CompuGroup Medical SE & Co KgaA

XETRA:COP

Earnings Call Transcript 2020-Q3

[Operator]

Dear ladies and gentlemen, welcome to the conference call of CompuGroup Medical. At our customers' request, this call will be recorded. [Operator Instructions] May I now hand you over to the Head of Investor Relations, Claudia Thomé. Please go ahead.

[Claudia Thomé, Head of Investor Relations]

Good morning, everyone. I hope you are all well. We have published Q3 results this morning. As always, you'll find the presentation, the quarterly statement and the press release on our website. And we will now hear Michael Rauch, our CFO, with this statement on the third quarter. And after that, we will move into Q&A. And with that, I hand over to Michael.

[Michael Rauch, CFO & Member of Management Board]

Thank you, Claudia. Good morning, and a warm welcome also from my side. The COVID-19 pandemic continues to impact our world. Our customers, in particular doctors, hospitals and pharmacies, continue the intensive fight against the fundamental challenge, and we at CompuGroup medical support them in the best possible way. Against this background, we are reporting an exceptional Q3, reporting records in a number of ways. However, please let me remind everybody upfront that Q3 was the summer quarter in Europe with quite some degree of COVID-19 relief whilst we all experienced the second wave of COVID-19 now in Q4. Our financials continue to show an impressive resilience, and we've continued investing to further pursue our growth path. We've stepped up numerous digital initiatives across the group to support our customers in the increasing digitization in health care. In today's presentation, I will give you an overview on the operational highlights followed by the financials, including some segment specifics and closing with the guidance, which we are confirming. As usual, please consider the disclaimer as being read and taken to the notes. Once again, I would like to start with another big thank you to everyone out there working in the health care sector worldwide, doctors, nurses, medical aid and care personnel for their courage and dedication, working relentlessly to treat and help patients suffering from the COVID-19, where they're still in the first wave or, as just mentioned in many countries, already in a second wave after some summer relief. The health and safety of our employees and also of our customers remains our #1 priority. We've provided a working environment that enables to continuously make sure that the service support for our customers is fully operational. We are really proud of our customers and of our CGM team worldwide of all our employees who have been working hard for our customers. Nobody should suffer or die because, at some point, medical information was missing. Our founder statement and company's purpose is what is driving everyone at CGM and has never been more relevant than now during this worldwide pandemic. Now let's turn to the exceptional operational quarter that lies behind us. One of the reasons for our record revenues this quarter is the successful next phase of the Telematics Infrastructure rollout. In this next stage of eHealth Germany, CompuGroup Medical has again been the first mover in numerous regards. The first, to have our connector upgrade approved. The first to install at pharmacies and the first to have the new KIM feature-approved communication in medicine, a secure e-mail system within the Telematic Infrastructure framework. In the third quarter, we've made the connector upgrade available to all 56,000 practices that are our TI customers in the AIS segment, thus recognizing the full revenue impact from the upgrade in Q3. This has led to a significant revenue and EBITDA impact in the AIS segment, increasing the margin for this quarter considerably. In the PCS segment, so our Pharmacy Information Systems segment, orders for the Telematics Infrastructure connectors have surpassed the mark of 6,000. Almost 1/3 of those orders have been installed in the meantime. And as expected, the installation process will continue well into Q4 and potentially also into Q1 as of next year. I will come back to the financial impact a bit later when talking about the segment financial performance. All in all, the TI rollout is well on track and progress is fully in line with our full year guidance. The second driver of the outstanding revenue growth has been our large acquisition in the Hospital Information Systems segment, which we closed on July 1. The newly acquired activities delivered a performance well above our synergy plan, and this transaction is a quantum leap for our HIS segment. We are significantly increasing scale and are now the clear #2 in Germany, the DACH region, also Germany, Austria, Switzerland and for public hospitals in Spain. In Germany acute hospitals, we have added more than 3x the number. Going forward, this puts us in excellent position to benefit from future best practice rollout across the different products and features, and Q3 has been an excellent start in this respect. So many thanks also to the newly integrated colleagues and to the whole HIS team for making this integration so successful. This brings me to the direct -- sorry, brings me directly into the next chart. Digitization in health care is the major driver overall in the sector. And we, at CompuGroup Medical, have stepped up our digital initiatives across the group in the third quarter once