Medios : 9M/Q3 2020 Results Presentation

Medios 9M/Q3 2020 Results

Matthias Gaertner, CFO 12 November 2020

Agenda

• Executive Summary
  Financial Overview Guidance 2020

Appendix

2

Highlights 2020 year-to-date - Growth strategy on track

OPERATIONS

MANAGEMENT

FINANCIALS

Growth strategy on track

• Pharmaceutical Supply:
• • continues to be a clear growth driver, however, growth weakened at lower margins as a result of the COVID-19 pandemic
  • new indication: hemophilia
• Patient-specificTherapies:
• • performance on track
  • acquisition of Kölsche Blister GmbH - attractive new service "blistering", driver of additional new customers
  • new building rented in Berlin: manufacturing capacity can be tripled
• Administrative units consolidated at new premises in Berlin-Mitte
• mediosconnect: digital platform to manage order and billing processes
• Since 21 Sep 20: member of the SDAX
• Matthias Gärtner, CFO, to be additionally appointed as CEO effective 1 Jan 2021 - successor of Manfred Schneider; Executive Board: only three members
• Advisory Board to be founded in 2021 with Manfred Schneider in a leading role
• Revenue and earnings show growth in comparison to Q2 2020; however, results are lower compared to 9M 2019 due to ongoing COVID-19 effects
• Solid liquidity: various capital measures to finance organic and inorganic growth
• Guidance 2020 confirmed

3

Dynamic growth despite COVID-19 Pandemic

Continuation of growth strategy: Business model intact

Revenue €m

EBITDA pre* €m

EBT pre* €m

372	453		14.1	10.2			12.8
										8.0
	9M 2019		9M 2020			9M 2019		9M 2020		9M 2019		9M 2020

Corona-related effects continued in the second half of the year

• First quarter saw extensive stockpiling of pharmaceuticals
• March 2020: Introduction of an order - quota system - by the Federal Institute for Drugs and Medical Devices (BfArM)
• Increased difficulty to obtain medicines at accustomed purchase prices - resort to additional suppliers necessary
• Growing competition between EU countries regarding supply of pharmaceuticals, especially those that are higher-priced

* EBITDA and EBT without extraordinary expenses: adjusted for extraordinary expenses for stock options, M&A activities and amortization of the customer base

4

Q3 2020 vs. Q2 2020: Overview Key Figures

Revenue €m

EBITDA pre* €m

EBT pre* €m

160.0

3.1

130.1

3.8

2.21.2

Q2 2020

Q3 2020

Q2 2020

Q3 2020

Q2 2020

Q3 2020

Comments

• Revenue for Q2 and Q3 affected by COVID-19- related effects
• Revenue increase mainly driven by wholesale business
• Operating results impacted by procurement issues

* EBITDA and EBT without extraordinary expenses: adjusted for extraordinary expenses for stock options, M&A activities and amortization of the customer base

5

Business model intact: Proven growth strategy in place with growth prospects

VERTICAL GROWTH DRIVER

Grow customer base and

partner network

• Currently ~330 pharmacies covered
• Cover ~500 pharmacies mid-term
• Cover ~1,000 pharmacies long-term

HORIZONTAL GROWTH DRIVER

Extend product range and expand to further indication areas

• Currently >650 specialty pharma drugs offered
• Extend offering to ~1,000 specialty pharma drugs
• Increase of manufacturing capacities

PROFITABILITY DRIVER

Leverage economies of scale

• Margin expansion from increased utilization of existing capacities
• Shift from wholesale to compounding business by increasing the share of blistered products

Disciplined buy & build approach to accelerate growth strategy

6

New management structure effective 1 January 2021

Executive Board

Supervisory Board

Chairman

COO

CINO

Chairman

Deputy

Member

Chairman

Matthias

Mi-Young

Christoph

Dr. Yann

Joachim

Klaus J.

Gärtner

Miehler

Prußeit

Samson

Messner

Buß

Advisory Board: establishment in 2021

Member

Member

Member

..…..

