Medicover AB (publ)

Morning everybody, it's it's John here and welcome to our Q4 results. It's another good quarter for us. We've made some good progress. We've got continuing strong performance, you know double digit growth again and we're seeing margin expansion which is Really, really pleasing. You know, the performance remains strong. We're seeing that with good demand across all of our markets and particularly from our fee for service segment. Margins are improving and good cost control in place. So we're well positioned. We predicted a bit of softness in some of our lines in the previous quarter and we have seen that and we said that it would continue for a little bit longer. But we do see the beginnings of signs of recovery, certainly in Q4. So we're watching this space as we go through to Q1. We've got continued organic growth and profitability improvements in healthcare services, particularly driven by our sports and wellness business and our ambulatory business. Our diagnostic services team, they've continued their momentum. They've got double-digit growth in all of the fee-for-service markets and really strong volume tests that have increased. So well done to the team there. It's really great to see. We predicted that our leverage would come down and we see that happening. So down at 3.1 and the board has recommended a dividend increase, which I think really reflects our progress. On the right hand side, you can see organic growth 10.6, which is really solid. We see continuing operating leverage coming through on our adjusted EBITDA, you know, plus 20, 20.9. So again, an encouraging sort of trend for us in the fourth quarter, different season, different quarter. And in terms of margin improvement, you can see that that's followed through as well with a really decent margin increase. Operating cash flow, very pleasing indeed, up 56%. So that's very good for us and a good quarter from that respect. If we move on and look at it from a different perspective in terms of our growth, we've got, as I said before, continued double-digit growth coming through the business. Again, just to remind everybody, this is despite the fact that we've exited Hungary, so when we take the Hungary figures into consideration, it increases even further. Revenue by country, there's a bit of a change in some of the numbers here, but Poland's strong. Germany reflects the reform change that we're going through, that we're still navigating well. Romania, a decent return for us. And India, from a Euro perspective, they're seen as zero. which is kind of in line with some of the comments that we made in the previous quarter. And we're seeing some good momentum, which we'll talk about later. From a payer perspective, it's relatively stable. If you look at healthcare services, healthcare services have got good revenue growth, 8.5% from an organic perspective going up to 11%, a good percentage of that coming from price, which reflects our position of when we've been dealing with inflation that we've not been scared to be able to you know show the power of our proposition and make sure that we get the right price to deliver the right services so the team have done well there india revenue 14.7 in local currency and remember this is states in October. And, you know, momentum, which I think is the most important word for us when it comes to India, our momentum is increasing. And I've always said that this is the business end of our journey in India when it comes to IPO and that we need to get our figures into the right kind of order. And it's pleasing to see that the kind of doctor recruitment that we've done is now starting to see the first signs of maturity. Sports and wellness, key contributor to the FIFA service growth, as well as a bit of margin improvement. So our move into that space has been very, very successful. If you look at our membership, our membership growth is relatively small. But of course, we've taken out one of our key countries in terms of Hungary in that journey. And we have to balance this up with how our business has moved over time. We're a much bigger fee-for-service business nowadays, and that's one of the reasons that we took the decision to share with you the customer relationship number within healthcare services. And as you can see, Q3, when we gave it to you the first time, it was 3.6 million. We're now up to 3.8. Growth on the right hand side is good. You can see the revenue mix by country is again pretty stable. And from a margin perspective, we've got a very strong margin improvement in healthcare services going from 15 to 17. So, you know, really pleasing progress from the team. if we look at diagnostic services the momentum continues so congratulations to everybody in diagnostics revenue increased by 13.5 organic was 9.3 price was a smaller part of the increase here remember that a big part of our business in diagnostics is in germany and the regulations on price in germany were affected by the reform. We've got double digit growth in all of our fee for service markets, and that's been further supported by some public pay, particularly in Ukraine, who have had an incredible year and did incredible work considering the conditions that they operate in. So a big thank you to our team in Ukraine. based upon the fact that they're doing a fantastic job despite the circumstances. Germany, private pay growth. Again, we're seeing signs of that starting to move up as a consequence of the public funding But overall, if we look at all of 2025 and consider the reform that happened in Germany, we've really