Cegedim SA (ALCGM) Earnings Call Transcript & Summary

So I think we'll start the presentation. So thank you for attending the presentation, this third quarter revenue presentation, which is also the first 9 months of 2024 revenue for the Cegedim Group. So on a 9-month basis, the sales, the revenue amounts to EUR 475.8 million on a growth of 5.9% reported, 4.3% like-for-like. On the third quarter especially, the revenues are EUR 156.8 million, so it's a growth of 5.7% reported and 3.8% like-for-like. As you may have noticed, the organic growth for the 2 last quarters, so the third quarter and the second quarter, around 3.3% and 3.8% like-for-like, a bit less on our full year targets. And this is mainly due to the comparison effect of the subsidies that we received last year for the Ségur de la Santé. We have the occasion to elaborate a bit more on this during the presentation. The main contributors were marketing, BPO, HR and cloud solutions. And on the significant events that happened during the quarter, the main one is the new financing arrangement that we announced on July 31 and that we put there on this slide as a reminder for you. So on the third quarter 2024, you can see that on the left-hand side, the bridge of growth. So it's mainly organic growth, 3.8% growth organic, and the structure impact is EUR 2.7 million, so it's a growth of 1.8%, and is mainly due to the integration of Visiodent. The currency impact positive is due to the sterling pound. As you can see on the right-hand side, it's the bridge per division of the growth. So almost all the divisions contributed during this quarter, only Software & Services was just slightly down at minus 0.5%, and we'll talk about it later on. On the 9 months basis, the growth is mainly organic. So it's 4.3% organic growth. Structure impact, still Visiodent and currency impact, the sterling pound. On this 9 months' bridge, growth per division, Software & Services, Flow, Data & Marketing, BPO, Cloud & Support, so it means all the divisions, contributed positively to the growth, even though Software & Services was a bit timid compared to the others. So I suggest that we dive into the various divisions and see what happened during the quarter and the 9 months. Core division, as you know, is the Software & Services. That, on the 9 months' basis, generated a revenue of EUR 227.7 million, and on the third quarter, a revenue of EUR 75.6 million. So on Cegedim, so the various subdivisions that you know, Cegedim Santé. So as I mentioned earlier on, we have a strong impact of Ségur de la Santé on the 9 months' basis. So the subsidies were mainly during Q2 and Q3 last year. However, you can see that even though the organic growth is minus 9.8%, it's improving quarter-on-quarter on Cegedim Santé. Also, the gap between the like-for-like growth and the release growth, the published growth, is due to the integration of Visiodent since March 1. That also generates synergies among the group. On the other French subsidiaries, so the pharmacists especially had a difficult 9 months and on the third quarter also because of the comparison with Ségur de la Santé for which it had received last year gains of EUR 2 million and also because last year, due to the Ségur de la Santé, lots of pharmacists bought some equipment and so that this year, there are less sales in equipment. However, in the subdivision, HR and insurance are performing quite well for the 9 months and during the quarter. So it means the subdivision has a growth of 0.9% on a 9-month basis. Last, international activities. As expected, sales are a bit down on this 9 months' revenue. This is due, as I mentioned during the previous calls, to the strategic move from Cegedim on the U.K. doctors to refocus on Scotland, meaning getting out of the market in England, Northern Ireland, and Wales. So they are the first impacts on revenue as expected and as you probably expected to. The second division that we'll talk about is the Flow division. So on year-to-date, on the first 9 months, it generated a revenue of EUR 73.2 million, a growth of 5.7% reported, 5.6% like-for-like; and in Q3, EUR 23.7 million, a growth of 5.5% reported, 5.4% like-for-like. So as you can see, e-business had a growth of 5.1% on a 9 months' basis, which is a good growth and interesting growth, even though Q3 was a bit shy compared to the rest of the year and also for the 9 months. This is due, as you can remember, that the French reform on electronic invoices was postponed last year from '24 to '26. So it means also that our clients are lessening their urge to migrate to our solutions. But still, it's a good growth on a 9 months' basis. Also, third-party payer generated a growth of 6.7% on the first 9 months of 2024. And this is due to the volume in Q1 but also due to the success of its offering in fraud and long-term illness detection. The third division is Data & Marketing. So as you can see, Data is flattish in growth on the first 9 months. The division is up 10.8%, mainly due to the marketing. I will elaborate a bit more. So the 9 months' revenue is EUR 87.5 million, growth of 10.8%, as I mentioned. On Q3, growth is 17%, generating a revenue of EUR 28.2 million. So as I said, Data is flattish on this first 9 months, minus 0.7%. And France is a bit more dynamic than international, as we mentioned in earlier calls. And Marketing had a very, very strong first 9 months and a very strong Q3. This is due to two things. For the 9 months, it's due to this strategy, phygital strategy, with a good offering and a good demand on print and digital. And during the Q3, it led some special ad campaigns, so during the Olympics, meaning that resulted in a growth of 38% on the third quarter for Marketing. So all in, it's a growth of 10.8% in 9 months for this division. The fourth division is the BPO, the outsourcing. As you see and as you know, the insurance BPO had a very strong first 9 months growth. This is due partly to a favorable comparison stemming from the Allianz contract. As you know, it started last year on April 1, but it also had a very good dynamic for its overflow business. On the Business Services BPO, the growth was 6.5% on 9 months. This is due to the good success, to the important success, of its compliance offering, also reaching to new clients and a good momentum from the existing customer base. All in, its growth is 18.8% reported and like-for-like on a 9 months basis, so it's a EUR 61.5 million revenue. And on Q3, it was EUR 21.6 million, a growth of 13.9% reported and like-for-like. Then we have the division that we named Cloud & Support, still very good growth, very important growth, of 13.9% on 9 months, EUR 25.8 million of revenue. On Q3, it had an interesting growth of 12.5% reported and like-for-like. So it is a revenue of EUR 7.7 million, meaning that its sovereign cloud-backed products and services enjoy still a very good momentum. Regarding our outlook for the year, we keep the same outlook of a growth range from 5% to 8% like-for-like. But as you can see in our figures, we'll most probably be in the lower part of the range. And on the recurring operating income, we still expect an increase this year compared to last year. And last slide is the financial agenda for next year, for 2025, with our sales, revenues and you have it also on our website. I suggest that we can dive into the questions, and we'll ask you to raise your hand if you have some questions to ask us about this revenue presentation.

