COMPANY PRESENTATION.
STEFAN FELTENS, CEO EIGENKAPITALFORUM FRANKFURTNOVEMBER 27, 2019
INTRODUCTIONUPDATE ON FINANCIAL
PERFORMANCE BACKUP
TODAY’S AGENDA.
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SHOP APOTHEKE EUROPE IN A NUTSHELL.
COMBINING OTC, BPC & RX
OFFERINGS.
LEADERSHIP POSITION IN EUROPE.
8 COUNTRIES.
4.5 MILLION ACTIVE CUSTOMERS.
> 1,200 EMPLOYEES.
≥ 700 M € REVENUE FORECAST 2019.
SERVING THE WHOLE FAMILY.
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OUR SERVICES TODAY.
OFFERING A WORLD OF HEALTH TO THE WHOLE FAMILY.
UNIQUEPORTFOLIO.
8 COUNTRY-SPECIFIC
PORTFOLIOS.
PHARMA-CEUTICAL COUNSELLING.
PHARMACEUTICAL SAFETY.
INTER-ACTIONCHECKS.
PATIENT CARE PROGRAMMES.
SMART FOR 5 INDICATIONS.
LOYALTY PROGRAMME.
REDPOINTS IN
5 COUNTRIES.
SAME-DAY DELIVERY.
LEADINGPHARMACY APP.
APPLE STORE
NO. 2 DOWNLOADED
IN MEDICAL CATEGORY.
5 LANGUAGES.
2019 SUCCESFUL
LAUNCH.
5
ONE COUNTRY.
2014
2019
EIGHT COUNTRIES.*
* Spain Exit in Dec. 2019.
OUR EUROPEAN FOOTPRINT TODAY.
BENEFITTING FROM THE WIDEST PRESENCE IN THE INDUSTRY.
RIGOROUSLY REVIEWING CAPITAL ALLOCATIONS AND PROSPECTS OF EACH MARKET.
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OUR TRACK-RECORD.
GROWING ORGANICALLY AND WITH SELECTIVE STRATEGIC ACQUISITIONS.
Venlo
0
100
200
300
400
500
600
700
800
2010 2012 2014 2016 2017 2018 2019
NET SALES*IN EUR m
Acquisition of Webshop System Provider
Acquisition of nu3 (DE)
Start of European roll-out
Launch of Austrian webshop
Launch of French webshop
IPO Frankfurt Stock Exchange
Acquisition of FARMALINE
2010 2013 2014 2015 2016 2018
Spin-off from a local pharmacy
Strong investment in online leadership in Germany
2019*
Acquisition of EAV (DE)
*Forecast
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Huge Addressable European Market €180bn(1) … … with Online Market Penetration still close to zero.
OUR ADVANTAGE.
LOW ONLINE MARKET PENETRATION AND CONVENIENCE WILL DRIVEEUROPEAN ONLINE PHARMACY GROWTH.
Rx; €130bn
OTC; €35bn
Functional Food; €15bn
€180bn
~2%
~25%
~40%
Continental EuropeanMedications
US Medications Other European marketsMusic, films & booksSource: Sempora, Euromonitor, Iqvia, equity research. Note: (1) Sempora 2017. OTC is defined as non-prescription medication. BPC consist of
Beauty and Personal Care Products. Rx is defined as prescription medication. Functional food is defined as food delivering additional and / or enhanced benefits over basic nutritional value. Excluding UK and certain small EU countries; countries included are: Germany, France, Italy, Spain, Poland, Romania, Netherlands, Belgium, Portugal, Czech Republic, Hungary, Sweden, Bulgaria, Denmark, Slovakia, Norway, Austria. (2) IMS PharmaScope, 2017, Sempora market study, 2017, Euromonitor (as of 3 April 2017), online penetration calculated by dividing the internet retailing market size across Europe by the total market size for each vertical, DE and US 2015, other European markets including France, Germany, Italy, Spain, United Kingdom, Switzerland, 2016.
Online Market Share(2)
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INDIVIDUAL HEALTHCARE IS LARGELY INDEPENDENT OF ECONOMIC CYCLES.
