DocMorris AG (DOCM) Earnings Call Transcript & Summary

Hello, ladies and gentlemen, and welcome to the DocMorris AG Conference Call regarding the 2023 half year results. [Operator Instructions]. Let me now turn the floor over to your host, Walter Hess.

Yes. Thanks a lot. Good morning, everybody, and welcome to our conference call. We are pleased to inform you about our half year 2023 results. And to give you an update on our business activities as well as the exciting developments around eRx in Germany. Afterwards, we are looking forward to answering your questions. With me today are Madhu, our CTO, who will give an update on the expansion of the DocMorris Digital Health system and Marcel, our CFO, who will present the financial update and the outlook. Since we communicated last time in March, many positive and encouraging developments have taken place. Therefore, let me start with key messages and the highlights of this year till today. First of all, we are on track on our path to profitable growth. We can confirm to have reached the revenue as well as the EBITDA target of the first half year. With regard to revenue, we reached an inflection point at the end of Q1. At the EBITDA margin, we increased by 6.6 percentage points year-over-year. Regarding the milestones, we communicated already in May that the sale of the Swiss business has been successfully closed with total proceeds of about CHF 306 million, which brings us to an equity ratio of about 50% by middle of the year. In addition, and in the meantime, we have successfully launched our long tail marketplace in July. Second, the most exciting news since our last conference in March are the many steps which have been taken around eRx in Germany with the start of the nationwide rollout in July, and the confirmation that most of the doctor and pharmacy systems as well as the pharmacists are eRx-ready, already now. And even the KBV, the National Physician Association has started an information campaign stating that eRx is starting now and asks the doctors to use the time now to onboard and test eRx in order to be ready in January 2024. And third, there will be a seamless digital eRx channel ready to use as of Q4 this year. More details we will give you afterwards. And also very important was the fact that the eGK solution to redeem the eRx in local pharmacies has been delivered and launched on time on July 1st. As this was the base for the nationwide rollout that started. And finally, we can just confirm again that we are fully ready and really excited about the start of the eRx rollout now. We continuously expand our digital health ecosystem by enlarging the number of services and products. Our aim is to offer to our patients and customers the most customer-centric, convenient and caring digital health ecosystem unimaginable. By adding features and services for medication in 1 click, in combination with next-day delivery as standard and same-day delivery for acute demand as well as the integration of teledoctor services, we offer to our patients and customers a unique eRx and chronic care experience. The full range of OTC and beauty personal care products at attractive prices and with state-of-the-art customer experience expands our health offering. The continuous improvement of the performance in operations and marketing brings us to a profitable OTC and B2C business. To complete the fulfillment of the demand and wishes of our patients and customers, we will add incremental to the already existing -- already existing marketplace for same-day coverage with more than 200 pharmacy partners, more than 150 sellers with additional 50,000 SKUs of long-tail assortments by end of this year. Let me give you now a brief update on the recent eRx developments. The main message here is e-script is starting. As you can see on the right-hand side, this claim does not come from us but from an information campaign of the KBV. As of today, about 2.8 million eRx has been redeemed with growth of 70% week-on-week since June this year. We also see a pleasing increase in the number of e-scripts that we received. The regulatory framework for the mandatory launch in January will be defined in new digital law. It shall be approved by the German cabinet end of August and come into floors by end of this year. Within this law, we are happy to see that the eRx will be the binding standard and therefore mandatory as of January 2024. There will be a close monitoring of physician usage of e-script [indiscernible] technically ready. The patients will have the right to lower the level of data security for their identification when using the telematic infrastructure health services, such as eRx and the Health [indiscernible] very much online. His will to bring eRx to life now by stating that it is not acceptable that we still have paper prescriptions. We need a race to catch up. And most importantly, all stakeholders, including doctors already or are getting ready for eRx now. Even more so, it is important that we, as online pharmacy, have nondiscriminatory accesses to the eRx tokens as well. The really good news is that there is an easy, convenient and fully digital channel by combining NFC-capable eGK and smartphone ready for use. The process is similar and the data protection standard is equal to the use of the eGK in local pharmacies. And already today, close to 90% of the eGKs and all Apple iOS and major Android operated smartphones are NFC capable. And as in the local pharmacy, no separate pin number is required. There are close interactions with the relevant regulatory bodies and stakeholders with the target to bring the solution life in Q4 this year. And I would like to now turn for a deeper insight on the progress of our digital health ecosystem to my colleague, Madhu.

