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.

If you wish to ask a question, please dial pound key five on your telephone keypad to enter the queue. If you wish to withdraw your question, please dial pound key six on your telephone keypad. The next question comes from Philip Eckengren from ABGSC. Please go ahead.

Good morning, guys. So I'll kind of stay away from asking about the new targets and keep that for tomorrow. But just on margins, so adjusted the A margins up 200 basis points year over year. Could you give us sort of the key drivers behind that increase? And perhaps also if you can split up how much is operational leverage and how much is the price of that increase, please?

Well, from a price perspective, you can see it in the numbers that we've just kind of published. If you go through not only the quarter, but for the year, you'll see that from a healthcare services perspective, from a diagnostic services perspective, it's a lot weaker. You know, the increase from a diagnostic perspective, the increase in the volume of tests, as we all know with a diagnostic business, that once you put more tests through the lines that you've already got, it's quite a sweet position for you. You know, if the team continues to drive that extra volume, that extra volume will result in operational leverage. And it's pretty similar in healthcare services, but not to the same extent of the margin increase. You know, you've got to do a bit more volume from a healthcare services perspective to get the same kind of outcome in the financial numbers. But, you know, capacity in healthcare services, that's where most of our square metres has gone on. You've got a bit of mix in there as well. You know, Q4, you know, it was a slightly strange quarter with all the holiday pattern as well that happened over Christmas, which was quite unusual. Lots of different factors in there, but certainly price, certainly capacity, certainly a bit of volume, the usual levers that then have an impact on the model.

Makes sense. And on India, it's continuing to show some double digit growth in local currency. What are you seeing on the market starting during January 26? Can you say something about that?

Well, you know, we usually talk about Q1 at the end of Q1. But I can understand you asking the question because it's such an important component of the story that we've been talking about in recent times. You know, if you look, I'll make two comments on Q1, you know, as I start the year. is that you know if you look at europe there's been a very strange weather pattern that's hit us which is very unusual in our key markets at time you've got you know minus 20 degrees positions and then of course in india you don't get that so india i think that europe will be affected a bit by the by that weather position and i think that from a india perspective the moment i said earlier on the key word was momentum and you know that momentum that we said that would build in q4 has started to build in q4 and you know we expect it to build as we go through the year because that's what we need to be able to continue with plan a and we're certainly on plan a from a ipo perspective and the team have done a good job so far and then you know we'll see how q1 turns out it's always uh has a little bit of ups and downs in q1 because of holiday patterns etc so we'll see i appreciate it thanks for for the comments and then perhaps the final one from me

So you mentioned some softness ahead of Q4 in the Q3 report and the call, and now you talked about some early signs of improvement. Could you elaborate a bit on that? Is it a change of the underlying macro, or is it you're mitigating factors that's working?

Well, you know, that's always a very difficult one to be able to quantify because, you know, as it moves, you know, it could be economic factors. It could be the fact that what we've actually done has resonated with the consumer. What we know from history is that when we've hit this kind of patch, it's taken us one, two, sometimes maybe three quarters to kind of like reprofile. And then we've reprofiled and pushed through. So I think we will get some positive impacts from an economic perspective where we're seeing this softness. And I think we will get, you know, our teams doing what they've managed to do over a period of time. It's just a question of how long that takes. Q4 versus our expectations was a little bit better than we thought. Q1, let's see.

Okay, that was all for me. Thanks very much. Thanks a lot.

The next question comes from Julia Angelistran from Handelsbanken. Please go ahead.

Good morning and thank you for taking my question. I have a couple and I start off with a question on India. So how much did the strike affect you? Was there a pent up demand effect or more of a negative effect in this quarter?

it was negative you know uh uh honors let's quantify it again so everybody remembers this is it this is in one state where for one for the governmental pay business yeah which is a smaller percentage of our overall um the or every provider in that state uh uh basically didn't provide care unless it was an emergency uh for members of the public that were entitled to it This was because the local government had taken quite a long time to be able to settle all of their bills. It lasted for all of October, maybe a little bit longer, but certainly most of October. It did affect us. It did have a negative impact on us. I'm not going to quantify what that impact is. But from our perspective, we've moved through that in the quarter very successfully. I think that's the important soundbite. It won't be there in Q1 because things have returned to normal for the time being. And we fully expect, as I said earlier, that momentum is a really key word when it comes to india and we expect that that word to be something that we talk about after q1 okay understood and is it are you able could you disclose how much of the revenue in india that comes from mature hospitals i don't think i don't think we've put that on public public record so i don't think i can unfortunately

Okay, understood. But could you instead say something about when you expect to reach mature occupancy in India, given the hospital facilities you have open today?

