Redcare Pharmacy NV (RDC) Earnings Call Transcript & Summary

Well, good morning, everybody. Jasper and I would like to welcome you to the release of SHOP APOTHEKE Europe's full Q3 financials. To start with the end in mind against the backdrop as we're all witnessing this of a difficult and challenging economic times and many uncertainties everybody is facing right now, I dare to say that SHOP APOTHEKE delivered a solid quarter, which was fully in line with the guidance we had provided earlier this year. Talking about the guidance. SHOP APOTHEKE's management continues to stand behind this guidance and the guidance at the end of our call will be reiterated by Jasper, one more time. Well, you see the usual agenda. We're going to start with a deep dive into our Q3 performance. And then we just have literally a couple of charts on e-prescriptions in Germany and SHOP APOTHEKE's commitment to sustainable development. And at the very end, rest assured, we're going to have plenty of time to answer any questions that you might have. So let's start with a deep dive into Q3. At the start of the call, I mentioned that we delivered a successful quarter in line with our guidance. But before we go through the details, let me just take a step back and let me acknowledge that we did reach an important milestone just last week with 0.5 million redeemed e-prescriptions in Germany. Not surprisingly, of course, as SHOP APOTHEKE, we would like to see the growth happen at a much, much faster pace. But still, I think we need to acknowledge that just a couple of months ago, we reached the target that had been set out for the eRX test phase in Germany, which was 30,000 processed e-prescriptions. And as of last week, we surpassed the 500,000 mark. Right now, literally, every single day, physicians are issuing, pharmacies are filling and health insurers are reimbursing electronic prescriptions, thousands on a daily basis. So process-wise, certainly e-prescriptions are working smoothly. Shifting gears and looking at SHOP APOTHEKE's performance in Q3. Our sales growth went up to 20%. This compares to 15% in the second quarter and 7% in the first quarter. Our non-Rx growth continued at an even faster pace. Looking at this on a year-to-date basis for the first 9 months, we showed sales growth year-over-year of 13.5% and sales of EUR 877 million. Our Q3 adjusted EBITDA came in at around 1% of net sales of EUR 3 million. This is an improvement by 1.8 percentage points versus a year ago, versus Q3 2021 and a very notable improvement through the first half of this year and more on that from Jasper in a few moments. Our active customer base continued to grow at a rapid pace. We are approaching 9 million active customers. This is an increase by around 1 million customers since the beginning of this year. And more importantly, and this is one driver for our customer growth, of course, is the high customer satisfaction level at the NPS for third quarter stood at 73 to be precise. And shifting gears one more time, sustainability, sustainable development is very important to what we do at SHOP APOTHEKE. At the end of September, we made the commitment to become net 0 by 2040. So we are fully committed to bringing carbon emissions down to 0 along the entire value chain by 2040, more about this also later in this presentation. So looking at our 2 reporting segments, I already mentioned on the left-hand side, over the first 9 months, SHOP APOTHEKE's business continued to grow at double digits with 13.5 percentage points, non-Rx grew at a faster pace of around 18%. And our sales over the first 9 months of the year were close to EUR 880 million. In the DACH region for the first 9 months, we generated top line sales of around 10%, non-Rx grew by around 15%, and our Rx business for the first 9 months declined by around 13%. The only driver and you've heard this before, was still the Rx bonus band. If you just look at the third quarter, our Rx business didn't just stabilize, but it grew actually a little bit by 4% compared to our Rx business in the third quarter '21. And our international business grew at a faster pace, continue to be a growth driver for SHOP APOTHEKE, growth was approaching 30% and the total sales were close to EUR 200 million. So before we now switch to our KPIs, we just want to take a moment to reflect on the position that SHOP APOTHEKE has across the 7 markets in which we operate today. In Belgium, SHOP APOTHEKE is the undisputed market leader in the online pharmacy space with a wide and a growing margin versus the #2 in the Belgian market. In Austria, SHOP APOTHEKE is the undisputed market leader in the online pharmacy space with an even wider margin versus the #2 in the marketplace. And in Germany, of course, Europe's biggest pharmacy market, we continue to be the largest and the most frequently business pharmacy website in Germany, and I can say here again with a wide and growing margin. In the other 4 markets in which we operate today, our business is indeed growing. But at the same time, we need to acknowledge we have not yet reached critical mass. We have not yet reached a market-leading position. But rest assured, we are working on that. So I already referenced our KPIs, starting on the left-hand side, 8.9 million active customers, customers who have placed at least one order