DESPITE A CERTAIN SEASONALITY, INDIVIDUALS USE TO HAVE AN INDISPENSABLE NEED FOR DRUGS AND FEEL-GOOD-PRODUCTS.
HEALTH IS NOT SUBJECT TO FASHION BUT IT IS A FUNCTION OF AGE.
HIGH CUSTOMER LOYALTY + COMPETITIVE CUSTOMER LIFE TIME > 40 YEARS.
CROSS-SELLING POTENTIAL AT RELATIVELY LOW AVERAGE PRODUCT PRICES (LOW INHIBITION THRESHOLD).
HIGH BASKET VALUE. SMALLEST PRODUCT SIZES, LOW COST PACKAGE HANDLING (WEIGHT, SIZE).
MARGINAL RETURN RATE < 1 %.
OUR ADVANTAGE.
NO OTHER BUSINESS IS AS SUITABLE FOR E-COMMERCE AS THE PHARMACY SECTOR.
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OUR COMPETIVE ADVANTAGE.
RUNNING RELEVANT DIGITAL TECHNOLOGY INHOUSE.
IT & ONLINE EXPERTS:INHOUSE
2014
IT & ONLINE EXPERTS:INHOUSE
2019
~50EXPERTS
• Our technology platform enables us to quickly respond to thelatest developments in e-commerce.
• The platform’s underlying service architecture means we canrapidly deploy new features to further improve the customerexperience.
• It ensures the fast and secure connectivity of partner systemsand external solutions to our systems.
− Easier and therefore faster maintenancethrough smaller code base.
− Simplified development through modular technology.
− Better and faster results by working in smallerautonomous teams that develop, deploy andimprove their respective services independently.
~280EXPERTS
ADVANTAGE
Improving customer experience based on ourstate-of-the-art technology platform is a key competitiveadvantage of our business model.
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MUCH LOWER HANDLING COST, PAPERLESS WORKFLOW.
• No mailing cost, no handling of envelopes, no scanning.• No manual corrections, easier cash collection procedures with health insurance companies.
HIGHER BASKET VALUE, HIGHER RETENTION RATE, INCREMENTAL MARGIN – ALL LEAD TO HIGHER CUSTOMER LIFETIME VALUE.
FASTER DELIVERY AS E-SCRIPTS ORDERS ARE TRANSMITTED ELECTRONICALLY.
INCREASED CUSTOMER LOYALTY.
LOWER CUSTOMER ACQUISITION COSTS: Increased convenience from a customer perspective will lead to higer conversions.
OUR PERSPECTIVE.
E-SCRIPTS TO BOOST SALES GROWTH AND PROFITABILITY.
In June 2019, the GSAV (law for secure supply ofmedicines) passed both Germany’s lower house ofparliament (Bundestag) and the upper house (Bundesrat).
Several pilot studies are already running, technical implementation will follow. E-scripts planned for 2020.
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OUR STRATEGY.
BEST PREPARED FOR E-SCRIPTS.
INCREASE AWARENESS WITH ONE BRAND STRATEGY.
• Acquisition of Europa Apotheek as RX specialist.• Integration of “SMART patient care programme“ into the SHOP APOTHEKE brand. • Integration of Europa Apotheek into shop-apotheke.com – one brand.
CREATE CUSTOMER BENEFITS.
• Same Day Delivery Service for future acute medicine offering.• Partnerships with clear RX customer benefits and scale.
ACCESS TO E-PRESCRIPTIONS.• Inhouse API development for digital workflow.• Active colloboration with relevant organizations.
BUSINESS
TECHNOLOGY
REACH
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• Groundbreaking for ~ 40,000 sqm took place on June 14, 2019.
• Distance from current site just 1km.
• 42 docks to speed up delivery.
• Further automation of pharmacy operations to significantly reduce cost per parcel.
• Established Microsoft Dynamcis ERP plus JDA Warehouse Management System for a smooth transition phase.
OUR NEW LOGISTICS HEADQUARTERS.
MEETING FUTURE CAPACITY NEEDS. REDUCING COSTS PER PARCEL.
