Medicover AB (publ) ($MCOVB)

Welcome to the Medicover Q1 2026 Report Presentation. [Operator Instructions] Now I will hand the conference over to the speakers, CEO, John Stubbington; and CFO, Anand Patel. Please go ahead.

Good morning, everybody. Welcome to our Q1 presentation. I think we've had a good first quarter. It's been a consistent and solid sort of position. We've got good momentum going on in the business with strong organic growth of 10.3%. This is our fifth consecutive quarter of improved margins year-on-year, which we're delighted with. There's been a few negative headwinds that have hit us. I don't think we need to talk about that too much. I think as a team, we've sort of navigated that well. And it shows the strength of our model. So it's pleasing to see the position that we've come out with despite all of that. India, India has shown some strong momentum. We expected that. We talked about that a lot in previous quarters in terms of what we've done to be able to get a bigger level of growth and more momentum as we go towards IPO. So we're very positive with that particular result in the quarter, and we fully expect it to progress as we go through coming quarters. Very robust performance in Diagnostic Services, very pleased for the team, done an excellent job and our fee-for-service development is increasing in all markets, which is exactly what we want to achieve. Leverage has come down to 2.9. We expected that. We talked again about that in previous quarters. So it's good to see that going in the right direction. As we move on to the right-hand side, you can see revenue, EUR 624.2 million, organic growth of 10.3%. Adjusted EBITDA of EUR 104.6 million, a nice increase there of 15.4%. Adjusted EBITDA, 16.8% and again, an increase from 15.7% previously. So we're seeing strong momentum in terms of our operating model as we see the operational leverage drop through as we develop the business. Pretty good cash flow. I'll let Anand talk through the mix of that because that's got a little bit of change and as discussed before, leverage coming down. As we move on to look at the growth metrics, you can see on the left-hand side here, very consistent sort of growth trajectory from us, consistent quarter-on-quarter growth in line with the expectations that we have as a business. If we look at the mix, the mix is pretty consistent for us. We see that in the smaller part of our revenues, we were affected by the Hungary impact as we exited there. But most of our business is showing solid growth. And in Germany, it's the last quarter of the reform impact that is washing through. And if you go to the revenue by payer, again, pretty consistent. We've got a bit of work still to do on the funded business. We said that in history, that had been driven by the higher price increases that we put through, and we fully expect there to be momentum coming through in coming quarters. But what's really pleasing is that you see a very strong growth in our fee-for-service element, which is a reflection of how the business has changed over the years. We have a much higher exposure to this particular area of the market, and we're growing well and growing strongly, which puts us in a good place. If you look at it from a Healthcare Services perspective, again, pretty strong growth from an organic perspective, 11.8%. India, 14.3%, but in local currency, 34.4%, which again, shows the work that we've done in terms of recruiting doctors and working on our average revenue per occupied bed. Sport and wellness going very well, going very strong for us, which is driving some of our operational metrics. Members, as I say, at the moment, pretty subdued, but we expect that to change. And more importantly, overall, due to the fact we've got a higher fee-for-service mix, we're still making good momentum in terms of the relationships that we keep to be able to have a long-term repeating business in this area of our business. So revenue good. EBITDA margins strong. You can see good increases there, driven by operational leverage and the rest of our indicators are pretty stable from a health care services perspective. As we move to Diagnostic Services, very pleasing to see the level of growth, 9.9%, driving the revenues over EUR 200 million, which is really, really good. The fee-for-service revenue increased across all markets again. That's been a trend that's been developing for some time. So again, well done and very impressive performance from Ukraine because they had a particularly difficult quarter in terms of some aspects of the war and the impact that had on the operating model just with things that we take for granted. But they navigated that reasonably well and exceptionally well when you consider those circumstances. So a big thank you to them. The German team continued to sort of develop solid momentum, navigating the reform, building the platform for the future. So all of the reform now is washed through. So it will be interesting to see our development as we go through for further quarters. A number of tests have increased quite nicely. Again, weather has actually impacted some of those volumes from an organic perspective, but we don't expect that to -- it certainly won't impact us in coming quarters. And again, I think we, as a team, navigated that particularly well. So on the right-hand side, if you look towards the revenue by country, you can see all markets have done well. All markets are seeing growth, some of them seeing extreme growth. If you move down to the EBITDA margin, we're progressing it. We're going from good to very good, and we intend to keep pushing on with our development as we move forward. That sets up quite nicely and a very stable mix for us. So I'll hand over to Anand, who will talk you through more of the details related to the lower down in the P&L.