navigated that position well. And we mentioned earlier that we've got strong test increases, you know, increased by 17.6%, which is a really good result for the team. So if we go across, we've got good growth in revenue. We've got a relatively stable revenue by country, but some really good increases in different lines. We still have a margin increase. in diagnostic services as well 17.3 from 16.1 which again is really pleasing and and here you can see the lab tests starting to move up and that that be strong some of this momentum of course is caused by Copernicus which has started to the synlab the sorry the synlab acquisition which is starting to show through in our numbers and as expressed before we're fully on track now with our our activities in that area. If we go and have a quick look at 2025, I think 2025 was a very strong year for us. We've made significant progress as a team. We've got organic growth of 12.7. Our revenues overall has grown 13.7 and really, really good. We've made excellent progress from an EBITDA perspective, good progress from a margin perspective. Cash flow really good and a positive impact from a dividend perspective. So we've got a really strong track record in terms of stating the direction that we'll take over a three year period and looking to make sure that we outperform what we say. And if you remember back three years ago when we first went through these numbers, it was seen as quite a challenging position for us. We've navigated the German reform really well in 2025. I think we've got another quarter to go before we see the that we've done have been embedded very, very well. And as a consequence of that progress, you can see that our return on invested capital is increased quite nicely and getting into a more appropriate zone. So we're really pleased with that. And then if you look at the 23 to 25 targets, you know, we're in a position, a very lucky position, a very privileged position. A lot of hard work has gone in to be able to deliver this. But, you know, we're basically saying from a revenue perspective tick, from an EBITDA perspective tick, from a leveraged perspective tick and from a dividend policy perspective tick and then even if we look at our alternative measures we've got a couple of ticks in the boxes there so it's nice to see so many things being ticked off and being achieved but this is all history now, it's all part of our past it's not part of our future and we'll move on as we go through today and tomorrow to tell you much more about how we intend to improve on this over future years. So now I'll hand over to Anad who will talk you through more of the financial details of the quarter and I'll come on at the end and then we'll answer the questions.

Thank you, John, and good morning, everyone. So as John said, another solid quarter for Medicover ending FY25. So from a revenue perspective, 611 million, which is double-digit growth on the total revenue, on the total basis, and also strong organic growth year on year, which has already been mentioned. In terms of profit measures, good year-on-year growth in terms of margin growth. Hence EBITDA and the EBIT lines were growing faster than our revenues. So if you look at EBIT, for example, in the quarter, EBIT of 35.2 million. Strong growth with margin of 5.7%, which is 150 basis points year-on-year. And also another thing to note is, I would say, net profit of 17.3 million at a margin percent of 2.8%. So strong flow through of our revenues into the quarter. And the final profit metric I'll talk about is the EBITDA number, because also leases are a part of our cost base and how we grow our business. So EBITDA of 57 million, up 30%, with margin rate of 140 basis points year on year at 9.3%. So I would say a solid quarter and in line with the messaging that John and I gave at the end of Q3. And if you look across the business units, it's again, similar messages of growth that we saw in prior quarters, but not as pronounced year on year, I would say. So looking at healthcare first, organic revenue up 11%, price driving 6% and volume driving five, EBITDA of 72 and a half million, growth at 23%. And John's already mentioned that we had margin expansion of 200 basis points in the quarter. So really pleasing. I guess I'll touch on the EBITDA loss on the immature hospitals. So year on year, the loss is slightly less, moving from 3.3 to 3.1. Quarter on quarter, though, as we basically opened a new hospital operationally, then the loss increased from 2.7 million to 3.1 million in the quarter. So I would summarise that as a good quarter for healthcare and doing what we said we would do. In terms of diagnostics, John's already said it was really strong performance by the team, so well done to them. So organic growth of about 10%, with price driving 3% and volume driving 7%. We talk about Germany a lot, and I think even in Germany, although we have the reduction in prices, we're still getting good, strong volume growth in that market. From an EBITDA perspective, 33.3 million, growing 120 basis points year-on-year to 17.3%. And John's mentioned, you know, there's good kind of move in terms of the FFS markets and a positive performance in Germany as well, I think, from a payer mix potential. So in summary, a strong quarter to end the year in diagnostics too. So if I wrap up the full year, I guess I would say a stellar year in terms of consistent growth across both business units with double-digit revenue growth and profit measures growing faster than revenue, resulting in improvement in margins. The other thing I'd add