DocMorris AG

Thank you very much and good morning to everybody to today's conference call. The full year results '24 will be presented by Daniel Wüest, our new CFO and myself.

We will share insights and updates across all segments and provide a comprehensive overview of our business performance. So we will start with a business update, followed by a financial update and conclude with our outlook.

Thereafter, we are looking forward to answering your questions. Let us start with the highlights of last year.

In 2024, we achieved significant milestones again. Since the introduction of CardLink in April '24, there has been a fivefold increase in new Rx customers.

These new customers show significantly improved KPIs compared to our former TRx customers. We are very pleased to announce that in 2024, we reached profitability with our non-Rx business.

It reflects our strategic efforts and the successful execution of the breakeven program over the last few years. Overall, there was a 7% increase in revenue with contributions from all business segments.

And further, Teleclinic achieved a noteworthy milestone by doubling its revenues, demonstrating strong performance and attractive profitability metrics. And in conclusion and due to a really effective cash management, we reported a cash balance end of 2024 of CHF95 million.

On Slide number 5, we look forward to '25 with our strategic initiatives that are centered on, first of all, further expanding Rx growth with the customers who demonstrated already that they show significantly improved KPIs and favorable unit economics. With the new marketing campaign, Mach's dir Doc einfach, our objectives are besides further enhancing awareness, to increase consideration and drive conversion into eRx orders.

The non-Rx business is expected to further grow profitably, thereby contributing to the future expansion of our eRx business. And also Teleclinic is continuing to achieve significant growth while also expanding its profitability margins.

And finally, as you have read this morning, we will raise capital of about CHF200 million to support the Rx growth and safeguarding the refinancing of the convertible bond 2026. On Slide number 6, you see that since the introduction of eRx in Germany in Q1 '24, our Rx business is continuously growing each quarter in terms of revenue.

Our CardLink innovation led to a 2.5-fold increase in eRx revenue from statutory insured people from Q1 to Q4 last year. Meanwhile, as you see on the left side on the chart, paper scripts for the statutory insured people decreased significantly, whereas those for privately insured grew slightly, even though they still need to hand in paper scripts.

And to look forward for Q1 2025, we expect a further decreasing Rx growth in absolute value and at a rate of about 50%. On Slide number 7, we are witnessing also a consistent growth of new Rx customers which is most important and which serves as an encouraging indicator of our effectiveness in our initiatives and customer acquisition efforts.

The success relies on providing and continuously improving cutting-edge apps and enhancing the customer experience. The primary focus on customer acquisition is, of course, with the DocMorris brand which has seen a threefold increase in new customers year-on-year and even a fivefold increase from Q4 '23 to Q4 '24.

And we will also be able to further leverage the existing customer base of all brands moving forward with the ongoing deployment of the CardLink solution in the MedX app right now and its implementation in an Apperal app in Q2 this year. On Slide number 8, we would like to share with you some insights in relevant eRx KPIs.

The cohorts of new eRx customers who, by the way, have an average age of 57 years, demonstrate a marked improvement in customer loyalty and frequency when utilizing the e-script with CardLink. As you can see on this slide, the CardLink cohorts reorder at a rate that is 2.5x higher than the ones of previous PRx customers.

This confirms the high quality and attractiveness of the eRx customers and confirms that they appreciate a great experience and convenience with CardLink in our app. Another relevant KPI is the average order value which reached €110 due to, on one hand, a higher AOV of new Rx customers than before.

And on the other hand, with a growing proportion of mixed baskets of Rx and OTC products. Over 85% of these customers currently utilize our app and card link to redeem their e-prescriptions with a very high rate of even more than 95% of the regular orders being delivered to their homes the next day.

Now on Slide number 9. We are really proud that in 2024, our non-Rx business has reached profitability.

This achievement is crucial as we continue to diversify our value streams and strengthen our overall financial health. The key value drivers to achieve this remarkable milestone include the increase of gross margins, the strong scaling of Teleclinic, our advanced retail media business as well as the ongoing expansion of our marketplace.

And of course, important to mention is also Teleclinic which will become even more important as a value driver in the future. Additional significant factors include enhanced operational and marketing performance and ongoing improvements in customer experience which contribute to higher conversion rates.

Together with substantial reductions in overhead and indirect costs, along with the closure of several locations and integration of brands in the last 2 years, we finally got back to a successful, profitable non-Rx business. On Slide number 10 now, we would like to introduce to you our new marketing campaign 2025.

The starting eRx campaign launched last year with the Gesundbergs was highly successful in enhancing brand awareness and attracting attention to the new eRx CardLink solution. Now the successor campaign 25 which combines the slogan Mach's dir Doc einfach in English make it easy for you by playing with the word Doc from Doc Morris.

