Medicover AB (publ)

Morning, everybody. Welcome to our Q1 presentation. I think we've had a good first quarter. It's been a consistent and solid sort of position. We've got good momentum going on in the business with strong organic growth of 10.3%. This is our fifth consecutive quarter of improved margins year on year, which we're delighted with. There's been a few negative headwinds that have hit us. I don't think we need to talk about that too much. I think as a team, we've sort of navigated that well. And it shows the strength of our model. So it's pleasing to see the position that we've come out with despite all of that. India has shown some strong momentum. We expected that. We talked about that a lot in previous quarters in terms of what we've done to be able to get a bigger level of growth and more momentum as we go towards IPO. So we're very positive with that particular result in the quarter. And we fully expect as we go through coming quarters. Very robust performance in diagnostic services. Very pleased for the team, done an excellent job and our fee for service development is increasing in all markets, which is exactly what we want to achieve. Leverage has come down to 2.9. We expected that. We talked again about that in previous quarters. So it's good to see that going in the right direction. As we move on to the right hand side, you can see revenue 624.2 million. Organic growth of 10.3. Adjusted EBITDA 104.6. A nice increase there of 15.4%. Adjusted EBITDA 16.8%. And again, 15.7 previously. So we're seeing strong momentum in terms of our operating model as we see the operational leverage drop through as we develop the business. Pretty good cash flow. I'll let Anand talk through the mix of that because that's got a little bit of change and as discussed before, leverage coming down. As we move on to look at the growth metrics you can see on the left hand side here very consistent sort of growth trajectory from us consistent quarter on quarter growth in line with the expectations that we have as a business. If we look at the mix the mix is pretty pretty consistent for us we see that in the smaller part of our our revenues we were affected by the the hungary impact as we exited there um but most of our businesses showing solid growth and in germany it's the last quarter of the reform impact that is uh that is washing through and if you go to the revenue by payer again pretty consistent we've got a bit of work still to do on the funded business We said that in history that had been driven by the higher price increases that we put through and we fully expect to be momentum coming through in coming quarters. But what's really pleasing is that in our fee-for-service element, which is a reflection of how the business has changed over the years. We have a much higher exposure to this particular area of the market and we're growing well and growing strongly, which puts us in a good place. If you look at it from a healthcare services perspective, again, pretty strong growth from an organic perspective, 11.8%. India, 14.3%, but in local currency, 34.4%, which... Again, shows the work that we've done in terms of recruiting doctors and working on our average revenue per occupied bed. Sport and wellness going very well, going very strong for us, which is driving some of our operational metrics. Members, as I say, at the moment, pretty subdued, but we expect that to change. And more importantly, overall, due to the fact we've got a higher fee for service mix, we're still making good momentum in terms of the relationships that we keep to be able to have a long-term repeating business in this area of our business. So revenue good, EBITDA margins strong. You can see good increases there driven by operational leverage and the rest of our indicators pretty stable from a healthcare services perspective. As we move to diagnostic services, very pleasing to see the level of growth, 9.9%, driving the revenues over 200 million, which is really, really good. The fee-for-service revenue increased across all markets again. That's been a trend that's been developing for some time. Again, well done and very impressive performance from Ukraine because they had a particularly difficult quarter in terms of some aspects of the war and the impact that had on the operating model, just with things that we take for granted. But they navigated that reasonably well and exceptionally well when you consider those circumstances. So a big thank you to them. The German team continued to sort of develop solid momentum, navigating the reform, building the platform for the future. So all of the reform now has washed through. So it'll be interesting to see our development as we go through for further quarters. A number of tests have increased quite nicely. Again, you know, weather has actually impacted some of those volumes from an organic perspective. But we don't expect that to, you know, it certainly won't... impact us in coming quarters. And again, I think we as a team navigated that particularly well. So on the right hand side, you know, if you look towards the revenue by country, you can see all markets have done well. All markets are seeing growth. Some of them seeing extreme growth. If you move down to the EBITDA margin, we're progressing it. We're going from good to very good. And we intend to keep pushing on with our developments as we move forward. Lab tests up quite nicely and a very stable mix for us. So I'll hand over to Anad, who will talk you through more of the details related to the lower down in the P&L.

