Medios (Xetra:ILM1) Q1 2026 Earnings Call

0:00 Good morning, and welcome to our earnings call for the 2025 financial year. My name is Claudia Nicolas, and I'm Head of Investor and Public Relations and ESG at Medios. As a reminder, this conference will be recorded and all participants will be in a listen only mode. After the presentation, there will be an opportunity to ask questions. If you are logged in via the webcast tool, you can also submit questions at any time using the Q and A icon below the presentation slide at the bottom of the screen. If you have any technical difficulties during this session, please use this Q and A button as well. As always, all relevant documents can be downloaded from our Investor Relations website.

0:46 Additionally, this presentation can be followed in parallel via the Internet link provided to you in the invitation. Today, with me is our CEO, Thomas Meyer and our CFO, Falk Neuchelisch. Thomas will start with an executive summary, followed by Falk, who will then provide details on the financials of the fiscal year 2025 and the guidance for 2026. Finally, Thomas will comment on Medios' focus activities in 2026. And after the presentation, we will begin the Q and A session. I would now like to hand over to Thomas. Thank you very much, Claudia. Good morning, everyone. Welcome to the conference call for the financial year 2025.

1:33 I started as the CEO of Medios in February. Over the past few weeks, I got to know our teams and operations and our partners more closely. I'm very impressed by the strong organization and the opportunities ahead of us. On this slide, I highlighted some past experiences and summarized my first fifty four days in office. I'm fully in the listen and learn mode. As I mentioned, I meet people, and I'm trying to understand the organization and, work together with my colleagues. As I said, fifty four days, it's kind of a little bit more than halfway through the first hundred days, and I can tell you one thing. Medios is a great place to work. And above all, Medios has all the ingredients for success in the specialty pharma business.

2:28 Let me present the highlights of 2025 on the next slide. We had a very solid financial year 2025 with a significant improvement in profitability, and we continue to see good growth. In more concrete figures, revenue grew by 10.4% to, for the first time, over €2,000,000,000 to €2,100,000,000. EBITDA pre rose disproportionately by 17.8% to ninety three point one million euros Consequently, EBITDA pre margin rose from 4.2% to 4.5%.

3:16 And it is especially rewarding to realize that all earning figures, EBITDA, EBITDA pre, earnings per share as adjusted grew disproportionately compared to the revenue. Revenue of €2,100,000,000 and EBITDA pre of €93,100,000 were broadly in line with the 2025 guidance. In 2025, Medios agreed to the reimbursed medical cannabis market. We announced that, and we did that in Germany with an exclusive partnership with Bedokan. This business is up and running, and we are happy with the start we see.

4:07 Outlook for financial year 2026, we expect revenue to reach €2,000,000,000 to €2,120,000,000 reflecting a growth of up to 2%, and EBITDA pre is expected to be in the range of 94,000,000 to €102,000,000 Again, a disproportional raise in the profitability with up to 9.6%, reflecting a margin of 4.8%. If you're looking at the quarter's development over the last three years, we always see that the fourth quarter is a little bit weaker than the other quarters, especially looking at the profitability. We have seen the similar fluctuation this year.

4:57 However, back in fall, we had expected a slightly stronger Q4 result. So the question is out there, what happened? And unfortunately, we indeed experienced some unexpected one off effects. But nevertheless, and I think that's very obvious, the overall trend remains unchanged. We see disproportional earning growth going forward. Furthermore, and the key point, the earnings of Medios, they translate in a very strong cash flow. And I think that's a really strong statement for the company and the capabilities we have. On Slide nine now, we talk about our ESG highlights.

5:44 And for everybody at Medios, when I talk to them and for myself personally, it is important that we deliver for pharmacies for patients, and we strongly feel that we are an important element of the strategic infrastructure for supply security of pharmaceuticals. We work every day to make sure that patients get their medicine they need. In addition, of course, we have ESG targets that we achieve, and we highlighted some on this slide. And let me also tell you that for the first time, we completed Scope three analysis of all relevant categories.

6:31 And with that, I conclude the initial part and hand it over for more details on our financials to Falk. Falk, please? Thank you, Thomas. Good morning, and welcome also from my side. I will now give you a more detailed overview on the financials for full year 'twenty five. As always, you can find the full financial statement on our website. Let's go to Slide eight. All in all, we had a very solid fiscal year. Our revenue showed double digit growth and came slightly in above our forecast for '25 of €2,000,000,000. Also, EBITDA pre increased significantly, and the EBITDA pre margin even improved to 4.5%, however, due to one off effects in q four, as as already mentioned by Thomas, and also due to a somehow too optimistic expectation on the timing of a ramp up of business opportunities, especially in segment international 25.

