Cantourage Group SE (HIGH) Earnings Call Transcript & Summary

Good morning, ladies and gentlemen, and a warm welcome to the first Deutsche Boerse Scale Summit. My name is Judith, and I'm very pleased to welcome you on behalf of Deutsche Boerse. This new format brings together investors and high-growth scale issuers to enable a direct exchange on strategies, positioning, and investment stories. Each presentation will last 20 minutes and will be followed by a 10-minute Q&A session. We warmly encourage you to actively participate in these discussions. With that, I'm pleased to welcome Cantourage's CEO, Philip Schetter, who will guide us through the presentation on Cantourage Group SE. And with no further ado, I'd like to hand over to you, Philip.

Thank you, and thanks for having us. The pleasure is all ours. So we're one of the high-growth companies you just talked about and happy to talk about Cantourage and our story and also, let's say, the latest market and business developments. So let's jump right into it. First of all, I'd like to kick it off with a couple of our investment highlights to give you guys a rough overview what we're all about and what we do. So we are a company that's focused on medical cannabis. We're one of the very few pan-European companies. We've shown in the past that we can grow profitably in highly regulated markets. We implemented a very asset-light, scalable, capital-efficient business model, which we'll later talk about and also which shows basically in our numbers and our financial performance. We are in a market-leading position in the 3 largest European medical cannabis markets, which are Germany, U.K., and Poland, and are currently in talks in entering additional markets. We have developed a very unique operating model, which leads to a very diversified product portfolio, which definitely helps us to build those market-leading positions with a, let's say, very broad and very patient-centric product portfolio. So that's basically us. But what's actually medical cannabis and what is it known for or being used for? So medical cannabis can be used for various different indications. It ranges from digestive conditions to chronic pain to nausea to neurology. So very, very diverse indications and cannabis has demonstrated that it can help manage those symptoms. So cannabis doesn't cure any illness, but definitely helps managing pain, managing all types of different indications, especially when we're talking about, let's say, massive illnesses or massive disorders. Here on the left-hand side, 150 million people are suffering from sleep disorder, 60 million from anxiety disorders, and more than 100 million people suffering from chronic pain. And given especially in, let's say, in the Western Hemisphere, people are getting older. People are suffering from more of those type of illnesses. So that's why we also firmly believe that medical cannabis will become even more mainstream. It already shows in market developments. We can here see on the right-hand side, the development in Germany. There was a change in the regulatory landscape in April 2024, which basically kickstarted that market, which definitely eased the patient access. So it's a lot easier than it was before to start a cannabis therapy, and it also shows in the latest market developments. However, looking at the European landscape of medical cannabis markets, there are two core challenges, which we definitely attack with our operating model. On the one hand, still to this day, there is a shortage of consistent supply and innovative products in the European medical cannabis market, which is, to a certain degree, mind-boggling because there are definitely lots of excellent growers out there. However, those growers don't have the necessary license to turn an agricultural good, which is being grown into a medicine. And they won't have the capabilities nor the needs to get to those capabilities and needed licenses and permits. So that's one big challenge, the shortage of product. On the other hand, as I just also briefly talked about, the ease of access for patients is very important. We do have a second big challenge. There is a lack of doctors and pharmacies prescribing or dispensing cannabis. And still in the rather mature markets like in Germany, there's just a couple of doctors willing to entertain the thought of starting a cannabis therapy. So for patients, it's often very time-consuming, very challenging or at the end, not successful in order -- are not successful in order to start a cannabis therapy. So we're also trying to solve that riddle with Cantourage. With regards to the product supply challenge, so I mentioned those growers can't manufacture pharmaceutical goods or medicines. That's where we come into play. We found a unique model, which allows us to certify selected growers worldwide. We then import that biomass into the European Union. And together with partners, we turn that biomass into a medicine and then distribute and sell those products to pharmacies and wholesalers. So that basically opens up Cantourage to engage with the best growers around the world. So initially, we started off with growers from Africa, South America, Australia, New Zealand, and in particular, Canada. And today, most of our biomass is actually coming from Canada, where there are excellent growers and the regulatory landscape is very stable, and we have very consistent and stable supply chains established with our partners, especially in Canada. So with that platform, we can very quickly and efficiently supply European medical cannabis markets with our partners. So there is no need to involve external regulators. There is no need for heavy investment for our growing partners. We take care of that. Our platform allows them to enter EU medical markets. Very swiftly, very quickly that makes us very, very successful because we can also then address changing patient demand very effectively and quickly. Because then we can talk to our growing partners, which biomass they can send to us in order to meet changing demand in different European medical cannabis markets. Second challenge we'll quickly talked about is the ease of access or the lack of doctors and patients (sic) [ pharmacies ]. So in most European countries and still to this day also in Germany, it's pretty tough to get a cannabis prescription. So patients are walking from doctor to doctor, talking about their illnesses, their indications, their suffering, and most of the doctors basically straight up send them away. And if they find a doctor willing to start a cannabis therapy, and oftentimes, it's also a tedious way to actually get cannabis out of a pharmacy. So not every single pharmacy around the corner is dispensing cannabis or dispensing cannabis at affordable prices. So that's also another odyssey for patients to actually get their hand on medical cannabis out of a pharmacy. That's why we