Thank you, John. Good morning, everyone. As John said, despite some headwinds we had, we delivered a strong set of results in Q1. Consistently, we now for a number of quarters now delivered double-digit organic growth and margin accretion. So John said 5 quarters of margin accretion, and we expect that to continue in the future, which is good for us. In terms of revenues, revenues of EUR 624 million, 8% up in total by over 10% at organic level. We said we'd be laser-focused on EBIT growth as well as EBITDA growth. And you can see a good expansion in our EBIT numbers, so EUR 46.7 million in the quarter at a margin rate of 7.5%, which is up 130 basis points. And if you look at the kind of cash EBITDA or EBITDA as we call it, strong performance there as well. So EUR 67.4 million, up 20% at a margin rate of 10.8%, which is up 110 basis points year-on-year. So even in challenging circumstances, our model continues to work. We also delivered a good performance in the EPS numbers as well. In terms of -- before we move on to the next slide, I think just one thing to note. So the margin accretion year-on-year is particularly strong in Q1. That won't be the same for the rest of the year, although there will be margin rate accretion. In Q1, what we have is we're anniversarying the acquisitions we made in Q2 last year, which are not in the base in Q1. So previously, we said they would be sales accretive and margin rate accretive. So that kind of laps onto a base in Q1. But as we reported in Q2 last year, it will kind of mitigate that factor going forward. But we still expect growth, as we said. In terms of Healthcare, so strong performance before we go into that strong performance across both business units is what I would say. So Healthcare, up 11.8%, price up 6.8% with healthy growth in volumes, too, and margin accretion across all profit metrics. So at EBITDA level, EUR 48.9 million. John mentioned the margin rate of 11.3%, which is up 140 basis points year-on-year. In terms of the loss on the hospital, so that's in line with expectations. It grew from EUR 2.2 million to EUR 3.8 million in the quarter. That's largely because we opened a new hospital financial district in Hyderabad. So that's kind of expected, and we expect that to improve as the year goes on. And I guess just to stress the point on India there. So I think, as John said, 34% growth year-on-year in local currency, 14% in euros, again, against soft comps, but need to say we're pleased with that result in terms of the performance of the business. In Diagnostics, organic revenue growth of 7.2%, roughly 50-50 between price and volume growth. So even in a challenging quarter for the business, I think as John said, I think they did a super job. In terms of the EBITDA numbers, EUR 33.4 million, margin at 16.7%, which is up 100 basis points and EBIT grew as well. In terms of the BDPs, they're a lot higher year-on-year, so 121 higher year-on-year. That's predominantly due to the fact that we did the S acquisition. So the lion's share of the increase on that is a consequence of that. Other metrics, leverage pleasing trend down from 3.1 to 2.9. Our tax rate is in line with expectations and guidance at 28%. From a cash flow perspective, a bit of a timing challenge. So we had a little bit of a benefit in Q4, and we expect to see a benefit in Q2. So it's not a structural change. It's just timing related. So we'll get back to normalized levels from Q2 onwards. And that's the net cash flow from operating activities and free recurring cash flow. And the other thing I'd say on this slide is obviously that ROI continues to grow to 13.9% versus 13% at year-end and 8.3% a year ago. In terms of CapEx spend, we spent EUR 26 million in the quarter, roughly 4% of spend. We have said before that we spend between 6% and 7% this year, we stand by that. And obviously expansion that happens later in the year with regards to investment in gyms, et cetera, but that will flow through. In terms of the split of CapEx, broadly speaking, it's roughly 2/3 on health care and 1/3 on diagnostics with 58% on growth and the balance on maintenance. Again, as we expand into new sites, it will get back to a more normalized split of about 2/3 on growth and 1/3 on maintenance. And the final thing I'd say on this slide is actually from a medical space perspective, we grew to over 1 million square meters. So at the end of the year -- year-end, we were just under EUR 1 million. So we added 10,000 square meters and now we're over 1 million. And then finally from me, a reminder of the midterm targets that we gave in February. So we said that our organic revenue would exceed EUR 3.25 billion. We said our adjusted organic EBITDA will exceed EUR 600 million. Our leverage would be below 3 and our adjusted EBITDA in excess of 430 million and EBIT in excess of EUR 290 million in 2028. So you can see 1 quarter in, we're pleased with our progress, and we're in line to achieve those targets. Back to you, John.