Future operations can process up to 35 million parcels per year facilitating future e-script sales growth to take us to the next level of EUR 2 billion annual sales.
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SHOP APOTHEKE EUROPE TODAY.
CREATING THE LEADING EUROPEAN ONLINE PHARMACY.
Source: Euromonitor, Sempora Research. Note: 1) Continental Europe excludes the UK and certain small EU countries; countries included are: Germany, France, Italy, Spain, Poland, Romania, Netherlands, Belgium, Portugal, Czech Republic, Hungary, Sweden, Bulgaria,
Denmark, Slovakia, Norway, Austria. Apparel and electronics TAM for 2014. 2) Sempora 2017. Sum of OTC, BPC, Rx, Functional Food. OTC is defined as non-prescription medication. BPC consist of Beauty and Personal Care Products. Rx is defined as prescription medication.
Functional food is defined as food delivering additional and / or enhanced benefits over basic nutritional value.
APPAREL
€ 182 billion
ELECTRONICS
€ 105 billion
PHARMA
€ 180 billion(2)
NO SIGNIFICANT OFFLINE BRAND IN CONTINENTAL EUROPE
LEADING ONLINE BRAND
LEADING OFFLINE BRAND
CONTINENTAL EUROPEAN TAM(1)
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Today
PURE RETAILER
ONLINE PHARMACY.
Future
HEALTH-FOCUSSED
PLATTFORM PLAYER.
OUR VISION: BUILDING THE FUTURE OF HEALTHCARE.
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ENHANCED VALUE PROPOSITION.
BETTER AVAILABILITY.
FASTER DELIVERY.*
BROADER PORTFOLIO.
NEXT STEP.
MARKETPLACE TO BE LAUNCHED IN 2020.
* INCLUDING SAME-DAY
We will expand our business from a pure online pharmacy retailer to a health-focused platform player.
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MULTIDIMENSIONAL
GROWTH OPPORTUNITY
Additional market penetration in
existing and new markets
Increase and enhance product offering
Roll-out of marketplace solution
Expansion of Patient Care Programmes
UNIQUE PLATFORM &
TRUSTED BRAND
> 4.5m active customers, up to 60k daily
shipments and >90m site visits p.a.
Shop Apotheke ranked #1 online
pharmacy by Webshop Awards
Huge SKU portfolio and superior service offering
Best online brand awareness
E-SCRIPT CATALYST
Introduction of digital prescriptions
in Germany expected in 2020
Precedent countries show surge to
c.10% online penetration after e-script introduction
HIGHLY SKILLED
MANAGEMENT
Dynamic and entrepreneurial
Long-standing and visionary management
team – 2 of 4 board members are founders
Proven track record of delivering
organic sales growth > 25%
AMAZING METRICS
Fastest growing online
pharmacy in continental Europe
Outstanding CLV – customer lifetime
potential of > 40yrs
High repeat orders and no returns
Attractive basket size – €72
MASSIVE MARKET
OPPORTUNITY
€180bn addressable market
Low online penetration – c.2%
High barriers to entry
Strong market position of Shop Apotheke
1
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INVESTMENT CASE.
INVESTING IN HEALTHY GROWTH.
INTRODUCTIONUPDATE ON FINANCIAL
PERFORMANCE BACKUP
TODAY’S AGENDA.
18
HIGHLIGHTS.
9-MONTHS 2019.
Strong growth momentum continues:Consolidated revenues up +31% to EUR 509.2 million (28% organic growth).
Gross profit outpaced sales growth: +1.1% to 19.6%.
Strong cash position: EUR 148.9 million as of Sep 30, 2019.
Brand integration successfully completed:The Europa Apotheek customers migrated to shop-apotheke.com.
New distribution centre:Increase of shipping capacity to 35 million parcels per year.
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Group revenues | YTD (in EUR million)
Group revenues | Q3 (in EUR million)
# Active customers(in million)
KEY FINANCIALS.
IMPRESSIVE ORGANIC TOPLINE GROWTH.