again. So let's start with the HIS segment on the bottom left, since we just touched on the increase in scale we reached in Hospital Information Systems through the major acquisition we did there. We've increased our market share significantly in Germany, which is perfect timing with regards to the Hospital Future Act, which just has been enacted or passed in Q3. The government decided to spend more than EUR 4 billion in Germany going forward to increase digitization in hospitals, with at least 15% of the budget allocated to IT security improvements. Our HIS colleagues are evaluating and preparing to support our customers in the best possible way in this process. In the AIS segment, the rollout of CLICKDOC video consultations is continuing. The COVID-19 pandemic has led to a massive shift in terms of mindset in a very short time frame for digital and virtual applications in health care. And we have by now reached around 8,000 paying customers. They are roughly 1,000 in the U.S., giving us tailwind towards the low double-digit million euro amount in a full rollout scenario from 2022 onwards, which we have been communicating along. In the PCS segment, we've taken a big step forward in terms of digitizing the patient's journey going forward. Our patients portal, CLICKDOC, and the German pharmacy portal, IhreApotheken.de, are preparing a corporation, which will enable patients to preorder and redeem prescription in the pharmacy of their choice within a few hours. The portal, IhreApotheken.de, already represents more than 7,000 pharmacies, and the number of partners behind this corporation is constantly growing. And last but by no means least, our CHS segment has delivered another proof point for increasing consumerization, again, being early mover, introducing digital health apps. Doctors are now able to prescribe those apps using a feature in the AI segment -- sorry, in the AI System, of course, that we are providing. CLICKDOC then supports patients in the reimbursement process with a public insurance companies, aiming at fully digital and seamless process. Our goal is to monetize our great reach on the doctor side and to build a platform that attracts digital solutions and app providers. We see this as another significant milestone for increasing our digital reach and establishing a CompuGroup Medical ecosystem for the full patient journey.With that, let's move into the discussion of our Q3 financials. We've registered an outstanding quarterly performance on all dimensions. Significant revenue and EBITDA growth of 30% and 42%, respectively, propelled by the weighted software upgrade in the Telematics Infrastructure and our recently closed HIS acquisition of the Cerner assets. Recurring revenues are up 16%, adjusted EPS is up 39% and free cash flow has seen a massive increase from about EUR 3 million to EUR 32 million in Q3 year-on-year. On the revenue side, the 30% reported growth translates into a very strong 17% organic growth. Now if you exclude Telematics Infrastructure, organic revenues were slightly up this quarter. Recurring revenues increased by 16% and the share of recurring revenues was with 58%, slightly below our full year target and below the prior year quarter, obviously due to the significant TI one-off revenues we incurred in this quarter. We flagged this effect in August, and we still expect a recurring revenue share of more than 60% for the full year. Taking a closer look into the enormous jump in revenue, we wanted to give you today the full transparency of the relevant contributing elements in concrete million euro amounts as shown on Chart 10 here. The Telematics Infrastructure revenue column includes the onetime revenue from the software upgrade of the connector for doctors and dentist practices as well as the rollout to the pharmacies. This comes with significant EBITDA benefit, contributing to a steep EBITDA increase in Q3. Also, the higher-than-planned revenues from the first quarter inclusion of the HIS assets acquired from Cerner came in with additional EBITDA contribution. Obviously, the strong EBITDA has contributed nicely to the free cash flow in Q3. Please remember that, as said, that we expect to see a significant pickup in free cash flow when releasing our Q2 numbers. And so we delivered, even to the degree that we announced slightly above free cash flow for the first 9 months versus prior year. We also reduced net debt significantly this year, thanks to the successful placement of shares in June and despite the payment to Cerner in the beginning of Q3 for the acquisition of the HIS assets. Leverage is down to 1.3x after the strong Q3 performance, and net debt stood at EUR 294 million at the end of September. As you know, we are comfortably financed with our debt facility in the size of EUR 1 billion in place, running over 5 years with a 1 plus 1 extension option, and split into a EUR 400 million term loan and a EUR 600 million revolving credit facility. This facility can be kept for acquisitions and general corporate purposes, just to remind everybody. Let's now move to our segment reporting. The exceptional revenue performance was driven by all segments. And we've seen a margin increase in all segments, except the CHS segment where we are overproportionately investing, particularly in the quarter 3. Whilst we obviously like this picture, you and we all know that AIS and PCS have been impacted by the TI onetime benefits and the HIS segment has benefited from the first-time