Thank you, John. Morning, everyone. As John said, despite some headwinds we had, we delivered a strong set of results in Q1. now delivers double-digit organic growth and margin accretion. So John said five quarters of margin accretion, and we expect that to continue in the future, which is good for us. In terms of revenues, revenues of 624 million, 8% up in total, but over 10% at organic level. said we'd be laser focused on ebit growth as well as ebitda growth and you can see a good expansion in our ebit numbers so 46.7 million in the quarter at a margin rate of seven and a half percent which is up 130 basis points And if you look at the kind of cash EBITDA, or EBITDA as we call it, strong performance there as well. So 67.4 million, up 20% at a margin rate of 10.8, which is up 110 basis points year on year. So even in challenging circumstances, our model continues to work. We also delivered a good performance in the EPS numbers as well. in terms of uh before we move on to the next slide i think uh just one thing to note so the margin accretion year on year is particularly strong in q1 uh that won't be the same uh for the rest of the year although there will be margin rate accretion in q1 what we have is we're anniversarying the acquisitions we made in q2 last year which are not in the base in q1 so previously we said they would be sales accretive and margin rate accretive So that kind of laps onto a base without it in Q1. But as we bought it in Q2 last year, it will kind of mitigate that fact going forward. But we still expect growth, as we said. In terms of health care, so strong performance, before we go into that, strong performance across both business units as well, I would say. So health care up 11.8%, price up 6.8% with healthy growth in volumes too, and margin accretion across all profit metrics. So EBITDA level, 48.9 million. John mentioned the margin rate at 11.3%, which is 140 basis points year on year. In terms of the loss on the hospital, so that's in line with expectations. It grew from 2.2 million to 3.8 million in the quarter. That's largely because we opened a new hospital financial district in Hyderabad. So that's kind of expected and we expect that to improve as the year goes on. And I guess just to stress the point on India there. So, you know, I think, as John said, you know, 34% growth year on year in local currency, 14% in euros. Again, against soft comps, but needless to say, we're pleased with that result in terms of the performance of the business. In diagnostics, organic revenue growth of 7.2%, roughly 50-50 between price and volume growth. So even in a challenging quarter for the business, I think, as John said, I think they did a super job. In terms of the EBITDA numbers, 33.4 million. And EBIT grew as well. In terms of the BDPs, they're a lot higher year on year, so 121 higher year on year. That's predominantly due to the fact that we did the SYNLAB acquisition. So the lion's share of the increase on that is as a consequence of that. In other metrics, leverage pleasingly trends down from 3.1 to 2.9. Our tax rate is in line with expectations and guidance at 28%. From a cash flow perspective, bits of a timing challenge here. We had a little bit of a benefit in Q4 and we expect to see a benefit in Q2. So it's not structural change, it's just timing related. So we'll get back to normalised levels from Q2 onwards. And that's the same with net cash flow from operating activities and free recurring cash flow. And the other thing I'd say on this slide is obviously that the ROI continues to grow. So 13.9% versus 13% at year end and 8.3% a year ago. In terms of capex spend, so we spent £26 million in the quarter, roughly 4% of spend. We have said before that we'd spend between 6% and 7% this year, so we'll stand by that. Although we say expansion, that happens later in the year with regards to investment in gyms, etc. But that will flow through. In terms of the splitter capex, broadly speaking, it's roughly two-thirds on healthcare and a third on diagnostics, with 58%. on growth and the balance on maintenance. Again, as we expand into new sites, it will get back to a normal, normalised split of about two thirds on growth and a third on maintenance. And the final thing I'd say on this slide is actually from a medical space perspective, we grew to over a million square metres now. So at the end of year end, we were just under a million. So we added on 110,000 square metres and now we're over a million. And then finally, for me, a reminder of the midterm targets that we gave in February. So we said that our organic revenue would exceed 3.25 billion. We said our adjusted organic EBITDA would exceed 600 million. Our leverage would be below 3%. And our adjusted EBITDA in excess of 430 million and EBIT in excess of 290 million in 2028. So you can see, you know, one quarter in, we're pleased with our progress and we're in line to achieve those targets. Back to you, John.

