Redcare Phamacy Unsp/Adr

Yes, thank you very much and good morning to everybody and very warm welcome from our side. Let's have a look at the agenda of today. So first of all, we would like to start with a recap, then a business update, afterwards financial updates, and then we have plenty of time for a Q&A session. So if we go to the next slide, let's start with an update on the guidance. As you know, we increased our 2026 guidance for revenue growth and profitability back in June. And I want to start by walking you through what changed and why. Total revenue growth, we moved the range up to 15 to 17% from 13 to 15% back in March. Rx in Germany, we now guide to 680 to 720 million up from more than 617 million previously, mainly driven not so much by new customers but by higher baskets. Non-Rx growth now 10% to 12%, up from 8% to 10%. And adjusted EBITDA margin now 2.5% to 3%, up from more than 2.5%. And the main drivers are broad-based, strong Q2 tradings across all business segments, continued RX adoption, especially on higher baskets, sustained acceleration on non-RX operating leverages, combined with continued efficiency improvements. So this is not a one-off effect in any single area. It's a broad-based approach, and that's why we lifted the guidance for the entire year. Let's have a look into the regulatory framework. Germany's recent health care reforms provide a stronger and more predictable regulatory framework for online pharmacies. And I want to walk you through three specific pieces of the regulation. So first of all, the regulation on pharmacy pricing. And this has already been adopted. The fixed price dispensing fee, you know, the fixum we always call it, will increase from 8 euros 35 to 9 euros already starting 1st of July of this year, and there will be a further increase to €9.50 effective January 1st of next year. Secondly, a law on healthcare. This is part of a broader reform debate in Germany on healthcare, and this has also been already adopted. Part of that is that the mandatory pharmacy rebate will increase from €1.77 to €2.70 1st of January next year, which is then a partial offset to the increase in the fixed home. And then the third one, and we have been discussing this also in previous session, is the regulation on pharmacy operations. This one has not yet been adopted. Final approval by the German Federal Ministry of Health is expected for August 2026. But what's important is the direction. The regulation confirms that pharmacy operating obligations remain with pharmacies and are not extended to logistics providers, which strengthens the legal certainty for online pharmacies. Overall, I would say we have a great regulatory framework in which we can operate as an online pharmacy. If we go to the next slide. Let's talk a little bit more about non-Rx development in Germany. You know, this has also been a tension point since mid of last year. So non-Rx business growth in Germany accelerated from 9 to 12%. As the broader market recovered, non-Rx Germany went back to double digit growth, which is generally good news after the soft quarters we talked about earlier. Looking at the acceleration from Q1 to Q2, Of three percentage points, we see that unit sales growth increased one percentage point and a further two percentage points came from price and mix. Gross margin for non-RX in Germany improved by more than two percentage points quarter over quarter. Overall, very good development, but the German market remains volatile and an attention point also for the second half of this year. Let's now have a look into the business update. And we can probably start with one slide at the beginning. You know, 25 years of RedCare, just one upward curve. This year marks 25 years of RedCare Pharmacy. And looking back, it has really been a success. From a local pharmacy in Cologne in 2001, it's even difficult to say, 2001, 25 years ago, to the market leader in five out of seven markets, serving 14.7 million active customers across Europe. We have become Europe's leading online pharmacy. A few markets worth calling out along that journey. Our IPO in Frankfurt in October 2016 at 28 share price, crossing 1 billion sales already in 2021, the launch of ERX in 2024, and almost 3 billion of sales in 2025. And what I'm particularly proud of is this growth has been broad-based. Since our IPO 10 years ago, we have delivered a decade of double-digit growth with only one year just shy at 9.7%. Our active customer base has expanded tenfold since the IPO. That is perhaps the clearest demonstration of what these 25 years have been about, earning trust, of more and more people year after year. Looking back, we are proud of what we have achieved so far, but even more important, we believe the opportunity ahead of us is significantly larger than what we have accomplished so far. So let us shift our focus now from 25 years of growth to our performance in the second quarter