over the last 12 months by the end of September, an increase by 1.6 million versus September last year, by 1 million versus January this year. And in Q3 alone, we added around 0.3 million active customers. Our Net Promoter Score remained at a high level of 73. We succeeded in maintaining very competitive order delivery times. And we're also very well positioned across the whole range of delivery options. And we're going to talk more about this in a moment. And the last KPI that we want to share, our average order value was pretty much stable. We saw really just a marginal drop from around EUR 61 a year ago in Q3 '21 to around EUR 60 this year. I already mentioned that our Rx business has stabilized and as a result of this our average order value has stabilized as well. So I mentioned when I referenced our customer satisfaction level that we are very well positioned across the whole range of order delivery options. I'm starting on the left here, of course, today, the vast majority of the orders that are placed by our customers are placed through the SHOP APOTHEKE web shops or the SHOP APOTHEKE apps. Through this pathway, we can offer our customers the broadest choice of product, a huge selection of products but also competitive pricing. And our commitment is that we are going to deliver these orders within 1 to 2 days to our customers' doorsteps. If a customer has an expectation to receive the order on the same day the order was placed, of course, we cannot do this for all the markets or the metro areas in which we operate from our facility here in the Netherlands. So we do this through our SHOP APOTHEKE NOW! program by collaborating closely with selected local partner pharmacies. And lastly, the latest addition to the SHOP APOTHEKE family First A, if a customer has a need to get order delivered even faster, we can do this through First A in the metropolitan areas, and then delivery would be in 1 hour or less. Okay. Shifting to our web traffic. You are familiar with this picture, but we have added one indicator to show the -- to illustrate a little bit better the underlying trends. So you see the blue bars, you see the green line and then you see that -- and this is new, the dotted red line. I'm going to walk you through all of these indicators, one by one, starting with the blue bars. The blue bars indicate the traffic growth across all of our web shops and across all of our apps compared to the exact same week a year ago. At the end of Q2, at the beginning of Q3, you almost see a prototypical peak. Of course, this has to be seen against the backdrop of very low traffic levels at the same period last year. For those of you who have been following SHOP APOTHEKE for quite some time, at that time, a year ago, we had to drastically reduce our performance marketing activities because we had constrained logistics capacities. Of course, we are recycling this time now with very low traffic. And as a result of this, you see the peak towards the end of Q3, you see that our web traffic growth leveled out between -- at between 10% to 20%, and that is pretty much in line or pretty close to our top line development. The green line shows the total -- the absolute number of weekly visits to our websites, to our app. And what you see here is an elevated level in Q1, not a surprise, not a surprise to you because Q1 and also Q4 are the busiest periods for any online pharmacy. And then we see a little bit of a leveling off in Q2 and Q3, but we -- of course, we have looked at this in detail. This is purely driven by seasonality. And to take out seasonality, a little bit of what we are sharing with you, we have added the red dotted; line. The red dotted line shows you the rolling average weekly visits over the last 52 weeks. So in other words, we added up the weekly visit over the last 52 weeks. And we divided this number simply by 52. You see a steady increase. And again, that is once again broadly in line with the -- elevate with the top line growth that we have seen. A moment ago, I mentioned to you that shopapotheke.com was the most popular pharmacy website in Germany. Well, I have to admit, I didn't tell you the whole story because you've already come to expect from shopapotheke.com being the most frequently visited pharmacy website in Germany. But in September, according to Similarweb, shopapotheke.com was actually the most popular, meaning the most frequently visited health website in Germany, ahead of websites that offer general medical advice or the Robeco Institute, which, of course, was very popular during the COVID pandemic or websites that offer appoint services. So in September, SHOP APOTHEKE was the most frequently visited health website in Germany. We just want to illustrate that SHOP APOTHEKE in Germany, not just in Germany, but here we're talking about Germany continues to expand and to solidify its position in the German healthcare arena. And the last chart I want to share with you before I hand over to Jasper to walk you through the Q3 numbers. According to Google Analytics, shopapotheke.com was also the most searched pharmacy brand in Germany, we're saying here by far. And I know it sounds like a broken record but SHOP APOTHEKE held a spot by a wide and a growing margin versus the #2 in the marketplace. And with this, Jasper, I'll hand it over to you.