Thank you, Walter. As you can see from Walter's summary, we had a very productive and busy H1. Over the next couple of slides, let me go into a few more details. As a CTO, it's pretty bad form to not have a complicated architecture slide, so this is kind of my answer to that one. But all kidding aside, if you look at this picture, I shared this in March of this year during the yearly conference, and we have it updated for H1. Our vision of journey to Health in OneClick continues to be an outstarrer. To continue on this path, we focus on 3 essential elements: experience on the top product in the middle and operations and innovation on the bottom. On each of these, we've been making steady progress over the past years, but with much more acceleration in H1 of this year. More recently, we focused on the care experience to improve, especially in the checkout and the shopping cart area, and also new patient services that I'll cover in the next slide around medication management. On the product end, as Walter already mentioned, we significantly increased our assortment with variety of categories and the marketplace now allows our customers to buy our products directly from DocMorris or from our partners through the same DocMorris ecosystem. On the operations and the back office front, working closely with my friend, Casper, Head of Operations, we have significantly improved the automation in our distribution centers increasing the efficiency and getting ready to scale for eRx. For a company our size, having a strong foundation and a unified platform is key to scaling and growing and the work that we did in H1 puts us on a very firm footing. In the near future, we'll continue to bring on more chronic and patient services to enable the vision of Health in OneClick on the top here. Our goal has always been to delight our customers, and it's a very complicated task. But having platforms and architectures is cool, but having apps and websites is much, much cooler. So let's add a product team, talking to our customers is part of our DNA. And when we work in patient services, this is the primary dialogue that we have with our customers. And what we hear back from them is very consistent. Medications, especially acute and chronic, is a complex workflow. Obviously, when you're taking a medication that you're used to it, it's easy. However, when you're either a new patient or you're starting a new medication or you're starting a new protocol, it's very intimidating. As a customer, what they want is to feel safe and confident, number one; number two, get key questions answered and number three, to reduce the manual steps where possible using smartphones. So with all of these insights, what the DocMorris app includes now and in the very near future, I'll go start from left to right, is making the eRx journey as digital as possible. We're all very familiar with contactless. We all travel. Hopefully, many of you did during the summer, and the Boarding Pass workflow that you see where you can use your smartphone to get access to the gate is a very simplistic way for us to look at contactless. And when you think about digital health, this is the barrier that we have to cross. So the first part is making eRx and Rx easy to ready using NFC and other technologies. Second, making medication history, all in 1 place so that you have peace of mind when you want to take further actions. Somebody is being able to use the notifications and reminders that were also used to on the iPhones and the Android phones and be very specific on how to adhere to a medication plan. Fourth is, we all hate repeat prescriptions and the steps that are necessary. How do we make that process as seamless as possible using digital. And then finally, having the confidence that the pharmacist at DocMorris has my back and is always available to answer questions and so on is something that our customers love. So when I wrap all of these things into the DocMorris app, it gives us to the better digital experience that our customers are demanding us to do. Next slide. So somebody much smarter than me once said, you're not a platform until the people who are building on your platform are actually making money. So with the rollout of the marketplace earlier this year, we're at that point where we have a marketplace running on our own platform. But the core interaction that our customers have with this platform is around the shopping cart and we spent a considerable amount of energy this year in making that much better, better in the sense of being able to perform faster, have more options for payments, and be much more integrated into the experience itself. So we'll continue to refine this experience with significant amount of data points that we collect, and that will refine our approach towards this core interaction much more in the coming months. So maybe I should talk a little bit more about data and science as [indiscernible]. So data science and analytics are 3 terms that we use very often. But the trick is to make sure that they are a core ingredient of our agile teams, and that's what we are very proud of. We have a strong army of data scientists that spend their days understanding behavior and build models that improve that experience for our customers. Recently, in H1, we went live with our DocMorris recommendation engine that eliminates dead ends for our product searches and improves the complementary product visibility. As the data geek though, the strength of the recommendation is always measured by how close the recommendation is to what the customer already knows they want, and this is stable stakes. We can get there easily. The part that we are much more proud of and is a differentiation for us is how can you predict what a customer might want and then show that recommendation. And this is the magic sauce that we have now, where the might want is a key KPI that we measure and that we continuously improve our records. So in summary, the H1 has been a very busy time for our product science and tech teams as we bring new features to our customers. I'm looking forward to coming back in March with a few more cool features and deeper customer insights. With that, let me turn it over to my friend, Marcel, to make finance and numbers a lot more interesting.

