Cegedim SA (ALCGM) Earnings Call Transcript & Summary

I think we have almost everyone, most of the people have connected. So I suggest that we start -- share my screen. Okay. So thank you for attending the presentation. It's about the revenue for the Q3 2025. And as you may have seen, the reported growth from Q3 for Cegedim was a negative of 2% reported, plus 0.5% like-for-like. The difference between both being the deconsolidation of in-practice system at year-end 2024. On a 9 months basis, you can see the growth for the group is slightly positive and reaches 2.1% like-for-like, in line with our outlook. The activities which have performed best during this quarter have been cloud, HR activity, digitization and insurance. And we will see that we have some base effects from some other activity, especially on the marketing side compared with Q3 last year, where we had a very positive impact from the Olympics. Other main news -- sorry, the main news, sorry, during this quarter that we have already mentioned during the half year results were the recost -- restructuring at the pharmacy business, the transfer of Cegedim Group shares on Euronext Growth and also the sale of the In Practice System to OneAdvanced by the administrator. We have not much more news than we had in September. And remember that any impact from this latter news, if any, would be in 2026. You can see here on this slide the bridges of growth on Q3 and on a 9-month basis. And you can see the structure impact in the middle of each of the bridges, is actually for the Q3 fully In Practice System and on the year-to-date maintenance basis, mainly in Practice System with a slight positive impact from the integration of Visiodent on the full half where it was integrated last year on March 1, meaning that there are 2 months more this year. Well, you can find the like-for-like growth of 0.5% on the quarter, 2.1% like-for-like on a 9 month basis and a very low impact of currencies, if any. Now we would like to introduce you to the group through its business units. We started in July, in September, and we want next year to be fully in revenue in business units. So I'm going to introduce by business unit. And then after, we'll have also the view on division so that you can recollect everything. So our main -- our 5 business units. The first one is Health and Provident Insurance. On Q3, you can see that we had a revenue of EUR 40.4 million, a slight decrease of 0.7% reported, 0.6% like-for-like. You can see that on Q3 on this software activity, still experiencing growth of 7.5%, in line with the previous quarters with the same trend on projects and run from 2024 projects. Its flow operation is the third-party payer activity in which we still experienced growth related mainly to its fraud and long-term illness detection offering, which is performing quite well. And on the BPO side, we have a seasonal impact related to the execution of the Allianz contract, but we'll see on the next slide that overall, there's still a growth on this BPO activity in Health and Provident Insurance. On the Cegedim Business Services, the revenue on Q3 was EUR 43.4 million, a growth of 6.1% reported. Here on the software side, a growth of 8.2%. It's mainly this HR software, which is still being propelled by its client diversification strategy. The flow activity is the e-business activity in which we have seen during this quarter, a clear pickup in projects in e-invoicing in France as we are a bit less than 1 year ahead of the entry into force of the regulation in France. So companies are getting prepared for that. And also on its BPO activity, the strategy is to increase indirect sales through partners. And so it has an impact. And also, we have seen a slight decrease in the use of our business compliance offering from pharmaceutical companies during this quarter. On the Data and Marketing business unit, data during this -- the business unit, its revenue is EUR 27.7 million, a decrease of 1.7% reported, 2.3% like-for-like. This decrease comes mainly from the marketing activity. As I mentioned earlier, we have a tough comparison effect on Q3. Remember, last year, C-Media was able to sell some special campaigns during the Olympics in Paris. And of course, we had not this year, so we had a tough comparison effect. But you'll see on the next slide that overall marketing on the 9 months revenue is still growing. So it's exactly as expected. On the data side, the growth is 2.1% on this quarter, in line with the previous quarters and in line with the previous trends, meaning that France is more dynamic than the international activities. For Healthcare Professional, the quarter established at EUR 32.3 million. So we have a big gap between -- a big delta between reported growth, reported -- sorry, slowdown and like-for-like. This is due to the deconsolidation of In Practice System, which has its negative impact. We'll see also later that we have still the negative impact from the renegotiation of our data providing contract. And also in here, we have the French pharmaceutical business, for which during this quarter was mainly focused on repositioning teams and product offering meaning that not generating growth. Last but not least, our Cloud & Support business unit. The revenue for this quarter was EUR 9.9 million. It's benefiting from 2 things. One is the start of projects won in late 2024. And also, we had a special trading contract in July, sort of a one-off. Those both we'll see later on the next slide, more than offset the ending of the outsourcing contract that came to an end in Q2. So here on the 9 months basis, year-to-date, you can see that the insurance business, the Health and Provident Insurance experiencing a growth of 4.4% reported in like-for-like. And you can see especially that on the BPO side, despite a difficult