So I'll frame it slightly differently. If you're looking at our occupancy journey and what will need to happen, I think we've been quite open and clear about that in many discussions that we've had in many different places. You know, we have improved our occupancy, but it's never really been seen because as we've done that, we've opened more and more facilities and that's suppressed things. The opening of the new hospital, which has happened in soft launch, which has happened sort of the beginning of the year. um is the last major investment that we we have planned and that now we're we look to mature our occupancy rate so it's a a really key driver it's one of the three key drivers that we talk about the other two being doctor recruitment and the other the other one being the average revenue per occupied bed so currently we're below the 50s you know before we talked about being on the 50s so it all depends about the bed mix and what's happening now we fully expect if our momentum picks up in the way that we need it to pick up we will see that occupancy start to move if that occupancy moves you know even a 10 percent movement up for us will be a very significant impact on our operating model. If we go further than that, then it will be an even bigger impact. So we're at the business end. We realize that and the next couple of quarters are going to be key. So we're really looking forward to talking to you over the next couple of quarters about India.

Okay, that's clear. And then just one last from me. How should we think about the free for services in diagnostic, is this an indirect effect of German reimbursement or just a strong momentum?

No, I think that the German market will need a period of time to mature when it comes to fee-for-service. We'll see signs of fee-for-service growth, both coming from the fact that it's been reformed, but also from a lifestyle perspective, consumers are wanting different things when it comes to things like anti-aging, longevity, all that type of thing. So there'll be a mixed change as well, and some of those things are not covered. under the national scheme. But Germany will take quite a while, I think, before we sit here and say we've got a fee-for-service market in Germany. It'll be more complimentary when it comes to fee-for-service. And of course, if that line grows in Germany from a margin perspective, it should be good for the model. But the other markets that we have, they are mainly led by FIFA service. And we're a strong player in those markets. We have a good proposition. We have excellent service. We have a broad base of tests that we can give to give to people. And we have great technology that provides a platform in that network for us to uh take advantage of things so i think what you're seeing is you know um some of that benefiting us and of course the synlab uh the synlab uh acquisition also benefiting us which is driving some of the overall positivity uh but you know it's positive i think that's the key word there here that those markets are very positive for us and doing really well and as i said before congratulations to the team

Okay, thank you for that. Those were all of my questions.

Thank you.

The next question comes from Mattias Vadsten from SEB. Please go ahead.

Hi, good morning. Thanks for taking my question. I have a few here as well. First one, India again, so rephrasing it a bit perhaps. So it must have improved quite a lot through the quarter. So What is basically the key contributor here? Am I correct to say the key is that you have removed the bottleneck from lack of talent to care for patients through good recruitment? Or is it sort of something else that you want to add to that? Or how should we think about it? That's the first one.

Oh, yeah. I mean, we said in the previous quarter that we'd focused a lot on retention and recruitment. And in that previous quarter, we also said that when you bring some of these doctors in, they're very good doctors, but it takes a period of time for customers to realize where they are, where they move to. And it takes a period of time for our excellent marketing team to get out there and and spread the word, et cetera, et cetera. So recruitment is definitely a key part to it for us. And then, you know, there's other things from an operational leverage that, you know, from our model in India, once you once you increase the revenues it starts to get really, really positive for us. And, you know, we've put a lot of technology changes into India as well, which, you know, stops some of the revenue leakage in the patient flows. There's a lot of developments that's going on in India. But the key one, you're right, is doctor recruitment, doctor retention.

Perfect, thanks. And then Germany, just if you could provide some commentary on the digital margin movement in 2025 as a whole, so we understand just...

I'll hold that till tomorrow, Matthias. I think there'll be something tomorrow that shows you that over a couple of year period. The only comment I'll make about it, I won't go to specifics. I'll just say, you know, if you look at Germany over a two-year period rather than just a year of reform, it's a very positive position for us. And I think we'll share that tomorrow. Okay, good.

And could you... I guess we'll come back with this as well tomorrow, but could you give a sort of high-level commentary on the anticipated capex to revenue ratio through 2028 and sort of a rough split between the segments?

