Last week Docmorris ($DOCM (+0,91 %) ) presented its latest business figures last week and I would like to summarize my impressions of the analysts' conference.
It was an informative event at which CEO Walter Hess and the new CFO Daniel Wüest presented the results and answered the analysts' questions.
Right at the beginning, Walter Hess emphasized the significant milestones that DocMorris has achieved in 2024. Particular emphasis was placed on the five-fold increase in new e-prescription customers since the launch of Cardlink in April 2024. These new customers also showed significantly improved KPIs compared to previous prescription customers.
Another important point was the the achievement of profitability in the non-Rx business (non-prescription medicines ), reflecting the successful implementation of the break-even program in recent years . Overall, a sales growth of 7% was achieved across all business segments. Teleclinic also developed very positively and doubled its sales with attractive profitability. Thanks to effective cash management, DocMorris had a cash position of CHF 95 million at the end of 2024. cash position of CHF 95 million.
For 2025, the focus is on the further expansion of e-prescription growth with the aforementioned customers with improved KPIs. The new marketing campaign "Make it easy for Doc" is intended to raise awareness, increase conversion to e-prescription orders and promote the profitable further development of the non-Rx business. business. Teleclinic is expected to significant growth with increasing profitability margins. continue its significant growth with increasing profitability margins. As already announced, DocMorris is planning a capital capital increase of around CHF 200 millionto support e-prescription growth and secure the refinancing of the 2026 convertible bond.
Since the introduction of e-prescriptions in Germany in the first quarter of 2024, the Rx business has been growing continuously. The Cardlink innovation led to a 2.5-fold increase in e-prescription sales to people with statutory health insurance from the first to the fourth quarter of last year. At the same time, the number of paper prescriptions redeemed by people with statutory health insurance fell significantly, while they rose slightly for privately insured patients. DocMorris expects Rx growth to continue in the first quarter of 2025, albeit at a slightly slower pace.
Particularly pleasing is the consistent growth in new Rx customers. The success is based on continuously improved apps and a better customer experience. The DocMorris brand recorded a three-fold increase in new customers year-on-year and even a five-fold increase from Q4 2023 to Q4 2024.
A look at the e-prescription KPIs shows that the new e-prescription customers (average age 57 years) have a significantly higher customer loyalty and order frequency with Cardlink. The reorder rate of the Cardlink cohorts is 2.5 times higher than previous prescription customers. The average order value (AOV) reached 110 euroswhich is due to a higher AOV of new Rx customers and a growing share of mixed baskets. Over 85% of these customers use the app and Cardlinkwhere over 95% of regular orders being delivered the next day.
The profitability of the non-Rx business in 2024 is an important step towards diversifying revenue streams and strengthening financial health. The main drivers included higher gross margins, the strong growth of Teleclinic, the Retail Media business and the expansion of the marketplace. In addition, an improved operational and marketing performance, higher conversion rates, cost reductions and the integration of brands contributed to profitability.
Teleclinic demonstrates that telemedicine is an important part of healthcare. The addressable market for outpatient care in Germany is estimated at around 55 billion euros, with an online penetration of less than 1%. The introduction of the The introduction of the electronic health card, the e-prescription and the upcoming electronic patient file will catalyze further growth. Teleclinic already showed a doubling of turnover in 2024 doubling of sales to CHF 11 million with an attractive EBITDA of over CHF 3 million . Further strong sales and EBITDA growth is expected for 2025 and beyond. The Teleclinic app has already been downloaded 2.5 million times and has a rating of 4.8 out of 5 stars. Teleclinic is seen as the leading provider in the German telemedicine market.
The digitalization of healthcare in Germany (e-prescription, ePA, eAU) enables seamless digital healthcare pathways, which should lead to better adherence, customer experience and convenience. DocMorris plans to fulfill all healthcare needs by integrating online pharmacy, telemedicine, marketplace for healthcare products and services as well as valuable health information.
In the first two months of 2025 growth continues in all business areas, particularly in Teleclinic and the service business . For the Rx growth of around 50% is expected for the first quarter of 2025 compared to the previous year.
Interesting topics were covered in the analysts' Q&A session that followed, which I would also like to summarize for you:
Olivier Calvet (UBS) asked about Restatements of Rx sales. Daniel Wüest clarified that there were no Rx-specific restatements, but a general adjustment due to a positive legal decision. He confirmed the basis for Q1 Rx growth of 50% with CHF 37 million from the previous year. On the impact of the electronic patient record (ePA) Walter Hess was positive, but saw a longer-term rollout and benefits for the DocMorris ecosystem. With regard to the net working capital in the e-prescription business, Daniel Wüest explained that the average annual figure is 4.7% and that the medium-term target is 4%.
Jan Koch (Deutsche Bank) inquired about the confidence in the capital increase. Daniel Wüest was very confident based on the feedback from the mandated banks and the usual practice of rights issues in Switzerland. The question of a sale of a stake in Teleclinic was considered very unlikely by Daniel Wüest, as this would contradict the ecosystem concept and the value for shareholders is estimated to be higher in the long term. With regard to the sequential Rx growth in the first quarter, Walter Hess Walter Hess confirmed the continuous growth, even if the high proportion of new customers with initially lower order values is impacting sales growth. Daniel Wüest confirmed that growth is expected from Q1 to Q4, as Q4 is usually the strongest quarter.
Gian Werro (ZKB) asked about the reasons for the reduction in inventories Daniel Wüest cited improved order frequencies and more direct relationships with suppliers. To the e-prescription sales forecast in relation to the reorder rate Walter Hess explained that the more cautious marketing spend in the first quarter plays a role, but that the management of customer acquisition costs is also important.
Michael Heider (Warburg Research) asked about the marketing spend in 2024 compared to the guidance. Daniel Wüest corrected that the statement was aimed at doubling the e-prescription marketing spend and not the total marketing spend, which was achieved. With regard to the discrepancy in the AOV figures Walter Hess explained that the 110 euros represents the average order value of mixed shopping baskets, while the 98 euros applies to pure Rx orders and is influenced by new customers with lower initial orders.
Christopher Johnen (HSBC) inquired about the assessment of the ECJ ruling on the bonus ban. Walter Hess assessed the confirmation of the 2016 ruling regarding direct bonuses as positive. The decision regarding OTC-related bonuses is now back in the hands of the German court. In the long term, he sees convenience for the customer as the more important factor. On the status of the recurring prescription Walter Hess stated that the implementation is being defined by doctors and health insurance companies and that a start at the beginning of next year seems realistic. This should further increase convenience and make bonus discussions irrelevant.
DocMorris AG's analyst conference painted a positive picture. The company has achieved important strategic goals, in particular profitability in the non-Rx business and strong growth in the e-prescription segment following the launch of Cardlink. The key figures for new e-prescription customers are promising and indicate a high level of customer loyalty. Teleclinic continues to develop dynamically and underpins the potential of the digital healthcare ecosystem.
Even though the short and medium-term guidance is still outstanding due to the capital market transaction, the management is very confident about future development.