Thank you, Anand. So, you know, in summary, we've had a solid performance with good double digit growth, margin expansion following it. Yeah, there's been a few challenges in the quarter, but we've kind of navigated those particularly well. and they're not the kind of things that tend to repeat, so that'd be good for us. Really good progress from a fee-for-service perspective. We're developing the business well in both divisions in terms of the relationships we have with our customers. Very important for us to be able to form those relationships and even more important for us to be able to get those relationships to come back and keep repeating their business with us. And that's contributing to our growth and our improved results. So it's good to see. India is always a good subject for us to talk about. People have been expecting us to accelerate the growth. We've been saying that we need to do that in terms to keep on track from an IPO perspective. So it's pleasing to see some of those numbers coming through in local currency, which is great. And we will continue to focus on building the business, looking for growth, but at the same time, ensuring that we're efficient, improving our capacity, and making sure that we balance our positions when it comes to price, cost, and particularly value for customers. So Q1 has been good for us. It has had its challenges, but I think we're excited and energised by the model because it's weathered the storm to have a pun. And we've got other opportunities ahead, which I think is really, really good. So we're looking forward to taking your questions.

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.

Yes, good morning. So first, and I'm sorry if I missed this during the call, the line has been lagging a bit, but the two first months were affected by severe weather across key regions, at least in Central Eastern Europe, before normalizing in March, at least on my sort of numbers. Can you give us a sense of the magnitude of the weather drag here?

Yeah, it was a few percent on our revenue growth, the lag impact. So, you know, as you point out, January was affected. February was particularly affected. As we got to the back end of February, the sun came out again and things kind of stabilized and consumer behavior stabilized. And as you can see from the figures that we're presenting today, that's flowed through into our March position and therefore overall quarter looks good. And I think that's an indication of the strength of our model. At the same time, you know, when you look at these numbers, just bear in mind, as Anand said, that the acquisitions that we made last year, this is the final quarter for them flowing through, and they were particularly strong for us. So they have improved our margins as well. And I make one more comment just to help people with modeling, et cetera. that as we go forward in future quarters, we've got a little bit more expansion in terms of number of facilities that will pop through. It doesn't mean to say that we won't make progress from an operating model perspective. We still think we will, but there'll be more of that kind of like new space going on so that we not only grow in 2026, but we continue to grow in 2027 and beyond.

Got it. Thanks. That's helpful. And then on India, I think we're all happy to see that it performs well. You talk of 34% growth in local currency. Could you elaborate a bit on the operational progress you're making down in India and a bit more color on how recruitment is going and how, you know, everything around it, please?

Yeah, I mean, we know India is a really fierce market. We know it's fierce from a recruitment perspective. So we've focused very much on getting our recruitment right and getting our replacement recruitment right if we have to adapt to anything that's happened to us. We're expanding at a fast rate. We've opened the final hospital in this round, but that still means we've not only opened hospitals, but we've still got space in the existing facilities as well that we can expand into. So, you know, our focus is very much on making sure that we've got the right doctors that drives up the utilization. And also at the same time, we need to impact the revenue per occupied bed. Obviously, that's done by the types of doctors that you recruit and the mix of their special specialisms and what the types of things that they perform. So, you know, at a micro level by each hospital, we're dealing with all of those issues. And that's why we believe we've got good momentum at the moment. And we all know that for us to continue with the ambitions that we have that that momentum has to continue for IPO to be on track. You know, people are going to ask me today, where are we with the IPO? And the answer is going to be, we're still on plan A. There's nobody in our business talking about plan B. We're fully aware the external world around us has changed a bit. But from our perspective, in terms of the preparations, it makes sense for us to continue with A. And that's currently the position.

Perfect. Thank you very much, Sean. I think you answered my follow-up there with the IPO process. But then Perhaps the final one for me before I get back into the queue. It's been just over a year since the German pricing reform. Can you draw any conclusions from it now? Have you started to see any consolidation on the market or any change in sort of the behavior of competitors?