Manfred

Schneider

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Agenda

Executive Summary

• Financial Overview
  Guidance 2020

Appendix

8

9M 2020 Group: Financials affected by COVID-19-effects

In € million	9M 2020	9M 2019	∆%
Revenue	452.9	371.7	21.9
COGS*	426.7	348.1	22.6
ratio in % of revenue	94.2%	93.7%
Personnel expenses	10.6	7.5	40.8
Other expenses	6.8	4.7	45.5
EBITDA pre**	10.2	14.1	-27.3
EBT pre**	8.0	12.8	-37.5
EPS (€), undiluted	0.28	0.55	-49.1
CF from operating activities	6.9	4.0	72.9
CF from financing activities	51.9	-0.5	n/a
In € million	30 Sep 2020	31 Dec 2019	∆%
Inventories	32.1	16.1	99.7
Cash & cash equivalents	67.3	15.6	>100.0
Equity	140.0	81.6	71.5%
ratio in %	67.0%	70.0%

Comments

• Strong revenue growth, Pharmaceutical Supply key contributor (Kölsche Blister included with €3.5m revenue for Q2 & Q3)
• Growth investments: prepared start of new indication 'hemophilia' and introduction of e-prescription significantly reflected in personnel expenses
• Other expenses including legal and consulting costs
• Earnings decrease as a result of ongoing COVID-19 pandemic:
• • higher purchase prices due to quota order and limited availability of drugs
• Inventories mainly driven by the new indication hemophilia
• Increase of cash & cash equivalents resulting from capital increase and positive operating cash flow

* COGS Costs of goods sold	9
* * EBITDA and EBT without extraordinary expenses: adjusted for extraordinary expenses for stock options, M&A activities and amortization of the customer base

9M 2020 Segments - Growth driven by wholesale business

	Pharmaceutical Supply	Patient-specific	Internal Services and	Group
	Therapies	IFRS consolidation
In € million	9M 2020	9M 2019	9M 2020	9M 2019	9M 2020	9M 2019	9M 2020	9M 2019
Revenue (external)	406.0	333.9	46.5	37.6	0.3	0.2	452.9	371.7
Delta (y-o-y in %)	21.6%		23.8%		>100%		21.9%
COGS* ratio	97.3%	96.4%	71.5%	75.0%	0.0%	3.8%	94.2%	93.7%
(% of revenue)
EBITDA pre*	6.0	8.5	4.3	4.6	-0.1	0.9	10.2	14.1
margin (% of revenue	1.5%	2.6%	9.3%	12.3%	-20.3%	>100%	2.3%	3.8%
EBT pre*	5.0	8.1	3.5	4.0	-0.5	0.7	8.0	12.8
margin (% of revenue)	1.2%	2.4%	7.6%	10.7%	<-100%	>100%	1.8%	3.4%

Comments

• Initially planned COGS ratio for the Pharmaceutical Supply segment for 2020 at 96.3%; for the first nine months (9M) of the year actual ratio at 97.3% => 1 percentage point worse reflecting a decline in earnings of €4.1m in 9M 2020
• Weaker EBITDA pre* margin for the Patient-specificTherapies due to internal cost allocation of investments for future growth (M&A, personnel expenses) and consolidation of Kölsche Blister
• • Excluding these mentioned costs EBITDA pre* margin improved (15.3% for 9M 2019 vs. 16.8% for 9M 2020)

* EBITDA and EBT without extraordinary expenses: adjusted for extraordinary expenses for stock options, M&A and amortization of the customer base	10

Financing Power - Strong financial position to invest in future growth

As of 30 September

Syndicated loan

Thereof called/drawn

Cash & cash equivalents

Total liquidity

In € million

62.5

-1.5

67.3

approx. 128.3

Comments

Organic growth

• High single-digit million € range to be invested in own labs

External growth

• M&A strategy: focus on compounding business or specialized wholesalers

11

Agenda

Executive summary Financial Overview

• Guidance 2020

Appendix

12

Guidance for full-year 2020 confirmed

In € million	2020e
Group revenue	610 - 630
Adj. EBITDA*	14.0 - 15.0
Adj. EBT*	11.5 - 12.5
Adj. EBT* margin (in %)	1.9 - 2.0