consolidation of the Cerner assets. Although we love this chart, let's now move on to the individual segments. So let's start taking a closer look here at the AIS segment. Here, we recorded strong revenue growth of 19%. Organic growth showed an excellent 7% plus, benefiting from the full recognition of the Telematics Infrastructure software upgrade in Q3. We talked about the quarterly phasing this year before, therefore, it shouldn't come as a surprise that the organic growth, ex TI, was impacted by the strong prior year quarter that had benefited from the Windows 10 upgrade as well as from the rollout of the electronic patient records in Austria, so-called ELGA. This coincided with the fact that our dental business and the U.S. business felt the COVID-19 impact to some extent this quarter. Recurring revenues have grown by 4% year-on-year, and now represents 63% after 73% in Q3 2019. This is obviously attributable to the significant TI one-off. EBITDA increased even stronger by 53%, and the margin jumped by 10 percentage points due to the higher profitability of the TI software upgrade. So overall, the AIS segment is fully on track. So let's turn to the next segment, the Pharmacy Information Systems segment. The PCS segment was positively impacted by the first time rollout of Telematics Infrastructure to the pharmacies. Revenues are up 26% and EBITDA increased even stronger by 30%, in line with the profitability of the TI. Organic growth, ex TI, continued with strong 6%, again, driven by additional sales in German pharmacies resulting from a module for cash points that was rolled out until September. Like in the first half, the business has been continuing to perform well despite the COVID-19 situation and despite our specific exposure to Italy in this segment. So once again, congratulations to all of the colleagues out there in the field helping us in difficult times. With our Hospital Information Systems segment, we have yet another segment of excellent performance in Q3. Looking at the numbers, the exceptional revenue growth of 80% is, of course, driven by the first-time consolidation of the former Cerner assets that started with a strong quarter and the revenue contribution above our synergy plan. But even excluding the acquisition effect, organic growth was at 10%. So during our Capital Markets Day in September, my Board colleague, Hannes Reichl, already mentioned, the earlier-than-expected rebound post the softer Q2 and the strong July. The good organic growth was mainly driven by the German and the Polish business. The EBITDA margin stands at 40% now, up 4 percentage points compared to the prior year quarter. As mentioned before, a really strong quarter in the HIS business, quite a step change and fully on track regarding the full year expectations, although we do not close our eyes towards the second wave of COVID-19 having hit Europe by now. Before coming to the summary, let's finalize the segment review with the Consumer & Health Management Information Systems segment. Here, revenues increased by 5% to almost EUR 12 million. Organic growth of 10% results mainly from the German Intermedix business. The revenue growth is again mainly driven by the CGM LIFE activities. EBITDA and the margin are down due to increased R&D investments, talking about a comparably very small number in euros, given the small size of this segment. And as you have seen, the investments are yielding results, with the first proof point of the consumerization being the launch of the digital health apps platform this quarter where CGM was an early mover. We continue being upbeat towards capturing additional benefits from consumerization, data application and IT security-enhancing solutions. Let's now turn to the guidance for 2020. We are confirming our guidance today, which we increased in August to reflect the Telematics Infrastructure effect in the HIS acquisition. We continue to expect the range of EUR 820 million to EUR 860 million for group revenues and of EUR 205 million to EUR 220 million for adjusted EBITDA. Our guidance for all KPIs is unchanged compared to the August 6 update. And be it for segment revenues or additionally guided KPIs, everything unchanged. Now just depicting here, from 2021 onwards, we are going to bundle the TI revenues that you now see in the AIS and PCS segment into the CHS segment. With this decision, we are aligning managerial responsibilities and reporting structures according to our strategic intent. At the same time, we are providing better visibility into the underlying core business performance of the AIS and PCS segment. We will, of course, provide old/new segment transparency in the annual report and provide you with a quarterly comparison going forward. As you might have noticed, we have just released our financial calendar for 2021 last week. We are going to publish the preliminary full year results on February 4 next year and the full annual report on March 25, 2021. Now before handing back to the operator, let me thank again all of our customers, the doctors, nurses, medical aid personal and everybody in the health care sector again for doing a tremendous job fighting COVID-19. We will be here to further work on digitization of health care records, and we will invest into records, processes systems to support your great work. Thank you for your attention, and now we are looking forward to your questions. With that, I would like to hand back to the operator. Thank you.

