Cegedim SA (ALCGM) Earnings Call Transcript & Summary

So thank you for attending the presentation. So today, we will show you the first quarter 2025 revenue for Cegedim. So, the -- yes -- so the revenue is EUR 161.3 million on Q1 2025. So it's a growth of 3.5% reported and 4.5% like-for-like. The gap between both reported and organic growth for the group and specifically for the Software & Services division, mainly comes from the deconsolidation of In Practice Systems since December 10, which the consolidation on the full quarter from Visiodent this year. Last year, we only had 1 month revenue from Visiodent as it was consolidated on March 1. It only partly offset this in-practice system deconsolidation effect. So it explains why we have a stronger like-for-like growth compared to reported for the group and for the Software & Services division. For the Software & Services division, we'll see that later on, but you can see that we had an almost flat like-for-like growth this year. For the 4 other divisions, as you can see here, and we'll deep dive later on, we had growth on all of these 4 divisions reported and like-for-like. All-in, the growth on the quarter was mainly driven by the activities from marketing, health insurance, HR and cloud activities. On this slide, you can see the bridge from organic growth and reported growth. So you can see the structure impact is mainly due to the deconsolidation of In Practice Systems, as I mentioned, with the consolidation of the full quarter from Visiodent only partly offset. You can see a slight positive currency impact, EUR 0.2 million on this quarter. You can see also the bridge from all the division on the right-hand side of the slide, and we'll deep dive into each of the division just after this slide. So I suggest we move on to the Software & Services revenue and go into the details. So as I mentioned, the reported growth for the Software & Services division was negative 2.6%, almost flattish on like-for-like basis of minus 0.4% on this quarter. On the subdivision, on Cegedim Sante, so you can see there's a gap between the reported and the like-for-like growth. So it stems from the full consolidation of Visiodent, which is in Cegedim Sante subdivision, which had only 1 month revenue last year, and we have the full quarter this year. Also, the Maiia suite of products and the Claude Bernard database also experienced a good quarter this year. The decrease, as we mentioned in the press release was due to the renegotiation of a raw data providing contract, which didn't provide revenue on the first quarter. On the other activities in France, you can see a growth of 3.4% on this quarter compared to last year. So there are 2 main contributors, HR with its client diversification strategy, but also good growth from its core markets, which are large accounts. And also the health insurance generated a very good momentum on this quarter, still on project-based sales as last year and also the transformation of these projects into rent phase this year -- rent phase revenue this year. On the pharmacies in France, the business environment was still challenging, especially because of the fact it's between the 2 Segur waves. All-in, the subdivision grew by 3.4% this year. On the international activities, as you can see, there's a large difference between the reported and the like-for-like growth or decrease. This is due to the deconsolidation of In Practice Systems. Remember, it was put under administration voluntarily in December. So it means that we didn't have any revenue from In Practice on the first quarter, which explains this very -- this decrease in reported growth. On the other U.K. activities, the pharmacy software activity suffered from a base effect from last year. Remember, last year on the first quarter, we had subsidies from the Pharmacy First program in the U.K. This was a one-off. So it's a bit difficult comparison on the first quarter. Also, Activus had one of its clients running out of business by the end of 2024. However, we believe that both businesses have good prospects ahead to reverse this momentum by the end of the year. Also, very important, activities outside the U.K. had a positive quarter and remain on track, especially in Spain on health care centers and equipment for Higher Council of Sports in Spain. Romania and Belgium doing good as well. On the Flow division, the revenue was EUR 27.6 million this quarter, a growth of 8.9% reported, 8.8% like-for-like. The gap is just a small positive currency impact. Both divisions contributed to the growth -- subdivisions contributed to growth. On the e-business side, we could see -- we hear both segments experienced growth during the first quarter, especially in France for the e-invoicing, we saw a pickup in demand as we are getting closer to the September 2026 date, the date to which the reform had been postponed. Also on this side, on Invoicing & Purchasing, the international was positive with the new regulation coming into force in January 1 in Germany and U.K. doing well, too. On the Healthcare Flow segment, we still experience a positive momentum on the first quarter, especially for the solutions for the hospital, securing the supply. For the third-party payer, we had a growth of 8.7% this quarter. It's a strong growth coming from its fraud and long-term illness detection offering. We had the chance to talk about previously -- in the previous quarters about this offering, still experienced a good momentum in this first quarter. All-in, the growth was 8.9% reported on the Flow division this quarter. On the Data & Marketing division, also growth from the 2 subdivisions, Data & Marketing. The whole division had a revenue of EUR 29.9 million on this quarter, a growth of 10.6% like-for-like and reported. The Data subdivision experienced a 5.9% growth on the quarter, especially on the back of a strong showing in France doing very good. They are doing better than in international activities. And on the Marketing activity, remember, last year, we had a stunning experience and a stunning growth due to especially the strategy and to the Olympic Games offering that we had. Still on the first quarter, we had a strong sales momentum with new clients win and a very good business with existing clients. Remember that, the target for marketing this year is try to have the same sales as last year without the Olympic Games effect. On the BPO division, BPO side, so it was a growth of 4.3% this quarter and came -- revenue came to EUR 21.1 million. So now we have the Allianz contract on a full year basis. That's why we don't have this steady growth that we had last year. But on Insurance BPO, we have a very positive momentum on the overflow business as it serves as written here, a critical need for clients. We can see that there's a good, very, very interesting demand, solid momentum for this solution on the last 2 quarters. So it's still going on. On the Business Services, it's still the compliance offering that -- which the growth stems from with a 3% -- 3.4% growth this quarter. All in, it was a 4.3% growth on the quarter for the BPO division. And the last, but not least, division, the Cloud & Support division, still experiencing some solid growth from its cloud-backed products and services, 14.8% this quarter. However, it's good to -- it's worth noting that Q2 may be -- may experience less growth as one of its branches, Cegedim Outsourcing, IT infrastructure and consultancy services will face nonrenewal of one of its contracts due to the regulation applicable to the French public administration. We went at the maximum of the contract. So we may experience a bit less sales, but it's usually low-margin contracts. So just for you to know that we won't have this 15% growth for the whole half year. However, doing quite good on -- specifically on the cloud-backed products. So in light of the -- of what we -- I said before, we keep on getting this guidance of 2% to 4% range on like-for-like growth, even though we experienced a 4.5% organic growth on the first quarter. We stick to this one for the moment. Also, we still guide on increasing recurring operating income over the full year. This is the next meetings we have to dig together. The shareholders' meeting will be on June 13. First half revenue on July 24, results on September 25 -- 26, sorry. And the third quarter revenue will be on October 24. Now I think we can switch on to the question you may have. So for that, I will ask you to raise the little hand, so that I can give you the floor for asking your question.