Yeah, it's, you know, the reform impact on us was quite tough. So I think the team has done an incredible job to be able to manage that and for us to come through in the way that we've come through. The market is seeing, you know, early signs of changes in behaviour, you know, by some of the smaller suppliers. You know, smaller suppliers not being able to adjust and consumers adjusting. You know, you'll notice in some of the commentary that we're seeing a trend of more fee-for-service starting to appear in Germany. You know, as I said before, I don't expect that to be a waterfall and to change the market dynamics overnight. But, you know, because of the reforms that are coming, it looks like that that kind of paying trend is going to continue. So, you know, we've still got a watching brief. We've got strong pipelines when it comes to M&A in many different areas, and Germany will be no different. We've got a watching brief.

Thank you very much. That was all from me. I'll go back to the queue.

Thanks.

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

Good morning. I have a couple of questions. So first one, just to be clear, when you say consumer behavior was affected, can you elaborate a little bit on what services that are referred to in such a comment? So what services are affected?

I think it was a general trend that occurred You know, it's been 10 years since we've had the weather conditions that we had in Poland, which lasted, you know, a number of weeks. And, you know, I don't think the public were quite as used to it as they had been in history. It wouldn't have affected them 10 years ago. It would have just been normal. So, you know, people kind of worked from home, stayed away. You could see if we looked at our telemed mix in our funded business, That started to kick up, which was an indication of people, you know, not wanting to really go out and travel around. So it just subdued overall kind of volumes for a period of time. You had a few days in Romania with severe snow. And when you get that, doctors can't get into work on time. Therefore, they can't perform well. perform their procedures. You had big black eyes and some blackouts in Berlin which didn't particularly help and all the problems in Ukraine. All of those things were just very unusual. You know, we're not sitting here and saying that that's an excuse for us. What you've seen really through the quarter and what we take, you know, as very positive news is these things hit us But we recovered as we went through the quarter. And I think that's just a sign of our model being strong, our relationships being strong and our ability to bounce back when these things hit us. But, you know, January, February were tougher months than normal for this time of year.

Good. And I agree completely. Your next question relates to Poland. Of course, it's been a major driver, beating expectations for long in this company. So I think it's a little lower growth rate, and you allude to many of the drivers. But aside from that, would you say that your sort of business momentum in Poland is intact, so to speak, and that we can climb back to higher growth rates already from Q2 there?

Yes. Yeah, I think it's a good observation that you make that, you know, we did point out a couple of quarters ago that even before the things we just talked about, that there was an underlying trend that we needed to sort out. And kind of like Q1 doesn't help us understand whether we've sorted it or not because of the other factors that came into play. uh and you know that uh you can see from the funded business in terms of memberships that you know we need to drive that higher we're not particularly worried about it um you know we uh um you know the growth rate in poland's been a strong base for us and uh we fully expect for us to see momentum sort of build in poland as we go throughout the year um and uh you know we're looking forward to sharing that with you so uh

let's see how it develops it's not you know it's not something that is causing us in due worry at this stage good last one is firstly sort of on on Germany what is a likely price impact on growth from here onwards is it a neutral or

Yeah, look, I think we're expecting muted growth from a price perspective, obviously. So they're having price cuts on the KV. But as John says, what we have done is focus on our fee-for-service business in Germany. And in there, in terms of absolute percentages and absolute numbers, we've been focusing on that. But overall, it will be muted growth from a pricing perspective.

Good. And last one. you said you're i'm kind of with the ipo in india so what does that mean in terms of timing

Well, you know, we've always set out the timetable that we announced in December 2024, that it was 24 months. So, you know, that's getting tight, of course. People are going to, you know, ask questions around that. But, you know, I think in terms of our preparations, we're on track, yeah, and we'll push ahead exactly as we are. We've always said that we're not 100% time bound we're in a lucky position that if circumstances from a trading perspective meant that we delayed a quarter or so or from a external world perspective we delayed a quarter or so you know that is still possibilities but we are fully focused currently plan a plan a plan a so we've been open all the way through and it stays the same good thank you so much No problem. Thank you.

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

Thank you and good morning. I have a few questions, maybe take them one by one. And the first one, if you could explain a little bit more the modern improvement we saw here in Q1 versus Q4. I know Q4 was a bit weaker than previous quarter, but how much of this is just seasonality versus underlying improvements, would you say?

