Redcare Phamacy Unsp/Adr

Ladies and gentlemen, welcome to the RedCare Pharmacy Full Year 2024 Earnings Released Analyst and Investor Conference Call. I am Valentina, the Quotas Call Operator. I would like to remind you that all participants will be in listen-only mode and the conference is being recorded. The presentation will be followed by a Q&A session. You can register for questions at any time by pressing star and one on your telephone. For operator assistance, please press star and zero. The conference must not be recorded for publication or broadcast. At this time, it's my pleasure to hand over to Olaf Heinrich, CEO. Please go ahead.

Yes, thank you very much and good morning to everybody. And a very warm welcome also from my side. So let's have a look into the agenda of today. So first of all, we would like to start with some highlights from 2024. and followed up by business performance of 2024 and leading into a update on strategy session. And then finally, the outlook and guidance. If we go to the highlights of 24, you know, I mean, this has been an exceptional year to RedCare. If you just look back, I mean, it's almost like you can't believe it. I mean, at the beginning of last year, there were the questions, is the Eastwood coming? Is it not coming? What will be the adoption rate of it? And so, but I mean, we quickly learned that ERX became the nationwide standard in Germany for all publicly insured patients. And that is actually great news. And then there was the second question. I mean, how can we access that market? How do we get discrimination free access? And, you know, then we launched our fully digital patient journey by a card link in May of last year. It seems like it is almost more than one year ago, but it happened last year in May. And at the same time, we also further developed our product. So now we have a highly valued, customer-centric product. It has all the features you need, so it does not only have the card link functionality, but also you have the product availability, you have the payments, you have the 24-7, you can order OTC, EPC, RX. So everything is in the product and this product actually has developed over the year and now we think it's a great product out there in the market. And at the same time, we also launched our marketing campaign. So it is on the one end the product, but on the other hand also our very successful marketing campaign from last year. So which really I think may also made a difference when looking back was great achievement also on that side and also the decision to step up our marketing activities in Q4 was also the right decision based on the numbers we see. You know, our growth accelerated from 7% in Q1 all the way to 142% in Q4, again confirming we have a great product out there and we had a great marketing campaign. And putting this all together, it led to market leadership position for Redcare in Germany. You know, we always have been the market leader on non-RX, but now in 2024, We also got the market leadership on our X, so we can say that has been an exceptional year looking back in terms of the ERX. But the company is not only about ERX. We have a larger value proposition in that one. So we also continued our great growth in all of our other countries. What you already saw in the numbers, I mean, really great achievements across all countries, also high customer satisfaction, so NPS, continues to be one of our key metrics and as a result of that I mean some of you are probably tracking also traffic in Italy as a result of that we are now also market leader in Italy so I mean not only in Germany Austria Belgium and Switzerland but now also in Italy clear market leader we are proud of that because again it's not only about ERX it's also about our Phamacy Unsp&Adr Phamacy Unsp&Adr Well, at the same time, you know, with this growth also, we had to produce much more parcels. So, and we are really proud of that. We managed that also in a great way. So this, especially looking here into Severnum, but also Italy, I mean, it has been a great achievement that we kept our high level of customer satisfaction and service levels. And we were really able to manage all of those parcels leaving our warehouses. And at the same time, we even increased our efficiency in logistics. But this is not the whole story of it. You know, we also had a change in the leadership team. So in April, two board members left, and then we had two successors coming in. And I think to me, I mean, that shows how strong also the organization is set up. Because, I mean, we had two internal successors, Dirk and Lode, and it almost worked out seamlessly, I have to say, yes, sir? Yes. So it shows. Organization is strong and has a strong leadership, and we build also talents on our own. So we are really happy with what we have seen throughout 2024. And thanks to Dirk and Lotte for stepping in and making this happen. And then the last thing, you know, it's the first year of reporting CSRD. So it's been a tough audit, we have to say. It's been a tough audit, but we are ahead of the legal requirements and we are proud of the product which is out there. 