Eric, I see you here. Yes, Eric. The floor is yours.

Hello? You hear me?

Yes, very well.

Okay. No, it's just a point about Software & Services. You said that, you were in a renegotiation of a contract which is missing in terms of sales on the first quarter. Can you give us some granularity about what is this contract and perhaps the amount -- if you can give an idea of the amount?

Maybe I can answer.

Yes.

So Cegedim Sante is providing raw data to our internal data business, but it is also providing raw data to competitors. One of those competitors is IQVIA. The fact is that due to the CNIL constraints, it is more and more difficult. And due to the fact that CNIL is more and more at risk -- strict on the fact that the data has to be anonymized. We are obliged to have less precise data. So Cegedim Sante is now collecting data, which are not so precise than in the past. So for our clients and for our competitors, we have a tendency where they think and they say that the data we are collecting in France, it's the same for everybody, are not so powerful. So they have reduced -- we have discussed and the price, it has been negotiated now. It was not at the end of March, but now the negotiation is done and the price has been reduced. The fact that we have not made any billings during the first quarter, it explains the negative figure.

That means that this business is declining 4.7%. We can assume that this is almost due to this contract?

Yes. If we had kept the same tariffication, we would have roughly the same figures than last year. But with the new tariffication, we are at minus 4.7%.

But in fact, you have no sales on the first quarter.

No, yes, we have no sales. If we have -- so this is really the situation with 0 revenue on the first quarter compared to the first quarter of last year in terms of internal growth, we are at minus 4%. If we had billed during the first quarter of this year, the same amount that last year, we would have been at 0.

Okay. And it could have an impact on the profitability for...

Yes, yes. So have -- we are making some reorganization into the Cegedim Sante company in terms of having no negative impact. And of course, the data business is a high profitable business. So may have an impact, but we are dealing with that in order not to have any impact on the full year.

Mark, the floor is yours.

Can you hear me?

Yes.

Yes.

I'd just like to know a little bit more about what's happening at Maiia. Could you give us a bit more color in terms of how Maiia is operating in its market? You said it was doing well. So by how much is it growing? How has the competitive environment evolved over the first quarter, but at the same time over last year? Just to get a bit of a feeling of how the competitive environment is going there and how they are penetrating?

Damien, do you want to give the figures?

So Maiia experienced a good growth on the first quarter, between 20% and 25% growth. So it's building good momentum. We may remember that we launched the Maiia [ Medecin ] solution also. And so Maiia is still -- we had also this growth starting last year. And on the competitive landscape, still have the same -- there's no big change on this side, specifically. So Maiia has experienced this growth for the -- on the first quarter and keeps on this momentum.

