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Cegedim SA
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Ladies and gentlemen, good day, and welcome to the Cegedim First Quarter 2019 Revenue Call. [Operator Instructions]At this time, I would like to turn the call over to Mr. Jan Eryk Umiastowski, Cegedim Chief Investment Officer and Head of Investor Relations. Sir, please go ahead.
Good morning, and good evening, everyone. Thank you for joining us to discuss Cegedim First Quarter 2019 Revenue.Before we begin, I would like to remind you that this presentation and conference call may constitute forward-looking statements. These forward-looking statements may include comments about our guidance, our expectation and prospects and are based on our view as of today, May 15, 2019. Any such statement and projection reflect various estimates and assumption by management concerning anticipated results. For additional information concerning important factors that may cause our results to differ materially from expectation and underlying assumption, please refer to our registration documents, specifically the Risk Factors section. We undertake no obligation to correct or update these forward-looking statements whether as a result of new information, future events or otherwise.Having this in mind, I will turn on Page 3 of the presentation. So as you may see, revenue growth accelerating in the first quarter of 2019, revenue came from EUR 111.9 million to EUR 119.2 million, this is an increase of EUR 10 million in the first quarter of 2019.If you remember well, in 2018, for the full year, we've seen revenue increase by EUR 10 million. And this year, we already get EUR 110 million more of revenue in the first quarter, so have been done last year over the full year, in term of revenue already done in the first quarter of 2019.How this translate in term of percentage points? So on a reported basis, revenue increased by 6.5%. This is 4.6%, if we exclude any acquisition disposal and currency effect. So 4.6% is the like-for-like basis increase of revenue and we added to this 1.6% coming from the acquisition of Rue de la Paye in March 2018, end of March, and also the acquisition of XimantiX in January 2019. And we have a small positive currency impact, a positive boost of 0.3% coming from the U.S. dollars.In term of revenue breakdown by currency, euro is still around 86% of revenue, GBP around 10%, USD around 2.5% of the total revenue of the group. This increase of revenue, EUR 10 million increase in the first quarter, 20% of this increase is related to the increase of our BPO revenue. So BPO, we're doing BPO for insurance companies, we're doing BPO for doctors in the U.S. and we're doing BPO for HR departments. And the main increase between first quarter '18 and first quarter '19 came from the increase of the BPO for the insurance. You remember that few years ago, we have signed a big contract for BPO with a group called Klesia. And this year, at the end of 2018, we have signed a new contract with BCAC. And this gives a boost you, of course, on the BPO trend, so an increase of 25% between first quarter '18 and first quarter '19 and, of course, this trend of increase of revenue from BPO will continue.Despite this increase of the BPO revenue, if you look on Slide 5, you'll see that the number of headcount is quite stable. Revenue of headcounts increased only by 2.5% between December '18 and March '19. This means that this is what we have experienced about that, more BPO contract, we need less people we need to hire to catch up with this contract. So there is a base effect. We are more efficient and there is a -- [ the cost is ] earning this way that more BPO contract we get, more profitable we become and less people we need from either service. So from 4,562 employees, we moved for 4,676 employees at the end of March and around 2.5% of increase for the full year is something that we assume will probably be.In term of breakdown of revenue by business group, so 2/3 of revenue -- I'm on Slide 6. 2/3 of revenue is coming from the Cegedim's health insurance, HR and e-services that came to EUR 79.2 million, this is an increase of 8.7% on a reported basis and 6.4%, if we exclude the acquisition and currency. So on a like-for-like basis, you see that in 2018, from the first quarter to the last quarter of the year, we've seen a little slowdown of the growth rate. We came from 6.4% to 3.1%. And this year, we get to remain again at 6.4%. So we get the same increase of revenue as in Q1 2018. And part of it is related to the fact that we have signed the BPO contract, this is also the fact that we are very strong on the electronic invoicing activity, on the payroll activity, on the third-party payment. So this continues to develop quite well, and the growth rate accelerated again in this division.In the Healthcare professionals, so it's 1/3 of revenue. We are positive of 2.8% on the reported basis, and then we get the negative impact of currency. So we're only at 1.7% increase on a like-for-like basis. This is the second quarter of increase for this division after few quarters of decrease. We've been at 2.3% at the end of 2018, the last quarter of '18. And in '19, we've seen an increase of 1.7%. So we expect to continue this positive trend to develop and to be positive in all quarters of 2019 [indiscernible] specific to mention and this is less than 1% of revenue. So the biggest contributors on the group revenue increase, it's, of course, coming from the [ first division: ] Health insurance, HR and e-services. That's increased by 6.4% on a like-for-like basis. This is a strong rebound on the growth rate and the second is Healthcare professionals that turned positive for the second quarter in a row, so it's very positive and encouraging.On the Health insurance and HR and e-services on Slide 7, you see that the biggest contributors are our activity dedicated to the data, so we're sending more and more data. We have the BPO activities that contribute quite well. We have the third-party electronic reimbursement, electronic invoicing and the payroll activities that contribute quite strongly to this growth rate. On Healthcare professionals, we get positive trend and increase of revenue on software for doctors in France and Belgium and for allied health professionals in France. And it is important to mention that activity for doctors -- software for doctors in U.K. and U.S. were stable in the first quarter of 2019. And you'll remember that in the second half of 2018, we have released new solution for U.K. doctors and at the beginning of '19, in the U.S. doctors, so this translate by stability in term of revenue at boost activity.Potential impact of Brexit, I'm on Slide 8. U.K. represents 10% of revenue and around 10% of EBITDA in 2018 for the full year. We operate on local currency, so most of our costs are in the U.K. and revenue are in the U.K. So we really do not have any significant impact on the EBIT margin. And on the same time, we have no major European health program at work in the U.K. So we do not expect any big change if the Brexit happen or not in our strategy and development in the U.K. business.In term of outlook, we have still the same outlook as we've provided to you 2 months ago. So still, we expect full year 2019 revenue to increase by 5% on a like-for-like basis and full year 2019 EBITDA to be on the same trend, an increase of 5.0% also.This concludes my presentation, and I'm now ready to open for Q&A. So operator you can open the line for the Q&A, please.