of this year. Let me walk you through the business highlights. First of all, as I said, we reached 14.7 million active customers in June, 9% up year over year. Our RX active customers in Germany reached 1.7 million, growing 4% quarter over quarter. RX Germany sustained growth in the high 50s, and our RX NPS, now it is at the highest level since launch at 77, 19 points up year over year. And importantly, we have trimmed marketing spendings and increased prices while keeping growth high. So I want to send the message that this growth is not being bought via advertising. Let's have a look a little bit more into the details. Another very good quarter for RxGermany. So far in H1, our growth sustained in the high 50s. I would like to give some kind of color to the number in Q2. So you see a slight increase from 55% in Q1 rose to 58%. This is not a sign or signal of accelerating momentum. It is more technical kind of piece. In Q1 2025, we carried out a heavy marketing campaign. You remember, it was the end of 24 and the beginning of 25. We call this the marketing boost. and whereas we reduced marketing in Q2 of 2025. So Q1 of this year is lapping a hard comparison and Q2 of this year is lapping an easier one. So therefore growth rates of 58%. And please do not forget from September on, we will face also month compared to previous years where we already offered a bonus. So we will see a slowdown in growth rate just by nature. If we go to the next slide, You can see RX customers show higher basket values and rising satisfaction, and I think this slide captures it pretty well. The RX average basket value is up 14%. Main drivers are higher priced medications, confirming the increased trust and acceptance from patients to our online pharmacy. The mixed order rate, the share of RX orders, that also includes non-Rx items is stable at 42%, so customers continue to consolidate their shopping with us. To further increase the share, we will optimize our one-stop pharmacy value proposition and our product. The Rx Active customers grew from 1.5 million in Q2 of last year to 1.74 million in Q2 of this year. The slowdown in the active customer growth clearly shows the main challenge ahead of us on Rx. It is about change of behavior and adoption on the customer side. The NPS on the Rx improved from 58 to 77 over the same period, which is the highest level up to date. This confirms our superior value proposition. So once patients have used RedCare, they are very happy customers and Good news, they are also returning customers, which we can see on the next slide. This slide you should be familiar with. We have shown it already a couple of times, but the story, the overall story stays the same. New Rx customer cohorts continue to generate more revenues and more gross profit than new non-Rx cohorts. Looking at index accumulated revenues per new customers, across all four 2025 quarterly cohorts. So Q1 to Q4 2025 cohorts, you can clearly see that the gap on revenue is widening with each quarter. After six quarters, including the initial quarter, sales is roughly four times higher with Rx customers compared to non-Rx customers. And main drivers, as you can imagine, is retention, basket and frequency. RX customers, they are very sticky. Once they are in the system, you can also see this on the high NPS, they really like this system. So they are returning a very good retention. They have significantly higher baskets. And of course, the frequency is also higher because those customers are chronically ill patients. And by definition, at least how the German healthcare sector works, you have to go each quarter to a doctor and receive a script. So that means there's a frequency given by nature Phamacy Unsp and therefore retention basket and frequency is driving this. And on index accumulated gross profit, that's the part on the right hand side, the pattern holds at roughly two times for RX versus non-RX customers. And what I want to highlight here is the consistency of the cohorts. This is not a one quarter effect. It holds across every cohort we have onboarded through 2025. This gives us the confidence that this is a durable feature of the RX Customer Economics. If we go to the next slide, it's for the first time that we are giving you some insights into marketing. The main reason is to give more transparency and allow you to better understand and model our business. On marketing, we believe for the time being, peak spend is behind us and we are now in optimization mode. Both DACH and International reduce marketing spends by roughly 200 basis points year over year. At the same time, we continue to optimize the marketing mix, testing new formats, new channels, especially for the RX customer acquisition. Our plan is to stay around 5% of revenues in marketing spend through the remaining part of the years. Having said this, I would like to hand it over to Henrik to take us through the financials.