I wonder whether you can give me a little bit more color on what is happening. Can you tell me what that Maiia solution is that you launched and is doing well? And why is it doing well? And also help to understand which parts of Maiia are driving the growth at the moment? And in the competitive environment, how have you been doing compared to the others? And also, how much are you spending on sales to drive that growth?

So Maiia Medecin, it's a bundle between Maiia Agenda and software for doctors. It is an answer to the Doctolib competition, which has launched last year, a software for doctor, which is simpler than the one we have -- the one we have is called MLM, My -- Mon Logiciel Medical, which is more dedicated to organization -- complex organization, which might be too sophisticated or too complex for stand-alone doctors. So we have decided to launch this Maiia Medecin, and it is on the way. It is starting now. We see a very good appetite for -- coming from the clients on this. Another reason for the growth is Maiia [ Kinesitherapeute ]. Same thing, we have made a bundle between Maiia Agenda and software for the [ kinesitherapists ]. And it has a very positive growth. So this explains the 25% growth on this Maiia line. Compared to the competition, since we have lost a lot of doctors last year because we were not able to launch this Maiia Medecin. Last year was rather disappointed on this side. And since we are only launching now the new Maiia Medecin, we think we should increase our market share strongly from now. So nevertheless, we see 25% growth and those 25% are partly gained on the competitors. One of the competitors we are gaining from is CompuGroup. Doctolib is still growing on the market.

That's great. If I can just ask a following question on that. On Maiia Medecin and on any other bundles you've already launched or you might launch. Looking into the future, is this your future product where it will become the majority of your sales? Or the majority sales it will be?

It will be for the doctors. We will keep MLM, My (sic) [ Mon ] Logiciel Medical, for a complex organization like [ Maison de Savon ], Maison de Sante and so on. But Maiia Medecin would -- will be the future unique software for doctors.

Perfect. And just last question on that. With Maiia Medecin in the bundle, what does that imply for the profitability margin on that product compared to the more complex product that you had before overall?

Well, we have -- of course, it has to be confirmed, but our competition shows that the profits per doctor is much bigger than with MLM, because MLM is really a big and heavy product to launch, and it needs a lot of parameterization and specific work to do. And we have a plan where we will see an improvement into the profits. This is sure.

Great. And sort of the previous question I asked is how much are you spending on sales? And does this new product that's selling on it -- is it selling on its own or does it require sales?

It is sold mainly through phone calls. So we have a team in Morocco, which spends 100% of its time to call and to get new clients. And the development have been made so that it does not require any intervention, any help from technical guys. The doctor is able to start with the help of trainers, but the trainers are web trainers or phone call trainers. Yes. This is the reason why Doctolib has really had good performance last year on this because they are in the same -- it's the same organization. It is not needed to have a strong technical guy to help the doctor to start with our product.

[indiscernible]?

Yes. Can you hear me?

Yes.

I have actually 2 small questions. The first one is, is there any potential buyer identified for INPS? And the second one is when can we expect the next wave of Segur for pharmacies in France?

Yes. So there has been -- there is 1 company in the UK, which is a candidate to acquire In Practice Systems. So there are negotiations. But as you understand, since we have put the company under administration, we have no -- we are informed, but we have no impact at all on this negotiation. Of course, if the negotiation finishes in a good manner for us, we may recover part of the loan we made to the company. We have made a EUR 6 million loan a few years ago to help this company. The EUR 6 million loan has been fully [ provision a ] commodity that are fully put to 0 in the accounts at the end of '24. If the existing negotiation comes to a happy end, we may recover part of this. This will be the unique effect of the fact that this company might be acquired by a competitor in the U.K.

And do you have an idea when could the negotiation end currently for Q2?

It's difficult because we are not master of the time. It should have been done, because the first deadline was end of this month. It has been postponed. I think it should be done at the end of the second quarter. So end of June, it should be done. Anyhow, the administration, the medical administration in the U.K. is pushing hard because 50% of the Scottish doctors are using our software, well, are using what was our software in the past. And they need to have a company to go on with this software. So we think that end of June is a good target.

Okay. And...

The other question, what was it?

The second wave of Segur for pharmacists in France.

Nothing in '25. It will be for '26 for pharmacists and doctors, and [ kinesitherapist ] from '26, '27. On the next 3 years from '26 to '28, we expect -- but it's really just an expectation because all is not -- the negotiations are not finished, but we expect EUR 30 million subsidies on those 3 next years, starting '26. But as we say always, this is subsidies, but it covers R&D costs because we are obliged to develop specific part of the software to meet the requirement of Segur. So unfortunately, it is not EUR 30 million, a bit more.