Yes. Thank you very much, Stefan, and good morning to everybody who's joining the call today. On this graph, it's the number of orders per quarter for 2020, 2021 and then the 3 quarters of the current year 2022. In the last quarter, quarter 3, we processed in total 5.4 million orders, which is an increase of 1 million compared to the third quarter of last year. The third quarter was somewhat soft, but still, of course, it's a significant increase. And also, if you would compare the current third quarter to 2 years ago, so quarter 3 2020, which was still the first and the full Corona year, the increase from 4 million to 5.4 million is an increase of 1.4 million orders that we processed or an increase of 35% in 2 years. The other thing to mention on this slide is that, again, we were able to welcome a lot of returning customers. And actually, the number that Stefan just quoted, the 0.3 million new active customers to our base is a number that we are internally very proud of, but despite the fact of adding those new customers this quarter, we had a total of 85% of the total sales that were from loyal customers, returning customers to our website. Not only to our website, to place an order. To the next slide, please, what this means for our numbers. This is the table going from sales up to and including the adjusted EBITDA. But before I talk about the table, in the footnote, we made very clear what the adjustments are and equal to what you have seen in the past 3 quarters. And equally, I explained it, the adjustments increased year-over-year significantly only due to the booking, the accounting of 2021 business acquisition that we do as of quarter 4 of 2021. Apart from that, the other 2 customary items in the adjustments are related to stock options and a very small amount related to external project costs, but the key thing of those adjustments is that they are all for the majority, the far majority, noncash items. So of course, our P&L reflects the correct and the best representation of the financial results. But if you look at the EBITDA, EBIT and net income, actually the adjusted EBITDA, the adjusted EBIT and the adjusted net income, as you can find in our interim report, are much closer connected to our operational and to our cash performance. And exactly for that reason, to once again emphasize to be as close as possible to our real cash performance, we make those adjustments. Now going to the table. Quarter 3 last year, quarter 3 this year, the better worse year-over-year that quarter 3 compared to the first 6 months of the year and for reference, the 9 months of last year and the 9 months of this year, but later I have also bridged us in explaining the latter too. In quarter 3 2021, we did a total of EUR 238 million, and this year, it increased by 19.6% to EUR 284 million. We achieved that with a significantly increased gross profit margin that was year-over-year, 3 percentage points higher, comparing quarter-over-quarter, that's mainly the net impact of product and pricing mix and the remainder compared to the quarter of last year is actually impacted by a non-repeat of some negatives related to the corona assortment last year. And apart from that, we continue to see and benefit from better sourcing conditions and more media income. So 3 percentage points up compared to last year, but also 0.9 percentage points better than the first 6 months of this year. Then to the selling and distribution as a percentage of sales this quarter, it ended at 23.8%, with an increase of 1.1 percentage points to the same quarter last year and that is mainly as a percentage of sales. And this increase compared to last year is mainly last mile and the remainder is from IT and labor. And the interesting thing is, compared to last year, well, actually, we see, of course, inflation in cost, our operational cost as a percentage of sales were lower than last year and marketing did not increase. So there's a lot of words. So let me summarize again the increase compared to last year is mainly because of last mile cost that increased and actually our operational performance that we