2024 great achievements. Let's look into the numbers. What does that mean in numbers? You have seen the numbers, so it's a growth of 32% in 2024. Even if you exclude Mediservice, I mean, you're still on the 26%. So it confirms our strong growth part here. The non-Rx growth is at 21%. And the Rx growth is at 64%. and you know it was even higher in the German segment. At the same time, we also managed a margin at 1.4% and you know that's based on the strategic investments we also the decision we took to further accelerate our marketing in October of last year. I mean strongly underlying core businesses and Jasper will talk a little bit about that later in the presentation with a strong underlying core business which of course also helps You have a positive margin here out there. Cash flow is minus 26 million. We are operating and we are generating cash from our operations, but at the same time we also took some strategic investments and also I think here we did a good job manage the working capital and Jasper will talk a little bit more about the cash flow later in the session. If we go to the next slide, you are familiar with those slides. I mean it's just One additional information, international again is growing on the non-Marex a little bit faster than the DACH region. And of course, I mean, I pointed out the market leadership in Italy. It is also driven by our success in Italy, but not only in Italy, we are growing in all of our other countries on the international segment. If we go to the next page, you can also see that the number of active customers Now we are at the level of 12.5 million active customers by the end of the year. We added 0.6 million active customers in the last quarter of 2024. So also great achievement on our customer development. And at the same time, we kept the NPS very high level of 69. Again, this is still one of our key metrics This is all about the customer and we need to continue to work hard on keeping that net promoter score up. If you look into the AOV or the basket size, I mean, of course you can see the first impact of the RX business. We have more RX orders coming in and the average basket size is increasing. It's now almost at 61 euros. If we go to the next page, You can see our very impressive development of the orders. But the overall message, I think it's still the same pattern that it has been in previous years. I mean, Q3 even has been a little bit better. Usually Q3 is a little bit lower. But if you look into 2024, we almost reached the level or we exceeded the level of the Q2. So great development. And it's the first time that we processed 10 million or more than 10 million orders in one quarter. also a milestone for this company. And as always, if you look into the share of repeat orders, still very healthy at a level of 88%. So having said that, I would like to turn this over to Jasper.

Thank you very much, Olaf. And thank you all for joining today's call. Very happy that you show your interest in the company. And we are very happy in sharing with you today our Phamacy Unsp&Adr Phamacy Unsp&Adr Phamacy Unsp&Adr Phamacy Unsp&Adr 25.6% pre-organic. So actually our growth accelerated in the fourth quarter on an organic base. So an increase of 1.799 billion last year to close to 2.4 billion this year, an increase of 572 million. If we look at the gross profit margin line, that is slightly down versus last year in quarter four, and it's more down Phamacy Unsp & Adr but we explained that also in the second part of the presentation later and in the full year that's a bit an apple and an orange because of the full year impact of the service. In selling and distribution as a percentage of sales in the fourth quarter you see an increase of the cost to above 20% impacted by our marketing and that we are really happy with the marketing that we have been spending. I hope will become clear when we show the second Part of our presentation and our overall numbers. And perhaps you are a bit surprised to see that here the full year year over year is a flat number. But there we have the big benefit of the lower significantly lower SMB as a percentage of sales of main insurance. Now a lot of mix. I will explain it in the other slides a little bit more. in expenses 2.9% and actually it improved in the fourth quarter to 2.8% of sales a year over year. That is flat. Adding all up, the adjusted EBITDA in Q4 was minus 0.7 and for the full year we generated 33 million of adjusted EBITDA, which you will see later. It's very close to our cash generation and that's why we adjust for it to get close to the cash that we generate with our businesses and it was in the range of 1.2 to 2.2 as we updated you on October 3 for the guidance for the year. If you go to the next slide please. So this is the gross profit margin. To the left the same number as we just saw already, so that is going down 0.5% because more of the profitable are X sales that we have. And on the right, you see the larger increase as we reported in the first two pillars. But actually, if you take