Thank you all and welcome everybody. So let me take you through the financials of Q2. Starting with revenue, revenue was up 20% year over year versus 18% up in Q1. We see strong growth in both segments. DAG was 21% up versus 90% in Q1 and international grew 17% versus 16% in Q1. So we accelerated across the board. And as Olaf mentioned already, we achieved this revenue acceleration whilst improving quarter over quarter our non-AX gross margin in Germany. Our adjusted EBITDA margin increased 0.9 percentage points to 3.5% in Q2, and this is the highest EBITDA margin we've delivered in 10 years. It confirms that we are on the right path towards our guidance for this year and our mid- to long-term profitability goals. We work hard every day to structurally improve our profitability, and we continue to invest in the long-term roles of our business instead of focusing on short-term profit. Next slide, please. Let's look into revenue in more detail. Our X grew 34%, and X in Germany was up 58% year-over-year. This is better than the 55% in Q1, as Olaf explained. This does not imply a structural change of Rx growth trends. These growth rates will decrease in the second half as the baseline increase. We are very happy with our Rx business in Switzerland, our midi service joint venture, which grew 13% adjusted for Forex. This business operates in a more mature market for what we call specialty Rx. Non-Rx grew 13% for the group compared to 10% in Q1. Looking at DACH, revenue in DACH was up 21% year-over-year, with RX up 34% and non-RX up 11%. We have increased prices slightly in Germany, as Olaf showed, and we monitor closely the impact of these changes on top and bottom line. After testing in Austria, we have now started as well to use AI in Germany to optimize our prices. Gross profit margin decreased from 23.3% to 21.3%, with 1.1% contribution from RX, which continues to be headwind as the RX share obviously continues to increase, and as we're still having a prior year without the RX bonus. Non-RX was an 0.8 percentage points headwind despite the improved gross margin in Germany quarter over quarter. And you see that retail media, It's as well a bit of a drag still with 0.2 percentage points, Hedrend and DACH versus minus 0.3 in Q1. So we are catching up a little bit, but the majority of the catch up will actually happen in H2 as we improve the capacity and the automation of campaign delivery for retail media. Switching to international, you see that an international revenue was up 70% year-over-year. and gross margin was stable at about 26%. Looking at the gross margin bridge here, you see that retail media contributed a positive 0.8 percentage points in Q2. So in international, the catch-up on campaign delivery has already happened. Whilst in DAF, we are still doing this and on this for H2. And that means that for the group overall, retail media had no impact on the year-over-year gross margin impact, whilst it had actually negative 0.5 percentage points impact in Q1. Okay, so looking at margin expansion, you see margin expansion is on track across both segments as we trim marketing spend and as we see economies of scale in all areas. International has reached breakeven in Q2, which is an important milestone. And you see we moved from minus 1.5 to a positive 0.9 percentage points. Three out of our four international markets have been profitable in H1. Our French business is still too small to really scale, but we are working on this as well. So, summing up. If you look at this slide, you see a lot of numbers. We have talked a lot about Q2, so I will focus on H1. Revenue increased in H1 from 1.4 billion to 1.7 billion, so up 19%, fueled by the strong growth of our X business in Germany. As explained, this fueling will slightly decrease in H2. Gross profit margin decreased 2.1%, driven by a higher share of X. But as well, due to gross margin compression in non-RX, as we discussed, marketing improved 2.1% year-over-year to 5.6%. And we plan to keep it roughly at that level. And we will continue to invest in our brand, including doing TV advertising. We see as well scale in other selling and distribution expenses with 0.4 points improvement year-over-year and administrative improved as well by 0.2 percentage points. So bottom line, EBITDA margin was 2.6% in H1, up 0.7 percentage points year-over-year. So exactly in line with our guidance that we will improve margin between 0.5 and 1 percentage points in 26 versus 25. In absolute terms, EBITDA is more than 60% up year-over-year, and we're very happy to report a positive EBIT of 9 million in H1. Let's move to cash flow. So despite the significant increase in profitability, we have not been cash flow positive in Q2. We are working on improving our cash cycle with a focus on inventories. Being in stock and having a high availability is very important for our customers' experience, especially in the Rx segment. And we are working on improving our SKU level forecast so we can achieve this high availability without having to overstock. We have also an impact of 7 million in Q2 due to the ongoing automation project in 7M. The project is on plan and we'll have about 30 million ahead of us to fully complete it. in H2. Overall, if you look at our cash flow and working capital, please keep in mind that our Rx business is more working capital intense than our non-Rx business. This is especially true for accounts receivables. In non-Rx, we get basically paid at checkouts, whilst for our Rx business, we get paid by the health insurance system, so the Krankenkassen, which takes more than a month. We continue to invest as well in our IT, especially in our AI infrastructure, and we are building this out every month, obviously as well, with the objective to improve our scalability and efficiency long term. Moving on to what is ahead of us. So July trading has been soft. We expect group growth below 20% for July and a single-digit growth for our non-ex-business in Germany. As Olaf already pointed out, we begin to lap in September the introduction of the bonus in 25, which obviously has fueled a lot our ex-business in Germany. And we have as well made a change to the cadence at which we are updating you on the business, so we will Merge our revenue and profit updates to one publication per quarter, with the exception of the early January trading update that we will maintain. So with that, I'll hand it back to the moderator for Q&A.

The first question is from Jan Koch, Deutsche Bank. Please go ahead.