Thank you, Anand. So in summary, we've had a solid performance with good double-digit growth margin expansion following it. Yes, there's been a few challenges in the quarter, but we've kind of navigated those particularly well. And they're not the kind of things that tend to repeat, so that would be good for us. Really good progress from a fee-for-service perspective. We're developing the business well in both divisions in terms of the relationships we have with our customers. Very important for us to be able to form those relationships and even more important for us to be able to get those relationships to come back and keep repeating their business with us. And that's contributing to our growth and our improved results. So it's good to see. India. India is always a good subject for us to talk about. People have been expecting us to accelerate the growth. We've been saying that we need to do that in terms to keep on track from an IPO perspective. So it's pleasing to see some of those numbers coming through in local currency, which is great. And we will continue to focus on building the business, looking for growth, but at the same time, ensuring that we're efficient, improving our capacity and making sure that we balance our positions when it comes to price cost and particularly value for customers. So Q1 has been good for us. It has had its challenges, but I think we're excited and energized by the model because it's weathered the storm to have a pun, and we've got other opportunities ahead, which I think is really, really good. So we're looking forward to taking your questions.

[Operator Instructions] The next question comes from Philip Ekengren from ABGSC.

So first, and I'm sorry if I missed this during the call, the line has been lagging a bit, but the 2 first months were affected by severe weather across key regions, at least in Central Eastern Europe before normalizing in March, at least on my sort of numbers. Can you give us a sense of the magnitude of the weather drag here?

Yes, a few percent on our revenue growth, the lag impact. So as you point out, January was affected. February was particularly affected. As we got to the back end of February, the sun came out again and things kind of stabilized and consumer behavior stabilized. And as you can see from the figures that we're presenting today, that's flowed through into our March position, and therefore, overall quarter looks good. And I think that's an indication of the strength of our model. At the same time, when you look at these numbers, just bear in mind, as Anand said, that the acquisitions that we made last year, this is the final quarter for them flowing through, and they were particularly strong for us. So they have improved our margins as well. And I'll make one more comment just to help people with modeling, et cetera, that as we go forward in future quarters, we've got a little bit more expansion in terms of number of facilities that will pop through. It doesn't mean to say that we won't make progress from an operating model perspective. We still think we will, but there'll be more of that kind of like new space going on so that we not only grow in 2026, but we continue to grow in '27 and beyond.

Got it. That's helpful. And then on India, I think we're all happy to see that it performs well. You talked of 34% growth in local currency. Could you elaborate a bit on the operational progress you're making down in India and a bit more color on how recruitment is going and how -- everything around it, please?

Yes. I mean we know India is a really fierce market. We know it's fierce from a recruitment perspective. So we've done -- we focused very much on getting our recruitment right and getting our replacement recruitment right if we have to adapt to anything that's happened to us. We're expanding at a fast rate. We've opened the final hospital in this round, but that still means we've not only got -- not only opened hospitals, but we still got space in the existing facilities as well that we can expand into. So our focus is very much on making sure that we've got the right doctors that drives up the utilization. And also at the same time, we need to impact the revenue per occupied bed. Obviously, that's done by the types of doctors that you recruit and the mix of their specialisms and the types of things that they perform. So at a micro level by each hospital, we're dealing with all of those issues. And that's why we believe we've got good momentum at the moment, and we all know that for us to continue with the ambitions that we have, that momentum has to continue for IPO to be on track. People are going to ask me today, where are we with the IPO? And the answer is going to be, we're still on plan A. There's nobody in our business talking about plan B. We're fully aware that the external world around us has changed a bit. But from our perspective, in terms of the preparations, it makes sense for us to continue with A, and that's currently the position.