388.4
509.2
30SEP2018 30SEP2019 30SEP2018 30SEP2019 30SEP2018 30SEP2019
131.3
170.93.2
4.5
+30% +41%+31%
+28%
Total
Organic
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KPIs.
OUR CUSTOMERS ARE HIGHLY ENGAGED.
OF ALL ORDERS ARE FROM EXISTING CUSTOMERS.
~80%
ON AVERAGE PER ORDER WITH EUR 66.48 SHOPPING BASKET (9M/2018: EUR 73.60).
~5PRODUCTS
VIRTUALLY NO RETURNS.
<1%
NPS-SCORE.~70
Germany
SUCCESSFUL LOYALTY PROGRAM WITH HIGHLY ENGAGED CUSTOMERS AND HIGHER BASKETS.
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Web traffic(in million)
Source: SHOP APOTHEKE EUROPE.
KPIs.
CONTINUOUSLY GROWING WEB TRAFFIC YEAR-BY-YEAR.
Share of mobile visits(in %)
2017
22
Number of orders(in ‘000)
KPIs.
CONTINUOUSLY GETTING REPEAT ORDERS.
Share of repeat orders(in %)
Average basket size(in €)
2017Source: SHOP APOTHEKE EUROPE.
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KEY FINANCIALS.
CONTINUOUS ORGANIC GROWTH.
(in EUR million) YTD Q3
2018 2019 Delta* 2018 2019 Delta*
Revenues 388.5 509.2 31% 131.3 170.9 30%
Gross profit 71.8 99.7 39% 25.4 32.3 27%
Selling & distribution costs – 68.6 – 96.7 (41%) – 22.8 – 29.7 (30%)
Segment EBITDA 3.2 3.0 (6%) 2.6 2.7 6%
Administrative costs – 13.4 – 17.3 (30%) – 5.3 – 6.0 (13%)
EBITDA – 10.2 – 14.4 (41%) – 2.7 – 3.3 (20%)
EBITDA adjusted – 7.2 – 11.7 (62%) – 0.2 – 2.1 (99%)
% of Revenues – 1.9 – 2.3 – 0.2 – 1.2
* Favorable variances without parentheses; unfavorable variances with parentheses.
Q3YTD
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KEY FINANCIALS.
SEGMENT EBITDA.
30SEP2018 30SEP2019 30SEP2018 30SEP2019
DACH
INTERNATIONAL
(in EUR million)
(in EUR million)
YTD Q3
7.8 8.0
4.8 4.2
– 3.1– 4.7
– 0.7 – 1.3
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Q1/2019
KEY FINANCIALS.
Q2 & Q3 WITH MAJOR IMPROVEMENTS ON OUR WAY TO EBITDA BREAK-EVEN.
Q2/2019 Q3/2019
Adjusted EBITDA(in EUR million)
–2,1
0,2
–9,8
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Additional EUR 110 millionto fund growth.
• E-script opportunity,
• Online penetration increase,
• New business models.
31DEC2018* 30SEP2019*
KEY FINANCIALS.
STRONG CASH POSITION TO LEVERAGE THE E-SCRIPTS OPPORTUNITY.
58.8
148.9
(in EUR million)
* Including cash, short-term securities and credit facility.
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LOOKING FORWARD.
FY 2019 AND BEYOND.
EBITDA break-even in 2020 and long-term target profitability of at least 6% EBIT confirmed.
Sales in 2019 estimated at around EUR 700 million (+ 30%), paving the way for future growth.
Narrowing of earnings forecast: adjusted EBITDA margin in 2019 expected between – 2.0% and – 2.3% (2018: – 2.2%).
INTRODUCTIONUPDATE ON FINANCIAL
PERFORMANCE BACKUP
TODAY’S AGENDA.
29
CONSOLIDATED SEGMENT FINANCIALS.
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CONSOLIDATED SEGMENT FINANCIALS.
31
UNAUDITED CONSOLIDATED STATEMENTOF PROFIT AND LOSS.
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CONSOLIDATED BALANCE SHEET.
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CONSOLIDATED CASH FLOW STATEMENT.