7:29 In '25, the EBITDA was just below forecast of €96,000,000. The new business opportunities began to materialize at the end of twenty five, but are expected to fully unfold in '26. Medios fiscal year figures for '25 were driven by first time full year consolidation of the Siban Group acquired in June 24. As you know, in the previous year, Siban only contributed to the group's result on a pro rata basis for seven months. Consequently, the operational segment international business still contributed in '25 significant significantly by inorganic growth. Beside this, pharmaceutical supply contributed with a solid organic growth in revenue and EBITDA pre. Overall revenue rose to 2.00 o €2,080,000,000 from €1,880,000,000, which is an increase of 10.4%.

8:27 Of this increase, €63,200,000, that is 3.4% were attributable to inorganic growth from segment IP mainly to the to the just mentioned twelve versus seven months effect. The rest, an amount of €132,400,000 corresponding to 7% is attributable to organic growth, mainly from PS segment. The the revenue increased the revenue increase of PST segment is mainly caused by the discontinue discontinuation of performance based sorry for that. For of performance based payments for increased compounding volumes in 2025 versus 2024.

9:16 Gross profit of Medios Group improved significantly by €49,100,000 to €203,700,000 and an increase of 31.6 percent. This improvement is mainly due to the IB segment, which contributed €77,400,000 in gross profit, an increase of €37,000,000 sales, €31,700,000 inorganically, resulting from, like I just mentioned, twelve versus seven months effect, and the income from divestments of smaller Siban entities, mainly pharmacies in the amount of 2,700,000 million euros. Gross profit of PSD segment rose by €8,300,000 to €55,600,000, representing a gross profit margin of 23.8% and a margin increase of 3.1 percentage point points.

10:06 This is mainly due to the positive business development and the elimination of performance based payments for compounding orders in the amount of €6,200,000. Gross profit of PS PS segment increased again organically by €4,300,000, reaching a gross profit margin of 3.8%, which is unchanged compared to previous year. All of that together contributed to a higher Medios Group gross profit margin, which rose by 1.6 percentage points to 9.8%. Personnel cost rose by €17,200,000 to €69,400,000. This rise was mainly attributable to the first time full year consolidation of the C band group as well as one off expenses related to the change in the executive board in financial year twenty five and a higher average number of employees compared with the previous Noncash expenses for stock option decreased from €1,700,000 to €1,200,000.

11:10 Other operating expenses rose from €39,500,000 to €50,200,000, an increase of €10,700,000, thereof €6,500,000 attributable to the IB segment. In addition, other operating expenses increased year on year mainly because of higher IT costs, €4,300,000, thereof €2,400,000 increase for one off costs for the implementation of an e ERP system, which we adjust under EBITDA pre. The EBITDA pre increased by 17.8% to €93,100,000. The EBITDA pre margins thus improved by improved to 4.5% compared to 4.2% in the previous period. This was supported by two factors, the EBITDA contribution of the IB segment with higher higher EBITDA pre margins and the strong organic growth of PS segment focusing on higher margin products. EBITDA pre was adjusted by extraordinary expenses in the amount of around €9,000,000 compared to €16,000,000 last year. These adjustments consist of €5,100,000 for ERP system implementation, €1,500,000 one offs related to changes in the executive board, €1,200,000 other m and a expenses, and €1,200,000 for expenses for stock options. The decline in overall adjustment is mainly attributable to the discontinuation of performance based payments for

12:41 increased compounding volumes and lower m and a expenses compared to previous year. Depreciation and amortization increased by €6,600,000 to €37,900,000. A significant portion of this increase, €6,900,000, is attributed to the IB segment and many results from the full year consolidation of the Siban Group in '25. The financial result decreased by €8,500,000 to minus €18,300,000, mainly driven by extraordinary financial expenses of €9,200,000 recorded in the fourth quarter of twenty five, which are related to the revaluation of the NCI liabilities for the acquisition of minority shares in connection with the acquisition of the Siban Group. Interest expenses for liabilities to bank banks declined due to the scheduled repayment of the term loan facility and the replacement of the bridge financing facility for acquisition of Siban Group against the Siban Group facility in November 20 The company's company's is company's expenses from the revaluation of of financial NCI liabilities financial position still high as in the previous year, where nontext deductible financing costs and m and a cost increased the tax ratio as well.