Yeah, so I'll take that one. So I think I'll talk less about Q4, talk more about Q1 and what's going forward. So I think you've seen in Q1 that actually I've mentioned a bit about the acquisitions versus last year when we didn't have them in our base. So that accounts for, you could argue, let's say just over 50% of the growth that we've seen year on year in terms of margin rate that's part one part two is what we have seen is uh fundamental improvements in volumes through all of our infrastructure so you look at if india volumes are up 34 at local currency level and 10 at euros you can imagine that there's margin expansion in india in romanian hospitals the numbers are up here on here we're filling those capacities and the margin rate is up there as well so in terms of seasonality Yes, but it's hard to say again, as John says, because we were impacted in the first two months of the year by weather. But needless to say, the theme going forward is we're still filling our infrastructure, not just in anniversarying a period where we didn't have acquisitions, but it cut numbers and countries like India and Romania are flowing through to the numbers as well. So we still expect to see healthy margin accretion for the balance of the year.

Okay, but based on previous comments, it sounds a little bit that we shouldn't expect any huge sequential margin improvements here in the next few quarters versus what you delivered in Q1. Is that correct?

Correct, yes. So we will get 140 basis points growth in Q2.

Yes, correct. Okay. And could you maybe comment what the margin is in India right now and how much it has improved?

No, we don't. We don't divulge that information. We've got to be really careful at the moment as we build towards IPO. The Indian authorities don't like us to say too much, you know, which doesn't help you and doesn't help our relationship with you. But we've just got to be careful. And that's not something that we divulge. And we wouldn't divulge at this stage due to the process.

Okay, and yeah, I don't know if you could comment on this one, but the minority loss that you still have, I guess more or less all of that relates to India and the fact that you have, that they have financial costs in that operation as it runs right now.

Yeah.

Okay. And then on the German diagnostic, Martin, is it possible to comment how that has developed since the reform started versus what you have now in Q1?

Yeah, again, we don't divulge that in terms of information, but, you know, as a soundbite that, you know, from our perspective, the team have handled it really, really well. And we're pleased with how they've navigated that. So I think it's a positive for us.

Okay, but have you been able to keep it at least flat or is it down? Is that possible to quantify?

I think, you know, we don't divulge it, Kristoffer, but, you know, from our comments, I'm saying that it's positive for us. So I think you can read between the lines.

Okay, thanks. And then finally, sorry, a lot of questions here, but when it comes to the number of healthcare members in Poland, What will you do more precisely to increase the growth rate again? Is it just about being outselling or something else?

Yeah, I think that there's a few things in there if you want a bit of flavor. One is that we made that decision about price. And when you make those decisions about price, at times you've got a bit of a lag in terms of some of the people that don't like the price. Our new business volumes are very, very good. Organic growth in the market isn't particularly strong at this moment in time, so therefore we have to be. We have to go to different level of sophistication in terms of the different types of products that we offer to the different types of customers to stimulate more more growth. we're in a good position because we've got, you know, and our proposition is quite wide. So we can, you know, we can blend in terms of the way we do our pricing and the way that we make it more attractive for customers to cover more of their employee base. And we'll be, you know, offering different solutions in coming quarters related to that we've already started uh it's getting uh the the beginnings of some traction that's why we're quite confident as we go forward that we should see that line uh start to uh improve again uh but the the organic growth in the market is uh is causing a bit of a bit of issue that usually adjusts itself over time great thank you very much no problem thank you

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

Morning, guys. Just a quick one. Just on the Middle East situation, you obviously referred to the sort of external headwinds, I guess. I'm just wondering, is there any hedging in place to mitigate some of the sort of potential cost inflation you might see? And how exposed are you? I would imagine... um there's some energy exposure but maybe not too material but yeah just just any comments on sort of any hedging in place to mitigate uh potential cost increases and then uh just secondly are you guys sort of uh comfortable with where consensus is sitting i'm just trying to kind of kind of gauge sort of given sort of some of the commentary this morning around sort of q1 being a bit higher and maybe there's a bit of phasing in the u.s so yeah just wondering if you're sort of comfortable with where the consensus numbers sit for the full year thanks

