Medicover AB (publ)

Welcome to the MediCover Q2 2025 report presentation. For the first part of the conference call, the participants will be in listen-only mode. During the questions and answers session, participants are able to ask questions by dialing pound key 5 on their telephone keypad. Now I will hand the conference over to the speakers, CEO John Stubbington and CFO Anand Patel. Please go ahead.

Good morning, everybody. It's John here and welcome to our presentation for Q2. As you can see here on the headline, we've sort of positioned this as sustained high growth with strengthening profit margins, which I think is really, really good. When asked to frame the first quarter from many people, I think I positioned it as strong. I think to frame the second quarter, our positioning would be actually it's a little bit stronger. You can see strong growth coming through with good operational leverage. And this, of course, is improving our operating cash flow, which we're very, very pleased with. From a growth perspective, 17.1, you know, we're seeing growth in all markets, which is good. A little bit later on, we'll talk you through each of the markets and how it's progressing. But literally across the board, we're in a good position. Most of this growth is organic. As you can see, there's a relatively small amount of revenue that's come through with recent acquisitions. And of course, growing rate revenue is one thing, but at the end of the day, we want to expand our margins. And again, that's really going well for us. All of our metrics from a profit perspective are up. I think I'll leave Anna to talk through that. And this is being driven by our strong Polish market as usual. Pleasingly, our Romanian hospitals are starting to mature, which is what we expected. We've brought in the acquisitions, which has been good for us, and we've got solid volume growth across the board. And what's really nice to see is that our Ukrainian business has improved, and some of the initiatives that they put in some time ago are starting to pay off, is excellent for them because if anybody in our operating sort of network needs good some good news it's Ukraine so absolutely delighted for them healthcare services pretty consistent in terms of robust organic growth and enhancing profitability Polish ambulatory are doing very well sports and wellness again doing well and our fertility continues continues to support as well as the Romanian hospitals that we mentioned earlier. And diagnostics have got growing momentum, which is really good to see. And most of that coming through fee-for-service, which, of course, would be our preferred revenue stream from an ability to control pricing, etc. Leverage, as we talked about last time, is at 3.6, which is the sort of zone we expected. We We'll notice that over future quarters start to come down. So we advised last time it would go over our guidance and then slightly correct itself over the course of the year. Then if we look on the right hand side, you know, you've got revenue 596 up 17%, which is good and organic growth 13.9 again, which is good, really consistent revenue growth from the group, which is exactly what we want. In terms of our profit metrics, it's really strong, 100.9 of 35. So that's great. And 16.9 in terms of margin, which is a nice improvement to see. So congratulations to all the team that have contributed positively to that. And talking about positive things, it's nice to see the cash flow improving at such a rate, which will stand us in good stead for the future. So I think we move on. To look at the revenue and how the revenue is developed, as you can see here on the left-hand side, we've got the graph which shows the previous performance over the same quarter. And what we see here is good, steady, consistent performance by us in terms of our positions being 17% growth, 20% growth, 17% growth. So that's really good to see. And if you look at the pie chart in the middle, you can see that that growth is pretty much across the board. You know, 21% coming from Poland, Germany slightly subdued. But again, we would expect that with the reform that's going on. And I would say that the team are navigating some of those challenges really well. Romania, very, very strong there at 25. India, again, looks relatively low at plus five. But what we've got to remember is in terms of last quarter was very low but in local currencies up to up to 13 percent. And we're quite pleased with the local currency 13 percent sort of jump. And we're monitoring this the start of this quarter and we believe that and improve our position, which is as expected from the commentary that we made last time. And you can see a good contribution from Ukraine and our other parties. our pay mix is pretty much unchanged good growth across the board so it's nice and balanced strong fee for service again which is positive for us in terms of our ability to be able to control pricing and some of the challenging dynamics but supported well by the funded business and the governmental pay which of course is steady consistent pay as for us so that's really really good Healthcare services, you know, strong performance, Poland continues to drive it. So nothing's really changed dramatically in terms of healthcare services. You can see strong organic growth driven almost across the board from each and every business, which is pleasing to see. Whilst that is great, we still have many areas that we feel that we can improve. So we fully expect to continue on the journey of consistent growth in this particular area. As I talked about previously, you can see Indian hospitals is up. and has rebounded and