quite detailed guidance on different levels, sales and adjusted EBDA, for example, but we don't have guidance on the free cash flow for the current year. Having said that, We always continue also to focus on working capital optimization where possible. No guidance there. And then as to the capital structure that you're saying, yes, we have a convertible bond there. Convertible bond is not at the level that it's at this moment converting. So that could be a potential repayment that we will update you at the moment when there are any developments there. How we look at it now is that with all the capital that we raised in the past It has enabled us to absorb certain fluctuations that have brought us to the current level with fast growth and solid margins. So that's where we stand. We just saw actually we're still north of 200 that we have in total. So we have a nice cash balance. But what we do with our total capital structure, we did not communicate anything on that at the moment.

Okay, fine. And a final one, very final one, just qualitatively, you know, looking into the second half. is obviously an increase in your growth rate in RX that is sort of assumed. Do you, you know, if you had a choice between, you know, gaining market share given, you know, you have some somewhat of a first mover advantage versus other players coming onto the market and profitability, you know, can you help us understand what you're thinking is here, you know, is there a minimum level of profitability, you don't want to go below, anything there would be helpful.

Maybe I can give it a try. So I like the question a lot, because I think that is one of the most relevant questions. And we are constantly exchanging about that question, especially in the board here. So there is no definite answer to that one right now. So again, we are looking into this situation. If we have the feeling that it makes more sense to accelerate the growth, then we will do so. And if not, then we will not do so. The good thing is, and that was what we were all trying to show in the Q2, we have control of our margins. So whatever we do on the marketing level, we know what we are doing. And the decision if to accelerate or not, that has not been taken right now, but of course that is one of the main questions we have to answer. Okay, thanks.

And the next question comes from Michael Heider from Warburg Research. Please go ahead.

Yes, hi, good morning, and thanks for taking my questions. I would like to come back quickly on Mediservice. The STF elaborated already, If I'm not mistaken, you have stopped communicating the profitability of Mediservice. And in Q1, it was a little bit below what the original guidance was. And I was wondering whether you can comment on the second quarter. Maybe you can give us just an indication whether it was contributing to the overall margin or diluting. That would be my first question. And then just a minor point, but you mentioned that you are planning to open a new warehouse to deliver to the Austrian market. Can you give a little bit more detail on timing? And I suspect it's rather OPEX than CAPEX, but maybe you can comment. Thanks.

Thanks, Michael. I fully understand both of your questions. and also the Mediservice one. I always prefer to immediately answer, but I don't want to provide more details than we disclosed in our interim report in any financials. So Mediservice is part of the total group and part of our total margin there. So that's the maximum we disclose. It's part of DAG. By the way, there is a direct and indirect Mediservice impact, of course, because Mediservice, the company Mediservice, but for example, if you go now to our redcat.ch, website you already see a lot of more assortment also specific swiss assortment through our partnership with Galenica and with Mediservice actually we significantly expanded our proposition our product our product range that we have on our swiss website and that is benefiting our knowledge growth that we have in the dark segment research and despite of the lower words and not giving an answer to your question what Phamacy Unsp & Adr et cetera, and that was very successful in Italy. And basically, you see that the Austrian market is also very important to us. And we are doing the same over there, starting with it, having signed the necessary contract there. And OK, we don't give any time in there, but it's reasonable to assume that we aim for opening it somewhere next year. That is reasonable to assume. As to the CAPEX and OPEX, as you said, it will be mainly OPEX. No, there will also be CAPEX because it is the opening of a distribution center and we need the shelves and the other things that we have in there. But if you look at the trend of the past years and you have a certain level there, there's not really, I think, in your DCF to assume anything relevant there. We will spend a couple of million this year and next year for the opening of Thanks. Yeah, welcome there, Michael.

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

Hi, thanks for taking the question, Olaf and Jasper. Just two very quick ones from me. The first one is on the non-Rx guidance of 15% to 25% growth. Clearly, you've come in bang in the middle of this guidance range in the first half. And as you've shown in the slide deck, this range has tightened. in the last year. So I guess at this stage, is there any motivation to not narrowing this range for the year, given the visibility you now have? And I guess, would you say the bottom end of this is probably less likely at this stage? And then the second question is just a housekeeping one on the adjustments to EBITDA. What do the external project expenses relate to, and are you expecting a similar level for a second half? Thank you.

Yeah. Yeah, but correct me if I say so. Yeah, OK, thank you. Yeah, actually, yeah, it is rather around 20% the past, but yeah, but still the opportunity in Europe is so large from the total pharmacy market and we cannot impact everything there. And it's also reflective of the dynamics that we say, let's let us give a certain range there still from 15 to 25%. And it makes us feel more comfortable giving that direction than a precise one. And if you would say it's 20% and then we have 90.5% and say, yeah, it's below your guidance, it is between 15 and 25%. The numbers, of course, in absolute terms, they get each year rapidly much larger to be able to report this growth. So the stable around 20% is each year much more euros that we're adding there. But it's just not the market at the moment, any dynamics that we would not give a range. Then the second one was...

The adjustments to EBITDA.