Sure, I'll answer the first one and I'll pass the second one over to Anad. So obviously from a war perspective, the Middle East perspective, we have conducted exercises inside the business to understand what would the impact of that be based on what we know. So, you know, we're... putting in more monitoring positions in terms of some of the relationship with customers that could be more exposed. We're looking at our supply chain in terms of, is there any delays? We're looking at our building program to understand if there's impacts on that. And, you know, obviously the one that you highlighted, energy, is an important factor for us. It's particularly important in sport because there's quite a lot of property exposure there. Quite a few of our contracts from a Polish perspective on an energy basis are on a slightly longer term basis or fixed basis. And currently, of course, you'll see that the governments in many countries from an energy perspective are putting some kind of shield or mitigating circumstances in place. So currently there's no major impact on us, but we are taking countermeasures and we've got plans from a group perspective that should things turn, what are the levers that we would need to look at? But at the moment, as it stands today, you know, on the 29th of April, we haven't pressed a button on those things. It's very much that we've got the watching brief with our indicators.

Okay, from me on the consensus question. So look, we give three targets. I'm not going to comment on entry numbers for you today. I guess the common themes of what we've said, though, are double-digit organic growth, and you can imply that from our three targets, and margin accretion. to implied rates that you can calculate for yourself in 2028. So we expect to see progress towards that. And we've said, you know, there'll be a little bit slower potentially in 26 versus, you know, an uptick in 27, 28 towards those targets. So for me, for us, you know, we've said on our call that we will achieve our targets in 2028. And after that, the entry years will be different.

All right, thank you. I guess just the reason I asked is, you know, clearly you report in quarterly, which is pretty regularly, so it might help just to have a little bit more on the sort of near term. But yeah, take your point. Thanks. Thank you.

As a reminder, if you wish to ask a question, please dial pound key five on your telephone keypad. The next question comes from Darius Saftoiu from Jefferies. Please go ahead.

Hi, thank you for taking my questions, too, if I may. First, on the diagnostic volumes, test volumes were up 9.5% in 2021, with 8.7% on the position, so I was wondering if you could update us on the underlying test demand in 2021 and FVF in 2021.

Can you repeat that? I heard that you were talking about diagnostic volumes and underlying trends. Yes.

Yeah, sorry, so test volumes in Dinoxys were up 9.5% and 8.7% from the acquisitions, prior acquisitions. And I was wondering if you could update us on the underlying organic demand and volume of the diagnostics in Q1 and as we exit Q1.

We're struggling to, apologies, but we're struggling to get the clarity of the question. So can I make a suggestion? Can you type it into the feed? Because we do want to answer your question, but we just can't pick it up exactly. We don't want to mislead you. Yeah.

Sorry about that.

I just couldn't hear it through.

First in diagnostic volumes, test volumes were up 9% earlier. With around 8.7 percentage points coming from prior year acquisitions, could you update us on how... Yeah, I think that's what... Sorry, we've now got the question.

So, you know, the test volumes are up 9.5% year on year and around 8.7 percentage points coming from the prior year acquisitions, etc. Yeah, I think this is just one of the areas where we were affected by some of those headwinds. It's not something that... We fundamentally believe that we're suppressed on this particular line. You can see from the development of the diagnostics team that all our fee-for-service markets are growing quite strongly. You know, there is a different focus in terms of the businesses there looking at the higher margin test volumes, et cetera, but that shouldn't affect our overall volumes as we go through. I wouldn't pay too much attention to that at this moment in time. You know, Q1, just an unusual quarter for us. We'll move past it, get to Q2, and I think that our dialogue will be slightly different than it is today.

Thank you. And I'm sorry if I didn't get it properly. I've sent the question, second question in the chat as well. My second question is on the regulation in Germany. I understand that the impact from last year public reform is putting in the base now. But I was wondering if you can update us on how do you assess the proposals for the private medico-fiscal reform in Germany? And do you see any risks or potential opportunities for Medicover? And if so,

