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.

Good morning, Olaf, Henrik, and Irina, and thanks for taking my three questions. There's not much to criticize, but it looks like the growth in the German non-AREX business decelerated somewhat in June. Was this driven by tougher comms, or did the heatwave in Germany have an adverse impact on your business? Secondly, on competition, a recent headline suggesting that Rossmann plans to launch an online pharmacy this year did not really come as a surprise, but they still created some uncertainty among investors. Given that DM does not appeared to have taken any market share from you so far. And given that ARIK's offering is significantly more complex, how do you view the risk of Rossmann entering the online pharmacy market? And then finally, on the regulatory environment, as part of the recent changes, prescription medicine must now be delivered against a personal signature. I'm wondering whether this has any implications for last-mile delivery costs. based on the website of the largest parcel delivery company, it looks like that this could potentially increase the delivery charges by 19 cents. Is that correct?

Okay, so thank you very much for the questions. Maybe I will try to answer the first two, Henrik, and then maybe you take number three. But I mean, feel free to step in now. So yes, I mean, Phamacy Unsp-Adr Phamacy Unsp-Adr Phamacy Unsp-Adr Phamacy Unsp-Adr Phamacy Unsp-Adr Phamacy Unsp I think I mean you raised the question and to me are you partly at least also answered it already a little bit because I mean we saw DM stepping into the market and as of now but only as of now it looks like it does not have a significant impact on our business and I would now try to apply that learning to the Rossmann piece because I mean it is it is somehow obviously not so easy to enter our market. We are positioned as a pharmacy. We are growing strongly. So therefore, it doesn't seem to be so easy to get into that market. And personally, I think that the RX is even a little bit more complex than the non-RX. So therefore, Rossmann said, and we don't know, but I mean, they said they also want to offer RX, but to me, probably even a little bit more difficult than the non-RX piece.

And on the regulatory, Hendrik, would you like to step in? Yeah, I can confirm what you're saying, Jan. You're right. The personal signature is actually adding some cost. It is a service that carriers provide, but this cost is not significant. It's included in our forecast. It's on an annual base less than a million. So yes, we will use this service and it will cost, but it doesn't change fundamentally the economics of the Rx business.

And maybe just one note. Because I said this earlier, formally it has not been adopted yet. I mean, I think it's important to understand there has been a ruling in the German Bundesrat on the 10th of July, but it's still on this specific regulation that was the number three I mentioned in the presentation. It still needs a final approval from the Ministry of Health. We expect this in August of this year, but again, we still need to have this kind of approval.

Thank you. One follow-up, if I may. It was helpful that you included the statement on the current trading. So given that the summer holidays are on the way, Jim, it makes sense that growth rates are coming down a bit. But how should we interpret the below 20% growth in July? Meaningfully below 20% or just slightly below that level?

Yes, we are softer. We are slightly below the 20%. We have not yet fully finalized as well the month, so the numbers are just settling in. We don't see any structural changes. So our non-AX business in Germany has oscillated around 10% in the past. As Olaf said, we're experimenting with pricing to optimize the trade-off between growth and profitability. And then, obviously, we have, as well, expected a slowdown in the RX growth rate. So this is not a surprise. But we wanted to signal that the July trading is not at the same growth rates as published for Q2.

Thank you.

The next question is from Guillaume Galland, Barclays. Please go ahead.

Hi, everyone. Hi, Henrik and Irina. I have one question, maybe. Looking at the Rx active customers, I think you added roughly the same number in Q1 and Q2, around 100,000. So I was wondering, but you curated the Rx growth, which is good. Just wanted to have more color on the current underlying trends in customer acquisition. How much is coming from OTC conversion? How much is more new Rx customers, given you did flag some softness Thank you very much.

Okay. Maybe I will give it a try. So when we talk about active customers, that is, and it's not identical to new customers. So, you know, active customers, sometimes you win customers and also sometimes you lose customers. So if we add 100,000 active customers, that means our new customers are higher than the 100,000. Phamacy Unsp-Adr Phamacy Unsp-Adr Phamacy Unsp-Adr Phamacy Unsp-Adr Phamacy Unsp& So they all love the system. So it's really more about how we can bring this across this change of behavior and adoption. That is the challenge ahead and it is with our existing non-Rx customers as well as completely new customers.

The next question from Olivier Calvet, UBS. Please go ahead.

Yes, morning all. I just have two questions left. Thanks for the marketing disclosure. I guess my question is more on the S&D X marketing. So you're obviously doing automation investments. I'm curious if you'd like to comment on a level you think is Fair to bear in mind when it comes to S&D ex-marketing as a percentage of sales and if that's any different on the German side or the dark side, should I say, versus international. That would be the first question. Then secondly, Hendrik, you disclosed or you talked about working capital dynamics in RX, which is definitely fair. Do you have a sense of the level of working capital you need as a percentage of sales for Rx and then non-Rx, because that would help us a bit in the cash flow projections. Thanks.