14:12 Especially the one off financial expenses due to the revaluation of NCI liabilities reduced the growth of the net result. Nevertheless, the net profit was up 22.4 to €15,400,000 in 2025. Accordingly, earnings per share rose from €0.51 to €0.61, an increase of 19.6%. Adjusted EPS increased to €1.94 euro 1.94, sorry, compared to €1.661. Last year, earnings per share adjusted are based on the net result after tax adjusted for extraordinary expenses, PPA depreciation and amortization, revaluation of noncontrolling interest liabilities as well as corresponding tax expense adjustments.

15:06 Operating cash flow was within the expected range and amounted to €52,300,000 versus €73,700,000 for fiscal year twenty four. This increase was despite a higher operating result mainly attributable to the net working capital due to higher trade receivables in the PS segment at the balance sheet date and higher tax payments in 2025. Free cash flow reached 44,000,000 and was thus largely within the estimated free free cash flow range as communicated in the past of 40 to €50,000,000. The investing cash flow of minus €4,000,000 mainly reflects CapEx of minus €8,300,000 subsequent accrued purchase price payment for the acquisition of Siban in the amount of €2,300,000 as well as cash inflows of €5,900,000 from the disposal of fixed assets and the sale of pharmacies in the IB segment.

16:10 Financing cash flow of minus €72,600,000 mainly reflect the scheduled repayment of the term loan in the amount of €25,000,000, net repayment of the RCF loan of €20,000,000 in '25 and cash outflows from interest payments, €10,000,000 and €12,600,000 for the acquisition of treasury shares. You will find a summary of the share buyback program in the appendix of the presentation. Cash and cash equivalents amounted to €81,800,000 at the end of the reporting period. The equity ratio of 56.9% increased again slightly as of end of as as of the end of December twenty five compared to the previous year with 54.6%.

16:59 On Slide nine and ten, we have provided again a breakdown of organic and inorganic growth. Slide nine shows the inorganic revenue growth amounted to €63,200,000 or 3.4% fully dedicated to I b to the IB segment. Organically, revenue increased by €132,400,000 or 7%, resulting from all operational segments, but mainly from segment pharmaceutical supply. Slides 10 shows the organic and inorganic EBITDA pre breakdown by segment. EBITDA pre increased inorganically by €12,000,000 or 15.1%, fully dedicated to IB segment. Organically, EBITDA pre increased by €2,100,000 or 2.7% resulting from segment pharmaceutical supply and to a smaller extent from international business. It's a decline of the organic EBITDA pre growth of the segment PSC is mainly a result of onetime higher personnel costs, e. G. To severance pay and onetime higher other operating expenses mainly to maintenance and repair.

18:13 EBITDA pre for the Internal Service segment fell to minus €10,800,000 from minus €10,500,000 in the same period last year, primarily due to moderate increases in staff costs, which are relevant to EBITDA pre. Let's go to slide 11, providing the twelve months overview of all segments compared to the previous year. As mentioned before, the 10.4% increase in group revenue is mainly driven by the strong organic growth in in the pharmaceutical supply segment, inorganic and organic growth in the IB segment, and to a lower extent by PST. The external revenue of the PS segment strongly increased by 6.9% to €1,690,000,000.

19:01 PST segment contributed €220,100,000, an increase of 6,500,000 plus 3%, of which €6,200,000 are attributable to the elimination of performance related expenses for the acquisition of compounding volumes. The IB segment contributed €169,200,000 external revenue in '25, which is an increase of €80,400,000, thereof 60 sorry, thereof €63,200,000 inorganically. EBITDA pre for the PS segment amounted to €52,500,000, a plus of 5.1%. EBITDA of the PST segment reached 22,200,000, a minus of 4.6% due to the already mentioned onetime higher personnel and other operating expenses as just stated.

20:01 IB contributed €29,100,000 EBITDA pre there of €12,000,000 inorganically. This translates into a segment EBITDA pre margin of seventy seventeen point two percent. Slide 12 provides status information on the recent financing structure. In November 24, the debt financing of Medios was replaced by a syndicate loan facility with two tranches in the total amount of €225,000,000. There is net debt amounted to around €120,000,000 as of 12/31/2025, leading to an attractive leverage ratio of 1.3. And is an estimated annual free cash flow of around 40 to fifth €50,000,000 will enable Medios to continue repaying the term loan, cover interest payments, and, of course, finance further growth.