Thank you, Madhu. Good morning from my side. I will show you that our figures fully support the path to possibility and that our breakeven plan communicated in August '22 have been implemented and achieved. And very important in several key figures, we have already reached an inflection point towards profitable growth. I'd like to start with the half year EBITDA improvement. As you can clearly see, the past profitability continues. We have improved EBITDA compared to H2 '21 by a very strong CHF 76 million. You might notice that the numbers changed compared to our last update in March, to ensure continued comparability, we have restated the historical data to continuing operations and excluded our divested Swiss business. To compensate for the EBITDA contribution of the former business, we needed to define additional initiatives. We identified incremental structural synergies of CHF 5 million and a new area of profitability drivers will contribute more than CHF 50 million to achieve breakeven. So far, we are fully on track and have achieved our plans. Our biggest levers are the strong gross margin increase, the improvement of our marketing efficiency and the reduction of complexity and costs with the major milestones of Medpex integration and distribution center. The last few months have been dominated by continuous efficiency gains such as reduction of cost per house process of patients and the improvement of customer experience, all based on the strong foundation of our tech platform as presented by Madhu and target oriented automation. With the initiatives, we already have implemented. We were also able to more than compensate for market headings such as material and wage inflation or global medication stoppages. Given that we have already executed more than the savings that are visible in the figures, we are confident to deliver on the remaining improvements and to achieve breakeven in 2024. On Slide 15, we show that these measures lead to a year-on-year improvement in our adjusted EBITDA of CHF 34 million or a 6.6 percentage point margin increase. A very strong and important driver is the gross margin, which increased by 5.5 percentage points due to brand integration, selected price increases and procurement optimization. Focus on profitable customers and the weld integrations led to a decline of consolidated revenues by 6.4% year-on-year. But compared to the previous half year already to a growth rate of 6.2%. Consolidated revenues are extraordinarily driven by the structural integration of Medpex, in comparison, external revenues declined 17.3% year-on-year in local currencies. Speaking to external revenues, we are pleased to report that we have reached an inflection point on our path to profitability. We have returned to quarterly growth. Let me dive into the segments on Slide 16 shows a similar development. The breakeven initiatives concentrate not only on Germany, even though this is, of course, where the largest contribution is generated from all areas of the company. In Germany, we are pleased with our OTC development. The paper prescription developments are behind our plan, but we expect the business to catch up in the second half of the year. In Europe, we have already largely eliminated the cash trade to 1 million. Our KPI slide -- our KPIs on Slide 17 are calculated on a 12-month basis. This means that the recent positive impacts are not yet fully reflected in all of these figures. The focus on sustainable customers with Rx potential led again to a decline in the total number of active customers, mainly because we reduced the number of onetime shoppers. I will come to that later. Now we see the continuously positive development of the more earnings-oriented cases of like basket size, order frequency, and repeat order rate as proved that the strategy we have adopted is working. On site visit, we have already -- we are already seeing trend reversals, where we were able to switch back in growth mode. On Slide 18, we provide our typical profit and loss statement. Essentially, we have 2 main drivers of the figures. Firstly, our breakeven program resulted in an increase in gross margin and a reduction in the line items, personnel, marketing, distribution and other operating expenses. Secondly, the brand integration, especially Medpex resulted in the financial insourcing of significant parts of the business into the scope of consolidation. More specifically, this leads to; one, an increase in consolidated revenue and thus a reduction in the difference to external revenue. Two, a significant increase in the gross margin; and three, an increase in personnel, marketing and distribution expenses. Together, this leads to a comparable adjusted EBITDA of minus CHF 20.8 million and an improvement to previous year of CHF 34 million. As a link to the balance sheet on the next slide, you can see the positive impact of sales -- of the sale of the Swiss business of roughly CHF 200 million in the net income from discontinued operations on the last line of the table. In the balance sheet, we see the comparison between December '22, including the Swiss business, and June '23 without. Let me explain some of the main changes. The cash position includes the initial proceeds of roughly CHF 300 million for Swisse. On top, we have a CHF 50 million receivables in current financial assets, which mainly comprises the earnout, which will be paid in Q2 '24. Immediately after closing, we started to repurchase of outstanding bonds for debt optimization and interest rate reduction and [indiscernible] CHF 10 million. The successful offer that we repurchased below issue price of CHF 109 million of the '24 million straight bond and CHF 31 million of the '25 convertible bond. In addition, after the reporting date in July, we fully paid back the '23 straight bond in the amount of CHF 30 million and bought back a CHF 22 million of the convertible 25 million. Several other line items are also improved. For example, the operating net working capital from continuing operations could be significantly reduced by CHF 20 million. Overall, we are very pleased with the massive strengthening of our balance sheet, our equity ratio increased to close to 50% and [indiscernible] refinancing of the remaining debt positions. Let's move to the outlook. Before jumping into the guidance, we have an updated version of the quarterly development. The bars show initiatives that quarterly absolute revenues guided to chronic and non-chronic. We have 2 key take aways on this chart. One is the increase of the share of chronic revenues, which ensures a sustainable profitable growth development in the future based on loyal customer cohorts. This is exactly what we have targeted with our strategic [indiscernible]. Two is we were able to go again in Q2 compared to Q1 by 2%. And as reached an inflection point, as shown by the [indiscernible]. On year-on-year development of our corporate sales, we are improving and will return to growth in H2. This leads to our financial outlook, answering you here. We are pleased to confirm our short and midterm guidance as released in March this year. For ease of interpretation, we have provided the restated values for 2022 without [indiscernible] in the orange boxes here. With that, I would like to open the Q&A session, and we look forward to your questions.