Yeah, thank you Olivier for the question. So you're right that in selling distribution we are as well continuously make progress with automation, all kind of The biggest step change going forward will be the impact of the 7 automation. We mentioned this before. Roughly 0.5 percentage points improvement due to the increased productivity, roughly 77% reduction in labor content for the fulfillment. So that is a big step change. The project is on track and then this will start to provide tailwind for us. in January, February 27. But there's a multitude of smaller initiatives. As you can imagine, there's multiple processes, whether it's fulfillment or customer service, where we constantly improve and every month basically bring down the cost per order. But the step change, as I said, is one big project. On working capital, Yes, as you pointed out, it is a higher working capital need for our X business. We have so far not provided guidance on cash flow. We're working on that. Cash flow obviously becomes increasingly relevant now as we're going to be profitable and our positive cash flow is something that will fundamentally be of interest for investors. But we are switching to this in 27. So we will not provide any P&L or segment view Rx versus non-X, but we will provide more guidance around free cash flow going forward, but not for this year. It's not a guidance metric.

Understood. And then maybe just one follow up on, I think, an earlier question on the sequential development of your business in the second half. So in H1, you've done 19% group sales. You talk about sort of growth below 20% for July. But the guidance is, you know, 15 to 17% and the comps get a bit easier in the fourth quarter. So just a few comments there on what you expect in the second half would be helpful. Thanks.

Yeah, as we laid out, there is obviously the deceleration of the IX growth because of the higher baseline, especially as you start to let in 25, where we had the bonus as well. So this is fairly predictable. We don't think that there is a massive change in new customer acquisition. As Olaf pointed out, we're working hard on spending marketing wisely on our customer acquisition. But this is much more granular now as we have shifted our focus on online acquisition versus trying to acquire customers via TV. So from that perspective, we expect a fairly significant slowdown of the RX growth in Germany. Our non-IX business has obviously importance for our profitability overall and is as well an important anchor point for our nearly 15 million customers. So we are planning our business long term. We don't want to milk the business and just increase prices and sacrifice long term growth and customer engagement. We want to continue to earn the trust of our customers that we have competitive prices and therefore in this environment we want to keep the flexibility to reduce prices as well, obviously to the detriment of margin to make sure that we continue to have a very vibrant business and with this background we think at this point there There's no reason to change anything in our guidance. We are fully on track. We are finishing a very strong quarter. We have a very positive outlook. We are bullish on our business. But in the end, it's not about Q3 or Q4, but building a strong business for the long term. And that requires some financial flexibility. Thank you, Hendrik.

As a reminder, if you wish to register for questions, please press star and 1. The next question from Sven Sauer, Kepler-Shiver, please go ahead.

Hello, hi all, thanks for taking my questions as well. The first one is on Switzerland. I'm not sure if we spoke about this in the previous conference calls, but in June there was some press news about Switzerland potentially introducing electronic prescriptions. and as well also making amendments to being able to also enable OTC mail delivery. I was just wondering what your thoughts are on this and what we could expect from this in the future and if it would be a big hurdle for you to ramp up your Phamacy Unsp & Adr The CardLink license extension expires on 31st January of 2027 and that the Proof of Patient Presence Phase 2 rollout starts in Q4 2027. So I was just wondering what the bridge is going to be from January until Q4.

Shall I give it a try? So, thanks for the questions. First of all, on Spitzer, yes, you are completely right. I mean, it looks like there's a change in the regulatory framework. On the one hand, non-Rx, on the other hand, also on Rx. Yes, and if you can recall, the reason, the strategic rationale for our joint venture with Galenica was really that we have a foot in the Swiss market. and part of that is also of course looking waiting for regulatory changes so therefore we think we have a very good setup together with our partner and approaching now the potential changes going forward i mean they are not confirmed but at least it looks like there's a development going on and again together with our partner we are in a very good position to capture to capture this opportunity On the regulatory roadmap, I think you looked into the details. I like that question. You are completely right. So what it looks like is that we will have the final, let's say specs for POP will only be available by the end of this year. And the final specs are only available by the end of this year. Then based on those specs, I mean, the new product needs to be developed and that probably will take some time and the rollout will not be ready before Phamacy Unsp the end of January of 2027. So therefore, we have applied for an extension of our card link license. And we expect the answer from Gematik at any point in time. But I mean, if you recall it, I mean, we already had this once. So the card link has been extended once because of the same situation. So we don't see any reason not to believe that there will be any Let's say challenges on the extension, and it's not only us, it is also all of the other players, including also brick and mortar pharmacies. To me, it's a formality, but you're right, we need to get an extension on Card Lane to bridge whatever the timeframe looks like for the full implementation of POP step two.

Great, thanks. And on ramping up non-RX in Switzerland, do you already have relationships with wholesalers or would this be a process that takes several months?

No, I mean, look, we have a strong partner in Switzerland. That's the setup we have there. So we feel really comfortable to answer all of the challenges. But please also keep in mind the regulatory framework still needs to be developed. So this will also take some time. So it's not that from tomorrow on something is going to happen. So it takes a long time to get the regulatory framework right. And we will use, of course, the time together with our partner to prepare whatever is needed.

Great. Thank you.

For any further questions, please press star and 1. There are no more questions at this time. I would like to turn the conference back over to Mr. Heinrich for any closing remarks. Thank you.

Yes, thank you very much. Thank you to everybody for joining. Thanks for the questions. We tried to give some more transparency and more data so that you can model us a little bit better. Thank you very much for the questions and see you next time. Have a great day.