[Operator]

[Operator Instructions] And the first question is from Uwe Schupp, Deutsche Bank.

[Uwe Schupp, Small and Mid]

Three questions, please. Firstly, on the guidance, especially on the margin guidance. I noticed that after 9 months, you are at 26-point something percent and obviously, the upper end of the guidance 25.5%, if I calculate correctly. And Q4, obviously, is really a good quarter for you. So where exactly do you see the risks? Maybe you already indicated that COVID-19 and second wave could be one, but where exactly do you see this high amount of caution is warranted, in which particular areas maybe? And then secondly on the organic growth, that was, as you indicated in your prepared remarks, slightly negative even in the quarter. How concerned should we be that this should be spilling over into next year? Or do you expect those special effects that you had in the prior quarter also to be fading out? And then maybe lastly, I noticed that you had not a lot of adjustments between the adjusted and the reported EBITDA, what should we really read into that? Is it going to be acquired for second half in M&A terms as you digest the Cerner assets? Any thoughts around that.

[Michael Rauch, CFO & Member of Management Board]

Okay. Thank you, Uwe. Great questions. Let's start with the first question regarding your margin. We didn't give out any particular margin guidance, as you know. But obviously, people calculate the upper and lower end and put it in relation to the revenue in order to come up with some kind of a feeling here for the margin. So I don't want to shy away from that question. We would expect in the next quarter, a lower margin. Why? If you just compare it also to the prior year, in the prior year, we had benefited from some onetime effects like the Windows 10, like the hardware sale, which we did for our lower Austrian project here in the HIS segment. And we are investing into quite some technology and R&D upgrade here and also into people helping us and building footer on the ground in order to roll out also technologies. And that investment wave is going to hit us also in Q4 and obviously then going into 2021. So with that, basically, that gives you a bit of a feel why we still feel that the numbers we have provided in terms of guidance are exactly as they are, and we confirm it. Now that brings me to the second topic, which is somewhat tied to that organic growth. And I also saw in some of the early commentaries released by you and some of the colleagues in the last couple of days and also this morning, comment regarding organic growth. Now let me reiterate one point for the third quarter. We are actually growing organically in the third quarter, 17%, so 1-7 percent. Now we just basically castrate ourselves, if I may use that term for a second, by spiking out the effect of Telematics Infrastructure out of that. But let's not forget, we are investing and building up resources in order to have that Telematics Infrastructure benefit here on the growth side. Additionally, excluding Telematics Infrastructure, we are also still growing positively because I heard a notion of negative growth here. So we then come only to the segment, if you were alluding to that, AIS, where we show basically, excluding Telematics Infrastructure, a bit negative growth here organically. That, however, is fully in line with the expectations on a full year guidance because here, I would basically just want to draw your attention back to the first half where we have been growing significantly, excluding the Telematics Infrastructure. So our business model is fully intact. On the contrary, we actually are going to invest more in order to propel organic growth for the future, and building more solutions for our clients, which is obviously helping the digitization here in health care. And now the last point of your question with regard to reported to adjusted. Yes, you're right. I still remember basically reporting about the first quarter that was onboard last year, where we had quite some adjustments because of an abandoned M&A transaction that did not happen this quarter. That does, however, not mean that we are not looking also into further M&A activities. And you're right, we have just won our biggest acquisition, our third largest in December. So there is something to digest. But CompuGroup wouldn't be CompuGroup if we would not be eager in order to grow further, be it organically or inorganically.

[Uwe Schupp, Small and Mid]

And I think just a follow-up on the guidance, I think, would it be fair to say that at least the guidance is rather on the conservative end because it obviously takes a huge margin decline in Q4 for even that range to be hit? Or would you just say, look, the guidance is the guidance?

[Michael Rauch, CFO & Member of Management Board]

I take the latter part of your sentence. Thank you.

[Operator]

And the next question is from Florian Treisch, Commerzbank.