With the song with the same title aims to, first of all, maintain the high top-of-mind awareness of the brand and the CardLink solution from the Gesundbergs campaign. But then secondly, increase consideration by strengthening the middle funnel and intensifying the focus on specific customer groups that have been identified over the past 12 months using eRx with the result to boost eRx and sales in the future.

I would like to invite you to use the QR code from this slide to see the spot and hear the song of our Mach's dir Doc einfach campaign. Enjoy it.

Now let's talk about the exciting development of Teleclinic on Slide number 11. The demand from patients, doctors and strategic partners demonstrate evidence that telemedicine is a crucial requirement and a real benefit to all of them.

TeleClinic offers a solution to address the significant and underutilized market of ambulatory care valued at approximately €55 billion with less than 1% online penetration. The recent introduction of the electronic sicknote, the e-script, along with the fast coming implementation of the electronic patient record in Germany will serve as a further catalyst for future TeleClinic growth.

We are talking about the telemedicine platform with a take rate model showing a strong upward trajectory in revenues and providing highly attractive margins with significant expansion potential. Already in 2024, Teleclinic has doubled its revenues to CHF11 million with a highly attractive EBITDA exceeding CHF3 million.

In '25 and beyond, Teleclinic expects strong revenue and even stronger EBITDA growth due to increased demand of patients, doctors and partners again. And the app of TeleClinic has already been downloaded 2.5 million times and has received an impressive rating of 4.8 out of 5.

On the next slide, we see that TeleClinic has the strongest value proposition by far in Germany. The demand for telemedicine has led to a significant increase of treatments in recent years and has exceeded 3 million in total with more than 1.3 million treatments in 2024 only.

The leading position and competitive advantage of the platform is further demonstrated by the annual strong increase in doctors surpassing 4,000 in total in 2024. Teleclinic's uniqueness and excellence are evident as it consistently attracts new doctors and renowned partners such as TK Techniker Krankenkasse with more than 12 million members which just started in December 2024.

And we can tell you with many more to come in the near and midterm future. On Slide number 13, I would like to give a brief update on our sustainability activities which for the first time are aligned with the European Sustainability Reporting Standard, the ESRS.

We successfully reached our sustainability targets for '24, making significant strides towards net zero emissions. Our commitment to a sustainable planet and responsible corporate practices is reflected in our initiatives, including renewable energy adoption and gender pay gap alignment.

In 2025, we will further prioritize leveraging our corporate culture which will be essential to support our agile work methodology and align with the OKRs to realize our really ambitious objectives. So let me conclude the business update with a reconfirmation of our strategy and positioning.

Our aim is to be the health companion for customers and patients. The continuous development of our digital health ecosystem is essential for our strategy of being more than a pharmacy.

User behaviors are rapidly changing at the moment due to the new opportunities presented by using Gen AI tools. Specifically in the health sector, this will create new chances for those who provide comprehensive offerings to customers and patients.

The digitalization of health care in Germany, for example, with the e-script, the e-patient records and the e-sicknote further enables seamless digital health journeys which will lead to a much better adherence, a far better customer experience and convenience. And accordingly to all of that, we want to meet all health requirements by integrating online pharmacy, telemedicine access, a marketplace for health and well-being products, services, health services from strategic partners and highly valuable health information and content through our extensive health platform.

And with that, I would like to hand over to Daniel now for the financial update.

Thank you, Walter. And also from my side, a very warm welcome to all of you, ladies and gentlemen.

And it will be always a great honor for me to, for the first time, present the full year '24 figures to you. Let's start on Slide number 16 with an overview on the group performance.

As already mentioned, we could achieve a very solid growth of 6.7% in local currency on group level and that's especially remarkable with all business units contributing to this positive growth. And also taking into consideration that in the first half, our Rx business contributed, there was kind of double-digit negative contribution that is, therefore, even more remarkable, the performance which we could show over the full year.

Besides this, we could continue our positive trend in increasing the gross margin by a further 50% and that's even more remarkable after the fact that we had increased the gross margins the year before already by 350 basis points and we are currently running different initiatives to further improve the gross margins and we will talk about this later in the presentation. The EBITDA which came in lower than last year, reflects the additional marketing expenses for the eRx business once the CardLink business has started.

We guided for an EBITDA of around minus CHF50 million and finally came out with CHF48.6 million of adjusted EBITDA. On the contrary, I think and Walter already touched on this, very remarkable development on our non-Rx business in Germany.

The non-Rx business is basically containing all business units, excluding Rx. But just for your recollection, it's OTC BPC, the services where we have different services which we offer alongside the OTC BCP business and then last but not least, TeleClinic.

And the non-Rx business achieved kind of a positive EBITDA in 2024. And I think that one can really say the breakeven turnaround program has finally closed and we will see further growth speed on the top line but also on bottom line and therefore, very promising and also very good development in '24.

To conclude, overall, a very pleasant result on group level, achieving the set targets in the revised targets which we had communicated in the first half '24. Then let's move to the next slide and to the segment to the to our 2 segments, Germany and Europe.

