Good day, everybody. I'm today here for this conference, and thank you for your participation, with all the team.

Mr. Dorin Preda is the Deputy CEO; Alina Irinoiu, CFO of the group; Ioana Bîrsu, that is IR manager; and Flavia Câmpean is one of our financial managers, financial manager, the right hand of Alina here.

First, Alina Irinoiu, the CFO, will present the figures, and after that, of course, we are here for your Q&A session. Thank you.

Alina, please take over.

Yes, of course. Good afternoon, everyone, and thank you very much for joining the presentation today.

As always, I will start this presentation with the highlights for the first six months of this year. We will look first at the overall performance, and we had a solid start of this year.

Pro forma sales reached 1.7 billion RON. It is up almost 11% year-on-year, out of which organic growth was of 9.5%.

This growth, you will see that was mainly driven by higher patient volumes, it's based on traffic, in all of our units. We witness that the demand for healthcare services remained rather strong even though there is, of course, a challenging macroeconomic environment in Romania, and we have seen that the consumer spending has decreased.

What is also important for us is that growth came together with an improvement in EBITDA margin. We saw a positive progression in the second quarter, which brought the first-half pro forma EBITDA margin to 16.4%.

For us, on one side, this is revenue growth with better absorption of our cost base, but also reflects the efficiency and the cost optimization measures that we have implemented across the group this year. All our main business lines performed well, with particularly strong momentum in corporate and clinics, while laboratories and hospitals also posted solid results.

We will go together into more detail regarding each business line in the next slides, but overall the results do confirm the synergies across these business lines and also the strength of the underlying demand. At the same time, we continued to make good progress on the projects that are very important for the group's next phase of development.

We have continued during this period to invest in infrastructure, in advanced diagnostics, in personalized medicine, but also in digitalization and technology. As we go in the second half of this year, our priorities remain very clear.

We will continue to grow organically, we will improve efficiency across the group, and deliver on the strategic projects that are already underway. On the network expansion side, we continued to consolidate our regional footprint through a combination of acquisitions and organic investments.

In January, we completed the acquisition of Medstar Group. We added four clinics to the Sfânta Maria network and further expanded our presence in the west part of the country, particularly across diagnostics, imaging, and recovery services.

In Arad, we opened the fourth MedLife medical center, expanding access to over 17 specialties, while also introducing there a longevity center. In Bucharest, we have relocated a clinic into a larger one-stop shop hyperclinic.

This brings our network to 37 hyperclinics at the national level, including eight in Bucharest. More recently, in August, we have announced the acquisition of a 75% share in Qualipat company.

This is a specialized pathology and molecular diagnostics laboratory. The transaction has a strong strategic rationale.

It will further strengthen our capabilities in advanced diagnostics and personalized medicine, and is also sustaining our leading position in the Romanian anatomical pathology market. Beyond the network expansion, we have continued to invest in higher-value healthcare services and new growth areas.

For example, in MedLife Polisano in Sibiu, we invested over €2 million in advanced surgical infrastructure, expanding our robotic-assisted surgery capabilities and positioning the hospital as a regional hub for complex care. The corporate division maintained strong growth.

We developed there new products and tailored service packages. Another strategic area we continued to develop is personalized medicine, and there we took two complementary directions.

First, we are increasing the complexity of our laboratory capabilities, the Longevity 100+ program evolving from genomic sequencing towards the integration of genetic, microbiome, and clinical data, laying the foundations for more personalized diagnostics and care. In parallel, we are taking our mobile app to the next level.

We are gradually developing it. We want it to be a health ecosystem, and of course, a trusted health partner for our patients.

The idea here is to bring together the medical, the genetic, the biometrics, and also the lifestyle data in one single place, allowing us to better understand each patient and to provide more personalized insights, recommendations, and also care over time. Looking ahead, our focus remains on sustainable growth and also disciplined capital allocation.

We continue, of course, to closely monitor the macroeconomic environment and remain flexible in how we respond to the potential changing market conditions. As on on the investment side, of course, we want to continue to invest in technology.

We want to capture the synergies across the network and to further improve margins. The last one that I didn't mention is M&A.

On M&A, we remain active in the market. We will continue to look at opportunities that make sense for us strategically, both in Romania and across the region.

Our focus remains primarily on small- and medium-sized transactions. We are not currently looking at any large deals, and we expect this approach to remain broadly unchanged over the medium term.

Moving to the next section, the financial results. We are now looking at the consolidated statement of profit and loss, six months 2024 pro forma versus six months IFRS.