I think we have Gabriel.

Yes. Can you hear me?

Yes, very well.

Just one question for me. Do you have any visibility on 2025 growth, organic growth, concerning Ségur de la Santé and for the group, too, please?

It's too early. Budgets are not finished. There won't be any exceptional items, except to the fact that the revenue coming from the U.K. will decrease strongly. So globally, the growth rate will be very small. The impact will be positive on the EBIT and EBITDA side. But we are going to lose our revenue in the U.K.

And any news of the Wave 2 of Ségur de la Santé?

No. It is always on negotiation. It should start in the second half of next year and on the PARAMED. But the amount of the subsidies is still on negotiation with the authorities. So we are going to be very cautious in our budgets and our estimation for next year.

We can be thinking like EUR 5 million of sales or something like that?

Yes. If it starts effectively in second half, having a gain of EUR 5 million is really achievable.

Eric, I think you raised your hand.

Do you hear me?

Yes. We can hear you.

Just first of all, very good quarter on marketing. Can we expect this kind of growth on the fourth quarter?

No. Because in the past, the revenue between half July and end of August was almost 0 because the company which make announcements, advertisement, they don't want to pay for this period because all the people are in the holidays. So it was really exceptional due to the Olympic Games and due to the fact that we have created some specific presentation into the pharmacies near the Olympic sites, where the Olympic Games were. So it should be something like not far from double-digit but the growth should be around 10% and not as high as we have.

On the third quarter?

Yes.

Okay. And any news about Maiia offer, I have heard that Equasens want to launch kind of product similar to Maiia.

CompuGroup launched such a product 2 years ago and they had no success. So yes, we have competitors. Today, we are the real and main competitor to Doctolib and we are gaining market share. Not as much as we expected because we expected to have a growth this year which should compensate the fact that we have had no subsidies. And we know that it's going to be difficult match the subsidy.

Match the subsidy figure of Doctolib.

Yes. As you see, end of second quarter, we were at minus 12%. End of third quarter, we are at minus 9%. So it should improve in the fourth quarter. But we now think that we won't reach the plus 0% we had as a target, meaning that the growth of the business would compensate the fact that we have no subsidies. We will be a few million euros under.

And when you say that you are the second one in front of Doctolib, what kind of market share that means for you in front of Doctolib? Just an idea, but it's very small.

I think we are not far from 10% of the market. And Doctolib is, let's say, 35% or 40%. Half of the doctors, they don't use those agenda tools. So we think that there are still some room, some places for us.

But Doctolib is very well known. It's a problem for you.

Yes. It's really a problem. You see Doctolib is now seen as having a very dominant market position by more and more doctors. And since our prices are below their prices, we have some transfer from Doctolib to Maiia. Almost 1/3 of our gain comes from Doctolib. But it is true that we grow, we would expect to grow more, but Doctolib is a real competitor. It's a real company, well installed.

And the last point is on Great Britain, how it was, your decline. Is it continuing slowly? Or is it working well?

As you can see, it is slow because the doctors need to be transferred to the competitor software and to do that, we need the help of the NHS. And they seem to be reluctant to push doctors to migrate. So what we do is to reduce our staff in order to be just able to maintain the existing software. We don't make any development anymore. That's the reason why we have a plan where the losses we are making are going to decrease. But we know that it will take a minimum 3 years, well, 2.5 years now, to go out from the market.

And with a slow decline at the beginning.

Yes. And we have the same problem, I would say, in Scotland, where we are the unique agreed provider agreed by the NSS, the National Social Scotland Security (sic) [ National Services Scotland ]. But then we have 50% of the market. We should grow because the NSS should push the doctors who are equipped by the competitor software to our software, but it's also slow. It's a long process. But the goal is really to reduce as quickly as possible those losses we have on this market.

So I don't see any other questions. So I guess we have been clear. So let me thank you for attending the presentation. If you were to have some more question, you can contact me at [email protected]. Thank you very much, and have a good evening and see you next time.

Thank you very much.

Thank you. Bye-bye.