can influence was even better than last year. And then a very important number on the S&D as a percentage of sales is the 1.7 percentage point improvement compared to the first 6 months of this year. Admin is basically hovering around 3.2% to 3.3% of sales. Adding up all the numbers I just mentioned, last year, Q3 was a minus 0.9% margin, this year is a plus 0.9% is an increase of 1.8 percentage points from minus 2 to plus 3 is an increase of EUR 5 million. And moreover, this margin of this quarter of 0.9% is 2.4 percentage points higher than the first half of the year. The gross profit margin. On this slide, you see the increase of the gross profit margin from 25.4% after 9 months last year to 27.4% this year. Number 1 of the building blocks is improvements in sourcing. Number 2 is a small number for the impact of net pricing and product mix after 9 months, roughly half is coming from net pricing and half is coming from the increased impact of our platform business models. [indiscernible] is mix, mainly the Rx OTC mix and the remaining relatively large block is, again, mainly related to the non-repeat of negatives related to corona that we saw in last year. To the right side, again, this 27.4% is the gross profit margin. After 9 months, but from the end of Q2 to quarter 3, there was an increase of the gross profit margin of 0.9%. Next, please. Then the selling and distribution cost as a percentage of sales. Before I walk you through the changes, I think it's also very relevant to take a helicopter fuel because actually, from our perspective, quarter 1, 2021 is quite a while ago. Imagine, for example, in quarter 1 2021, was still in the full corona period. There was much more paper Rx we hadn't met up in the Netherlands yet. We didn't have smartpatients in Germany. Our core business still needed to move to the new distribution center and we hadn't even the distribution center in Italy that we opened in the past quarter. But still, these are the numbers of the 9 months of this year compared to the 9 months of last year, but many things have happened since. If we start with marketing, and marketing is generally our decision how fast we want to grow, managing sales and margins. But in this comparison, as you see here, it's also relevant to note that quarter 1, 2021 still had a lot of paper Rx, or did have a lot of corona and in quarter 2, as Stefan also just mentioned, we reduced our marketing because of our capacity constraints to get that. More substantial remarks I can make on the shipping, which is the next one because we do see an increase of shipping costs, the last mile cost as a percentage of sales. We see some higher fees, and we see some mix from the fact that we have more same-day deliveries and we grow international even faster than we grow [ inter ]. Operational labor in this comparison, minus 0.2. But as I already preannounced in quarter 2 and luckily, we were able to realize it. If you look at quarter 3 versus quarter 3, despite inflationary pressure, cost pressure, we actually have lower operational costs as a percentage of sales this quarter 3 compared to quarter 3 last year. And the last one other is mainly related to IT. Most important to mention here on this slide is that compared to the cost as a percentage of sales after 6 months, which stood at 25.5%, we lowered our cost by 1.7%. We increased our focus on efficiency, and we also took out costs in order to achieve these numbers. What does it mean for our cash? We ended in our balance with cash and cash equivalents well above EUR 200 million, and we stood at EUR 228 million to be precise. And after the 9 months of this year, you see the first 2 blocks together is that our operating cash flow was basically a flat 0. It was EUR 0.3 million. And then we invested for EUR 44 million which includes acquisitions, the opening of our distribution center in Italy, but it mainly relates to the core of our business and that is the investments in IT. The financing here is half interest and half related to leases. All in all, well above EUR 200 million. And with that, I'll give it back to you, Stefan.

