EQS Group-Ad-hoc: Zur Rose Group AG / Key word(s): Half Year Results Zur Rose Group accelerates growth in second quarter with revenue up 26 per cent 18-Aug-2021 / 07:00 CET/CEST Release of an ad hoc announcement pursuant to Art. 53 LR The issuer is solely responsible for the content of this announcement.
Frauenfeld, 18 August 2021
2021 Half-Year Results
Zur Rose Group accelerates growth in second quarter with revenue up 26 per cent
- Positive performance sustained with 20.8 per cent growth in first half despite drugs market stagnating due to pandemic
- Significant acceleration in second quarter: 35.6 per cent growth in Germany
- New DocMorris app launched on schedule as e-prescription test phase gets under way
- Half-year results lower than last year due to stepped up investment in e-prescriptions and growth In a challenging market environment, the Zur Rose Group continued to rigorously implement its growth strategy in the first half of 2021. Although the OTC drug market stagnated as a result of a considerable decline in demand for cold and flu medications due to the pandemic, external revenue^ rose by 20.8 per cent in local currency terms or 23.2 per cent in Group currency terms to CHF 998.0 million, in line with the targets announced. Growth accelerated substantially in the second quarter, rising 26.2 per cent, after 16.0 per cent in the first quarter. The general move towards more online purchases and steady growth in new customers contributed to the dynamic performance. The number of active customers rose by more than 600,000 to 11.7 million^ in the second quarter.
Sustained pleasing performance in the segments The Zur Rose Group saw strong gains in Germany, with growth in external revenue accelerating in the second quarter to 35.6 per cent in local currency terms (after 25.2 per cent in the first quarter). In the first half it grew by 30.0 per cent in local currency terms or 33.7 per cent in Group currency terms to CHF 656.0 million. This positive performance was driven by the online business in non-prescription medications and health products, despite the stagnation in the OTC market. The prescription drugs business based on paper prescriptions almost reached the same level as the period last year and is testament to the high degree of customer loyalty. The Switzerland segment also put in a stable performance, thanks to successful initiatives. Revenue in the home market increased by 5.6 per cent to CHF 305.1 million. In the Europe segment, which currently consists of Spain and France, revenue rose by 22.9 per cent in local currency terms or 26.4 per cent in Group currency terms, to CHF 40.5 million in the first half.
Investments stepped up to support the growth strategy To support the growth strategy, in the first half the Zur Rose Group stepped up investments in electronic prescriptions and high-margin areas for the future: the healthcare ecosystem, telemedicine and PaaS (platform as a service). As the European umbrella brand for the ecosystem and with a view to the launch of e-prescriptions, in February 2021 DocMorris launched a major marketing campaign in Germany ("Das neue Gesund"). In total, expenditure for these activities increased in the first half by around CHF 20 million. Because the OTC market stagnated due to the pandemic, the costs of growth were higher, which had an impact on the margin and the marketing ratio. The results were also burdened by non-recurring expenditure, chiefly in connection with acquisitions and restructuring. EBITDA adjusted for non-recurring effects was minus CHF 42.9 million. The operating result (EBITDA) was minus CHF 49.7 million.
Technical components for e-prescriptions ready: test phase for e-prescriptions starts The introduction of electronic prescriptions in Germany is proceeding as planned. As at 30 June 2021, all technical components - the gematik app for forwarding e-prescriptions, the identity provider as the central access system and the specialist e-prescription service on which all e-prescriptions are stored in encrypted format, the implementation of which Zur Rose subsidiary eHealth-Tec was also involved as a partner of IBM - had been provided on schedule.
