Release Date: July 30, 2024
For the complete transcript of the earnings call, please refer to the full earnings call transcript.
Positive Points
- Redcare Pharmacy NV (SHPPF, Financial) reported a strong overall growth of 42%, with a 21% growth excluding managed services.
- The company saw significant growth in Europe, with a 37% quarterly increase in their Eurex business.
- Redcare Pharmacy NV (SHPPF) added 0.4 million active customers in the last quarter, reaching a total of 11.6 million active customers.
- The company's Net Promoter Score (NPS) remains high at 69, indicating strong customer satisfaction.
- The company achieved an 8th consecutive quarter of positive adjusted EBITDA margin, demonstrating consistent profitability.
Negative Points
- The adjusted EBITDA margin declined to 2.7% in Q2, bringing the year-to-date margin to 2.4%, down from 2.8% last year.
- The gross margin decreased from 26.5% last year to 23.4%, indicating a reduction in profitability.
- The fully loaded EBITDA decreased by 5 million euros due to fewer adjustments compared to the previous year.
- The company faces challenges with the distribution of digital IDs and EGK plus pin in Germany, which remains very low.
- The insurance app redemption option lacks the full features available in Redcare Pharmacy NV (SHPPF)'s own app, potentially impacting customer experience.
Q & A Highlights
Q: Could you help us understand a little bit on the customer mix within the Cura and Rx orders? How many more PKV versus GKV orders have been going through your system in the second quarter? Also, where is your AOV within the current Rx orders?
A: The growth is primarily coming from publicly insured customers, which make up the majority of the market. The average order value (AOV) for Rx orders is significantly higher than for OTC orders, but we do not disclose specific numbers. The Rx growth rate accelerated towards the end of the quarter.
Q: Are you able to win new customers via the AERx offer? How do you see the cross-selling potential?
A: Yes, we are seeing new customers who have never shopped with us before, as well as existing customers shifting to Eurex. There is significant cross-selling potential, with Rx customers also ordering OTC products. Our strategy includes fostering this behavior through our app's one-click solution.
Q: How does the insurance app redemption option work, and how do you benefit from it?
A: Customers can use their digital ID or EGK plus pin to access their insurance app and select us from a list of pharmacies. However, the insurance app does not offer the same level of features as our app, such as real-time availability and preferred medicine choice. Orders from the insurance app are forwarded into our system.
Q: Could you confirm that you did not lose any market share in the generics market in July? Also, could you elaborate on the sequential margin improvement drivers for the group in Q2?
A: We cannot comment on market share specifics for July. The margin improvement in Q2 is primarily due to scale and market leadership in our international business, which allows for better margins as we grow.
Q: Could you comment on the profitability of media service in Q2? Also, can you provide more details on the new warehouse for the Austrian market?
A: We do not disclose specific profitability details for media service. The new warehouse in Austria aims to improve delivery speed and customer satisfaction. It is expected to open next year, with both CapEx and OpEx involved, but primarily OpEx.
Q: Is there any motivation to narrow the non-Rx guidance range for the year, given the visibility you now have? Also, what do the external project expenses in the adjustments to EBITDA relate to?
A: We prefer to maintain the current guidance range of 15% to 25% growth for non-Rx due to market dynamics. External project expenses relate to employee stock option programs, M&A projects, rebranding, and capacity expansion projects.
Q: Could you talk about the slight decline in the NPS? Is it driven by the introduction of Carling and customers getting used to it?
A: The NPS remains high at around 69, which is within the range we consider excellent. The slight decline is not significantly driven by Eurex; we have happy customers across all segments.
Q: In the first half of the year, 217 local pharmacies closed, representing lost sales. How does this impact your business?
A: The number of pharmacies in Germany is declining, but the proximity to brick-and-mortar pharmacies remains high. Our role is to educate and convince customers to use the digital-only way, which will take time. We expect to benefit from this trend in the long term.
Q: Could you confirm that you did not lose any market share in the generics market in July? Also, could you elaborate on the sequential margin improvement drivers for the group in Q2?
A: We cannot comment on market share specifics for July. The margin improvement in Q2 is primarily due to scale and market leadership in our international business, which allows for better margins as we grow.
Q: Could you comment on the profitability of media service in Q2? Also, can you provide more details on the new warehouse for the Austrian market?
A: We do not disclose specific profitability details for media service. The new warehouse in Austria aims to improve delivery speed and customer satisfaction. It is expected to open next year, with both CapEx and OpEx involved, but primarily OpEx.
For the complete transcript of the earnings call, please refer to the full earnings call transcript.