Gross sales, National Health Program for chemotherapy drugs included, has increased by roughly 11%, reaching 1.7 billion RON. The pro forma operating profit increased by 22.3% to 103 million RON.

Pro forma EBITDA increased by 14.5%, reaching 259 million RON, resulting in a margin of 16.4% on a pro forma basis. You will see 13.9% on IFRS against 14.4% in the first half of 2023.

I want to make a comment here, please note that on IFRS figures, in other administration and operating expenses is included an amount of €1.5 million paid during the period in connection with the final resolution of a litigation involving the company. No provision has been recognized in prior reporting periods in respect of this litigation because based on the information available at the respective reporting date and also the developments in the proceedings and the decisions that were, of course, issued by by the competent authorities, management assessed that the recognition criteria for a provision under IAS 37 that is covering this topic were not met at those reporting dates.

Nevertheless, following the final outcome of the litigation that took recently place in May 2024, this amount was recognized in full in in the current reporting period. After normalizing this expense as one-off, you will see that IFRS margin for the first half of this year is 14.4%, which is backed on a stronger second quarter.

In terms of net result, the approximately 2.8% depreciation of the the RON against the euro during the second quarter of this year impacted the financial results. The impact was of 56 million RON coming from this, leading to a pro forma net loss of 20 million RON.

On the financial impact side, because I mentioned it, and particularly looking at this unrealized FX loss, one of our priorities is to gradually rebalance the foreign exchange exposure on our balance sheet, and there are a few alternatives that we are contemplating to be done by the end of next next spring. Firstly, is to increasingly use local currency financing for future investments.

This would allow us to better align the currency of our debt with the future cash flows and gradually reduce our foreign exposure. At the same time, important to mention that we are seeing a natural hedge developing within the business.

As you already know, our corporate segment continues to grow strongly and ahead the the other business lines, and it's predominantly euro-denominated, and as this business grows, it should increasingly help balance our overall foreign exchange exposure. We are also looking at financial hedging solutions, including euro to RON exposure swaps and other suchlike instruments.

Also, we do not exclude a capital increase among the broader financing alternatives that we are considering for future investments and consequently, FX debt management. Overall, the objective is clear.

We want to gradually improve the currency balance of our funding structure and reduce the sensitivity to euro towards RON movement over time. Moving next, in terms of the bridge in revenue from IFRS figures to pro forma figures, we have included 3 million RON normalization adjustments from subsidiaries that were integrated in the first half of this year, namely Medstar.

That entered into consolidation in February, we have adjusted for January, and also extracted 166 million RON reclassification of the National Health Program for chemotherapy drugs. Just as a reminder, this is a business with zero direct margin contribution, but of course, very important in supporting volume growth in complementary service areas.

We also always approached this as an adjustment in in pro forma figures, and in the same period last year, the corresponding such adjustment was of 120 million RON. Moving to EBITDA, also the bridge, 1.8 million corresponding to normalization adjustments from acquisitions and 16 coming from non-recurrent or non-operational expenses.

Here, Pareto amount is this one-off litigation expense, and also expenses for units that weren't open, or expenses incurred by by units until their opening, and also expenses related to M&A transactions. Looking on the next slide, to the quarter-on-quarter evolution, the positive profitability trend accelerated in the second quarter with the EBITDA margin improving compared to the same period last year.

You will see that we marked them so on IFRS and without the one-offs. There is an increase from 14.2% in the second quarter last year to 14.7% in the second quarter of 2024.

On the revenue side, we continued to see a steady progression quarter-on-quarter. As mentioned before, it is mostly backed by traffic and increased patient volume.

Turning to the performance of each of our business lines, I will start with clinics. It remains the largest revenue contributor with 39% of total sales.

Here, revenues increased by 15% year-on-year. Performance was primarily volume-driven, with visits up by 12% overall.

The increase in volumes was broad-based across all our outpatient sub-segments, including MedLife units, second-brand units, Sfânta Maria, but also the oncology clinics. Hospitals also delivered a solid growth, with revenues up 8% year-on-year.

Patient volumes here increased by around 5%, while the average fee was up 3.5%, partially reflecting the shifts towards a more complex medical services and procedures performed. We mentioned that hospitals remain an important strategic growth pillar for the group.

We continue to see further potential here in this area. I remind you that we didn't enter also the contract with the National Health Insurance House with the two new hospitals.

At the same time, you will see the the growth rate that naturally started to normalize here compared with previous periods, and this is something that we we expected as the the hospitals are now moving beyond their initial ramp-up phase. Laboratories also performed well.