Q3, growth is still 1.1% year-to-date. The same, as you can see on the Cegedim Business Services, even though the BPO was a bit slowing down in Q3, still experienced a growth of 2.5% year-to-date. And meaning that Cegedim Business Services overall is experiencing a growth of 7.4% since the beginning of the year with the trends we had talked just before, keeping on HR softwares and e-business. On Data and Marketing, you can see down on the right side that marketing from the beginning of the year is experiencing a 5.8% growth, meaning that this Q3 that we were expected didn't offset all the good growth from the marketing activity, which outlook was to be able to be flat in terms of growth overall over the whole year and is more than on track to expect this outlook. And the data side, still 2.4% growth on a 9-months basis, meaning that the data and marketing is experiencing overall year-to-date, 4.1% growth reported, 3.9% like-for-like. You can see the Cloud and Support also that this Q3 allows this business unit to have a growth year-to-date of 8.5% reported in like-for-like. On the Healthcare Professional, as I mentioned, the trends just before are the same. And the difference between the reported growth and the like-for-like growth is due to the deconsolidation of In Practice System in December 2024. In this next slide, you can see the gross -- revenue growth bridge by business units on reported growth. And you can see that the health care professionals, so it's suffering from this data contract renegotiation. Also, as its reported growth, we have the impact of the deconsolidation of In Practice System. And also Smart Rx, the French business, the French pharmacies business is focusing on its repositioning and teams and product offerings. Now the more -- the presentation you're more used to, by division so that you can find it. So no big surprise here. You can see that on Q3, the BPO activities have been a little drag on the growth from the group, as we mentioned for the insurance BPO and also on the Business Services BPO. And now I suggest we dive into each of the divisions and especially what we haven't mentioned before. On the software and services, you can see that there's a slight difference in Cegedim Santé on the 9-month basis between reported and like-for-like growth. This is due to the integration of Visiodent on the full year 9 months. Last year, we had only 7 months. It's worth noting that there's a good momentum for the Maiia suite of products. And the negative is mainly coming from this renewed data supply renegotiation that was with lower rates. On the other activities in France, we have the 2 main contributors, the HR on all client segments and also the Health and Provident Insurance with what I mentioned earlier, project-based sales and the start of run phases from last year. Also here, we have the pharmacy business in France with the focus now on repositioning the product offering and teams. Something we haven't seen before is the international activities. You can see the difference between reported and like-for-like. So of course, you can see it's here where lies the In Practice System impact -- yes, In Practice System impact, sorry. And you can see that on like-for-like on full -- on year-to-date growth, we are flat, a little positive. We have seen some pickup in projects in the U.K. in both activities, pharmacy activities and also insurance softwares. And Spain is still performing very well. So you can see some -- a pickup in the international activities. On the flow division, so we have already talked a bit about this. Worth noting that the e-business side saw the pickup in the electronic invoicing, especially in France as we are now 1 year -- a bit less than 1 year ahead of the entry into force of the reform. And the third-party payer is still experiencing good growth from -- a bit from project, but mostly from its fraud and long-term illness detection offering. On data and marketing, we have already quite thought about it. Just remember the negative impact on Q3 from the Olympics, but still robust growth over 9 months for the marketing side. BPO, I think we have discussed a bit about that. So we have the impact of executing on the Allianz contract and on the BPO side -- on the business services BPO. So it's both the strategy and also pharmaceutical companies using a bit less our business compliance offering. On the Cloud and Support, so finish with this is the start of projects won in late 2024 and also a bit of a trade contract in July, but consider this is a one-off. And these both have more than offset the ending of the outsourcing contract in Q2, meaning that we have this 8.5% growth year-to-date on the Cloud and Support. Overall, we stick to our outlook for the full year in like-for-like growth between 2% and 4% in the range. So on the 9 months, we are still in the range with 2.1% and we expect an increase in the adjusted operating income for the full year. Remember that in the adjusted operating income, we will benefit from the deconsolidation of In Practice Systems this year as it was losing money. And also, you have seen on the growth that C-Media, the marketing side, even though Q3 was difficult, we was able to achieve a 5.8% growth over 9 months and should be able to at least meet its outlook of flat growth, maybe better. We had some questions last time about the impact of the restructuring of pharmacy business in France. They will happen in 2026. This was saying also. On this last slide, you can see our financial agenda for 2026, which is quite similar to the one we had this year also, just for you to take a good note of it. And I think now we can switch to questions if you have some to the Q&A session. So just as we do traditionally, please raise your hand so that I can give you the floor for asking your questions. Thank you.