Okay. Thank you, Jasper. As we mentioned at the beginning of the call, this time, we keep the strategy or the general business update pretty brief. We are focusing on e-prescriptions and then we're going to say something about sustainable development at SHOP APOTHEKE. So starting, of course, with e-prescriptions that's top of mind, not just for you, but for all of us, on the left-hand side, you see the graph, we are seeing a steady growth in the number of e-prescriptions. In this case, it's e-prescriptions filled by pharmacies in parallel. That's something you're not seeing on this chart, but we're also seeing a steady growth of doctors that are issuing e-prescriptions. Last week, I just want to reemphasize this again because we think it's really an important milestone. We passed the EUR 0.5 million mark of e-prescriptions. At the same time, of course, we need to acknowledge if we would love to see the graph on the left-hand side to grow at a much, much faster pace or we would like to see an even steeper curve. Exactly today, just I think 2 weeks ago, we went to a physician office in the Ostwestfalen-Lippe region to see firsthand, okay, how are e-prescription working on a day-to-day basis. And we talk to a physician, she issues on average, 150 to 200 e-prescriptions every single day. She does not issue paper prescriptions anymore. And according to what she showed us, what she told us, e-prescriptions for her are working very smoothly, patients once they get used to them, they like them. And it did not just bring disruption, it did not just not bring disruption to our office, but it actually helped to further enhance internal workflows or processes. For example, there is no physician assistant that has to run any more after the doctor in order to capture a signature. So for her, e-prescriptions are working very, very smoothly. We at SHOP APOTHEKE together with many other participants, of course, we try to convince more and more physicians of the benefits once you have adopted e-scripts, of the benefits of electronic prescriptions, and we are talking to regulators. We're talking to the Gematik. We're talking to a lot of other market participants in order to address some data privacy concerns that have been raised, but also to address questions that have been raised by physicians in terms of, again, what does this mean for their practices and for their day-to-day processes. These discussions, the discussions with all different types of market participants, they are literally going on, on a day-to-day basis. I personally was in Berlin for a couple of meetings last week. I will again be there the week after next week. But this is, of course, not just done by me, a lot of individuals at SHOP APOTHEKE are totally focused on making e-prescriptions a success. At the same time, I cannot disclose exactly what we have proposed to the various players in this discussion right now. What I can tell you is when we outlined the proposals that we have made, again, in order to address some of the concerns that have been raised over the last few months. I think the proposals are very well received. But I would -- quite frankly, I think I would jeopardize the success of these conversations if I disclose too many details in public right now. Well, in closing, when we look at e-prescriptions, they are working smoothly. We are confident that they will continue to penetrate the Rx market in Germany will continue to see a steady increase of e-prescriptions. And we remain confident that e-prescriptions will be a very significant catalyst for SHOP APOTHEKE's growth going forward. Well, without any doubt, e-prescriptions and you can talk to anybody at SHOP APOTHEKE, and I'm pretty confident you will get a very similar answer. There are the top, top, top priority for everybody at SHOP APOTHEKE. At the same time, we have some other priorities that as well. And one of the other priorities is our commitment towards a sustainable development. At the end of September, SHOP APOTHEKE Europe joined the growing number of large and small companies to commit to becoming net 0 by 2040. We are fully committed to decarbonizing our entire value chain and to make sure that we -- that sorry, that we succeed in decoupling our business growth from our emissions. So in 18 years, in 2040, SHOP APOTHEKE Europe will be a very, very different company from what it is today, will be much, much larger, but our business growth will be decoupled from emissions, which will simply be 0 by 2040. Well, we're not just talking about 2040. Our sustainable development initiative was started 2 years ago in 2020, and we have already achieved some very tangible, some very hard benefits. We had -- in 2020, we had set out a target for ourselves to reduce our carbon emissions, our Scope 1 and Scope 2 carbon emissions by 80% by 2025. As of the end of September, we can say with a lot of confidence and a little bit pride that we have already achieved the target to reduce our Scope 1 and Scope 2 emissions by 80% by the end of September this year. Both our distribution facilities in the Netherlands and in Italy were switched to -- have been switched to 100% renewable energy. And to ensure that we continue to establish ambitious internal goals to continue to make progress and to rigorously also monitor our progress against these goals, we have compiled, reviewed and discussed our first very, very comprehensive, ecological balance sheet for the first time based on the numbers for the first 6 months of the year. Going forward, this ecological balance sheet or sustainable development will be part of how we operate SHOP APOTHEKE, it will become part of our forecasting processes. It will become part of our annual planning processes. It will become part of how we do things at SHOP APOTHEKE. So I hope I succeeded in conveying to you that sustainable development for SHOP APOTHEKE, it's not an empty shell. It's something that's very close to our heart and it will continue to impact it already has and will continue to impact how we do things at SHOP APOTHEKE Europe. On this Jasper, I think you're close.