also develop telemedicine platforms in Germany and the U.K., and England, which turns -- and those 2 odysseys, finding a doctor and then finding a pharmacy into a very safe and efficient process, which is fully digitized, is an online registration. So our customer care teams checking documents and see whether a patient could be potentially eligible for a cannabis therapy. Then there is a video consultation with a doctor. And if the doctor okays a therapy, then an electronic prescription is directly sent to a pharmacy dispensing cannabis and the medicine can be picked up and/or be sent to a patient's doorstep. All in all, in an ideal world, then from online registration to actually get your hand on cannabis or medical cannabis, this can happen within 24, 48 hours, whereas before, it took days, weeks, months, or forever. So we make that very efficient, but it's also a safe process for everybody involved. So that also comes into play our telemedicine platforms, as mentioned, in Germany and the U.K., and hence, we provide better access. All in all, that turns into our operating model, which is asset-light compared to our competition. As mentioned, we haven't invested heavily into growing operations or production facilities. We focused on those parts of the value chain where we add most of the value, which is mainly in production or manufacturing, but also we're known for our, let's say, sales capabilities, but also our telemedicine platform. So all in all, that makes us pretty unique in the European or global cannabis industry, whereas others focused on different parts of the value chain. Our portfolio, as mentioned initially, very diverse. So we have lots of different flowers in our portfolio. We're working with our growing partners, bringing their brands into European markets. And in the API business, which is neat THC, so pure THC or pure CBD, we have our own solutions, our own brands in the market. So we can cater to different patient needs or different regulations. So for example, in Austria, we're supplying dronabinol, where flowers are not allowed, whereas in most of the other markets, we are heavily involved in the flower game. Here, quickly shown also an overview of our different flowers. We can cater to different needs, being value flower or high-quality premium flower, establishing different brands in different market segments and bringing those to patients all over Europe. Footprint-wise, as mentioned, mainly active in Germany, the U.K., and in Poland. That's also shown in our revenue split for Q1 2026. So -- last year, we made almost 70%, 80% of our revenue in Germany. We switched it up, became even more diversified, now investing heavily into the U.K., where we see massive market growth and healthy margins. So do we in Poland, and we also continue to cater to our home market in Germany. Currently, also looking at France, Italy, and Spain, where there are ongoing developments of establishing a medical framework and we will definitely be one of the players if it makes sense in entering that market. Just real quick, there is also lots of talk about regulatory change in Germany. Some of you may have read the news or heard the rumors. There was a potentially change of the so-called MedCanG. But being brutally honest, that chart is basically outdated. There is no movement no longer or we hear is that there is basically a standstill. There is no ongoing talk of potential reform. People are rather talking about the larger reimbursement reform along, let's say, all aspects of the statutory health insurance. One aspect might include flower, which definitely won't impact Cantourage massively because most of our patients or patients buying products from our partners are paying for those products themselves. They're not using reimbursements at all. Slight effect might be patients shifting from currently insured flowers to other flowers, and they will definitely then look at our portfolio and to potentially switch their therapy and their therapy option. So we do like our chances that it's actually more of an opportunity for Cantourage than a potential risk if there is a change at all. This is also due to the fact that we're very diversified, as mentioned, with regards to products and markets, being a pan-European company pays now its dividends of being very flexible to potential changes in any way or form. Lastly, a couple of numbers with regards to KPIs, just to give you a quick overview. 2023, we sold roughly 2 tonnes. Last year, we're almost hitting 20 tonnes, so almost tenfold than 2 years ago, and we like our chances to further grow those figures along our core markets, have lots of different products in the market. And on a rough estimate, we are reaching more than 100,000 patients all over Europe on a monthly basis. And this is with flower only. Financial performance here, a bit of historic performance. The company was founded in 2019 and then, yes, basically, we started growing massively with regards to revenue, always focused on being operationally breakeven and we're quite successful in doing so, definitely turned the corner in 2024 by being EBITDA positive and doing our best to continue that trend over the foreseeable future. In 2026, in Q1, so we stabilized revenue as a group. There was lots of turmoil in the German market. We feel very comfortable where we currently at. We restructured our portfolio. Now also in Germany, overweight in the flower business on premium flower with healthy margins. And that also shows in our current EBITDA margin profile, which sitting at almost 11%, which is almost double than we did over the course of the last year. And we're working very hard on further stabilizing and improving our EBITDA margin in 2026. Look at market outlook. I think the future is green, so to speak. The cannabis is definitely a movement. Medical cannabis is well established. We see -- hopefully, bigger dominoes also to fall, as mentioned, Italy, France, and Spain, but also the trend towards fully legalizing cannabis is gaining momentum. That's definitely also something we're looking out for where very established, very successful in the pharma environment, but could also play a role if we choose to do so in a recreational market, which are way larger than the medical market. Looking at our strategy for 2026, we are, as mentioned, active in telemedicine. We have lots of data out of those activities. We are well established in a couple of European markets. We're leveraging those insights, that data now to start developing our own brands. We are currently in the midst of introducing additional form factors. So think about inhalable extracts, edibles, vape pens. We'll further build out our telemedicine positioning in the U.K. and in Germany. And we will further leverage our data insights into drive our business development and research activities. So that's us. Thank you so much. I'm happy to answer any questions.