I'm moving to laboratories, with revenue up 22% year-on-year. Here, it's mainly driven by higher testing volume.

You will see that the average fee remained broadly stable, reflecting a selective price adjustments and a slightly lower average ticket per patient. Looking ahead, we see significant potential in this segment, particularly as we continue to develop our capabilities in genomics and microbiome.

Over time, we expect these areas to become increasingly important. We see healthcare moving gradually towards more personalized medicine, while also strengthening the role of advanced diagnostics across our network.

Moving to corporate, continued to be one of the strongest-performing segments, I mentioned before. We see here an increase of 17%.

This is linked to the new products and service packages that we have introduced during the period. Demand here remains very strong.

We have brought in our portfolio new clients. We have also strengthened the the position with our existing clients, we we are seeing increased market share.

Dentistry remains the area where we continue to see some pressure, with revenues down 4% year-on-year. This is a segment that it's more sensitive to purchasing power and discretionary spending, the softer consumer environment continues to have an impact here.

Nevertheless, we have already taken steps to adjust our approach, with a stronger focus on medium- to high-end services, and we are implementing further measures to improve performance going forward. I will touch a bit the the last two.

Pharmacies are performing very well. Revenues increased by 34% year-on-year.

This is mostly linked to higher client volumes, but also improved product mix. Others, that represents 6% of total sales, have declined by 13%.

This is reflecting lower wholesale distribution activity. Looking at the cost structure, on the next slide.

Operating expenses as a percentage of sales improved slightly year-on-year. There are two main trends that I want to present behind this evolution.

On one hand, consumable and repair materials increased from 19.4% to 20.4%. This is basically reflecting the growing contribution of hospitals, oncology centers, and laboratory services, in line with the trend that we have seen quarterly since the second quarter of last year.

This was offset by a lower contribution coming from commodities, that is linked to the distribution activity. On the other hand, salary and related expenses has decreased as a percentage of sales.

As the business continued to grow, we were able to increasingly scale on the existing cost base, resulting in better operating leverage. This trend, if we are looking on a quarter-by-quarter basis, is much more visible in the second quarter of this year.

Turning to the financial position, on the next slide. Non-current assets remain broadly stable, increased by 1.2%.

Here, the main movement is coming from goodwill following the the acquisition completed this year. Current assets, excluding cash and cash equivalents, increased by 16%.

This is partially in line with the growth in activity, and partially, as I also explain in the first quarter, related to the timing of advance payments and receivables. On the other side of the balance sheet, the current liabilities, excluding interest-bearing liabilities, increased by 7.2%, broadly reflecting the higher level of activity.

Moving to debt and leverage, financial debt increased by 5% during the period, resulting in a 6.3% increase in overall net debt. Our net debt to pro forma EBITDA ratio remained broadly flat compared with March at 3.85 as of the end of June.

This was mainly influenced due to the 2.8% depreciation of the RON against euro. Also, I made a comparison excluding this FX impact, and the ratio would have declined to approximately 3.74, basically reflecting the the underlying operational deleveraging trend.

Looking ahead, we remain focused on gradually reducing leverage, and we target the level of around 3.5 by the end of 2026. The last part, and I'll just comment a few on it, moving to the consolidated cash flow, we continued to see strong underlying cash generation during the first half of the year.

Operating cash flow before working capital increased by 10%, reaching 249 million RON. Net cash generated from operating activities was 141 million RON, representing a 40% increase compared to the first half of 2023.

On the investment side, during the first six months of 2024, 128 million RON were allocated to investing activities, which is 6% higher than prior year. This includes the acquisition of subsidiaries.

37 million RON was used in acquisition of subsidiaries, while 80 million RON in property, plant, and equipment. This concludes the presentation that we have for today.

We can now move together to the Q&A session. We will take the first questions by phone, and afterwards, we can move to the questions submitted by you through the platform.

Thank you very much.

Hi, Alina. Um a couple of questions, please.

Um the first is I'm looking at your full-year budgeted revenues, and that would imply growth of uh 12.5% in the second half of the year. Uh given the market dynamics, uh is this still achievable, that pace of growth?

Uh the second question is with regards to um new uh units, uh losses associated with new units. Are you still generating any EBITDA losses in the new hospitals?

Um and if so, when do you expect them to start breaking even on the EBITDA line? Thank you.

Uh

yes, Bram. Hi.

Uh thank you for your questions. I will uh start with the first one, which is related to uh to the budget.

Um as you can see, we have succeeded during this period to increase, and to do that by organic development, uh despite the Romanian uh macroeconomic environment, uh and we will do that in the coming uh months as well. Uh we have also improved the margins, and we don't see a reason not to capture this improvement in the following quarters as well.