Okay. Yes. Absolutely, Stefan. So thanks again. Yes, nice anecdote in line with what you just said is that in 2020, with the move to the facility where we're presenting from our main central distribution facility for ecological reasons, we decided to totally not use any gas in this facility. So there you see nicely how the business model and actually sustainability goes hand-in-hand because not having any gas is actually also financially a huge benefit this year that we have at SHOP APOTHEKE. The outlook and guidance. Next slide, please. Basically, what Stefan just said, we are very happy and we want to thank all the people in SHOP APOTHEKE also by making this possible that we are able to, in this very exciting dynamic -- many challenges ongoing the outside growth environment, we are able to once again reconfirm with confidence the guidance that we gave to you at the start of the year. So for our ongoing business, as of the start of this year 2022, we expect to continue to grow our non-Rx by 15% to 25%. Rx, we don't give guidance and the adjusted EBITDA margin between minus and plus 1.5 percentage points. Mid- to long-term also unchanged. And as you can see to the left side, we added the target, which is a net 0 by 2040 and though that sounds very far away as Stefan just explained, how much we did already on Scope 1 and 2 already in the past 1.5 years. So with that, please, operator, could you go to the slides to ask for questions with a slightly, hopefully, improved procedure to ask questions.

[Operator Instructions] We will now take our first question from Chris of HSBC.

First, I want to get back to comment that you Stefan made earlier with respect to the discussions you were having with the market participants, and I understand that you said that you could not discuss too many details. But I'd be curious, and maybe I just didn't get that. What particular part are you discussing? Is this in relation to the privacy concerns, the eGK in general, changes to the phased rollout? I mean what sort of discussions are you having at the moment?

Chris, thanks for the question. So yes, the discussions focused on 2 topics, and they're closely related. How does the -- how is the e-prescription and it's not the e-prescription, it's the token, it's the QR code. How is the token transmitted from the doctor to the patient. And secondly, how can online pharmacies also participate in the eGK solution. So that is the focus of the discussions we're having right now.

And I know, again, within the lines of what you can't state. I mean, still today, a lot of paper scripts are sent via fax, right? I mean, if this is something that is being brought up, I mean, what sort of -- I mean there is nothing -- no pushback to be said on that, right? I mean, why now after so many years, is the token, which has been the sort of fundamental foundation of the whole eRX setup. Why is this now all of a sudden becoming a topic of discussion? I don't know, It's -- I just don't get it. It amazes me to be quite honest.

Well, Chris, we're asking the question ourselves as well. When we talk to physicians, and again, Jasper and I, we went to a supporter of e-prescriptions, 2 weeks ago. And what she said is, again, she loves it. It's so much easier for her, but there was one but that she had and it was -- that she still has to print out the prescription. It's not an insurmountable obstacle, but it's something that she didn't like and probably many other physicians don't like. So we have sketched out a way to transmit the QR code to the doctor -- from the doctor to the patient without having to print anything. At the same time, and I think I shared this anecdote in the past, we think for patients to start with something that they can put their hands around, meaning a paper print out at the beginning at least that might actually increase the trust patients have in paper prescriptions because they can still read exactly what the doctor has prescribed. And I'm going back to the start of the COVID vaccinations. When we went to restaurants, at least in Germany, you saw a lot of people with their paper certificates coming into the restaurant when they -- at the time when they had to show them. A couple of months later, you didn't see this anymore or you hardly ever saw this anymore because people got used to using the app. I think we're going to experience something very, very similar once electronic prescriptions have been introduced. And again, the doctor we talked to, she was very excited when she talked about a 75-year-old patient that successfully used the Gematik app for the first time. There are some [ groups ] that you have to jump through in order to get there. But once the patient was there, the doctor issued the prescription and literally a fraction of the second later, it appeared in the Gematik, in the e-prescription app of the patient. Again, once people get used to it, it's working smoothly.

Okay, that's understood. And the difficult questions. I mean first on -- I mean, you gave the example of this one doctor. I mean she does 150 to 200 e-scripts a day, then she basically accounts for 2% of all of the e-script are issued nationwide, right? And I mean, in [indiscernible], there's probably what is 9,000 or 10,000 doctors. So that's obviously the initial adoption is poor to say the least. It seems that the doctors are not willing to take this up unless they are being forced. And so far, there has been presumably no force. Do you see any chance -- is this maybe also part of your discussions of anything on the horizon that the doctors will be forced into this framework because the way it stands right now, I'm not even sure that we will necessarily see nationwide rollout in the second half of next year if the numbers keep where they are. So any sort of views on that?