[Florian Treisch, Research Analyst]

My question is coming back a bit towards the TI revenue contribution in Q3. You named them as onetime effects, which is good and fine. If I just look at the AIS guidance for Q4, it looks that there's still a contribution. So can you give us some sort of insight what you believe is the realistic assumption for the TI contribution in Q4? And as a consequence, probably as a follow-up to the questions on Deutsche Bank, Uwe. You are guiding organic growth ex TI, given that Telematics is, to a certain extent, only a onetime benefit for you. So if I look forward for, let's say, some quarters without asking you to guide for 2021, is it fair to assume that organic growth will be negative if you include TI in 2021 based on your comments on the Capital Markets Day that you expect low to mid single-digit organic underlying growth? So if I deduct the Telematics revenue contribution, the onetime contribution in 2021, there's hardly any organic growth including or is it too early to say something on that topic?

[Michael Rauch, CFO & Member of Management Board]

Yes. Thank you, Florian. You're opening up a field here, which gives me room for explanation, and I appreciate that. So going into the Telematics Infrastructure, I would like to remind everybody that we quantified for the year 2019 a bit the split between onetime Telematics Infrastructure and recurring nature of Telematics Infrastructure. And I want to also do that a bit more precisely by giving you a bit of guidance here. So we have currently a run rate of recurring Telematics Infrastructure in the vicinity of EUR 11 million. So that gives you a bit of a feel how much of Telematics Infrastructure is at least included then in the fourth quarter. And then obviously, for the pharmacies, we want to still install some connectors, and maybe there's also some room to get some installations in the AIS field, which obviously is of a much smaller nature. So that's with regard to the Telematics Infrastructure. Now your second question ties back to what we have been thinking and reflecting when talking to many of you. That is -- give us more color, Michael, kind of like on the underlying performance of your PCS and of your AIS segment, if you were to exclude TI. And that's why in the one slide, and maybe I wasn't clear enough, we are going to basically, for 2021, separate to eliminate basically the TI portion out of the AIS segment and out of the PCS segment and move it to CHS segment. And you have basically my saying here already in connection to 2021 and also the years beyond that we obviously have the ambition to grow organically, also excluding TI, the segments, AIS and PCS, and we will give an updated guidance regarding the year 2021 then in February. I hope that answers your question.

[Florian Treisch, Research Analyst]

Okay. Maybe if I can just follow up and much appreciate to split it out. I believe we have been more than transparent already in the past, so thanks for that. The follow-up might be on the Cerner deal. You are talking about higher or better performance compared to the synergy plan. This simply means that Cerner performed better on a stand-alone base. So it does not mean that you're already seeing some kind of revenue synergies. This will only come at a later stage, correct?

[Michael Rauch, CFO & Member of Management Board]

No. In essence, actually, we have already some benefits realized, and we are working on that. So obviously, this is something which we, for also competitive reasons, don't want to lay out in all breadths and depths here in the call. But I can confirm that we are already having the first synergistic effects already in the number of the Cerner portfolio. So it's not only a stand-alone perfect performance of all of the people that we have integrated into our group. They are doing an excellent job here, but it's obviously also the benefit of both groups working fantastically together under the leadership here of my Board colleague, Hannes Reichl.

[Operator]

The next question is from Charlotte Friedrichs, Berenberg.

[Charlotte Friedrichs, Analyst]

I'll just take them one by one. The first one is on the pharmacy segment. You mentioned at the beginning of your prepared remarks, how many installations you had completed here already. I'm not sure if I missed that, maybe.

[Michael Rauch, CFO & Member of Management Board]

Yes. Charlotte, sorry, because you said you had a couple of questions. So I answer question one by one. So on the pharmacy segment, taking more than 6,000 orders we said, and we had already about 1/4 already on installations we mentioned.

[Charlotte Friedrichs, Analyst]

Okay, perfect. And then the next question would be sort of on current trading, what you're seeing in terms of the order behavior or quoting behavior of your customers. Are they becoming more cautious now that they see COVID coming up again more aggressively in many European countries? Or is that not an issue so far?