20:53 At the end of the reporting period, the total loan amount drawn under the syndicate loan agreement amounted to €155,000,000, consisting of €1,100,000,000 under the term facility and €55,000,000 under the RCF. Let's go to Slide 14, providing our guidance for the full year '26 for the Medios Group. Our guidance parameters are again revenue and EBITDA pre. For '26, we expect revenues to reach the range of two to up to €2,120,000,000 reflecting growth of up to 2%. EBITDA pre is expected to be in the range of €94,000,000 to €102,000,000 a disproportionate rise up to 9.6%. Taking into consideration the middle of the EBITDA pre guidance corridor, organic EBITDA pre cost should be in the mid single digit percentage range. Both parameters reflect an EBITDA preach margin of up to 4.8%.

21:54 The EBITDA pre guidance is adjusted for extraordinary expenses like m and a related costs, expenses for stock option programs, implementation costs for an ERP system, and for one off expenses for efficiency improvements. Thank you for your attention. As I will be stepping down from my role as a CFO at Medios and leaving at the end of April, this marks my final earnings call. I would like to thank you, our investors and analysts as well as well the whole Medios team for your support and trust in the past. And I hear this and over to Thomas. Thank you. Thank you, Falk. That was a concentrated piece of numbers and, as always, very precise and eloquently delivered. Thank you very much.

22:41 As I started at Medios, you know, the question is is in the room, what is Medios doing? People ask me, what exactly is it that Medios does? And I try to put two slides together where I would like to talk about the market system as I see it, which is based on some consultancy that worked on it. And then internally, we added some specifics and flavors. And as such, we operate in a market system along a value chain. I I see commercial products from the very start that they're partially going directly into the dispensing channel, And then there are individual steps. You see that at the top of this list, that go from wholesale into compounding, into logistics, into the dispensing, being at the hospital, the physicians, pharmacies, clinics, you name it.

23:43 And as this value chain is somewhat fragmented in individual unit operations, one must also understand that this is an abstract station, and it's way too simple. It is more complex, and we're trying to figure out our ranges of operation wherever they fit best and wherever it can deliver the most value. But at the bottom of the slide, we highlight that in any case where we are currently active. And what we call pharmaceutical supply is covering the wholesale and compounding aspect. And there's a somewhat vertical integration in such that some of the drug products are compounded for patient specific needs, or some API is getting delivered out into the compounding area where we use it to make the patient specific or compounded product that then is going into the logistics and getting dispensed wherever it is needed.

24:55 Our international business covers, again, wholesale and compounding with a very firm and very, very nicely carved out compounding footprint that also delivers a nice profitability. In the dispensing segment of this value chain, we have currently 20 community pharmacies that were part of the acquisition in The Netherlands. So this is the big picture how I see that Medios is operating and the market is working to serve the patients. And now on this slide, we even deliver you numbers. And again, be mindful about those numbers. I want to talk about numbers, but we also need to see that, for example, I pick a number. If we say the compounding market is 30,000,000,000, that does not mean that our addressable market is close to that number. Because right now, a large part of this market is not addressable for Medios for various reason, being in regulatory reasons that are individually and different from country to country, being it that we are not active in the entire Europe market.

26:13 So we are in a smaller segment of this compounding market, and we we make sure that we deliver the most value in the market we are active. But we are firmly nested in this combination of wholesale compounding, and we believe, looking at the market CAGR that is here estimated to be between 5% to 15% for compounding and a healthy profitability estimated around 10% to 20%, that this is an area we would like to continue to grow, and we are focusing our operations, our network that we can do that even better for our partners and customers going forward.

27:03 The wholesale business, we make sure that we continue to do it successfully on a specialty base where we believe, and this five is a little bit moved, that we can achieve a profitability, hopefully, in the range of 3% to 5%. And I think that is the picture how we see it right now. And when we continue on the next page, I would like to highlight some of the activities that Medios did in 2025 to achieve a good positioning in this value chain and also experiment and try to gain additional value propositions that help to profitability.

27:54 And one proof of concept is shown here. Zimbrinzi, a well established drug for eye drops of Novartis. We were able to partner with Novartis and are now in German, a pharmaceutical entrepreneur. That means our name is on those on those boxes. Kraanach Pharma will be visible in the pharmacies, and we are using our distribution channels in addition to the wholesale for bringing those drugs into the pharmacies. And all under the idea, as I mentioned before, that Medios wants to be an important piece of securing that drugs are available available for patients.

28:51 Here, a well established brand that Novartis says, well, it is better in your hands. You give it more attention, and customers will find the drug they need, they like. Going forward, we trust you, Medios, to do this well. And I think we have proven that we are the right partner. We did all the regulatory necessary improvements in Krahner Pharma in Hamburg. We got inspected by the authority, and we got approved to be a pharmaceutical entrepreneur going forward. Something to watch, not a massive revenue contribution in 2026 to be expected, but as a proof of concept, something we wanted to try out, and the team really delivered in 2025.