Are there any other questions? Johannes?

The multimillion subsidies that you get, is that something that Doctolib also gets or how far does this then help you in the competition to the...

You mean on the Segur subsidies?

Yes.

On the doctor side, all the competitors, we need -- it's a requirement to develop those features. So it's not specific to Cegedim.

Maybe I've not understood exactly, but there are small companies in France, which are not able to fulfill the requirements of Segur. Of course, it's not an obligation. But we know that those companies, they cannot afford to develop what is asked. So it may be positive for us in terms of competition. Is that the question you had?

Yes. Because I think you have competitors like Doctolib that can also do that, but you were selected and Doctolib was not selected. So is that right to see it like this or?

I think Doctolib has been selected, CompuGroup too. But other companies, I'm not sure. I think -- I know that some small companies, they cannot afford. So at the end, the doctor can go on using their software, but it will be less efficient. And probably someday, the administration -- the medical administration will push the doctors because this is the goal of Segur, push the doctor to use those specific functionality. So we feel that some small companies will have a hard time in the next years. But Doctolib, I'm sure Doctolib is fulfilling the Segur requirements as CompuGroup, which are our bigger competitors today.

Okay. And then you said you win market share compared to CompuGroup. So is that in France or also in Germany?

No, we are not in Germany on this market. We have always had very good relationship with the Gotthardt family, and we always have decided not to go to the German market on this field, because CompuGroup is such a big company in Germany. It would be not a good idea to do that. And we have a specific contract with CompuGroup in Germany, where we collect -- they collect data for us. It's for our international data business. So no, we are not in Germany on this market.

And what are the market shares of Doctolib and CompuGroup and Cegedim?

I have noted the figures in my mind, but I think CompuGroup is still the leader, but we are not far from CompuGroup. And Doctolib is -- of course, Doctolib is the leader on the agenda. But on the software for doctors, it is -- for the time being, it is growing, but it is not as big as CompuGroup and our position. But I don't have all the figures in my mind, maybe, Damien.

Well, CompuGroup is about -- on the doctor side, is about 20%. We're a bit below them and Doctolib is behind. So we are more about 15% to 16%.

Okay. So -- and then the final question. So revenue is doing a little bit better than expected. So I know this meeting is about revenue, but can you elaborate a little bit on the margin, recurring EBIT margin? Is it also as good as expected or even a little bit better compared to Q1 2024?

Yes, yes. It is growing. So it is growing for 2 reasons. Reason one, last year, we had to -- we have a strong deficit in the UK on this company In Practice Systems. Since In Practice Systems is not anymore in the group, we feel that for the year, the like-for-like -- no, like the EBIT will grow by EUR 5 million. And then we also have an improvement -- a relative improvement because, as you know, we have signed 3 years ago, a big contract with Allianz, the insurance company, Allianz insurance company, where we are managing all their health care business in France. This is a 15 years contract. And the 3 first years are negative. They are making losses, but the losses are decreasing. And this business should become profitable next year in '26, but we see that this year, the losses are less big -- are smaller, sorry, than last year and the year before. So we have an improvement.

Very good. Have you further cost savings implemented besides these 2 effects?

We are focused to reduce or to stop the deficits on some subsidiaries. We still have some subsidiaries, which are loss-making. And so this is really a target we have for today and next year. It is to stop all deficits. So we may have some plans to reduce some staff in some part of Cegedim Group during the year.

[indiscernible], you had one more question.

Just one last question from my side. You said that there are some subsidiaries that are making some loss, which subsidiaries besides INPS might be subject to restructuring or consider it for disposal in the coming years?

Okay. I will just tell you what the subsidiaries are loss-making, because for internal reasons, we don't want to make any public announcement on some reorganization we may start into the year. But we are making losses on the pharmacists in France. We are making losses on the pharmacist business in the UK, but we have explained that we have signed some contracts, which make us optimistic. And we are making losses in some subsidiary, which are dealing with international data business. So we are working on that too. But we don't want to speak about any reorganization plan.

Eric, did you have a last question?

Yes. Just an information. You spoke about Maiia [ Docteur ]. The implementation of Maiia Docteur is totally done by web assistants only.

Yes, yes, yes. So I think that today, we have only 100 doctors on this. So it is really starting. But the transfer of the database from software to another and the implementation is full web.

Okay. No. It's just an information about that.

Okay. So if we don't have any more questions, then we're going to thank you for attending the presentation. And thank you for attending. And next meeting will be in July for the first half revenue. So thank you very much. Have a good night, and see you next time. Bye-bye.

Bye-bye.

Thank you. Bye.