the operational changes that we said that we would make have started to take effect. I don't think that that's a full effect that you're seeing yet in the quarter, so we expect that to mature as we go through the year. And we've got a little bit more immaturity that will come into the system because over the course of the next few days, we've got a 300 bed facility that is being opened. I think it goes fully operational on Monday with a soft opening. So good luck to our Indian team with that new opening. One of the Romanian hospitals, the Polaris Hospital, which is in Cluj, doing really, really well. It's become the biggest robotic hospital in Romania with the highest number of operations. And obviously that's just a facility that's only been open a couple of years. So congratulations to them. In the figures here, you'll see that we had a longstanding sort of position with Hungary where we were going to exit and we fully executed that in Q2. That drops our membership down a little bit, but we still have growth in membership. I mentioned in my commentary that it's a little bit subdued. That's mainly due to the kind of political political situations and the delays with EU funds being deployed in some of our markets. So people are a little bit hesitant, but we fully expect that to to start to flow through. we go through 2026. So even though those headwinds are coming at us, we're navigating it well and still performing at a high level. And I don't expect that to change. We've fully consolidated CityFit. This was the acquisition that we mentioned in Q1. That's come straight into our network and The biggest synergy you get from that course is that your member base that was going to a third party provider now is going to your own provider. So that's fully starting to show in our numbers. So the team have done well to put that in place. Look at the growth. It's very consistent. Look at the margin. It's improving. Look at the membership. It's been adjusted down. But as I said, I expect a little bit more membership growth to come through in Q3 and beyond. And then in terms of revenue growth for the division, it's pretty strong across the board. You've got the 21%, as I say, 13% for Indian local currency, 5% in euros and other areas doing well. We've got a pretty consistent payer mix and it's a healthy one. So that's positive for us. And then if we go to diagnostics, very encouraging for diagnostics. I think what you can see here is the building of some momentum. Part of that momentum is coming from the fee-for-service area, which is exactly what we would want to see. The SynLab acquisition has come into the business. We've started with our synergies and started to execute, and some of those have been done. There'll be others that will take effect over the course of the next few quarters. So that's very positive for us. And of course, it's had a big impact in terms of the number of tests that we do. So our overall test volumes have increased quite well. Germany, revenue growth, as we talked about, is fairly subdued, but really the reforms that came towards us, I would say the team are navigating that well. They are quite challenging. We've got to do more efficiency and put more things in place, but the team have done well, so that's good to see. Ukraine, strong growth driven by public pay and our ability to be able to also do fee for service with some of the customers that come and help sell and do other products. So that's worked quite well. And a couple of important developments from a genetics perspective, as you can see here, that our liquid biopsy portfolio has, they're doing some, clinical research that has gone well and looking for clinical validation of that and the first phases of that have been done and been really well received by the medical community. So we look to see that develop over coming quarters and years to see and see how we can can increase our exposure in that particular area. And we've integrated our technology with element biosciences, which gives us extended distribution capability, which again, we're quite excited about and looking to see how that will develop over coming quarters. If you look at the division's revenue, up 16%, very, very positive. If you look at the margin, We've got increasing margin, very, very positive, quite a big increase in the lab tests. No significant change really in the mid-test. And I'll hand over to Anad now really to talk you

pleasing to report another strong set of numbers from us and a continuation of the trend of prior periods so to remind you of the themes that I think are important so one double-digit organic growth so done that consistently now for a while number two is margin expansion across all profit measures and pleasingly not just EBITDA and EBITDA which we speak about a lot but actually now you can see that it's coming through in net profit and EBIT as well I'll take good cash numbers and debt leverage in line with prior guidance, which we've given. And I'll talk a little bit about the expectation for the end of the year. And finally, we're on track, as we've said before, to beat our 2025 targets that we've set previously. So in terms of going into a little bit more detail on that, so you can see that revenues in total were 597 million. John's touched on that. Overall growth is 17.1 with just under 4%. organic, which is pleasing. The EBIT numbers I'll just touch on now as well. So EBIT up 96% year on year at just under 42 million. And material margin expansion of about 280 basis points to 7%. And net profit tripling as well. So we normally have always spoken about EBITDA and EBITDA in the past, but actually as we see improved capacity