Reach the 1 billion € revenue mark by 2023 at the latest

* EBITDA and EBT without extraordinary expenses: adjusted for extraordinary expenses for stock options, M&A and amortization of the customer base

13

Proven financial track with strong profitable growth

Medios Group IFRS	2015*1	2016*1	2017*2	2018*2	2019*2	2020E*2, 4	2023E
		Pharmaceutical Supply																	1,000
		Patient-specific Therapies
												517			610-630
										328			10%
								254
						160			12%
			90			17%				90%
						25%				88%
				38%			83%
	Revenue in € m				75%
		62%
		Pharmaceutical Supply
		Patient-specific Therapies										16.2
								8.0		11.0		33%			11.5-12.5
						5.8			24%
			2.8			18%			67%
				37%		82%		76%
	Adj. EBT in € m	65%
	35%		63%
	Adj. EBT Margin	3.1%		3.6%		3.2%	3.3%		3.1%			1.9-2.0%

*1	2015 and 2016 pro-forma;*2 Adjusted for extraordinary expenses for stock options, M&A and amortization of the customer base; *3CAGR = Compound Annual Growth Rate;	14
*4	Adjusted at 5 Aug 2020

Goals for 2021 - Ongoing growth strategy

• Organic growth
• • Expansion of manufacturing capacities - completion of new laboratories in Berlin
  • Further establishment of "blistering" in Germany
  • Expansion of partner network of specialized pharmacies
  • Preparation of e-prescriptions launch on 1 January 2022 (legally required)
  • Further market integration through innovative digital trading platform "mediosconnect"
  • Further expansion and diversification of indication areas
• M&A Strategy with focus on compounding or specialized wholesalers

Medios is well prepared for growth and a successful future!

15

Appendix

Q3 2020 Group: Financials

In € million	Q3 2020	Q3 2019	∆%
Revenue	160.0	143.2	11.8
COGS*	151.3	134.1	12.8
ratio in % of revenue	94.5%	93.7%
Personnel expenses	3.8	2.7	42.0
Other expenses	2.1	1.5	45.4
EBITDA pre**	3.8	6.4	-41.0
EBT pre**	3.1	6.0	-47.7
EPS (€), undiluted	0.07	0.27	-74.1
CF from operating activities	0.0	2.9	-99.1
CF from financing activities	-18.2	-0.2	n/a
In € million	30 Sep 2020	31 Dec 2019	∆%
Inventories	32.1	16.1	99.7
Cash & cash equivalents	67.3	15.6	>100.0
Equity	140.0	81.6	71.5%
ratio in %	67.0%	70.0%

Comments

• Strong revenue growth, Pharmaceutical Supply key contributor (Kölsche Blister included with the second & third quarter)
• Growth investments: prepare new indication 'hemophilia' and introduction of e-prescription significantly reflected in personnel expenses
• Earnings decrease as a result of COVID-

19 pandemic:

• • higher purchase prices due to quota order and limited availability of drugs
• Decrease of cash & cash equivalents resulting from repayment of syndicated loan used short-term

* COGS Costs of goods sold | * * EBITDA and EBT without extraordinary expenses: adjusted for extraordinary expenses for stock options, M&A and amortization of the customer base