I think you answered my follow-up there with the IPO process. But then perhaps a final one for me before I get back into the queue. It's been just over a year since the German pricing reform. Can you draw any conclusions from it now? Have you started to see any consolidation in the market or any change in sort of the behavior of competitors, please?

Yes. It's -- the reform impact on us was quite tough. So I think the team have done an incredible job to be able to manage that and for us to come through in the way that we've come through. The market is seeing early signs of changes in behavior, both some of the smaller suppliers not being able to adjust and consumers adjusting. You'll note in some of the commentary that we're seeing a trend of more fee-for-service starting to appear in Germany. As I said before, I don't expect that to be a waterfall and to change the market dynamics overnight. But because of the reforms that are coming, it looks like that, that kind of paying trend is going to continue. So we're still got a watching brief. We've got strong pipelines when it comes to M&A in many different areas, and Germany will be no different. We've got a watching brief.

The next question comes from Mattias Vadsten from SEB.

I have a couple of questions. So first one, just to be clear, when you say consumer behavior was affected, can you elaborate a little bit on what services that are referred to in such a comment? So what services are affected?

I think it was a general trend that occurred. It's been 10 years since we've had the weather conditions that we had in Poland, which lasted a number of weeks. And I don't think the public were quite as used to it as they had been in history. It wouldn't have affected them 10 years ago. It had just been normal. So people kind of worked from home, stayed away. You could see if we looked at our telemed mix in our funded business, that started to kick up, which was an indication of people not wanting to really go out and travel around. So it just subdued overall kind of volumes for a period of time. You had a few days in Romania with severe snow. And when you get that, doctors can't get into work on time. Therefore, they can't perform their procedures. You had big black eyes and some blackouts in Berlin that didn't particularly help and all the problems in Ukraine. All of those things were just very unusual. We're not sitting here and saying that that's an excuse for us. What you've seen really through the quarter and what we take as very positive news is these things hit us, but we recovered as we went through the quarter. And I think that's just a sign of our model being strong, our relationships being strong and our ability to bounce back when these things hit us. But January, February were tougher months than normal for this time of year.

Good. And I agree. Next question relates to Poland. Of course, it's been a major driver beating expectations for loan in this company. So I think it's a little lower growth rate, and you alluded to many of the drivers. But aside from that, would you say that your sort of business momentum in Poland is intact, so to speak, and that we can climb back to higher growth rates already from Q2 there or yes.

Yes, I think it's a good observation that you make that we did point out a couple of quarters ago that even before the things we just talked about that there was an underlying trend that we needed to sort out and kind of like Q1 doesn't help us understand whether we've sorted it or not because of the other factors that came into play. And you know that you can see from the funded business in terms of memberships that we need to drive that higher. We're not particularly worried about it. We -- the growth rate in Poland has been a strong base for us. And we fully expect for us to see momentum sort of build in Poland as we go throughout the year. And we're looking forward to sharing that with you. So let's see how it develops. It's not something that is causing us undue worry at this stage.

Good. Last one is, firstly, sort of on Germany, what is the likely price impact on growth from here onwards? Is it neutral or...

Yes. Look, I think we're expecting muted growth from a price perspective, obviously. So there have been price cuts on the KV. But as John said, what we have done is focus on our fee-for-service business in Germany. And in there, in terms of absolute percentages and absolute numbers, we've been focusing on that. But overall, it will be muted growth from a pricing perspective.

Good. And last one, you said you're on plan with the IPO in India. So what does that mean in terms of timing?

Well, we've always set out the timetable that we announced in December 2024 that it was 24 months. So that's getting tight, of course. People are going to ask questions around that. But I think in terms of our preparations, we're on track, and we'll push ahead exactly as we are. We've always said that we're not 100% time bound. We're in a lucky position that if circumstances from a trading perspective meant that we delayed a quarter or so or from an external world perspective, we delayed a quarter or so. That is still possibilities, but we are fully focused currently Plan A, Plan A, Plan A. So we've been open all the way through and it stays the same.

The next question comes from Kristofer Liljeberg from DNB Carnegie.