Germany, I think we noticed an overall growth of close to 7% with 6.9% in local currency, while Rx contributing 2.1% I mentioned this that based on minus 10.2% in the first half and the non-Rx business of an impressive 8% growth. And there, services and teleclinic both showing a growth of over 100% in '24 and are set to further demonstrate the same magnitude of growth in this year and the coming years.

Having said this, given the yet small size of the businesses, the contribution to the overall growth was significant in relative terms but if you combine it, there was less impact of that. I think also in Germany, there was a huge impact on improving the gross margin which you can see most of it or a big step has already been taken from '22 to '23 with 370 basis points.

But this year, another 60 basis points came on top. And I mentioned that we will further work on this, being on the pricing side but also buy in the supply.

And therefore, you can expect that there will be a further improvement on this topic. Adjusted EBITDA, as mentioned, that reflects the down kind of the CHF15 million which has been additional be invested into marketing spend for ERX.

The segment EU also very pleasant development. I think the big achievement is top-line growth; we have a positive top-line growth of 3.6% that compares to a top-line decline of roughly 12% in the year before there, a clear return and sustainable return to the growth pattern there that the turnaround on top line has been achieved.

And on the bottom line on EBITDA level, also on a very good way to become EBITDA breakeven or even EBITDA positive with an increase of 270 basis points in EBITDA margin. I think on the EU, especially to mention that the gross margin level which is above 29% which is really kind of a very attractive gross margin level and kind of a consolidation of this 29% and there also some further upside potential on that end.

With that, I would like to go through the overview of some of our key KPIs of the group. There, you see on top, the active customer base and that's kind of customers being defined as customers being active over the last 12 months, substantial improvement during the year from €9.1 million to €10.3 million which is kind of a 13% increase compared to the last year or within this 12-month period.

And that shows kind of the attractiveness of the solutions which DocMorris is offering to its clients. The site visits over the last 12 months and the site visits, it's not only visits on the web but also on the app, that's web and app, both together.

Also an improvement of CHF10 million over the last 12 months. And there, we see a clear shift and that's a very good shift from web-based is losing and app-based is substantially gaining and that shows because apps are much more attractive because then people are already on the right pace to redeem their prescription and it clearly shows kind of the increase of new eRx customers which are only using the app and not any longer web-based.

Therefore, a very positive development. On the, let's say, more kind of KPIs which we usually show basket size, order frequency and repeat order rate, one could think slight disappointment because they remain more or less stable or even slightly decline.

However, that's a good message because that only shows that we could accumulate a lot of new customers, mainly eRx customers which are in the midterm, extremely attractive customers, as Walter already has explained. But initially, the huge magnitude of new customers is driving down these KPIs because the first and the second quarter usually is just kind of they are testing out system and has a lower basket value and that goes through to all the main KPIs.

But in the midterm, that will turn around and will then further increase the relevant KPIs. With that, just a short look at the detailed P&L and I don't want to be there too long and too detailed just a few headlines.

On the P&L, I think on the cost level, you see personnel expenses have gone down in absolute and relative terms substantially. That's mainly through the initiated and already executed but there are many other initiatives ongoing.

Mainly the closure and restructuring of the Group Germany in the closure of Hale which led to kind of less people and the centralization of the warehouse. The effects, we had a negative €5.5 million restructuring costs but that will translate into annual savings of over €3 million.

And that's only partially reflected in these figures but will show its full effect in this year and in the coming years. Marketing expenses increased by €30 million kind of what we already mentioned, the additional expenses for the eRx marketing following the introduction of CardLink.

Usually, you use adjusted EBITDA because this one looks better than the reported EBITDA. This time, it would be the opposite but we decided not to turn around kind of how we present it for good reasons that one can really track our historical financial performance.

Why is reported EBITDA roughly CHF5 million better than adjusted EBITDA? That's mainly due to the profit out of the sale of the former Switzerland building which led to a positive contribution of CHF13 million.

And then against that, we had these restructuring costs which I already mentioned for the closure of Germany and then additional severance payments on the higher management level, when we reshaped a little bit the EB but also other key positions in '24. With that, I quickly want to touch on the balance sheet.

The balance sheet also, I think we ended up the year with a comfortable cash cushion of CHF95 million which would constantly bring us through '25 and beyond. But we will come later to that, the capital increase of the CHF200 million, that will really lead to the fact that we are basically net debt free.

We have currently a net debt of CHF228 million on a pro forma basis; adding CHF200 million, we would have CHF28 million of net debt. I think this balance sheet which is already strong.

The equity ratio is over 40%, 44% but it CHF200 million then will secure, first of all, the forthcoming maturity of the bond '26, the convertible bond, the CHF95 million but also allows us to fully execute and even add some additional firepower for the promising market outlook. As I have said, growing in all business units and especially in Rx to safeguard the balance sheet and to take every discussion off the table whether DocMorris would be able to execute on its business plan and being in a position to repay the short-term debt.