if the outcomes were to have like less several impacts in certain pockets what are the mitigation levels within your control yeah i think it's a really good question you know so you know put it into a broader context it's not just germany i think it's a a lot of markets that uh the the the national funds are are looking at ways that they can drive efficiency This is nothing new. This is something that every healthcare organization, whether it's public or private, has to do to be able to serve their customers well. And in Germany, currently, there's lots of talk about the next reform that's going to come, which is the GOA reform that you refer to. It isn't clarified 100% yet that the date of the reform will come in from X. So, you know, we've been planning and scenario planning and scaling the impact of this reform for some time. You know, when it comes in and when it happens, it's not going to affect our operations in terms of what we do simply because we're preparing for it in advance. We know that from the first reform that we needed to implement change in our business. I think I've said in previous calls that that change will last longer than any reform. So we'll continue looking for, you know, to strengthen our operations to counterbalance any of the headwinds that come. But that GOA reform, you know, as it stands today, is quite substantial, but the last reform was, and we weathered that well. So, you know, we're talking theory. That theory's there. We're doing what any good business would do. We're planning for it. But as you also say, it drives opportunity. It does drive opportunity, which is, you can see in the German market already from what we've talked about today, there's a slight movement, you know, from people, from a community that's been very used for things being paid for to paying for themselves. So, you know, I think that trend will start to continue. And there's a general trend in wherever you go that people are much more interested in wellness nowadays. and longevity and things along those lines. And those kind of things don't tend to be covered by the funds. So, you know, wherever there's a challenge, there's an opportunity. And that's what Medica has always been good at.

Yeah, just a follow-up on that. So the proposals from the Medica, essentially, definitions show an impact on certain diagnostics tests that can be substantial in terms of pricing, so I was wondering how do you see the communication factors on those that we have like the higher pricing impact?

Literally again, we can't pick up the question and I don't want to mislead, so if you can type it again, we'll come back to it. I'm sorry about that. The phone line is affecting the communication, I'm sorry. Doesn't appear to be more questions coming through. So, you know, there's one more question online that we will answer. You know, when I talked about alternative products, people said, are you considering health insurance? We have health insurance solutions, so that will always be part of the mix. So we're prepared for that from a Polish perspective. There's also a question about the slowdown in diagnostic revenues in Poland and Ukraine. Yeah, from a Poland perspective, there was a B2B contract change that happened, which would have affected our underlying numbers. We are confident that we will be able to outgrow that as we go through the year and ukraine was impacted by uh the you know the obviously the weather because at that time of year down there it's quite it's quite tough but the the war um the um uh the the the war impacted at a higher rate in q1 and as a consequence of that um it affected the the numbers um you know that that uh that seems to recover as we've gone through the quarter so again we expect that to be stronger there's a question also about the revenues we generate on CT MRI scanners with the the fund the funds in Poland above the contract limit you know that's not something that we would disclose you know it's too much operational detail and sensitive. But what I would say is that, you know, we have limited, we have exposure to the NFZ. They are making changes in their contract limits in this particular area, but it's not a big part of our business. volumes, you know, it will impact us. But at the same time, it's going to impact the speed of delivery for the consumer. So there'll probably be a change in mix that happens here from some people that historically have gone to NFZ. And over time, they'll switch back to being out of pocket.

We'll go back to the queue.

Happy to do so.

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

Yes, thank you. Just a clarification. So I just wanted to make sure I catch your comments correctly. So the EBITDA margin improved by 90 bits year over year in Q1. Did I catch it correctly that you say basically the year-on-year margin improvement coming quarter will be much more modest? We obviously don't know exactly how it should be per quarter here. I just wanted to understand the profile through Q4, based on the comments.

Yeah, so obviously it's difficult for me to say without telling you the number, which I don't want to do. But look, I think if you look at more than 50 of the growth in q1 uh on the margin rate of you know roughly 120 basis points is due to the acquisition so that disappears in q2 because it's in our base so hopefully from that you can figure out what i'm saying with regards to the number for the rest of the year yeah no absolutely thank you so much

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

Yeah, I just thank you to everybody for attending. There was quite a lot of varied questions today and quite a lot of detail that we went into. Fully expected that with the, you know, difficult first quarter sort of headwinds that they're gone now. So we're looking forward to progressing for the rest of the year. You know, as I said before, we're We're pleased with the progress we've made on Q1. We're very pleased with the strength of our model, considering those unusual circumstances. And that's energized us for the future. So we're very much looking forward to how we develop this year. And finally, a big thank you to everybody in Medicover for making these results happen. They've done a fantastic job. So thank you.