[Operator Instructions]. And the first question comes from Alexander Thiel from Jefferies.

My first question is related on the focuses on the digital eGK NFC solutions, which obviously would be a positive game changer for the waiting period until we have the fully digital solution with the EID. Could you explain how your discussions are going to be progressive and what needs to be done from the government [indiscernible] market size to get this ready at Q4 and intent to get meaningful model. Could you explain your strategy on how you want to convert your existing PC customers with the going [indiscernible] to use your app for their [indiscernible] and what part of the follow-on description functions play in that regard?

Yes. Okay. So on the NFC capable eGK, the solution basically is technically ready. It fulfills all requirements for services and components as well as data protection. And it's now just the discussions that go on with this alignment with the regulatory bodies and stakeholders. But basically, the solution is here and could start almost immediately if needed.

Sure. And let me answer the second part of the question. I think if I paraphrase it, how is the prescriptions helping and how are we converting from different customer cohorts into the chronic side. So having done this a couple of times now, and in any country where you have an advantage will help. The repeat prescriptions is one of the most often used mechanism as a Trojan horse to increase the penetration of digital health. And we are doing the same thing here. What we've done is try to reduce the number of steps that a customer has to take directly in order to get a followup of prescription. So what we're trying to do is to automate some of those steps in collaboration with the customer with their consent, but also work with the doctors and the systems within the doctor offices to automate that process. And we've done this as a pilot, and we have very good results on it, and now we're expanding that into production. The second part of your question around the conversion from [indiscernible] this is an ongoing activity for us. And because we have such a long history with our chronic patients, we actually understand very well what their request is, but more importantly, what the customer journey looks like. And this is the path that allows us to be very precise when we define the chronic services and the patient services which are now modeled with the app, and more of them will be coming over the next several months as we kind of bring it all together.