Yeah, fine. So I guess we continue to see opportunities to invest. So I would assume, if I were you guys, that we'll keep roughly the same percentage of revenues as organic capex spend over the next two, three years. And I would envisage that, broadly speaking, the split would be geared towards healthcare more than diagnostics as well. So that's our view and all we can say for now, really. Thanks.

And one last one from me, a short one. How did seasonality with Christmas and so forth impact margins in Q4 versus last year?

Yeah, you know, the holiday pattern was very frustrating for us because, you know, for those that didn't work it out, you only had to take a few days holiday and then you were off for about three weeks, I think. So there was definitely a slowdown that occurred. And, you know, that slowdown in terms of people returning post-Christmas also, you know, was a longer period for us. But... I think when you look at our Q4, if that hadn't happened, you know, our Q4 I think would have been even stronger. It's hard to say exactly the position that we would have been in. But, you know, roughly our Q4, from our point of view, our Q4 is kind of in line with where we expected it to be. if not a little bit better in terms of some of the things we were navigating with standards in good stead. So, you know, it was there. It's just one of those things. It's not one of those things that happens every single year. We just have to navigate it, move on. And in our long-term journey and our long-term objectives of what we want to do, I don't think we'll be talking about Christmas 2025 too much in our future.

Great. Thanks, John and Anand. I look forward to tomorrow. Yeah.

Looking forward to seeing you. Thanks. Thanks.

The next question comes from Christopher Liljeberg from Carnegie. Please go ahead.

Hi. Good morning. Two questions. First, is it possible to maybe comment about the cost synergies from the SynLab acquisitions and how far you have come with that?

Yeah, I mean, we haven't obviously gone through a full cycle of a complete year of seeing the benefits of this, but in terms of the acquisition and post acquisition implementation plan, You know, we are almost complete from a SynLab perspective. The things that we've got left to do are things that are left to do based on the fact that the timeline would take us a little bit longer. so things such as our purchasing coming together and getting the benefits of that things in terms of any duplication that we had that needs to be resolved and things such as systems and things such as sending some of our more advanced tests to centralize in Romania or Germany. Those kind of things are super well progressed. So from a maturity curve against ambition versus activation, the team are almost complete. Now we've got to just make sure that comes through positively in our numbers as we go through the course of the next 12 months.

Is it possible to quantify the cost savings and how much more of that we should expect in 2026?

No, I'll take that one. So not now. I think what we will do is in the annual report for the first time when we report that, you'll see the split of the revenues and net income between CityFit and SYNLAB. So you'll see the numbers in there in terms of how they're flowing through into profitability. We're not sharing that in this Q4 interim statement. But as John said previously as well, we've said that the The sports business report had a strong start and carried on, and that's fair to say that's happened. And from a SIDLAB perspective, still lots of opportunity there, but we had a slower start. But we're catching up now, as John said, and we're getting to the run rate where we need to be in terms of delivering on synergies and the profits that we expect, although they're both still accretive versus the underlying medical businesses, is what I'd say. So in the annual report, you'll get a bit more information about it, and that's all we can say for now.

Okay, and then my second question, the margin outlook here for 2026, the reason I'm asking is, of course, we see the Q4 margin, it was lower than the full year level for 2025. So how could you say anything about how we should think about 2026 modern and particularly maybe in the first half of the year?

Yeah, I think, you know, the first half of the year for us, the first half of the year for us with the softness and whatever, we'll need to navigate that. We don't disclose margins as, you know, by quarter. or give forward projections on these things other than our mid-term targets that we've said. But I think if you look at it from a mid-term target perspective, we're confident over the next three years that we'll build an even stronger business model. And we've mentioned weakness, started to mention that in Q3, saying we're going to have to navigate it over a few quarters. So, I mean, that sends a slight message and we'll see how it goes. But we're positive that we can move our margins up over a period of time because we've got some levers that we feel we can pull. So we're in a good position, although we don't disclose as I say.

Okay. But if we just take the seasonal effects that was discussed here previously, So just from a seasonal perspective, Q1 versus Q4, is that a stronger model in Q1 than in Q4?

Yes, it will be. So Q4, I think particularly given the mix in the sports business is a little bit low in terms of how the margins flow through from a profitability perspective. So yes, that would be better. But remember, as I've said in prior calls, we had stellar margin rate growths in Q1, Q2 and Q3. So we've got strong comps to anniversary as well. So yes, the seasonality levels out in terms of the movement, but strong comps to offset that, yeah.

Okay. Thank you very much.