Chris, of course, there's a political decision. Our sense is that the current health minister, the current government in Germany, they want to do this in a collaborative approach, together with the physicians. They want to convince,, they want to address the concerns. Some of these are the generic concerns that have been raised by physicians. It is our sense that they don't want to mandate this and force physicians to use e-prescriptions, but they want to convince them and want to bring them on board. Again, Chris, these discussions, especially with physician associations, they are ongoing as we speak.

And so I mean what is your current expectation for the nationwide rollout? I mean we all know about the current set of terms with respect to Phase I, Phase II and Phase III. Yes, I'd be happy to pick your brain on that because you're probably also doing the same math that we are doing and yes, maybe we're missing something.

Yes. I think the original time line that came out of the market shareholder meeting a couple of months ago, I think that is at this point of time, it's not going to happen. We're not going to see an additional 6 federal states or regions in Germany to officially start with e-prescriptions on the first of December. What we have stated before is we are confident, we remain confident that we're going to see nationwide rollout in Germany sometime next year. At the same time, what we are seeing right now, every doctor across all of Germany who wants to issue electronic prescriptions can do it today. There's nothing that prevents [indiscernible] from doing this. It's just not part of these. Right now, the pilot region is limited to Ostwestfalen-Lippe. In the coming months, additional regions are going to join, but Chris, it would really be speculative to say another 6 states are going to enter in 2, 3 or 4 months. It's -- we simply don't know. But nobody -- again, we've had -- we are having -- we've had and we are having many, many conversations. We haven't heard from anybody that they -- that we should go back to the drawing board or we should stop this. Everybody sees the benefits, but they remain a couple of obstacles that need to be addressed and that need to be overcome.

Okay. Perfect. Thanks a lot for your time.

We will now take our next question from Volker Bosse of SHOP APOTHEKE.

Yes. Volker Bosse, Baader Bank. I would like to start with the consumer sentiment drop, which we -- which we see in Germany and across Europe. How do you see this consumer sentiment drop impact your business in the moment? Or is there any impact in any way, for example, higher price sensitivity or higher demand for private labels? It's the first question. And the second question would be on the adjusted EBITDA in 2019 and 2020, you reported a positive EBITDA in the fourth quarter, which was always better than in the third quarter. So would you expect to follow this pattern, which you showed historically in the fourth quarter this year, so being fourth quarter adjusted EBITDA better than in third quarter as a kind of help you for calculation? And the last question would be on your cash. Where do you think to end up cash at end of the year just for confirmation?

Yes, Volker, thanks for your 3 questions. Number one, on the impact of customer sentiment. We, of course, watch this very closely. But I think the summary at this moment for us is, and we are active in 7 markets where we are growing in quarter 3 and year-to-date by double digits in each of the 7 markets at the moment. And of course, you see sometimes some things happening there. But in sum, the best conclusion is that until now in the market where we are active, which is healthcare and medicines, we don't see significant impact of a recession or a change in consumer need. So that's the best summary of what we're seeing at the moment. So no impact at the moment at SHOP APOTHEKE. At the same time, we also see that we're increasingly focused on our cost for quarter 2 to quarter 3 because we want to be prepared for everything. But responding to your question, we don't see a significant impact. Adjusted EBITDA, what's called a [indiscernible] economy? I got the question this morning a lot already, but Volker, I can only say we have full year guidance. We are very happy that we can repatriate that guidance continuously but that's all we're going to say about the expectations. The only thing I can add there is that the start of October was good, not exceptionally strong, not exceptionally bad because a continuation, start seems to be good. But I'm not saying a lot about quarter 4. We still have Black Friday and December, who knows about the cold and flu season, et cetera. So I cannot answer that question for you, Volker. And the same goes a little bit for cash because we have our guidance on the growth of non-Rx and the adjusted EBITDA. And we don't have any guidance on cash. Generally, in quarter 4, that's always the case. We have a thing, which is named in Germany. The [indiscernible] where we generally build some inventories in order to do very good promotions in January and February, probably you will see that also this quarter again. So that's the seasonality that you might see in working capital increased requirements in quarter 4, but that's then reversing to the positive in the first quarter of next year.