Okay. Maybe a follow-up for Walter. I mean, if it's technically ready, but what needs to happen, [indiscernible] for data projects in the past that [indiscernible] -- how should we think about that?

Basically, there is -- I would say nothing additional is necessary. But of course, the solution has just to be aligned. So everybody has really no way to understand and to align on it. And that's basically what is going on at the moment. But as I said, it's really the similar process in the local pharmacy. It's the similar data protection standards that this full field has the similar requirements that core. So for us, it is really a huge step forward and a great development, and will bring us in a good position also for the start of the eRx in January '24, mandatory wise, but also already with the ramp-up now in Q2 and Q4.

If I can add to it, I think on the technology side, Walter already covered in the slide earlier, 90% of the eGK cards today support this within Germany, which is a very substantially high number just as a starting point. And then when you add on top of it, people are already used to NFC-type usage with their smartphones today, either in boarding pass and the airline or in a retail environment where you do contactless payments. So NFC by itself, the technology is very very mature, both on the Android and Apple platforms and more importantly, customers are very used to it. So from going from a retail or a travel experience into a digital experience from a technology standpoint, there is no barrier as what was said. And from an Easycare card standpoint, because we are starting with 90% as a starting point, there is less of a value. So I think in one of these things, I think, combined together, give us the confidence that this is something that will be very beneficial for our customers in Germany.

My second one is on the e-script numbers, and I know you all not most likely give us eRx a number. Could you comment on the current uptick that you are currently seeing a higher number of e-script system and lastly, I just want to thank Daniel and the rest of the team for the clear improvement of financial disclosure and presentation. I think all analysts and investors really appreciating this type of...

Thank you, Alex -- Alexander. Yes, the ramp-up so as commented before, so weaker week since June, it's a 70% ramp-up. We will -- we think it will grow significantly, and then we will see a significant uptick until the end of this year in the ramp-up phase. It's really difficult to predict. And we have just different scenarios for which we are prepared. And yes, we watch everything very closely and take the actions necessary in the right moment.

Next question comes from Chris Johnen, HSBC.

First, I'll be interested to get your views on the BGH sort of news that you've seen in the last couple of days regarding eRx expand, discounts versus bonuses, I'd be interested to hear also about the lawsuit. Just to pick a brain on that and see what you make of that?

Yes. Thanks for that question. We also follow it closely. There are some of these cases underway and BKH has forwarded to the new commission. So very closely, we are checking it, but I cannot say more at the moment.

Then the second question, coming back to Alexander's question earlier, if I understood you correctly in your first part of the presentation, you said that you saw an increase in eRx that you received. Is there any color you can give or sort of put it into perspective versus the overall trends in the market? And then a very small one in terms of the functional currency. If I remember correctly, last time, you said analyzing the topic, if it made sense to change it. Just to see if there is anything new on that?

So on the first question, of course, it's still a relatively small number, the percentage of eRx. What we see is just promising as the share of eRx what we see with us is already above the share of eRx. And the second question, could you repeat it, please, for me, about the functional currency. There are no news since March. We have analyzed and there is no pressure to do something immediately, but it's on our road map and monitoring, and it will be a topic at a later part in time.

The next question comes from Jan Koch, Deutsche Bank.

I also have two, please. My first question is on repeat prescriptions. Do you have any insights to when the reimbursement rates of repeat prescription market changed given that doctors currently do not really have an incentive to issue those.

So for the e-prescription now, what we can say is that it's already technically available, and it's basically in place and what we see the market is of more compensation issue for the doctors than a technical or a process issue. So it could already be used now with eRx. And we are just waiting until there are the improvements on the physician side.

Great. And thanks for providing your thoughts on revenue growth for Q3 and Q4. But do you also expect the number of customers to increase again in Q2?

We do not guide on the number of customers on this KPI.

The next question comes from Olivier Calvet Crédit Suisse.