With that, focus on 2 topics which I have taken on personally and which is kind of a key focus and the one who have already heard me know about it. I think focus has already been substantial and will be on the indirect costs.

You see we have made also in '24, a huge progress with a reduction of 110 basis points in indirect cost ratio but also on an absolute level with higher sales of CHF8 million which is remarkable. And if you ask me, are you happy or satisfied with 7.7% of sales?

No, I'm not. And there, that's the reason why we have this arrow clear focus this year and the years to come in further reducing the indirect costs, especially on a relative level to kind of a sustainable level which is definitely below the currently 7.7%.

The same is true for net working capital there. The figures are on an annualized on an annual basis, the average use of net working capital also there.

We have implemented and will further implement measures to lower the net working capital also in relation to sales with kind of 4.7% achieved this year over the year. I think there's room to further reduce that given the nature of our industry where usually you have only to pay your suppliers once you have already sold the product and get the cash from your customers which is not exactly true for the Rx business but there also, we are working on solutions to kind of free up cash on the accounts receivable side.

With that, I would like to come to the current trading and also will touch on some points of the targeted and preannounced capital increase. Let me start with the current trading.

As already mentioned by Walter and by myself, we see continuous growth across all business units in the first 2 months of '25, especially teleclinic and in our service business. As I already mentioned, this 100% growth is continuously going to further happen and already the two months showed a very promising development.

Rx also kind of we mentioned that we expect a growth in Q1 of around 50% compared to the quarter of Q1 of last year. And if you translate that, that would also mean that we would grow in the first quarter '25 compared to the Q4 '24 which is, in that respect, remarkable that Q4 is usually the strongest quarter for eRx and Rx in general.

And therefore, we are very confident and also pleased that with this current development in the first 2 months of the year. I think you will now maybe have some disappointment that we cannot provide you with kind of a strict guidance or a clear guidance short and midterm at this point in time.

There, I have to remind you and we have been reminded by our lawyers that we are from now on in a capital raise mode and the capital raise won't only be done in Switzerland but there will be a global offering, most likely. And therefore, we have also to obey to US securities laws and therefore, all communication which we are doing must be one for one exactly the same like laid down and written in the potential offering prospectus which will be published later in the year most likely following the AGM.

And therefore, we really want to align kind of the preparation of this document with our, let's say, critical communication in relation to guidance and that's the reason why you will get a very firm and detailed guidance. But not as of today but you have to be for a few weeks and then you will get not a new but amended and updated guidance for the forthcoming trading of DocMorris.

With that, let me give you a few words to the capital increase. I think you have seen the target is around CHF200 million.

Why CHF200 million? I think we mentioned that there are basically two reasons for that.

First of all, to really secure our growth, foreseen growth, especially mostly in Rx but also in all other business units which have very promising growth prospects and we want to be sure that this is the last call to our shareholders and that they really by supporting now for the last time, DocMorris with equity that we can fully execute our business plan and also reach then not only EBITDA but also free cash flow breakeven and having enough ammunition left until we are getting there. On the second layer, we also want to safeguard the forthcoming maturity of the '26 convertible bond.

I think that's kind of always a little bit a big elephant in the room and I explicitly say safeguarding a potential payback of the '26 convertible bond and the amount of the capital raise has really been tailor-made that if needed, we could pay back this '26 convertible bond, the €95 million with cash. And I think that's kind of a safeguard and that the investors really now have the confidence that we can fully focus on our business and executing the business plan and not that management team the first half of the management business, how do we refinance the '26 convertible bond but that should be now and we can put a tick mark to that.

For the capital raise, we have mandated banks, very reputable banks. Some of you have maybe seen that some of the usual brokers have already been restricted and cannot report anymore.

So therefore, it's not that difficult to guess who is on the camp. We have several weeks work with the bank.

We got that they support us in kind of preparing but also support us that the capital increase will be successful. And therefore, we are really together working and have got very promising feedback and kind of even let's say, firm confirmations that the transaction will be at the appropriate time, be safeguarded.

And as you know, such kind of transactions usually will be capital increase against the right tradable rights for existing shareholders which is addressed to existing shareholders. And we think that's the right way.

Also, we have alternative options and that's also one of the reasons why we have decided to announce this transaction early given the several inbounds we had so far from the financial or strategic investors. And that's the reason why we are now fully prepared and can run a fully and coordinated process on that level.

And with that, I hand over to Walter again for the Q&A.

Let's start with the Q&A here. And yes, please go ahead.

Hi, good morning. Jumping in for Sebastian here.

Thanks for taking my questions. I have 3 on Rx, one on the free cash flow.