Yeah, the adjustments to EBITDA, yeah. Yeah, so basically adjustments to EBITDA I normally don't like. Because just give me the total EBITDA, but we have a clear reason for it. And the reason is that actually I want to get to the EBITDA, which is the equivalent of cash. So that's why the major thing that we correct for actually is related to entry stock option program, which is from our perspective, a cash one. But you talked about the other project related external cost that we have. What there is that if we have certain projects, for example, in the past we had M&A projects and sometimes we completed the transaction and sometimes we did not. and then we made external cost for those projects then we had them also not in the operational results but in the adjustments and also when we did the rebranding to RedCare it was a major project and in capacity extension projects when sometimes there were things we could not capitalize but we paid to an external party so not internally cost we also had them as a third Column and always disclosed which products it concerns in the adjustments to EBDA. I would not. It's not a relevant category to really impact your DCF. I would not. There's not a reason to assume that this will increase significantly, Aysha.

OK, thank you very much.

Yeah, thank you, yeah.

Ladies and gentlemen, this concludes the Q&A session on the telephone. We will now switch to the written questions. Please wait one moment until we continue with the written questions. Please hold the line. The conference will continue shortly.

So maybe we will try to answer the question. So the first one, can everybody see the question?

No.

No. Can you read it out, Monika?

Sure. The question we have is from Malas Invest. John Malas, how many e-prescriptions did you redeem with a card-link solution? Amount, not revenue.

Ah, this is a nice question. I'm very sorry, we do not want to give the details on the different channels, but what we can say and which is obvious is that the majority of the, let's say, ERX orders is coming in, the vast majority via the carding solution. But of course, as I pointed out earlier, we still have also other channels. We have the printout. Yes, and so therefore some customers, are even sending in their QR code so that the e-script by a post. So we still receive some letters in the morning and we open them up and there are e-scripts in it. Yes, then again, some customers are placing by using the QR code and the vast majority is on the calling solution. So then there we have another question. Would you like to read that one out?

Yes, Carolyn asks, What sort of ERX are coming in? Are there many prescriptions of patients with chronic diseases?

Yes, I think this we can clearly answer. I mean, most of the prescriptions which are coming in are from chronically ill patients. I mean, the entire model is about really plannable medications. So that means customers are happy to wait one day for the medicines. So most of our RX customers are chronically ill patients. Nevertheless, we also have acute patients, but the majority clearly is on the chronic.

Then we have a question from Yannick Searing. He has technical issues, so he's asking, could you talk about the slight decline of the MPS? Is this driven by the introduction of card link and customers getting used to it?

Yeah, I hear your hypothesis there. To me, really the key point, Janek, and thanks by the way, because it's really important our model to focus on this, but to us internally, it is rounding. When it was 72, we also didn't say it's much more than 70, but it's 86. So there is not a real explanation that we have there in total. Actually, we were really happy that we are again around 70. That's the key message.

Maybe to add to that, of course, we are tracking also by customer type. We are also tracking the NPS by customer type. So let's say if you're a non-RX customer or an RX customer or an ERX customer using QR code using card links. So we have those numbers. We are following up on those numbers. But the overall message, and that's also what we wrote, we have very happy customers also on the ERX. So it's not the case that ERX is driving it significantly down. It is just in the range of what we considered being a great NPS.

This is a nice question I have to say here. I see somebody is asking, in the first half of 2020, in this year probably, 270 local pharmacies apparently closed, representing a lot of sales, and we only got a small part of that. But is there any comments perhaps in general you want to give on this development?

Because we look at it slightly differently. Monica, again, would you like to read the question out so that everybody has full understanding of the question?

In the first half of the year, 270 local pharmacies in Germany closed with at least €500 million REX sales revenue to redistribute, I guess. So only €13 million landed in your company. That's 2.6%. Isn't it a step back?

Well, I like the question a lot, but maybe the answer is a little bit broader to that. Look, the number of pharmacies in Germany is coming down. It had been just a couple of years ago 20,000, and it's now 17,000 and still declining. And at the same time, and that is probably also the background of the question, the number of scripts being issued by doctors stays the same. So, but I mean, even with the 17,000 pharmacies or roughly 17,000 pharmacies we are having today, I mean, the proximity for a customer to reach out to a brick and mortar pharmacy hasn't almost changed at all. So there's a good distribution of the brick and mortar network. So that means there's no reason only to use the online channel. I mean, we think going forward, we think that we will be part of the healthcare system in a way that if the number of pharmacies comes down further and the proximity from a doctor's office to a pharmacy becomes larger, then we can play a vital role in making sure that healthcare that there's access to healthcare and to a pharmacy and that is the role of the of the online world so but right now there's still a number a high very high number of um of brick and mortar pharmacies out there i think our job isn't that what what we were trying to explain earlier is really i mean it's now about a digital journey so we have to educate and convince customers to really use the digital only way and that will take some time and of course if we see the number of pharmacies going down further then we will also participate from that. I hope that answers the question a little bit.

Ladies and gentlemen This was the last question. I would now like to turn the conference back over to Olaf Heinrich, CEO, for any closing remarks.

Thank you very much for all of your questions. We really enjoyed it. Very detailed questions, also close to the business model, so it's always great having these sessions with you. Right now, it's a great time for this company, very exciting. Phamacy Unsp& And we are really looking forward trying to give you all the updates you were asking for questions on July and things like this, we will try to give you the update and in the Q3 call. So please keep on following us and joining us in the Q3 call. Thank you very much.