Yes. Got the message. Thank you very much, and all the best.

We'll move on to our next question from Otto Sieber.

It's Otto speaking from Barclays. Just a quick clarification. Gentlemen, you said that you remain confident in the nationwide rollout of the eRX next year. But you also said that your sense is that there won't be a mandatory rollout next year. So what would actually be then different next year in that rollout. So are you saying that you're confident that there will be a roll-out, but it will definitely not be mandatory? Because kind of in my mind is voluntary is one stage. Second stage would be mandatory without penalties and then third stage would be mandatory with penalties. But if it's definitely not going to be mandatory next year, it's going to be, what would actually drive the e-script adoption then next year?

Well, Otto, I mentioned that -- and I know that you heard our conversations there as well. Our sense is that the current government does not want to go for a mandate. They don't want to force, that could change tomorrow. Nobody knows, but that is what we've been picking up. I mentioned that we are -- of course, we are seeing an increasing number of e-scripts not as the progress. It's not as fast as we would like to see. We see more doctors coming on board and issuing e-prescriptions. This trend is going to continue. And if some of the concerns that have been addressed by doctors, if they are going to be addressed. At least I think if there is a solution that is on the horizon, and we're not talking about days, but we're talking about months in order to address some of the concerns that have been raised. We remain confident that more and more doctors are going to adopt e-prescriptions and are going to start issuing e-prescriptions. Otto, the benefits of e-prescriptions and now I don't want to go back to the very beginning of the e-prescription conversation, but they are so obvious with -- in terms of drug therapy safety, in terms of efficiencies that can be gained. At some point of time, these issues are becoming much, much bigger. You know that Germany is facing a huge deficit. The public health insurers are facing huge deficits. So I think all of this is coming into play and will result in an accelerating trend of e-prescriptions that are being issued. But again, we -- at this point of time, we don't assume that there will be a mandate coupled with -- because we have a mandate today is in the law, but coupled with sanctions that is not the assumptions that we use when we look forward.

Got it. Got it. That's very helpful. One more question on kind of the competitive environment in the German market right now. Your key competitor [indiscernible] clearly advertising less aggressively right now -- have you seen any kind of changes to your customer acquisition costs so far? Or are you seeing any in October so far?

Otto, we don't comment on these kinds of questions related directly to our competition. We try to what we do already for so many years to have the best possible proposition that's leading to the best contribution per order. And that's what we continue to do. And sometimes that's a bit more, sometimes there's less competition. And that's all. I think you will understand that I don't comment on that directly.

We'll now move on to our next question of [ Oliver Calvert ].

I have mostly one question left. I was just wondering why you are not giving guidance on the group top line now that Rx has stabilized year-on-year? Kind of related subquestion is, are you expecting any impact from eRX or from how you apply the bonus topic in Q4? And is there any update on the topic of these bonuses that you could provide?

Should I do the first?

Yes.

Okay. Oliver again. No, there was -- just because at the start of the year with the paper Rx and the unpredictability of eRX that we also discussed in this call, no, there's not anything ongoing there. What's very clear is that we are seeing already Q3 last year, Q4 last year, Q1, 2, 3 this year, we see the paper, it's fully bottomed out. So we feel very confident about the current level that we're having. So there will be no reason to not include that, but we didn't know that at the start of the year that we included in our guidance that we expect a bottoming out. And the eRX, at this moment, predicting that. We have all our scenarios there. But I think you will fully understand that we don't give guidance on that -- on the quarterly or on a year basis. So that's related to the guidance. So it's not a negative, but it's a positive reason that we do it for non-Rx and we don't see any change in paper Rx at the moment, ongoing compared to the last quarter. And then something on the bonus.

Yes. You've been following us, of course, for a long time. Nothing has changed. We remain convinced that the bonus ban enacted by the German government or the German Parliament is a valuation of European law that will be decided by -- through the legal pathway, legal proceedings are ongoing. So initially, of course, this will be in front of a German court depending on the decisions by the German court, then the question is whether this will have to go to the European level or not, but this is ongoing as we speak.