I have a few that I take one by one, if it's okay. Just a follow-up on eGK. You mentioned Q4 as a target for this NFC eGK solution. Could you clarify is this your target? Is this the Gematik's target? just the ministry's target? Just wanted to clarify that.

Yes. It's -- technically, it is already now so the test has been done. It's in the production. It's basically -- it's our target, of course, -- but it's also, yes, very realistically that it's there in Q4 this year.

Okay. And then I was just wondering just almost a philosophical question here, but why is this so critical? I mean a couple of years ago at the CMD, you had -- you were showing the capability to scan tokens with your app on the print out of the e-script. So I was just wondering why are the eGK capabilities are critical? Is it because in practice, you see doctors tend not to print the e-scripts? Just some color there would be useful.

Sure. So let me start on an anology, and maybe I'll ask you a question actually. So when you travel today, how many do you print your boarding pass versus take the boarding pass on your phone?

I mean you know the answer, how you can answer...

Exactly. So that is the exact reason why we think that the eGK to NFC is a much, much better answer and getting a printout and walking into the local pharmacy or any kind of a workflow that has a manual step or a paper, we shouldn't even call digital, right? So for us, the NFC eGK allows us to buy the whole process of adding a step in paper and printing and all this stuff and goes rapidly to everything that we carry all the time, including into rest room is your phone. So why not use the phone to trigger that transaction with the customer and use eGK NFC, which we all know works very well in terms of contactless, either on Android or Apple, and make it as simple as possible. Or just not the part, but I just wanted to give an analogy there.

No, sure, yes. That makes sense. Yes. And then just on prices. I was just wondering if you're seeing in one prescription a return to more competitive discount level in the second quarter? Or was it [indiscernible] promotional activity we've seen overall since early '22?

So we haven't seen any change. It's the normal development and competition.

And then just in terms of the cash flow? Or was there something else? So on the cash flow, I was just wondering about your taking order in terms of funding the cash burn you have until you break that free cash flow level. And so I think if I remember correctly, you were mentioning the sale and [indiscernible], which I think you were talking about something in the order of magnitude of CHF 30 million as much aiming for. But beyond that, what you'd be looking to do straight or convertible bond or an equity raise would be interesting.

In our balance sheet, which is now very strong and up to 50% equity ratio, the financing topic is the usual ongoing daily business and as you mentioned, we have now classified Swiss exit release date held for sales. So there, we started the process [indiscernible] because it does not make sense for us to own the distribution trends of the Swiss business, which we have sold. And out of that topics as I explained also, the earnout, which will be paid in Q2 2024, and so we are monitoring all the options. And as I said, that's a daily business.

Could you remind us of the cash inflow you expect from the earn-out?

Earnout is defined as up to CHF 47 million and depend on the EBITDA achievement of the [indiscernible] in 2023.

The next question comes from Gian-Marco Werro, ZK Bank.

Two questions from my side, please. So first one is just on your order operating income. [indiscernible] I expect most of it also related to the Swiss business. However, the number today for the first half of the year, this CHF 1 million was relatively low. So do we need to expect now a run rate of CHF 2 million to CHF 3 million going forward from this line item? That's just the first question. . Second question is, again, about the complaint to the EU commission that you just handed in with those 3 legs, first of all, the digital redemption and on the other side, the mandatory introduction of the electronic prescription and also the lifting of the bonus spend. Can you give us a bit your view or what you expect now as an answer from the EU commission on those 3 complaints and also by when do you expect an answer?

Let me take your first question. The easy one, yes, CHF 2 million to CHF 3 million for the moment, it's a good assumption. And we referred to the comparison to previous year, I think, where we had CHF [ 16 million ] there was an extraordinary impact of valuation of [indiscernible] included. So as I said, CHF 2 million to CHF 3 million is good option.