Uh we are on track of the budget, uh and we we keep our estimations by year-end as well. Um indeed, uh you uh might think at at the net results as well.

Uh I mentioned it also last time, in the budget, we have captured a depreciation of 2% by the end of this year, a gradual depreciation of 2%. What we can see now is a 2.8%, this will have a slight impact on the net profit.

Uh but the 2% was captured in the budget. Um in terms of EBITDA, it's true, there are still um um some gaps, let's say, uh in EBITDA margins that we are witnessing in the new units.

This is especially due to the contract with the National Health Insurance House. We don't have visibility of when we will enter into the contract.

Nevertheless, the question is when, not if. Up to now, those hospitals uh were cash-based, and um this, let's say, is reflected in a gap between how we budgeted versus how uh those are performing.

All the other units are covering for for this gap.

Okay. Those units are awaiting um contracts with the health house.

Um I assume that reading between the lines, they are still EBITDA negative, but better performance from mature units are offsetting that negative contribution from

the

new units. Yeah.

Okay.

Yes. Actually, one hospital is EBITDA positive; the other is slight EBITDA negative, but they are both of them have a greater potential, let's say, once they benefit from the other resources that all the hospitals here in Romania do benefit from.

Mhm.

Are both hospitals awaiting contracts with the health house or just the one?

Yes, both of them.

Both of them. Thank you.

Contracts and and national programs.

Yes. Just to intervene, Bram, thank you for the question.

I would say that, excuse me, I'll say that it's not something specially as for these four or two hospitals, but just average what happened with the hospitals, with private hospitals in Romania. We had We were not fortunate in sense that of uh many changes, in the uh political uh uh many political changes the past two years in Romania, and uh unfortunately, they were opened just into this period, but it's not something, again, if, it's just when, but it can be a long period, I can tell you that, and we don't see any any, let's say, lights at the end of the tunnel in this moment, but, on the other hand, it happened so all of a sudden.

All of all the other in the past was happened when you're not expecting. We're simply waiting.

We adjusted a bit the expenses of these hospitals and we'll do continuously if we see that it's not coming. We'll wait because these investments will pay in one day, but I don't know if it's going to be tomorrow and maybe in uh six months' time.

Sure. No, it's just a uh box-ticking exercise to keep track of um keep track of how they're performing.

Um and one other question, if I may add, um are you at this stage still not planning any price hikes um say, for the second half of the year? Uh

yes. Uh up to now, we we didn't uh discuss or decided on any price hikes.

We did some at the initial of this year, but we consider that as of now, no price adjustments should be applied.

Understood. Thank you very much.

Thank you, Bram.

I'll go first. I'll still uh have a uh an add to the last question and comment of Mr.

Bram. Uh it's related with the price and with the prices that we're offering to the market.

Uh as Alina said, we have not increased any prices from the beginning of the year, just very, very small increases in a bit on the other, but not relevant to the uh average business of MedLife. I'm telling you, the performance is not, uh, the demand is there.

On the other hand, we succeed to keep a a robust growth operational due to a demand, and especially you can notice easily that the the ticket is slightly decreasing in most of the business lines. In the same time, we succeed to have more clients uh offering actually uh more services uh these days.

Uh the market is suffering, we are not, we are lucky and we are we we succeed not to be linked with the consumption in Romania because that goes down. Most of the markets, and including as I know some of the medical uh uh markets, is not necessarily growing as it was in the years before.

That's why we will not, of course, we we didn't try, but we don't want to try to increase the prices. We succeed in a way to uh surpass that by increasing the number of clients.

I don't seem, I don't think we need. Uh and then I'll just switch to the first question which I see here.

Uh it's that following the improvement of underlying profitability on the Q2, if we consider that, we if we still consider actually if uh in all the year '24 EBITDA budget of uh uh 512 RON million RON is achievable, uh as long as, of course, reaching the budget will require an amount of 270 million uh RON RON EBITDA in the second half, implying a margin of roughly 5 15.1%, uh comparing with uh with uh what happened, said 14.7%. My answer is yes.

It's it's challenging, is right, but we are still there. As you can see, we succeeded a bit to increase the margin as well, not only the cells and the organic growth, but the margins also improved a bit, and as our visibility today is that we can we are uh it's not easy, but we can achieve this uh 15.1%.

Yes. That's the first question.

Alina, please go for the second one.