The next question comes from Kane Slutskin from Deutsche Bank. Please go ahead.

Good morning, guys. Just a quick one. On Germany, you mentioned you're seeing good volume growth there despite the reform. Are you seeing sort of competitors being sort of squeezed out there? Is the sort of volume share going? And then how much of the margin expansion in the diagnostics business is coming from a sort of shift towards more advanced testing and things like genetics versus the sort of more standardized testing? Thanks.

Yeah, I mean, from a German market perspective, we fully, you know, when we talked about reform all the way back in the early quarters of 2025, we talked a lot about the tail and that reform always ends up cutting and we fully expect that to come through. So, you know, again, when change comes like this, you know, people want to try and trade out of it and then eventually some of them realise that they can't. So I think there's more to come yet. And then from an advanced diagnostic perspective in our German model, our German advanced diagnostics, which includes, I'll include it generically with our genetics business, is a strong part of our proposition. And we'll show that a bit more tomorrow in terms of how that works and why that's important for us. And we do see growth in that particular area. And we have in 2025 invested further in that area because we firmly believe it's a, a strong place for us to be that we can do, we can grow quite strongly. So I think you'll see more, you know, let's talk about that more tomorrow that will give a bit more of a flavor to it.

Great. Thanks very much.

There are no more phone questions at this time, so I hand the conference back to the speakers for any written questions and closing comments.

So we've got a couple of other questions. In the report you noted you see the recovery members addition. Could you elaborate more what is driving this recovery?

Yeah, I mean, from a member perspective, we have to put everything into context. Our biggest membership business is Poland. It's much smaller in Romania. But our Polish position, if you look back in history, over the last couple of years with the extreme inflation that we were having, our focus was very much on making sure our business model was robust. that our pricing was appropriate and that we could deliver high quality services to our customers as a consequence of the pricing position. We didn't take a stance to say, let's use this to drive a high volume of membership growth. And that's what you've seen. You know, the inflationary position will still be relatively high, but not super high as it was. And our focus will move more towards building membership. And again, a bit tomorrow, you'll see some of that. But also I'll mention today that, you know, some part of that will be about product developments and how that product development can increase our membership. And we've done some of that already. And we see some early signs of success on some of that product development. And we see some good pipelines being developed. So, you know, we're back into a different kind of mode as we go through 2026. from a membership perspective, but also I'll counter that with, you know, if you look at our business mix now, we've got funded members and we've got fee-for-service members, and you can see extreme increases in our relationships that we have from a consumer perspective, which will also stand us in good stead. So I think we're reasonably well placed on both lines.

What scope do you see for pricing up healthcare services for 2026E in view of the more challenging Q425?

Yeah, I mean, we'll take our normal pricing position, which is that appropriate pricing will be put in place based upon what we see in terms of utilization and what we see in terms of medical inflation. And, you know, if we go back the last couple of years, our pricing has been normalized to positions we had before but we you know we we are not an organization that will discount price to get volumes we're an organization that wants to price appropriately so that we can add value to the customer and have a nice balance between them paying us an appropriate fee and us delivering a fantastic service to them the last question would it be possible to mirror the sport wellness success in Poland in other markets or is it very particular to just Poland currently today our focus is very much on Poland it's been a fantastic addition to our portfolio our customers appreciate the diversity of the proposition that we can now give them in Poland there's a slightly different pricing dynamic that comes into play because Poland has the the funds from the businesses, the independent funds that can be used, the social funds, which aren't necessarily available in other countries. And we've got quite a big expansion to do in Poland. So, you know, we've got laser focus on Poland at present.

And the final one. If you look at your last page and where you talk about where growth will come from, how do you look at the split between network expansion projects?

I think John's probably answered that on page six of the pack. So if you look at Poland, that was 16% growth year-on-year in the quarter. The majority of that growth was driven by sports and wellness, which we've mentioned already. And the other material areas of growth in the quarter in healthcare were in Romania. So obviously we've got Romanian hospitals in healthcare. So that's probably it.

the final question okay thank you everybody thank you for the questions uh really good uh a session uh we're really pleased with the uh the quarter that we've had uh we're really excited about the uh the targets ahead uh they're challenging they're ambitious they're everything that medica was about so we're very happy to take those uh to take those on board and looking forward to developing the business uh forward to be able to uh to achieve them for those of you that are joining us tomorrow we look forward to seeing you whether you're face to face or online and we wish you a good day thank you very much