Yes. And on the second question, we put this complaint for simple reason that the EU Commission stopped [indiscernible] Germany with the explanation that was during COVID that pharmacists have to focus now on caring about the people, and that there will be the mandatory introduction of eRx with nondiscriminatory access of all pharmacies as of first of January 2022. So I'd say COVID is over. So that does not need any more to focus on the part -- and as we all know, the mandatory launch of eRx has not started yet and is almost -- is more than 1, 1.5 years ago. And -- and yes, and therefore, the nondiscriminatory access has not been given the moment we have filed the complaint. And that's why we went back to the EU commission and [indiscernible]. And it was linked to our Rx-posed spend with these conditions, and this is how we set the whole thing now. So the commission will do a preliminary assessment now, which is due in September. And within the latest year, the commission will decide whether to take steps towards proceedings or to close the complaints. And yes, we will see how this process will go.

The next question comes from Sebastian Vogel UBS.

I've got 3 questions. I would ask one by one. The first one is on the digital law. From your point of view, do you see there is also some penalties included for doctors not complying and not going ahead on the eRx side or is it also still not included?

Yes. I'll take that. In the draft of this digital law, it is defined that doctors or physicians who won't be ready technically 1 month after the eRx has become mandatory, there will be a reduction of 1% of the income that you get from the insurance companies. So this is what is defined at the moment in the law, and we will see what will pass through the cabinet end of this month.

My next question would be in June, there was a roundtable on eRx and there was also -- it seems like one of the key product managers for eRx from the Gematik and he had been also asked about like what he expects in terms of market share that the eRx will have by the end of 2024? And he was just saying that is it getting 50%, so how would you square that with the mandatory use by the 1st of January if the main guy from Gematik is expecting even then 12 months later, there will be just 50% pickup there?

It's difficult to predict and give you a figure right now. But what I can say is that it will become mandatory, maybe a good comparison with the electronic signal, which became mandatory 1st of January this year. And meanwhile, more than 80% of the signals are electronically. So maybe that helps communication.

Understood. The last question is with regards to your EBITDA breakeven or adjusted EBITDA breakeven target that were outstanding on the slides. If I assume the eRx is going out in the way like you have budgeted, what sort of spending level we would see then in the -- on the adjusted or any adjustment bucket, so to say?

There are, as always said, we are working here in scenario about the ramp-up of electronic prescription and also in terms of marketing, we are very flexible and prepared to do more or less, so exactly to do what is needed. And that's why we have -- we say that the breakeven is excluding the positive or negative impact of electronic prescription, and we will achieve it on our base business on OTC B2C.

Sorry, if I may follow up. So in that sense, if the eRx is rolling out like it is in your base case, Justin, you of course, are there. Would it mean that then your marketing spending would go back to the sort of level that we have seen by the last time when you were expecting that the eRx rollout will be happening?

No, we do not see this dimension of a marketing campaign at the moment.

So the last question that we have time to take this point comes from Urs Kunz, Research Partners.

I have just a follow-up question on the question from Sebastien about the EBITDA breaking in '24. And what kind of scenario regarding Rx development. Would you get into a negative EBITDA? I mean when and how fast it drives that's something like that could have?

I would say the other scenario is when we do a huge marketing campaign and no eRx will end up with us -- and this we do not be very plausible. And what we see at the moment is that we have a very high marketing efficiency and we also have our existing customer base with very sustainable loyal customer base with [indiscernible] potential towards sales in prescription drugs. So yes, several scenarios, but we were excited about the actual development and indication of increasing electronic prescription in Germany.

And maybe one last question about the midterm part of this 8% EBITDA margin. I mean earlier times, you gave kind of a sales volume you have to have for that? Can you tell from now what kind of sales you need to have for an 8% EBITDA margin?

Yes. It's been the midterm guidance. And as you said, we [indiscernible] on an absolute sales number because it really depends on the category and the structure of our sales -- but just to give you a high-level number, it's about a tripling of our actual sales that we needed to achieve [indiscernible] margin.

There are no more questions. I'd like to hand back to the speakers for some closing remarks.

Yes. So thanks a lot from our side, from our team. As I said at the beginning, really interesting and exciting developments going on. And we are very close. We are really close to all the regulatory bodies. We are close to the patients, the customers, and we will do the whole team, everything to make it successful and to bring this profitable growth in the future as guided in our midterm guidance. Thanks a lot for your time, for your attention, and have a good day.