[indiscernible], Please?

So just one for me, please. Considering the BPO segment, you said that there was some seasonality involved and that is why this quarter revenue was down. So my question is, are we -- is it truly just for this quarter? And shall we expect an uptick? Or shall we expect a lower base from now on?

This was just due to last year. So I guess your question is to know whether there is some seasonality in the contract. No, it's not the way we -- sorry, excuse me. It's not -- we had just an effect last year, but you should not expect any -- much more volatility in the future. I don't know, Pierre, if you want to add something with that.

Well, we expect to have a Q4 growing compared to Q4 last year. Somehow the project we have built in August has given some effect at the beginning of 2025. So globally, on the year, there is no negative impact. It's only a visual impact on Q3. But the profitability of the contract is still there, although we are still loss-making, but the loss is much less than the one last year, and we expect to be profitable on this contract next year. So nothing has changed on a midterm vision.

Johannes, you have the floor.

Can you be a little bit more -- or can you give a little bit more color on the recurring EBIT guidance, especially for the second half of 2025? Because you know now what the impact from -- the missing impact from Olympia would be. So do you think that EBIT will also increase in the second half? Or do you see perhaps also an increase in EBIT for Q3? And what do you expect from Q4?

Well, we expect that the negative effect coming from C-Media will be compensated by the fact that C-Media is making a better year than expected. And other businesses are improving their EBIT. So we can say that there is a very good chance that the EBIT of the second semester of this year will be roughly the same or a bit better than the one of last year, meaning that we should end at a range between EUR 45 million and EUR 50 million current EBIT.

Okay. Recurring EBIT without...

Yes, without exceptional charges.

[indiscernible], you have the floor if you want to ask a question.

Yes. Maybe talking about Q4, what would be the trend by division?

You want trend on sales on division? Yes. So most of our business is quite recurring. Usually, we have a strong Q4 in data with less -- more cyclical part of the business. We stick overall to our guidance of organic growth of -- in the range of 2% to 4% in organic growth. This is what I can say. I don't know if you want to add something more, Pierre on this, but...

Usually, the revenue of the second semester is equal to the revenue of the first semester, plus roughly EUR 20 million. And we don't see why it should not be like that for 2025. So if you take the first semester and you add EUR 20 million, you come to our guidance.

Okay. And perhaps you can remind us about the amount that you can benefit from the following sale of INPS?

We haven't communicated on it. If any impact, it will happen in 2026.

I'm not sure that this is the question. The question -- what is your question? What benefit we had this year from the...

No, no, not this year. For 2026, what could be the benefit?

So we cannot say. We cannot say because the company has been sold. It has been sold at what we think is a good price. But the administrator has now to make the liquidation. And if something remains, it will be for us, but we are not able today to say exactly what it could be. And anyhow, if there is a positive impact, it will be an exceptional profit. It will not enter the current EBIT.

Yes, [indiscernible], I think you have another question.

Yes. This one is regarding the business. And in one of our last calls, you mentioned that e-business is mainly profiting from the volume of invoices processed by you. And so if you'd be open to give us some more insight into that where the volume this year is coming from? Is it coming from new customers you gained? Is it from an increased processing of invoices by you? And maybe if you'd like some outlook doesn't need to be specific for the future because currently, the companies processing invoice are not -- they are not required to use -- invoice, I think it's called [indiscernible]. But in the future, if the regulation is coming to be, then they would be. So are we able to extrapolate an increase in volume at a cost base, which would be rather flat?

So today, the growth comes from new clients. Then we are very cautious on the number of documents we will manage in the future. Why? Because the reglementation -- the law has been postponed. And so today, for big companies, it will be mandatory to use electronic invoicing in next September. But we -- as you know, the political people are changing a lot today in France. And so -- there can be some postponement of the law again. So that's the reason why we don't produce any figures on what could be our revenue when the law will be in place. We know that it will grow. We are sure that because today, what we are in most -- for most of our clients, we are just managing part of their invoices. The day they will be obliged to send to us 100% of their invoices, it will give new revenue for us, but we don't plan any increase for 2026 and except the fact that we are signing new clients. So we may have a very good surprise and news to give, but we better not speak about that today.

We had a written question from [ Jonas ] asking, so yes, indeed, Maiia sales were better on this Q3 and since the beginning of the year, as we had mentioned in the previous calls. On your question, whether the mix between on-premise and Maiia going to Maiia would boost the margins going forward. Yes, the margin would be better, and we're happy with the growth that happens for the moment at Maiia with the Maiia products. We had launched Maiia Doctors in the beginning of the year. So we're still -- it's growing.