I have a few questions, maybe take them one by one. And the first one, if you could explain a little bit more the margin improvement we saw here in Q1 versus Q4. I know Q4 was a bit weaker than previous quarter, but how much of this is just seasonality versus underlying improvements, would you say?

Yes. So I'll take that one. So I think I'll talk less about Q4, talk more about Q1 and what it means going forward. So I think, you've seen in Q1 that actually I mentioned a bit about the acquisitions versus last year when we didn't have them in our base. So that accounts for, you could argue, let's say, just over 50% of the growth that we've seen year-on-year in terms of margin rate. That's part one. Part 2 is what we have seen is fundamental improvements in volumes through all of our infrastructure. So you look at -- if India volumes are up 34% at local currency level and 10% at euros, you can imagine that there's margin expansion in India. In Romanian hospitals, the numbers are up year-on-year. We're filling those capacities and the margin rate is up there as well. So in terms of seasonality, yes, but it's hard to say, again, as John says, because we were impacted in the first 2 months of the year by weather. But needless to say that the theme going forward is we're still filling our infrastructure, not just in anniversarying a period where we didn't have acquisitions, but numbers like -- and countries like India and Romania are flowing through to the numbers as well. So we still expect to see healthy margin accretion for the balance of the year.

Okay. But based on previous comments, it sounds a little bit that we shouldn't expect any huge sequential margin improvements here in the next few quarters versus what you delivered in Q1. Is that correct?

Correct. Yes. Yes. So we won't get 140 basis points growth in Q2. Yes. Correct.

Okay. And could you maybe comment what the margin is in India right now and how much it has improved?

No, we don't divulge that information. We've got to be really careful at the moment. As we build towards our IPO, the Indian authorities don't like us to say too much, which doesn't help you and doesn't help our relationship with you, but we just got to be careful. And that's not something that we divulge and we wouldn't divulge at this stage due to the process.

Okay, Anand, I don't know if you could comment on this one, but the minority loss that you still have, I guess, more or less all of that relates to India and the fact that you have -- that they have financial costs in that operation as it runs right now?

Yes.

Okay. And then on the German diagnostic margin, is it possible to comment how that has developed since the reform started versus what you had now in Q1?

Yes. Again, we don't divulge that in terms of information. But as a soundbite that from our perspective, the team have handled it really, really well, and we're pleased with how they've navigated that. So I think it's a positive for us.

Okay. But is it -- have you been able to keep it at least flat? Or is it down? Is that possible to quantify?

I think we don't divulge it, Kristofer. But from my comments that I'm saying that it's positive for us. So I think you can read between the lines.

Okay. And then finally, sorry, a lot of questions here. But when it comes to the health care member -- number of health care members in Poland, what did you do more precisely to increase the growth rate again? Is it just about being out selling or something else?

Yes. I think that there's a few things in there, if you want a bit of flavor. One is that we made that decision about price. And when you make those decisions about price, at times, you've got a bit of a lag in terms of some of the people that don't like the price. Our new business volumes are very, very good. organic growth in the market isn't particularly strong at this moment in time. So therefore, we have to be -- we have to go to a different level of sophistication in terms of the different types of products that we offer to the different types of customers to stimulate more growth. We're in a good position because we've got -- in our proposition, it's quite wide. So we can blend in terms of the way we do our pricing and the way that we make it more attractive for customers to cover more of their employee base, and we'll be offering different solutions in coming quarters related to that. We've already started. It's getting the beginnings of some traction. That's why we're quite confident as we go forward that we should see that line start to improve again. But the organic growth in the market is causing a bit of issue. That usually adjusts itself over time.

The next question comes from Kane Slutzkin from Deutsche.

Just a quick one. Just on the Middle East situation, you obviously referred to it as sort of external headwinds, I guess. I'm just wondering, is there any hedging in place to mitigate some of the sort of potential cost inflation you might see? And how exposed are you? I would imagine there's some energy exposure, but maybe not too material. But yes, just any comments on sort of any hedging in place to mitigate potential cost increases? And then just secondly, are you guys sort of comfortable with where consensus is sitting? Just trying to kind of gauge sort of given sort of some of the commentary this morning around sort of Q1 being a bit higher and maybe there's a bit of phasing in the U.S. So yes, just wondering if you're sort of comfortable with where the consensus numbers sit for the full year.