17

Q3 2020 Segments - Growth driven by wholesale business

	Pharmaceutical Supply	Patient-specific	Internal Services and	Group
	Therapies	IFRS consolidation
In € million	Q3 2020	Q3 2019	Q3 2020	Q3 2019	Q3 2020	Q3 2019	Q3 2020	Q3 2019
Revenue (external)	144.0	129.7	15.9	13.4	0.1	0.1	160.0		143.2
Delta (y-o-y in %)	11.0%		18.7%		27.7%		11.8%
COGS* ratio	97.4%	96.5%	72.8%	72.5%	0.0%	2.2%	94.5%		93.7%
(% of revenue)
EBITDA pre*	1.8	3.2	1.4	1.8	0.5	1.4	3.8		6.4
margin (% of revenue)	1.3%	2.5%	8.9%	13.5%	>100%	>100%	2.4%		4.5%
EBT pre*	1.5	3.0	1.1	1.7	0.5	1.2	3.1		6.0
margin (% of revenue)	1.0%	2.3%	7.1%	12.6%	>100%	>100%	2.0%		4.2%

Comments

• Initially planned COGS ratio for the Pharmaceutical Supply segment for 2020 at 96.3%; for the first 3rd quarter of the year actual ratio at 97.4% => 1 percentage point worse reflecting a decline in earnings of €1.4m in Q3 2020
• Weaker EBITDA pre* margin for the Patient-specificTherapies due to internal cost allocation of investments for future growth (M&A, personnel expenses) and consolidation of Kölsche Blister
• • Excluding these mentioned costs EBITDA pre* margin almost unchanged (17.7% for Q3 2019 vs. 17.8% for Q3 2020)

* EBITDA and EBT without extraordinary expenses: adjusted for extraordinary expenses for stock options, M&A and amortization of the customer base	18

Consolidated statement of comprehensive income 9M/Q3 2020 impacted by COVID-19 pandemic and additional one-time effects

In € thousand	9M 2020	9M 2019	Q3 2020	Q3 2019
Revenue	452,900	371,679	160,015	143,172
Change in stocks of finished goods and work-in-	45	462	32	440
progress
Work performed and capitalized	17	97	0	-326
Other income	287	1,191	102	962
Cost of materials	426,723	348,091	151,283	134,113
Personnel expenses	10,631	7,548	3,784	2,666
Other expenses	6,839	4,701	2,109	1,451
Earnings before interest, taxes, depreciation and	9,057	13,089	2,972	6,019
amortization (EBITDA)
Depreciation and amortization	2,568	1,623	947	519
Earnings before interest and taxes (EBIT)	6,488	11,466	2,025	5,500
Financial expenses	527	121	224	52
Financial income	15	13	1	8
Consolidated earnings before taxes (EBT)	5,976	11,358	1,802	5,457
Taxes	1,707	3,399	702	1,470
Consolidated earnings after taxes	4,269	7,958	1,101	3,987
Total consolidated earnings	4,269	7,958	1,101	3,987

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Consolidated Balance Sheets 9M 2020

ASSETS	30/09/2020	31/12/2019
In € thousand
Non-current assets	45,548	37,136
Intangible assets	34,391	31,260
Property, plant and equipment	4,797	2,549
Right of use	6,139	3,045
Financial assets	220	283
Current assets	163,398	79,431
Inventories	32,064	16,053
Trade receivables	57,048	42,805
Other assets	6,839	4,787
Income tax receivables	191	165
Cash and cash equivalents	67,256	15,622
Balance sheet total	208,945	116,567

LIABILITIES
In € thousand	30/09/2020	31/12/2019
Equity
Subscribed capital	16,085	14,564
Capital reserves	103,828	51,273
Accumulated Group Result	20,058	15,789
Attrib. to shareholders in the	139,972	81,627
parent company
Liabilities
Non-current liabilities	11,659	6,253
Financial Liabilities	6,578	2,577
Other provisions	968	0
Deferred tax liabilities	4,113	3,676
Current liabilities	57,314	28,688
Other provisions	388	501
Trade payables	48,987	12,882
Financial liabilities	1,236	3,664
Income tax liabilities	2,786	7,577
Other liabilities	3,918	4,064
Total liabilities	68,974	34,941
Balance sheet total	208,945	116,567