out the full year impact of mainly service, it's a similar decline that you are seeing there in the gross profit as a percentage of sales. Apart from that, The result that you're seeing in the P&L is only because of the impact of mix. On the next one, the cost in total, the quarter four we already looked at. If you then look at the right hand of the slide and you exclude of our decision to increase the ERX marketing through the large opportunity that we have there. But it will also make clear, if you look at the total numbers, hey, how can a company achieve only such a small increase, seeing all the firepower that we showed in the ERX campaign? And that is really because, I'll give you just one example, that logistics, in our case, actually achieved a record efficiency and also across the group with automation, Phamacy Unsp and also the benefits of being the market leader we see that cost as a percentage of sales in our business is improving year over year. On the next one, this is about the DAG segment where I wanted to communicate a certain message on and then after that also international. So in DAG, so Germany, Austria, Switzerland, We are reporting the purple ones here in the segment reporting and that was last year in total 1.5 billion of sales at the margin, a fully loaded margin of 5.1%. This year we report a significant increase of the sales in part the full year impact of May reserves, in part organic growth, in part also because of the EOX addition that we have and we increased the 1.5 billion to 1.9 billion and a 2.6% margin. But if we now look at what we then define only for the purpose of this slide now here today as the established businesses, then I say, okay, in Switzerland, we had to do it together with Galenica and that's going really well, but also in Switzerland with the launch of RedCare.ch, which we did one and a half years ago, we have a strategic reset and growing there really fast. ERIX is also the growth that we have at the moment. You can see in the black graphs already that that is actually 1.1 billion in 2023, operating at a very solid 5 to 6%. And perhaps the term established businesses is suggesting that's a stable business, but that's not the case because also this business has been growing double digit before Corona, during Corona, after Corona, two years ago, last year. Phamacy Unsp & Adr because we have a continuous growing base in our core propositions of active, happy customers. We have the most comprehensive proposition and are a clear market leader in Germany and in Austria. And later, you will also talk about the proposition that elements, of course, you can order same day, you can order next day. We have the assortment of the marketplace. We have all the other things that you will discuss also later. And with that, we always have internally the expression, you need to run to stand still. So we invest in our proposition continuously to continue to aim to have the best proposition and expanding our market leadership. This segment well above 1 billion is of course, cash generating and is continuing to grow really fast. In international Actually, all the numbers on this slide are the same numbers that you can also find in our annual report and our interim reports. But I just put them on one slide to emphasize what is happening in international. And that's also because in the second part, we will dedicate a lot of attention to ERX, how great the developments are. So I took the opportunity to also show a bit of our other businesses here. So in 2020, we had 150 million of sales in the Netherlands, Belgium, France, and Italy combined. And in only four years, we've almost tripled that to last year, close to 450 million. And at the same time, you see that our fully loaded, including everything, marketing, overhead, everything that we can allocate, an adjusted EBITDA margin of minus 9.8 in 2022, Then minus six and last year we improved with 2.4 percentage points to 3.8. And as we also disclosed in the segment reporting before overhead, so it's also in the annual report, you see that last year you had at the first time a positive result before overhead for the total international segment of 1.3%. What do we have in international? We are already for many years the market leader in Belgium. One out of the four households We have an over 90% brand recognition in Belgium. And actually after the big boys like Amazon and SHEIN, et cetera, we are in the top five of leading websites in the country. And then you gave it already. Now, in addition, since 2024, also market leadership in Italy. The next slide, back to the total group. in cash balances, including what we have in fixed deposits. And at the end of the year, we had 178. From the left to the right, we got to the minus 26 million. We were generating 32 million of operating cash and had a minus 3 million in working capital. With the growth that we achieved as a company, also knowing that we had some more receivables related to ERX, it is showing that the working capital made a great improvement also in the past year Thank you very much. Thank you.