We have a lot of fixed costs of Maiia, R&D costs. For the legacy products, of course, the R&D costs are lower. So when we have a new client on Maiia, it's profitable. And the more we have new clients, the better it will be. And we can say and remember that next year, there will be subsidies from the Segur plan. And that was important for us to launch Maiia Doctors has been designed to respect the requirements -- subsidies for next year, not for today.

Starting in 2026 and over the years after. Yes, we have also a second question from [ Jonas ] about Cloud and Support in terms of growth drivers and margins and sort of long-term potential for Cloud and Support.

Okay. So at the end of Q1, there was a big service contract which finishes, okay. Next end of Q1, in Q1 -- at the end of Q1 '26, we have another big contract, which will be finished. Those 2 contracts, they were very specific. In fact, we were hiring people, technical people to put them into company which are administration company. So company linked to the state. Those companies, they have no possibility to hire people. So they use those contracts to have extra people. So those contracts, they have a big revenue, but they are not so -- they are profitable, but in terms of percentage of the margin, it's not that profitable. So we will have next year probably a 0% growth year -- on Cloud and Support due to the fact that we are going to lose this turnover for this contract which will be stopped. Those contracts, they are stopped. Why? Because in those administration, they are obliged to change -- how to say, what's the word, prescriber -- providers every 3 or 5 years. So we knew that we had to lose those revenue. So for next year, we'll be very cautious and we will plan a 0% growth on cloud and support.

Yes, Johannes?

Can you hear me?

Yes.

Could you give a little bit of an outlook for the profitability in 2026? So what could be the driver for higher or lower profitability? I think one driver is the Allianz contract, the BPO contract that will get profitable. Another driver will be the increased revenue of Maiia. So what are further drivers for higher or lower profitability?

And there will be a third driver, which is the fact that we have a reorganization plan on our French pharmacist business with 100 people leaving the company. So this will generate -- although it makes a lot of pertubation, a lot of movement into the company. We are hiring now a lot of commercial people to reinforce the commercial business on this part, but we will save the salary of 100 people, so roughly EUR 5 million to EUR 6 million. So I cannot give you a figure for 2026, but we feel that we may have an improvement into the EBIT -- current EBIT equivalent to the one we will have this year, meaning that we could be between EUR 45 million and EUR 60 million.

You mean EUR 55 million and EUR 60 million?

Yes. I'm sorry, EUR 55 million and EUR 60 million. So on the pharmacy business, you made a question. So we have a plan where we hire a lot of commercial people to reinforce the sales of the software business. And we are creating a company which is called Docashop and this will be a company we dedicated to sell everything healthcare professionals need. It will be only in France through a web system. So it is really an e-business.

E-trading for hardware.

Yes, for hardware. We never push a lot those hardware sales in the past. But now we are splitting the pharmacist business. So it will be a software dedicated business with a specific team to sell software. And then we will have Docashop, which will be a company which will work for all the healthcare professionals in France. So pharmacists, of course, but also doctors, [indiscernible] therapists, nurses and so on. This company -- this new company, Docashop will be launched in January. So we don't think it will continue to shrink. In fact, we expect not.

Yes, [indiscernible], I think you have one more question.

Yes, please. So you said that 2026 will benefit from increased profitability. And what about sales? How do you see the outlook on revenues, especially for software business?

Software -- division, I guess. You are speaking about division, not business unit.

Yes, yes, about the division.

It's a bit early. But it is true that we -- as for the present year, we are not -- we are more focused on improving the margins. So reducing the costs than having a strong growth. So I think that next year, we will -- it's a bit early to say, but we will have the same kind of proposition we have made this year. We will have a growth between 3% and 5% like-for-like.

I think we have one more question on the pharmacy market in France and the competition from Equasens. So you know that in the last few months -- years, it's more than Winpharma that gained market share in the French pharmacy market while Equasens is quite stable. But the player that took share is Winpharma.

So today, we are focused on stopping losing clients. That's the reason why we are hiring a lot of commercial people because the problem is that with this big reorganization into the company, a lot of clients have been not visited. And so our first goal is to stop losing clients. And then since it seems that our software and our offer is the most modern one, we think that we are going to, very slowly because pharmacists are not changing their system very easily. Very slowly, we can win some market share in the next years.

Okay. Do we have some more questions? I guess I don't see any raised hand, and I think we answered the written question. So thank you for attending the presentation. Thank you for your questions. Next call will be in January for the full year revenue. So thank you very much, and have a good evening. And if any questions, you can still send them to me, if needed. Thank you very much, and see you next. Bye.

Thank you. Bye.