Sure. I'll answer the first one, and I'll pass the second one over to Anand. So from -- obviously, from a war perspective and the Middle East perspective, we have conducted exercises inside the business to understand what would the impact of that be based on what we know. So we're putting in more monitoring positions in terms of some of the relationship with customers that could be more exposed. We're looking at our supply chain in terms of is there any delays. We're looking at our building program to understand if there's impacts on that. And obviously, the one that you highlighted, energy is an important factor for us. It's particularly important in sport because there's quite a lot of property exposure there. Quite a few of our contracts from a Polish perspective on an energy basis are on a slightly longer-term basis or fixed basis. And currently, of course, you'll see that the governments in many countries from an energy perspective are putting some kind of shield or mitigating circumstances in place. So currently, there's no major impact on us, but we are taking countermeasures, and we've got plans from a group perspective that should things turn, what are the levers that we would need to look at. But at the moment, as it stands today, on the 29th of April, we haven't pressed the button on those things. It's very much that we've got the watching brief with our indicators.

Okay. From me on the consensus question. So look, we give 3-year targets. I'm not going to comment on inter numbers for you today. I guess the common themes of what we've said, though, are double-digit organic growth, and you can imply that from our 3-year targets and margin accretion to implied rates that you can calculate for yourself in 2028. So we expect to see progress towards that. And we've said there will be a little bit slower potentially in '26 versus an uptick in '27, '28 towards those targets. So for me, for us, we've said on our call that we will achieve our targets in 2028. And then after that, the inter years will be different.

All right. I guess just the reason I ask is, clearly, you're reporting quarterly, which is pretty regularly. So it might help just to have a little bit more on the sort of near term. But yes, take your point.

[Operator Instructions] The next question comes from Darius Saftoiu from Jefferies.

Two, if I may. First, on the diagnostic volumes, test volumes were up 9.5% in Q1 with 8.7% on the acquisitions. So I was wondering if you could update us on the underlying R test demand in Q1 and as we exiting the Q1?

Yes. Can you repeat that? I heard that you were talking about diagnostic volumes and underlying trends.

Yes. Yes, sorry. So test volumes in Diagnostics were up 9.5% and 8.7% on the acquisitions -- prior acquisitions. And I was wondering if you could update us on the underlying organic demand and volume growth in diagnostics in Q1 and as we exit the Q1.

We're struggling to -- apologies, but we're struggling to get the clarity of the question. So can I make a suggestion? Can you type it into the [ feed ] because we do want to answer your question, but we just can't pick it up exactly. We don't want to mislead you. Sorry about that, I just couldn't hear it...

First in diagnostic volumes, test volumes were up 9.5%. With around 8.7 percentage points coming from prior year acquisitions. Could you update us on how...

Yes. I think that's what -- sorry, we've now got the question. So the test volumes were up 9.5% year-on-year and around 8.7 percentage points coming from the prior year acquisitions, et cetera. Yes, I think this is just one of the areas where we were affected by some of those headwinds. It's not something that we fundamentally believe that we're suppressed on this particular line. You can see from the development of the Diagnostics team that all our fee-for-service markets are growing quite strongly. There is a different focus in terms of the businesses there looking at the higher-margin test volumes, et cetera, but that shouldn't affect our overall volumes as we go through. So I wouldn't pay too much attention to that at this moment in time. Q1, just an unusual quarter for us. We'll move past it, get to Q2, and I think that our dialogue will be slightly different than it is today.

And I'm sorry if I [indiscernible] I've sent the question second question as well. My second question is on the regulation in Germany. I understand that the impact from last year public reform is fully in the base now. But I was wondering if you could update us on how do you assess the proposals for the private medical fee schedule reform in Germany? And do you see any risks or potential opportunities for Medicover? And if the outcomes were to have like less favorable impacts in certain pockets, what are the mitigation levers within your control?

