Release Date: August 20, 2024
For the complete transcript of the earnings call, please refer to the full earnings call transcript.
Positive Points
- CardLink's launch has significantly accelerated eRx growth, with new customers increasing fourfold compared to last year.
- TeleClinic achieved breakeven in Q4 last year and continues to show strong sales and positive EBITDA contributions.
- DocMorris AG (ZRSEF, Financial) achieved breakeven with its non-eRx business, showing a year-over-year improvement of CHF14 million.
- The company has a solid balance sheet with a cash position of CHF195 million, bolstered by the sale of non-operational property.
- The digital health ecosystem, including TeleClinic, is well-positioned for future growth, supported by favorable lawmaking in Germany.
Negative Points
- The transition from paper prescriptions (pRx) to electronic prescriptions (eRx) led to a significant reduction in contribution due to cohort dynamics.
- The company experienced a 10.6% decline in Rx revenue in Q1 due to the drop in paper prescriptions.
- DocMorris AG (ZRSEF) has increased its marketing expenses significantly, impacting short-term EBITDA.
- The company expects an adjusted EBITDA of around minus CHF50 million for 2024 due to deliberate investments in new eRx customer acquisition.
- Material and logistics cost inflation, as well as Rx medication shortages, are ongoing headwinds impacting the business.
Q & A Highlights
DocMorris AG (ZRSEF) Earnings Call Highlights
Q: Can you explain the rationale behind the new EBITDA outlook of minus CHF50 million and the marketing budget for 2024?
A: The new EBITDA outlook reflects an additional CHF10-15 million investment in eRx marketing, on top of the CHF20-30 million initially planned. This decision is based on strong KPIs and the expectation that these investments will contribute positively from next year. The total marketing budget for eRx is now around CHF45-50 million.
Q: What is the expected timeline for achieving free cash flow breakeven?
A: Free cash flow breakeven is expected to be achieved 12 to 18 months after reaching EBITDA breakeven for the entire company.
Q: How do you view your current performance in the Rx market compared to competitors, and what is your strategy for TeleClinic?
A: We do not comment on competitors but are confident in our strategy based on strong KPIs. TeleClinic is growing well, driven by strategic partnerships and increasing demand for telemedicine, supported by favorable lawmaking in Germany.
Q: Can you provide more details on the growth dynamics and EBITDA contribution of TeleClinic?
A: TeleClinic is expected to exceed CHF10 million in sales with a double-digit EBITDA margin, contributing a low single-digit million amount to EBITDA this year. Growth is driven by eSick notes, eRx, and integration into the public health system.
Q: What are your expectations for the Rx business ramp-up and the impact of repeat prescriptions?
A: The Rx business is expected to see gradual improvement, with significant contributions from repeat prescriptions starting January 2025. We are technically ready to process these prescriptions automatically.
Q: How do you plan to handle material and logistics cost inflation and Rx medication shortages?
A: While inflation is a headwind, we can pass some costs to sales prices. Rx medication shortages have a minimal impact on our growth dynamics.
Q: What is the current market share of your Rx business in volume and value terms?
A: As of July, our volume-based market share is 0.52%, and the value-based market share is 0.37%. The difference is due to average order values and product mix.
Q: Why are paper Rx revenues resilient or increasing slightly?
A: Paper Rx revenues remain stable due to a mix of privately insured patients and certain medications still being prescribed on paper. Additionally, some doctors continue to issue paper prescriptions.
Q: What is the long-term outlook for achieving an 8% EBITDA margin?
A: The target of an 8% EBITDA margin remains for the mid- to long-term (three to five years), based on achieving 10% online penetration in the Rx market.
Q: How do you balance growth and profitability for TeleClinic?
A: TeleClinic's growth is driven by strategic partnerships and increasing demand for telemedicine. We focus on onboarding more doctors to meet patient demand, balancing growth with profitability.
For the complete transcript of the earnings call, please refer to the full earnings call transcript.