So the first one on Rx is just on the restatements of revenues. I see in the annual report, €171 million Rx revenues in 2024 versus the preliminary number of €179 million you mentioned and the 2023 base is also restated to €169 million versus the initial €179 million we had.

I might have missed it but what is the driver for this? Is it Rx through Medpex or Apotal or something like that?

And could you maybe tell us when that was in the year so we can better understand the Rx ramp that you've shown on Slide 6. Maybe I'll take them one by one, so we can address any follow-up.

I think just to start with to restate that there has been no restatement on the Rx specific. And I've read the financials several times before signing them off.

But we will come back to you on this question. We just need to better understand it.

But there has been no restatement on this respect. We had a restatement of CHF3 million but that was just kind of overall where we got due to a positive law decision, we got the CHF3 million cash back of some of our suppliers but that was not Rx specific.

Sure, sure. Okay.

And then the second question was just on the total Rx growth of 50% for the first quarter. Is that on the 35 or €35 million base from last year, just to confirm?

Yes, it is €37 million.

On the 37?

Doing that in euros and in local currency because otherwise, it's due to the move of the area.

Okay. Okay.

Yes. So the euro base.

Okay. Got it.

And then I was just wanted to ask about the impact of the introduction of the electronic patient record nationwide in Germany next month. Could you share some color there if you expect any disruptions to the customer journeys?

Yes. Thanks, Olivier, for this question.

No, on the contrary, we think in the future, this will help tremendously to have electronic patient records also digitally. And I think with our ecosystem approach, this will be a huge advantage.

I think time-wise, yes, so Germany is rolling out the EPA. It might still take time.

So I don't think we will see in the next few months a nationwide rollout. But in general, we see it as a really positive development also for us.

Okay. Cool.

And then just on the free cash flow, so it's kind of a 2-part question. First, on the net working capital, you alluded to it on the eRx business.

So it is a different profile than your non-Rx business. Could you give us a sense of what the net working capital is in the percentage of sales, perhaps or the cash conversion cycle or the metric of your choice really before any of the sort of adjustment measures you mentioned?

Just to get us a sense of where we are starting from in terms of net working capital to sales in the eRx part.

No, no. Thanks for the question, Olivier.

It's explicit enough that if you look at the presentations we have it on Page 21. I think it's more accurate to look at on an annual basis, on an average basis annually.

And you see we are at 4.7% which is even a slight increase from the 4.4% the year before. And I would assume that, let's say, if not taking Rx into consideration any measures there that should be somewhere in the area of kind of 3.5% to 4%.

And if we can kind of do the measures on eRx and that would then bring that also substantially further down. But I think a midterm ratio of 4% should be achievable with the measures we have already implemented or about to implement them.

Okay. That's helpful.

And then just on the CapEx bit. I see, I mean, in terms of gross CapEx and PP&E and intangibles, you spent about CHF30 million in the last 2 years.

Is that a good proxy for what to expect this year?

Yes. I think the CapEx will be part of the short and midterm guidance but let's assume that it could be slightly higher than the 30% but just reflecting the huge growth initiatives and which we have and the apps we are developing.

But just put 30% and that reflects the growth of the businesses which needs to use a little bit more of CapEx and then you are in the right ballpark.

I have three. The first one is, have you had already firm discussions with potential investors?

Or what makes you confident that you can get the entire €200 million? And then secondly, in relation to that question, would you be willing to sell a stake in Taylor Clinic to lower the amount you needed through the cap raise?

And then finally, on eRx, if I have done the math correctly, the 50% growth in German Rx does not really imply any sequential improvement compared to Q4, while you mentioned that there is some growth. Could you please clarify this and also explain why we shouldn't assume a higher growth in Q1?

Okay. I'll start with the capital increase.

I think that the €200 million, we are extremely confident and that's really based on the banks we have mandated and their feedback and their commitment that we are able to raise this CHF200 million in a kind of pure rights issue. And if you look at in Switzerland, that's a common way that you perform a discounted rights issue with tradable rights which has an inherent value then.

And that has been in the past and especially if it is an underwritten kind of 100% guarantee that you achieve with the proceeds. And there, we have very positive feedback, not from investors but from the banks involved.

Investors, of course, could join if they would like and to basically reduce the CHF200 million depending on the stake that they would be willing to subscribe for. That's on that.

And you mentioned Teleclinic, I think it would be a small stake and then we would be done with the CHF200 million given the prospect of the business there and I think we always told in the past, we have basically 50 options to raise capital and TeleClinic would be number 50 if all the other 49 would not be feasible because I think selling Teleclinic at this point in time would form our ecosystem thinking. And additionally, I think keeping it the value which we will generate for our shareholders will be much higher and we would basically even run into kind of the danger that our shareholders would view us if we would now do a sale of part of Teleclinic.

I think the third question, I hand over to Walter.

Yes. Okay.

Yes, the third question. I can just reinforce, as you have seen, we continuously grow quarter-by-quarter also in absolute values.