Yes, I think it's a really good question. So put it into a broader context, it's not just Germany, I think it's a lot of markets that the national funds are looking at ways that they can drive efficiency. This is nothing new. This is something that every health care organization, whether it's public or private, has to do to be able to serve their customers well. And in Germany, currently, there's lots of talk about the next reform that's going to come, which is the GOA reform that you referred to. It isn't clarified 100% yet that the date of the reform will come in from X. So we've been planning and scenario planning and scaling the impact of this reform for some time. When it comes in and when it happens, it's not going to affect our operations in terms of what we do simply because we're preparing for it in advance. We know that from the first reform that we needed to implement change in our business. I think I've said in previous calls that, that change will last longer than any reform. So we'll continue looking for -- to strengthen our operations to counterbalance any of the headwinds that come. But that GOA reform, as it stands today, is quite substantial, but the last reform was, and we weathered that well. So we're talking theory. That theory is there. We're doing what any good business would do. We're planning for it. But as you also say, it drives opportunity. It does drive opportunity, which is you can see in the German market already from what we've talked about today, there's a slight movement from people from a community that's been very used for things being paid for to paying for -- they're paying for themselves. So I think that trend will start to continue. And there's a general trend in wherever you go that people are much more interested in wellness nowadays and longevity and things along those lines. And those kind of things don't tend to be covered by the funds. So wherever there's a challenge, there's an opportunity, and that's what Medicover has always been good at.

Yes. Just a follow-up on that. So the proposals from the Medicover essentially [indiscernible] show an impact on certain diagnostic tests that could be substantial in terms of pricing. So I was wondering how you see the mitigation factors on those that we have like a higher pricing impact?

Literally, again, we can't pick up the question. And I don't want to mislead. So if you can type it again, we'll come back to it. I'm sorry about that. The phone line is affecting the communication, I'm sorry. Doesn't appear to be more questions coming through. So there's one more question online that we'll answer. When we -- I talked about alternative products, people said, are you considering health insurance? We have health insurance solutions. So that will always be part of the mix. So we're prepared for that from a Polish perspective. There's also a question about the slowdown in diagnostic revenues in Poland and Ukraine. Yes, from a Poland perspective, there was a B2B contract change that happened, which would have affected our underlying numbers. We are confident that we will be able to outgrow that as we go through the year. And Ukraine was impacted by the -- obviously, the weather because at that time of the year down there is quite tough. But the war impacted at a higher rate in Q1. And as a consequence of that, it affected the numbers. That seems to recover as we've gone through the quarter. So again, we expect that to be stronger. There's a question also about the revenues we generate on CT, MRI scanners with the funds in Poland above the contract limit. That's not something that we would disclose. It's too much operational detail and sensitive. But what I would say is that we have limited -- we have exposure to the NFZ. They are making changes in their contract limits in this particular area, but it's not a big part of our business volumes. It will impact us. But at the same time, it's going to impact the speed of delivery for the consumer. So there'll probably be a change in mix that happens here from some people that historically have gone to NFZ and over time, they'll switch back to being out of pocket.

The next question comes from Mattias Vadsten from SEB.

Yes. Just a clarification. So I just wanted to make sure I catch your comments, Anand, correctly. So the EBITDaL margin improved by 90 bps year-over-year in Q1. So did I catch it correctly that you say basically the year-on-year margin improvement coming quarters will be much more modest. So we obviously don't know exactly how it should be per quarter here. I just wanted to understand the profile sort of Q2 through Q4 based on the comments.

Yes. So obviously, it's difficult for me to say without telling you the number, which I don't want to do. But look, I think if you look at more than 50% of the growth in Q1 on the margin rate of roughly 120 basis points is due to the acquisition. So that disappears in Q2 because it's in our base. So hopefully, from that, you can figure out what I'm saying with regards to the number for the rest of the year.

There are no more phone questions at this time. So I hand the conference back to the speakers for any closing comments.

Yes. Just thank you to everybody for attending. There was quite a lot of varied questions today and quite a lot of detail that we went into. I fully expected that with the difficult first quarter sort of headwinds that they're gone now. So we're looking forward to progressing for the rest of the year. As I said before, we're pleased with the progress we've made on Q1. We're very pleased with the strength of our model considering those unusual circumstances. And that's energized us for the future. So we're very much looking forward to how we develop this year. And finally, a big thank you to everybody in Medicover for making these results happen. They've done a fantastic job. So thank you.