Thank you very much for your presentation, Philip. Ladies and gentlemen, now it is your turn, and we are opening the Q&A session.

[Operator Instructions] What is your defensible competitive advantage, particularly against international players with more capital?

So maybe also a bit of my background story. Before I joined Cantourage, I was the CEO of Aurora Europe, which was the European platform of Aurora Cannabis Inc. At that point in time, the second largest cannabis company in the world, flush with cash at that point in time. I learned at Aurora, but now also at Cantourage that money is not the most important thing, especially in highly regulated markets. We have a very experienced, very talented leadership team and team who know how to navigate in very complex regulated markets where money can't buy success, so to speak. We also feel given that we're EBITDA positive, we're cash positive, we can finance all our projects out of our cash flow, we're well equipped in defending our market-leading positions in the different European markets, which are all different. And that's oftentimes especially looking at U.S. players, Canadian players, they need to wrap their head around. Europe is not a single market. It's a very different, complex market. So we do like our chances being -- staying on top of the box, so to speak. But we are also open for any types of partnerships. There are early talks with larger players. They want to partner up with us in order to get into the European market. We brought a very large U.S. brand into Europe just recently. So I'm a firm believer in frenemies. We can grow the market together, partner up if we want to, but we also like where we're at. We believe in ourselves, in our capabilities, in our expertise. We do like our chances either way.

And could you please outline how regulatory developments impact your growth strategy?

Then I have a follow-up question, which type of regulatory developments are we talking?

This is going back...

This is a very broad question and tough to answer.

Yes. This is going back to the person, I guess, he's writing in your key markets.