On 1 July 2021 a three-month test phase, in which DocMorris is also participating, started in Berlin-Brandenburg as a focus region. This sees selected doctors in their practices or by telemedicine, local and online pharmacies and patients trying out the new prescribing and dispensing process with e-prescriptions. A national test phase across Germany will start on 1 October 2021, before e-prescriptions become mandatory on 1 January 2022. From then on, patients will no longer have to follow the previous cumbersome procedure of sending paper prescriptions in by post to e-commerce pharmacies. By that date at the latest, providers of practice and pharmacy management systems and hospital information systems must have connected their software to the gematik e-prescription specialist service. eHealth-Tec has come up with a compatible software development kit (SDK) for this, which is already being used by various pharmacies and telemedecine providers. This tool meets the highest security standards and all gematik requirements and combines a host of individual steps into one stringent process.
New DocMorris app for the start of the test phase The new DocMorris app also started punctually for the launch of the gematik test phase for e-prescriptions. This provides users with a convenient scan function for the field codes on the print-out when having e-prescriptions filled, allowing the prescription information to be sent to DocMorris quickly and digitally. The Zur Rose Group currently anticipates that more than 90 per cent of patients will initially receive their e-prescriptions as a print-out, and that owing to the high technical requirements and the complex identification process, fewer than 10 per cent of prescriptions will be submitted using the official gematik e-prescription app.
For patients, the new DocMorris app also now gives them the option to order their OTC medications and healthcare products directly or arrange a video consultation with a qualified doctor from Germany. The launch of the app is being supported by a major marketing campaign focusing on e-prescriptions and how to have them filled.
By the end of the year, all services and functions like e-commerce, healthcare services and marketplace will be combined in a digital DocMorris healthcare platform with just one app and one front-end application, to ensure the most convenient customer experience. As an intermediate stage, the DocMorris+ marketplace has been renamed DocMorris Express for same-day deliveries by partner pharmacies.
Start for ecosystem healthcare journeys The first healthcare journey was successfully launched in collaboration with global healthcare company Novo Nordisk for people living with obesity (www.docmorriscare.com/adipositas) at the end of March 2021. The ecosystem healthcare journey allows people with obesity to seek information and professional help, get advice from specialist doctors and discover solutions to improve their health and quality of life. Doctors can be consulted both online, using TeleClinic, and physically with the help of a health care provider locator. The marketing campaign for the obesity care journey has already achieved a broad and substantial impact after just four months. The ads have been viewed more than 55 million times (number of impressions). Google Trends has also seen a sharp rise in interest in searching for the term "obesity" since the campaign and care journey started.
Awards for the ecosystem umbrella brand DocMorris The multimedia campaign "Das neue Gesund" launched in Germany in February in 2021 conveys the new brand values of DocMorris after the substantial rebranding at the end of 2020. In 2021, DocMorris has won eight prestigious international awards for the new branding and the #TakeCare Christmas campaign so far, including the Red Dot for brand design and four New York Festival awards. These prizes are a recognition of the new brand appearance, which reflects the values and positioning of DocMorris. Unaided brand awareness rose by eight percentage points.
Another healthcare digitalisation law approved On 6 May 2021 the German Bundestag passed the Digital Provision and Care Modernisation Act (Digitale-Versorgung-und-Pflege-Modernisierungs-Gesetz, DVPMG), with the support of the governing parties. Amongst other things, Doctors are now allowed to conduct and charge up to 30 per cent of their consultations as video consultations. Healthcare providers are also obliged to set a digital authentication procedure for video consultations. This will remove barriers to using remote treatment such as having to show an electronic healthcare card by video or afterwards in the practice. The new Act is likely to further accelerate demand for online consultations. An increasing number of doctors are opting for telemedicine offerings alongside their normal consultations. Zur Rose subsidiary TeleClinic has also witnessed a strong increase in treatments over the platform since the start of the pandemic.
Merger of apo-rot brand with DocMorris successfully concluded apo-rot B.V. merged with DocMorris N.V. on 30 June 2021. All employees were taken on and integrated into the existing structures at the Heerlen site. This means the Zur Rose Group has now completed the next stage of integration to increase efficiency.
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