Mhm. Um, "What's your outlook for the Romanian private healthcare market over the next one to two years, and what do you see as the main growth drivers or risks for MedLife specifically?"

Uh I will add some, and maybe, Mihai, you will uh come with additional ones. I would say that Romanian private healthcare market is seen to further increase over the the next years.

Um we were looking also at some reports and analysis, and uh they are projecting at 8% uh um increase in organic development of the the private healthcare market. The increase is still there, the need for medical services is there.

Uh then, the main uh growth uh drivers or risks for MedLife, I will say that we uh a growth driver is corporate. Uh these products are very well received by the market, and we will continue to uh promote and adjust our uh products in order to attract more patients.

Uh another growth driver is hospitals. Uh apart from the two that we mentioned, you have seen that we we are improving the infrastructure in our hospitals, and we believe that they are at the core of our uh of of our business with complexity, with finalizing the medical acts.

Uh another growth driver is laboratories, genomic together with microbiome, together with uh putting here imagistics, putting uh biometrics, uh putting lifestyle will also help uh uh the patients to um approach uh their health from a personalized, let's say, approach. Uh so we see all these coming as uh growth drivers for our business.

Did I missed? No,

I will I will uh use that, because that's a longer view, that uh creator of this last question. I will do also the final statement in the same time with uh with the answer.

I will uh say first, uh as you see that uh consumption remains robust in MedLife and the demand for our services. This is not a result of uh a fine-tuning made during these months on bringing the market.

We have few products which will pay in the coming years as well, and we have we have some others coming. Just to give an example, 2 weeks ago, we have launched We have We are the only institution in Romania ever, private or public, and one of the few in the region, in the southeast, able to do microbiome with their own forces, not any kind of support from outside, we are doing ourselves.

We have done first time in Romania and in the region the genome. Uh and we'll launch some others, and these are very well-received by the market.

It's not necessary at themselves to pay back, but the image of MedLife is strong, and the demand for our services remains strong because we are proving that we are able to deliver technically and uh scientifically results that nobody else can is able to do uh at least in Romania. These are things that have been cooked years ago, and I can tell you that we have launched just few days ago the new app.

I suggest you to try. The name is MedLife and IMed, you can switch from one to another.

Just keep in mind that you'll be able to compare in the real time your biometrics, your lab results, your imaging in MedLife, and your genome, which was custody by MedLife. Of course, this is only for the people that they made the genome with us, but starting with uh next half with with the second half of of September, is going to be for all persons, you may use it as well.

We are preparing some other unique services to the market as well, and we just see some acquisitions when we see that maybe uh they are small, as you can notice, but just to give you a flavor of Qualipat. Qualipat today today together with the acquisition we have made uh about 4 years ago, uh the name is OncoTeam, and 2 years ago, Personal Genetics, MedLife is becoming the higher and the most sophisticate and with by far the biggest volume in genetics and in molecular biology, sorry.

In Romanian is biologie moleculară, and I always miss. Also in uh in pathology, Romania uh MedLife is today the most specialized laboratory for the new technologies and the new new blood tests and the new medical tests in Romania to come, and for the next uh for the next generation of of medical results, and that uh put us in a very, very good position for the next 2 years, and uh I hope if the market will stabilize and we succeed also for the hospitals to deliver services at their potential, I think uh we are in a quite a good situation today.

Uh also, we are aware of the fact uh the debt of MedLife is not a small one, not necessarily very big like it was 2 years ago, but is still important, and also that is denominated in FX. With this, as Alina mentioned, we have some plans.

Uh at least for the years to come, we will not increase our debt in foreign currency. If we'll increase any debt, it will be in local currency.

The second one, very interesting, I think you noticed already, we started increasing the sales and we emphasized a lot on corporate uh sales, where we increase with 17% comparing with 10 the rest of the business, and usually these contracts are denominated as well in foreign currency, and that means we are matching a natural this hedging. It's a still a very small part, but we are continuing to do that.

Not the least, we are contemplating also to swap some of our debt. We are in discussion with financial institutions.

Why not, of course, is not a promise because I have not discussed with this with the board and it's not I'm not deciders as well as a CEO, but why not maybe in uh months or 1 year maybe to to increase the capital if we are to develop the company and to add uh uh some capital from the stock exchange. These are things we are discussing here.

None of the route is decided, not even uh in partially, but just for your flavor, we know that, we are aware of that, and on top of the operational activity which we believe is doing uh decently and may uh have performance in the coming years and in the second half of the year, we we will have to adjust these things. Thank you very much for today.

We wish you a very nice weekend, and thank you very much for participating to our press conference today. Bye.