And a strong focus is on gaining new eRx customers and there, we continuously grow as well and that they also have a lower average order value than existing customers. The growth of new customers is still not fully reflected also in the growth of the revenue.

But you can be assured, we continue to grow quarter-by-quarter.

And I think my statement is still true. And I think the exact base of Q1 '24 is €37.4 million.

Q4, it was 56.4 million and I stick to my statement that we will show growth in Q1 compared to Q4, even Q4 is usually the strongest quarter within the year.

Can you hear me now? Sorry.

Okay. Thank you.

So yes, most questions have been answered already. So two follow-ups left basically.

The first one would be on the guidance. And the question is like why are you unable to provide a guidance beyond Q1 or generally for the overall group?

And then the other one would be on OTC. Revenues grew 6% in 2024.

Is it right to assume that probably we won't see much like incremental growth beyond that rate? And then also the question, what are the drivers of growth here given that we see competitors growing much faster?

That would be the second one.

On the guidance, I reiterate what I said before. We would definitely be capable and even willing to provide you with a short and midterm guidance.

However, given that we are now under capital raising restrictions and we will also reach out to the U.S. and there will be kind of a very detailed and documentation in the offering prospectus which is currently being prepared and we just want to avoid that any communication which comes now at this point in time could only in a very small level or size deviate from what our kind of thinking and our base will be beginning mid of May.

And therefore, we decided to not to give no guidance but to postpone it much closer to the [indiscernible] rise so that you really have kind of, let's just say, a very fresh and straight to the point guidance and we do not have to kind of make any changes if there would be any at all.

Yes. And to the second question regarding the OTC growth.

So we have just taken a strategic decision that we steer OTC growth at about the growth level in the market and that we add any additional euro in marketing, in gaining and retaining eRx customers as an eRx customer is multiple times more interesting with regard to CLV than an OTC customer. And yes, that's how we steer the business.

We could grow also with OTC, if you would like much more, be 10% or 20%. But strategically, we see it differently.

Okay. Understood.

Thank you. And then one follow-up, if you allow maybe on the time frame of the guidance that you do provide.

You mentioned to increase Rx revenues by around 50%, it seems low given also the undemanding comp from the prior year. Do this 50% already include the assumption that revenues would accelerate with the new marketing campaign?

Or is this 50% just until now or, let's say, of the first six to eight weeks of the year with no considerable tailwind from the new marketing campaign? Thank you.

The 50% that's the only guidance we provide as of today, that's for Q1 '25 and based on the current trading for January and February. That's because we then can clear that on the 10th of April when we do have our trading update and alongside also the AGM invitation where with all the agenda items which then gives some further clarity on the targeted capital increase.

And I think the 50%, that's really and I said, this time, we do not provide short or midterm guidance. It's really a short-term guidance for Q1 '25.

And the other things, we will communicate then later a closer to the capital increase and this 50% do not include any positive effect so far from the new marketing campaign because the campaign only started beginning of March and, therefore, so far in January, February, we do not see of course, we have not seen any positive effect coming out of this marketing campaign. I think on the opposite, January, February, we were, let's say, on the marketing side, rather not very aggressive given the new campaign ahead but that's for your information and your consideration.

Yes. Thanks for taking my question.

Maybe I can ask again, clarify a little bit about this guidance. So this guidance comes for short, midterm comes together with the prospectus of the capital increase.

Is that after the Q1 results or can you elaborate a little bit on that? And then I come on with further questions after this.

Guidance. I think basically, we can discuss the time but there are some kind of this optionality in it, as I said, given the inbound code from financial and strategic investors which we now can start really kind of start having the discussions given that now it's out that we do a capital increase.

But back to your question, I think the new guidance will be communicated between the 10th of April and the start of the capital increase and we have to fine-tune that. But you could assume that you will then get kind of a short-term guidance but also a midterm guidance for the forthcoming five years and I think that's really kind of and showing all the experience out of the one year of eRx and the current trading and the development of all our other business units.

Okay. Then maybe on the capital increase regarding -- if you get this €200 million, would that imply some change in your marketing expenditures?

Are you thinking of increasing that again this year or are you feeling happy with kind of the marketing expenditure, so you don't kind of would increase that?

I think I'll give you, first of all, the CFO answer and then which is maybe now are fully aligned between CFO. No, I think the CHF200 million will certainly allow us to kind of doing maybe some additional very targeted marketing spend where we really see that we get kind of good value back for each euro invested into marketing.

But just to clarify and to take any fears of the table, we don't now then put kind of take the CHF200 million and put that in '25, '26 into marketing. As I said, I think we will €95 million will be safeguarded for a potential conversion of the '26 CD and the remaining funds will be very deliberately and very diligently then kind of used to kind of bringing the business, the eRx business really forward and there will be some additional marketing but not in kind of big size which one could expect given the CHF200 million headline figure of the cap increase.