20

Consolidated cash flow statement 9M/Q3 2020

In € thousand	9M 2020	9M 2019	Q3 2020	Q3 2019
Cash flow from operating activities
Net income for the year	4,269	7,958	1,101	3,987
Depreciation and amortization on non-current assets	2,568	1,623	947	519
Decrease/increase in provisions	-114	-50	-6	81
Other non-cash expenses	584	998	195	356
Increase in inventories, trade receivables and other assets not	-30,857	-13,744	-26,053	-1,993
attributable to investment
or financing activities
Decrease/increase in trade payables and other liabilities not attributable	34,835	4,337	29,489	-495
to investment or financing activities
Financial result	512	108	223	43
Income/expenses from the disposal of assets	-1	-865	0	-865
Income tax expense	1,707	3,399	702	1,049
Income tax payments	-6,557	253	-6,570	253
Net cash inflow/outflow from operating activities	6,947	4,018	28	2,935
Cash flow from investment activities
Payments made for investments in intangible assets	-1,203	-1,496	-532	-1,381
Payments made for investments in property, plant and equipment	-1,937	-810	-393	104
Payments from disposals of tangible fixed assets	15	4,183	4	4,183
Payments from disposals of non-current financial assets	62	54	21	54
Payments for additions to the consolidated group	-1,163	0	0	0
Interest received	15	13	1	8
Net cash outflow from investment activities	-4,210	1,943	-899	2,967
Cash flow from financing activities
Proceeds from equity injections	51,991	0	-19	0
Proceeds from financial liabilities	19,000	0	0	0
Outflows from the repayment of financial liabilities	-17,500	0	-17,500	0
Interest paid	-735	-137	-308	-68
Repayments of the leasing liabilities	-881	-349	-356	-88
Net cash inflow from financing activities	51,875	-487	-18,182	-155
Net change in cash and cash equivalents	54,611	5,474	-19,054	5,747
Cash and cash equivalents at the beginning of the period	12,645	11,772	86,310	11,499	21
	67,256	17,246	67,256	17,246
Cash and cash equivalents at the end of the period

IR Contact

Claudia Nickolaus

Head of Investor & Public Relations

Phone: [phone]

E-mail: [e-mail]

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Disclaimer

This presentation has been produced by Medios AG (the "Company"). The facts and information contained herein are as up to date as is reasonably possible and are subject to revision in the future. None of the Company or its directors, officers, employees or advisors nor any other person makes any representation or warranty, express or implied as to, and no reliance should be placed on, the accuracy or completeness of the information contained in this presentation. None of the Company or any of its directors, officers, employees and advisors nor any other person shall have any liability whatsoever for any loss howsoever arising, directly or indirectly, from any use of this presentation. The same applies to information contained in other material made available at the presentation. While all reasonable care has been taken to ensure the facts stated herein are accurate and that the opinions contained herein are fair and reasonable, this presentation is selective in nature and is intended to provide an introduction to, and overview of, the business of the Company. Where any information and statistics are quoted from any external source, such information or statistics should not be interpreted as having been adopted or endorsed by the Company as being accurate.

This presentation contains certain forward-looking statements relating to the business, financial performance and results of the Company and /or the industry in which the Company operates. Forward-looking statements concern future circumstances and results and other statements that are not historical facts, sometimes identified by the words »believes«, »expects«, »predicts«, »intends«, »projects«, »plans«, »estimates«, »aims«, »foresees«, »anticipates«, »targets« and similar expressions in English or equivalent expressions in German.

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In particular, this presentation does not constitute an offer of securities for sale or a solicitation of an offer to purchase securities in the United States. The shares in the Company may not be offered or sold in the United States or to or for the account or benefit of "U.S. persons" (as such term is defined in Regulation S under the U.S. Securities Act of 1933, as amended (the "Securities Act")) absent registration or an exemption from registration under the Securities Act. The shares in the Company have not been and will not be registered under the Securities Act.

This presentation speaks as of June 2020. Neither the delivery of this presentation nor any further discussions of the Company with any of the recipients shall, under any circumstances, create any implication that there has been no change in the affairs of the Company since such date.

23

Medios 9M/Q3 2020 Results

Matthias Gaertner, CFO 12 November 2020