[Operator Instructions] We have a question from Patrick Jousseaume, Societe Generale.
Jan Eryk, good evening. Just a quick question on the evolution of the headcounts. You compared the evolution of the headcounts from December 2018 to, say, end of summer, [right now]. You say that the headcounts have increased by 2.5% between March 2019 and December 2018, so it's relatively lower than the growth that we see at revenue level for the whole group, because here I suppose that you speak about the headcounts for the whole group, but when you show the growth of the revenue, which is 6.5% reported and 4.8% (sic) [4.6%] what we compare is with Q1 last year. So I was just wondering what is the evolution of the headcounts when we compare March this year with -- or first quarter of this year with first quarter last year.
Yes, so the headcount is for the full group, so for the whole group. Yes, if you look on December '16 and compare to December '16, so this will give you...
No, December '17.
Yes, December '17 is quite close to the level of March '17.
And here it's -- which means 4,676 divided by 4,226, so we are on 10%?
Yes.
So should we conclude something on, I mean, money get even on EBIDTA or anything else?
No. Anyway, if you look quite -- it's too early to discuss about profitability at the group level or whatever, but what we have seen is that the headcount -- the growth rate of headcount is slower than the increase of revenue. So we have more increase of revenue than on the payroll.
Okay. So Q1 this year versus Q1 last year, revenue has increased faster than payrolls?
Yes.
And we have no other questions at the moment. [Operator Instructions] We have a next question from [ Erich Blunt ] [indiscernible].
I am [ Erich ]. I just wonder if you can give some news about Docavenue because I think that you invested more money last year on Docavenue that means more people, I think, also about headcounts and you bought RDV Medicaux in France. What are you doing against Dr. [indiscernible] is still very aggressive and some news about United States also where you put [indiscernible] that means that we stay in somewhat troubled situation in United States? Or if you can give some colors about that, please.
Yes, thank you, [ Erich ]. So first on Docavenue, we still are quite aggressive developing this activity. We continue to hire people for R&D and for the commercial team to have more people going to see doctors to convince them to use our solution for Telemedicine and for appointment. If you see there is quite stable number of headcounts at the end of March, this means that also we have reduced the number of employees in the U.S., for example, and also in other countries. So the stability show a significant increase at Docavenue compensated by some decrease in other area of the group. So Docavenue still quite strong and aggressive in term of hiring people, having more people going to see more doctors. And the investment that we've done in the first quarter is quite similar to the one we have done in the last quarter of '18. So we maintained the same level of investment at Docavenue.
How many people are working now on this specific product?
It should be a little more than 100. And we'll not provide any more specific data on Docavenue at this stage that this is a very competitive market and we do not want to provide any insight to our competitors. On the U.S. market, the new product has been released in January 2019. This is approved by the government and we are able to sell it and we see a stability in term of revenue. So it's a good thing. We have reduced the number of employees to be more in line with the level of revenue and the level of cost, and we are just looking how this develops in the U.S. and we'll probably give you more update later in the year how this move, as it is a little bit too early to see clearly what is the real trend in the U.S.
And about pharmacy in France, you speak about doctors. What is -- you launched a new product, I think, 1 year ago, something like that. What is going on about number of pharmacy? You keep your market share now or you still have some pressure?
We're still under pressure, but we have seen that our order book is increasing quite significantly. So the order book have increased in the first quarter of 2019, so it's very encouraging. This show that, first, the commercial guys really trust our product and are able to sell it to the pharmacists and to some pharmacists are deciding to buy it. Now we need to implement this software at pharmacy in order to generate revenue, but the order book, it continues to improve quite significantly.
Our next question is from Charles Bordes from Kepler Cheuvreux.
Just a quick question regarding the BPO. So we had a pretty good growth rate during the Q1 with a new contract being signed. Should we consider this growth rate as a good baseline for the year?
Yes. As last year, we -- in 2017, we have seen the ramp up of the Klesia contract in our revenue and in 2018, it was more or less stable. So probably, we'll see the same growth rate quarter-after-quarter for the BPO. So say, for the full year, something between 20% and 25% increase.
We have a next question from [indiscernible].
I just have one question about health insurance division. Can we have some colors about the proportion of the different activities, please, or the growth rate?
Yes. We do not provide any specific breakdown of revenue for this division. However, the biggest contributor in term of revenue on this division is the insurance part. So we get the insurance part, the data part, the electronic invoicing and payroll and advertisement. The biggest one in [indiscernible] part is revenue. It's coming from the insurance division and the remaining can be split in equal part between the different activities -- remaining different activities.
We have no other questions at the moment. [Operator Instructions] .
So before we end this presentation, I would like to remind you that the key takeaway are that revenue accelerate in the first division, we are back at 6.4%. At the same time, in the second division, Healthcare professionals revenue continued to be positive at 1.7%. We still expect revenue to increase by 5% on a full year basis and EBITDA to increase by 5% for the full year basis. And having said that, we also see that revenue increased by EUR 10 million in the first quarter. This is what the increase of last year for the full year. And I would like to remind you that the second quarter 2019 revenue will be released on July 25 after the market close.Thank you very much. Have a nice evening. Bye-bye.
Thank you. Ladies and gentlemen, this concludes today's web conference. Thank you all for your participation. You may now disconnect.