29:41 And so we are up and running. We are happy with the results we have seen so far, and we wanna continue this avenue for our pharmacy supply PS business. On this side, a very beautiful example from the international business part. I said, we are in the business to keep medicines on the market. And sometimes, as you know, if global supply chains are disrupted, there are shortages in the market. And we are on the watch to understand where shortages are happening. Our teams are connecting with the pharmaceutical companies, and pharmaceutical companies typically have a certain visibility into the future. They know, oh, a shortage could come up here, shortage could be there. And we learn that ourselves. We get our intelligence from the market, but also sometimes in collaboration with pharmaceutical companies, we prepare compounding for drugs we expect to go into shortages.

30:45 This one is a histamine blocker that helps with bouts of where where where you might be itchy. And so, they they are necessary, medicines, and we are happy that we can deliver those whereas the shortage is happening in the market, and we are selling current volume 65,000 tablets a month. So a big thank you to our international business, to the Medios team, to help people having the medicine they like and not being affected by the shortage.

31:37 Falk told us that he's gonna leave the company, so it's important for me, and it's very good news that we can announce that with Stefan Bauberheis, we could gain a very experienced hand for our financial team. He will start mid of April, and he brings a very strong backpack of experience in international leadership in publicly traded companies at this German stock market. He was the CFO of Stabilus for several years. And before that, he was decades with Scheffler Group as CFO Europe and Germany at the end of his tenure there. He has a vast experience in corporate accounting, controlling, financing, and transformation of management team.

32:28 So we will feel privileged and blessed that he will start in a month, even a bit shorter, and help us to continue our way of transformation and increasing profitability at Medios and make sure that we we are matching the opportunities that are out there. And lastly, a few words before we go in question and answers. If a new CEO comes in, if a new team is building, of course, we're gonna look at the business. We're gonna look where we wanna put our focus, and we wanna make sure that we have all the capabilities we need to act swiftly and focus to achieve results.

33:18 We are doing this exercise as we talk, and we will present tangible targets. We will present a read on where we wanna position the vision and mission of Medios at our Capital Markets Day in fall. And until then, we're to make sure that we act as one team. We want to harmonize business and planning processes for compounding and pharmacy supply at first, and we will do that using modern tools, modern processes. And the core and centerpiece of that transparency data driven work is our ERP backbone that will be updated to SAP for HANA, as Sphere four HANA, will be our knowledge backbone of the company going forward. The rollout is in preparation.

34:16 We remain committed that Medios Pharma will be up and running very shortly, and this will help us to get better insight and hopefully result in faster decisions and progress. Another thing I would highlight after fifty four days or during my fifty fourth day is and I think it's not a new statement. We're gonna optimize our network, And we wanna do that on a solid plan, a solid plan that covers the entire group, and we're gonna call this capital master planning. And that plan is already worked on, and we're accelerate the formation of the plan and the execution according to this plan. I think there's value in this, and I will put down some of my energy together with the top team that this is a priority for the entire group.

35:14 Similar is business integration. We talked about the SAP project that is, of course, now the mission critical project for the entire organization. We're gonna focus our energy on that one, but at the same time, we already know that we need to reassess our digitalization road map to make sure again that we have focus and we can execute quickly and swiftly towards that plan. All this done to accelerate organic growth. We see good growth potential in the market, and we want to be sure that we can achieve that growth together and for our partners and customers, and also think that a go to market strategy to increase that group of partners and customers will help us achieving that organic growth.

36:14 Buy and build is a important and vital element of what we're gonna do going forward. It has always been part of the Medios success story, and we wanna keep it that way. We wanna be very disciplined in what we are doing, but we're gonna have value accretive bolt on acquisition, I believe, going forward. But, of course, we can't let them can't let you know before this happened for obvious reasons. And with that, I think I have one more good news on the next slide, and then we are ready for question and answers. And the good news is we're going to have a Capital Markets Day in Breda, The Netherlands. That's at our SEBAN unit, and the date shifted slightly. It's gonna be on the twenty ninth. I informed some of you that it's gonna be the thirtieth, so please mark your calendar. It moved one day earlier. It's on the twenty ninth. We're gonna have a pre dinner, on the twenty eighth, and I hope you will join us. I look forward to that.

37:22 I look forward to interact with you in person, and, hopefully, you find time in your busy schedule.