Maybe, Walter, do you want to..

No, fully in line.

Then maybe you got me a little bit confused about net working capital and you show that during the whole year. But I'm right that by the year-end, the net working capital was really low.

So it is kind of overstated a little bit the cash flow for the year 2024 and then that is not sustainable. Is that right?

I think 2 comments, maybe a little bit cynical. I think I would immediately fire every CFO who would not optimize net working capital by year-end and sometimes not the CFO but also the operational people.

I think you see it in every company and if the company is not doing that, that you are optimizing net working capital by year-end. It absolutely does not make any sense to put a lot of orders, scooters orders into the warehouse.

That's only good for the supply because then they have a very nice net working capital. That's kind of a good corporate governance that you try to optimize the net working capital.

I think what we have done this year, that's kind of you will see that in '25, '26, '27. And that's the reason why I show you the annual average.

That's much more an indication because if you only show year-end, then you always will see a very low net working capital number. And I think that's definitely sustainable because it's not a one-off.

It will happen from now on every year. And therefore, that's kind of a positive effect but which will occur every year.

And your question, of course, it will not be €44 million or whatever we had during the year but it was a few million lower due to the fact that we kind of had not the warehouse full over the Christmas time and New Year, then anyhow, the demand is low. And we have also taken care that our account receivables have been paid and the accounts payable, the ones which have been possible delay to pay them instead of 31st of December and 1st of January but all of my colleagues are doing so and I think that's not more specific thing.

Just if I compare end of '23 to end of '24 and trades payable increasing by a substantial amount, inventories decreasing by a substantial amount. So it seems to me that was even accelerated compared to the years before but...

But I think '23 was kind of the exception to the other side and that was really kind of a big mishap that there was too much inventory even more than during the year and that was the reason why. It now seems a little bit extreme into both directions.

But I think '23, forget about it, that was kind of really kind of a misalignment between operations and the finance department and that was kind of a onetime unlucky event and which hopefully never ever will happen again.

Okay. Then I have the last question is on TeleClinic and just a confirmation on Slide 12.

On one side, did you talk about 1.3 million clients in fiscal year '24. And then I see the chart on the left side in Q4, CHF3 million.

Is that an annualized CHF3 million? That means if it stays on Q4 level, we would have €3 million treatments in 25.

Is that correct?

You mean the left-hand chart on Page 12.

Yes, where you see the CHF3 million on Q4. So I guess that's an annualized figure of CHF3 million because otherwise, doesn't add up with the CHF1.3 million on the whole '24.

And it's more it's larger than CHF3 million and it's... Sorry...

Let's come back on that.

Two questions left from my side. First one on net working capital also pointing the finger here to inventories.

I mean you're really growing mode, ramp-up mode. And therefore, I really wonder how you can then reduce your inventories now in the second half 2024.

Was that also due to a reduction of SKUs or you have maybe some supply chain bottlenecks? Or what is really behind this reduction of inventories, please?

And then the second question is on your eRx revenues and also touching again on this 50% growth in the first quarter. So just from my perspective and tell me if I'm wrong but if I look at your repeat order rate of 76% and I put this on the last quarter of eRx revenues, then by nature, you would easily get out of these repeat orders around CHF40 million in revenue.

So the delta then is around CHF14 million, CHF15 million additional new revenues with new customers. So my question is now, is it really so difficult to gain new customers?

Or has it also to do with your now maybe cautious marketing spendings in the first quarter?

Let me start With the second one. Yes, it has a bit to do with what you just mentioned.

So that with the new campaign, we decided to start in March and not in January for some reasons. And then of course, this has an impact because we allocate the bigger part of the marketing budget, of course, to the new campaign then throughout the whole year.

But on the other hand, yes, it's really just going forward and for us, it's really important to well manage CAC, so customer acquisition costs in a good manner also and not overspending but nevertheless, continue to grow. And the combination of these 2 leads to what we just said.

But yes, let's see in April when we comment on the real figures and give the outlook where we will stand then and where we will go in the rest of the year.

And Gian-Marco, on the net working capital, I think in the second half, we definitely kind of have learned from the second half of '23, where already your colleague has rightfully mentioned that has been kind of less than optimal. I think we have already implemented some measures because in the past, we had much longer order frequency levels than with our suppliers.

We have kind of purchased good on stock for 2 months, 2, 3 months. And I think given the size of us and the magnitude as a customer for our suppliers, we have now kind of shortened this order frequency.

So therefore, it's more just kind of not yet but that would be kind of the ultimate target just-in-time suppliers the delivery, we are not there but the order frequency is in much smaller intervals. And then we have also kind of started to work directly with some of the suppliers instead of using wholesalers which also has a positive impact because I mentioned, we are not yet fully there consignment warehouses where we can really pick what we need but do not have it on the balance sheet or in the warehouse.