is actually a really strong performance in cash and a step up on return on investment metrics too. Highlighting a couple of measures, so revenue just under 2.4 billion, growing 13.7%. EBIT more than doubling to 155.7 million at a margin rate of 6.5%, which is up 310 basis points year-on-year. And EBITDAO of 243.1 million, growing 40%, up 190 basis points year-on-year. All the above leading to a really strong EPS. So our EPS was 51.4 euro cents, up from 11.2 euro cents last year. And as John's already mentioned, we beat the externally guided targets that we gave you for FY25 across all measures. On this slide, you can kind of see what some of the other metrics are. So from a leverage perspective, John's talked about it already in terms of 3.1 down from 3.4 last year and a reduction quarter on quarter as well. So a good result. Effective tax rate at 26.1 in line. with what we had shared previously. And I would put out a really strong performance in cash on the quarter and the full year. So our net operating cash of 100 million is up 56% year on year. And on a full year basis, it was 343.7 million, which is up 31% year on year. And I think if you look at free cash flow, you can see that in the quarter, it was 8.4% of our revenue. So a really big step up compared to prior year. The other thing I'd say, sorry to end that slide, is actually a really strong improvement in ROIC. So you'll have seen that we started the year at 6.7% at the end of FY24, and we've nearly doubled it to 13%. So kind of gives comfort that actually as we expand our margin and invest in white space opportunity, that actually the profit flow throughs are flowing through and impacting our investment metrics. On the next slide you can see where we are on CapEx. So CapEx in the quarter was just under 57 million. So there's a bit of catch up in CapEx from prior quarters in terms of percentage of revenues. But from a four year perspective, we're about 6.7% revenues, which is in line with what we've shared previously. And as you can see from the chart on the left, there continues to be clear white space between our free cash flow and our investment growth CapEx. So a good sign and we expect that to continue in the future. In terms of the spend in the quarter, as expected, predominantly in healthcare services, which is a common theme from this year. And in terms of growth and maintenance split, roughly 72% was growth, 28% was maintenance, and that's broadly the same split for the full year as well. And finally, in terms of new medical space. So in the year, we added on 77,000 square meters. We ended at 986,000 square meters at the end of the financial year. Undoubtedly, we'll break past a million in Q1. So in summary, a good quarter to end the year. In totality, a strong year in FY25. And as John mentioned previously, a year in which we beat the targets that we set externally. So now, looking forward, and please bear in mind most of the talking we expect about the future in terms of our numbers and how we get there is expected to be tomorrow. Today is meant to be predominantly about the final quarter and answering any questions you have on FY25. But the future targets are as follows and is in a similar vein. They're three-year targets which take us to the period of 2028. So to summarize, we expect revenues, organic revenues, to be in excess of 3.25 billion. We expect adjusted organic EBITDA to be in excess of 600 million. Leverage to be under three, at or under three, which is lower than the previous measures we're given of three and a half. Dividends to be 50% or lower of net profit. And on an illustrative basis, to help you with your models, you can see we expect to be EBIT to be in excess of 290 million. So you can calculate the EBIT CAGRs from that based on where we are at the moment. So it's actually strong EBIT growth. And adjusted EBIT DAO to be in excess of 430 million. So you can see the targets that we've got. I think they're ambitious but challenging, but it reflects the strength of our business and the opportunity that we see ahead of us. And with that, I'll hand back to John.

Thank you, Anand. So in terms of key takeaways, 2025 is a strong year. We've successfully achieved our three year financial targets, which I think is very positive for us. We've got good organic growth and good, well, very significant improved margins from both divisions. and a really strong fee for service line, which is a good revenue stream for us. There is room for us to improve. We can we know that we see that and it's that's really reflected in our future targets. And we believe we can improve from a growth perspective, and we believe we can certainly improve from a margin perspective. We're in very strong markets where we've got the opportunity to grow the network that we currently have. We can certainly develop some new products and some new areas of interest for our customers. And let's not forget that over a long period of time, we put a lot of investment into our business and increased our square meters for quite a period and we've still got capacity utilization to come. So looking ahead, we're entering a new phase, a phase where we enter it from a position of strength. We're very excited and we're looking forward to it. And so we're in a good place. And just really to end with a big thank you to all of the people in Medicover who have committed a lot to be able to achieve the numbers that we committed to. two, three years ago and who will continue to commit a lot to be able to make sure that we do it again in three years time. Thank you very much.