utilization flow through all lines of our P&L, naturally our EBIT and net profit improves, which gives us good Soundings for the future. So that's pleasing. In terms of other things to note, I'd say actually our net cash position was good. I'll talk about that in a later slide. And up year on year, and our earnings per share tripled to 12.7 euro cents in the quarter. And the final point to note from a cash flow perspective is that we did pay the dividend of 15 euro cents per share, turning to just under 23 million euros in Q2. If you look at healthcare services, John's touched on this. So the pleasing thing for me, a lot of organic growth, as John said, of 15.6% and broadly split 8.7% is price with the balance being volume. And you'll see on the next slide that actually on diagnostics, we've had good volume growth as well. So pleased to see that actually we can expand our pricing as well as generate volumes through our network. EBITDA of 53.5 million with margin expansion materially from a rate perspective. So what you can see in healthcare and diagnostics, again, a continuation of prior quarters in terms of margin expansion, but obviously the healthcare numbers you've seen this quarter are a lot stronger. So healthcare is up 3%, whereas diagnostics is up 1.5%. So still strong numbers. And what you can see, if you talk about the hospitals for example, you can see that in Q1, we had the loss-making immature hospitals contributing 3.9 million of negative EBITDA. That's going in the right direction in Q2, so that's 2.7 million impact now. But as those mature through their maturity curve, we expect them to, if they got to zero, add on another 0.7% within healthcare. So still room to grow, but as John said, there'll be new hospitals opening one in this quarter that will kind of bring the number down again. The pleasing thing I think to note is as we fill our capacity and all the infrastructure that we've built in the prior quarters or the store room to go in terms of what we can do, our medical ratios come down naturally. So medical ratios, you know, improving by about 2% year on year in the quarter. In terms of diagnostics, I would say strong growth again. So again, organic growth of just under 10%, with the majority of it being volume, with the price being about 3.5% of the growth. Again, strong numbers across EBITDA and EBITDA. What we did have in the quarter, which we'll talk about later, is obviously the SYNLAB acquisition. So we added on circa 27 labs and 92 drawing points. So that adds to our non-financial KPIs in terms of number of facilities. As there were challenges in Germany around obviously the public pay model, then clearly I think the team had done a good job in terms of the rest of the countries that were in diagnostics as well. And again, just to reiterate what I said earlier in terms of good price and volume growth from diagnostics as well as healthcare. In terms of cash and other financial metrics, so leverage at 3.6 times in Q2, you know, we've guided to that in the past and we've also guided to the fact that we'll be nearer three by the end of the year and we stand by that. And obviously in terms of the other material thing to note is as we did the two acquisitions in Q2 this year, we've increased our net debt by 178.2 million. Remember, we bought those two acquisitions because we expected it to be revenue accretive and margin rate accretive from this year we still expect that to be the case in terms of the effective tax rate 28 so that's pretty much in line with q1 and i've provided earlier that actually the range for this year will be between 26 to 30 so nothing different there and from a net cash operating perspective up year on year as a consequence of the margin expansion impacting our profit numbers flowing through into cash And finally, I think on this slide, I'll just talk about ROIC. So I think, you know, if you remember our Q4 statement, you know, our ROIC was 6.7%. We said that there'd be kind of, as we fill the infrastructure and as we get improving margins, we'd see an uptick in our ROIC numbers. And we're pleasingly seeing that this year reasonably quickly. So at the end of Q2, we're at 9.3%. We know there's still some way to go, but we expect to be double digit by the end of the year. In terms of capex and other investments, I think in terms of total capex spend in Q2, broadly the same as Q1, so we spent 27 million euros, which is 4.5% of Q2 revenue. However, we've previously guided that our capex spend this year will be between 5.5% to 6%, so clearly the capex will be back-loaded into H2, so back to your models. The other thing in terms of space, I would say, so currently we're at 970,000 square meters. In the quarter, we added on 55,000 square meters of space. And that's probably around the two acquisitions that we've made, the 26 gyms and the SynLab acquisition, which have basically 27 labs and 92 blood drawing points. And finally, from a target's perspective, I mentioned the start, you know, and Frederick said this last time and John's saying it now. And I'm saying the same thing again in terms of we will exceed these targets. Our revenue will be in excess of 2.2 billion. Our adjusted organic EBITDA will be in excess of 350 million. The numbers, the other profit measures quoted on the bottom right, we will exceed those as it stands today. a number below 3.5 and closer to 3 by year-end. So before I hand over to John, just to summarize what I said at the start. So double-digit organic growth, margin expansion across all profit measures, but pleasingly in EBIT and net profit, good improvement in EPS and ROIC, strong cash, and on track to exceed our targets.