I think that's a win-win for both sides. And of course, we won't see a substantial decline of net working capital in absolute terms.

But in relative terms, given that we are substantially growing but the net working capital, that's a big ambition and kind of very realistic ambition will be under proportionately grow compared to the top line growth and that will automatically then lead to a better net working capital ratio compared to net sales.

I have 2 left. The first one is on marketing spend in 2024.

So if I'm not mistaken, then your latest guidance was that you wanted to double the marketing spend. So that would have meant roughly CHF100 million.

You now spent CHF79 million in '24, so CHF20 million less. Now my question is, was this because you wanted to reach your adjusted EBITDA guidance?

Or was it because you didn't see any additional opportunities for growth in the market with this additional CHF20 million? That would be my first question.

And the second one is just like to understand correctly, you mentioned that on Page 8 of your slides, you mentioned that the average AOV is CHF110 million for eRx. But when you give on your KPIs on some slides further behind, you have the KPIs and the basket is CHF98 million on Rx and CHF38 million on OTC.

And I'm wondering how you can get to CHF110 if both baskets are lower actually than CHF110 million. So these are my 2 questions.

Maybe I'll start with the marketing expenses. I think that must be wrong.

We didn't say that we want to double marketing expenses. I think the statement was maybe that we want to double or even double marketing expenses for RX.

And if you have a look at Page 19, there you see, as you rightly said, roughly CHF80 million. But that's the CHF80 million that comprises OTC, BPC and Rx.

And we mentioned that we want to increase the eRx marketing spend by CHF50 million, that's exactly kind of the gap which we had to close on the EBITDA level and that was absolutely in line and we fully executed our what we said but basically walk the talk and invest this CHF15 additional million for eRx.

And on the basket size, so the CHF110 million, that's the mix baskets with Rx and OTC because that's also a big advantage now with CardLink. So we can add and incentivize also if OTC orders are done together with the Rx redemption.

And the €98 million is purely Rx. And this figure includes, of course, also in the mix, many new customers.

The first Rx order generally is significantly lower than the following orders. And so out of this mix and given the high number of new customers the 98% has to be understood.

Two, if I may. First, is it possible that you can give us your view on the ECJ ruling on the bonus?

Just any sort of color or things that you would want to highlight? I know you sent out a comment after the announcement but yes, just about how the sort of the next steps.

Anything basically, you want to point out on that? And then second question on the state of the recurring subscription.

Yes, is there any sort of update on that time-wise? It's obviously an important topic.

Is there any sort of indication on the Berlin that you can share with us?

Thanks, Chris. Two very important and good questions.

On the ECJ, so maybe 2 comments. The first one is, so for us, it was positive that the ruling of 2016 has been mentioned with regard to the direct bonus.

And with that has been reconfirmed by the ECJ. This was positive in our view.

And then regarding now the OTC-related bonus or incentive it goes now from the ECJ back to the German card to the highest card. And yes, let's see what they make with it, how they decide.

Our own view in general on bonus and incentives and this kind of thing is that in the mid and long term, anyway, the driver will be convenience for the customer. And so bonus or incentive will become less and less an issue or be important or priority.

And that's why we very much focus on improving the app, having a real state-of-the-art app. And then just making the bridge to your second question, so the repeat script will be really an important step towards further increasing convenience and there, we have not heard something additional but it's the doctors and the insurance companies now just to define the money, so the value of a chronic treatment of chronic patients throughout the year.

Yes, we expect this might start beginning of next year would be feasible. And with that, again, having a repeat script together with card link, together with a fully seamless digital process, this will then just really so much improve convenience that, yes, all incentive discussions will become irrelevant.

Yes. Thanks a lot to all of you for joining and taking the time.

And I can just really reassure and reconfirm. So we are so much confident for the future success as never before, frankly speaking, because we really have started now growing with eRx.

We see really good progress in gaining eRx new customers with highly attractive KPIs. We have done the homework.

So we have turned the non-Rx business around. And so we grow profitable now which is really a great achievement.

You know where we come from 3 years ago. So we have done a lot there.

And we have teleclinic as a platform which is really, really highly attractive. And you will see in the future, this will give us a lot of, yes, let's call it, pleasure or joy.

Daniel already has touched on it before. And then to combine all of what we hand in an ecosystem and also seeing the changed behavior.

And I'm sure all of you already used the ChatGPT, perplexity and you name them and the different way you start to handle and treat your health. So for that, with our ecosystem strategy, we are really, really perfectly prepared.

And by combining all of that, yes, we can say we look from our side in a really, really good future. And also, again, I can assure you, so we are highly ambitious and we have done a lot also with the teams.

The teams are highly ambitious. We have a lot of agile teams and the teams are completely motivated.

They see the progress that gives more wind from the back, pushes us forward. And yes, we look really forward to.

And with that, let's finish the call. Thanks to all of you and see you soon again, hear you soon again.