[Michael Rauch, CFO & Member of Management Board]

No, that's a very good point. And that's why I also, in the opening remarks, I think made that a little bit qualification statement by saying, yes, this has been a record quarter. We've seen and has been put behind us. But however, it has to be seen with the notion of some COVID-19 relief overall, right? So we talked, for instance, when we had our Q1 call in May, regarding the situations for hospitals where, for instance, some projects have been postponed or some RFQs have been canceled. Now everything opened up again towards the second quarter, and we saw some great results here in the third quarter. But the question is what we will see going forward now in the fourth quarter. And as we're obviously putting our books together regarding the October results, we are studying that very carefully and looking also into the booking behavior going forward. The second area, talking not only about hospitals regarding COVID-19 impact, obviously, is then also the dentist practices. And I think I made a comment already regarding Q3 impact here, but -- and the U.S. situation, unfortunately, not talking about the election here, but talking about our health care IT situation. The U.S. situation, obviously, is also affected with COVID-19 still, and that's something which we obviously need to observe going forward. But like I said, we have no reason not to confirm our guidance. But are we seeing some impacts potentially? Yes.

[Charlotte Friedrichs, Analyst]

Okay. Understood. And my last question would be on the Hospital Future Act. I realize it's quite early still. But in your conversations with customers, are you seeing that there is a good uptake of the potential subsidies or are hospitals rather a bit hesitant, maybe taking a little bit longer to take up the subsidies?

[Michael Rauch, CFO & Member of Management Board]

We noticed some early discussions, and we also realized how complex, basically, the discussions were by the nature of the content basically being discussed. And what we see right now is when many of the hospitals take basically a primary view towards COVID-19 patient care, and that topic of the digitization may be a bit impacted depending on how strong the second wave now hits the hospitals. But obviously, there's a lot of discussion going on, but it takes some time until it turns into tangible results, so to speak.

[Operator]

Next question is from Knut Woller, Baader Bank.

[Knut Woller, Analyst]

Yes. With regards to the pharmacy segment, Michael, can you give us an update? You already provided some color on the installations we have already seen. So do you expect still to run with the backlog based on the current orders into 2021? Or do you expect that, that will be broadly realized by the end of the year? And then just a question on the software upgrade. Is it fair to assume that the software upgrade basically was around almost 100% reflected in terms of EBITDA and also in the cash flow. I think there's some excitement, of course. I'm looking at margins in Q3, but especially the software upgrade comes -- should come at a very high margin, which, of course, helped in the third quarter. And hence, I would buy into your thesis that the guidance for the full year is realistic and not conservative since this tailwind won't be there in the fourth quarter. And then lastly, a housekeeping question on the financial income. We have seen here a swing compared to H1 due to a reversal of a call option and also exchange rate tailwinds. Can you give us some idea about the underlying run rate we should expect for the financial income in the coming quarters adjusted for these tailwinds.

[Michael Rauch, CFO & Member of Management Board]

Yes. Thank you, Knut. Great questions again. So let's start with the PCS segment. Yes, so we gave a range regarding PCS, obviously, including the TI installations when we went into the year 2020, I think it was on the 6th of February or so. And we kept the range throughout because we were positive that we would receive after all of the field tests, the approval from the gematik infrastructure quite early on to be the first actually to be able to install at the pharmacies, the new software upgraded connector to the pharmacies. And as you know, we got that at the end of July, and we went immediately to installations. And that was during COVID-19 times. Now we had a bit of ease during summer, but we do see, obviously, COVID-19 wave 2 coming back here, and that might have also an impact. So I think it is fair, as you put it, to assume that we will take a backlog going into 2021 here on the installations for TI. That does, however, not mean that the guidance for PCS is at risk, but it could mean that basically, potentially, we are maybe a bit on towards the lower end here on the PCS revenue guidance side. Now with regard to the Telematics Infrastructure impact in Q3, and maybe I have not been outspoken and loud and clear enough. We fulfilled all of the prerequisites in order to recognize the full impact of the software upgrade for all of the dental and doctors' practices. So everything in a AIS for 56,000 practices in Q3, and we have taken that onetime revenue benefit. And we have also actually seen a tendency of all of the doctors to also pay us in time. So that is also the cash flow benefit, as you correctly recognized. That is realized here also in Q3. And the margin benefit, obviously, is coming because that upgrade was at a higher margin than usual TI activities. So you're fully right, and you're also fully right in taking an assumption here on Q4. That goes in sync with a comment from Uwe, where I said we would rather take the latter part of his sentence, so not changing our guidance, but confirming our guidance. And that's still our view going forward. Now your last point was regarding the financial income and the -- and design call option, which you mentioned, which we had disclosed here. Yes. So -- but we don't specifically guide on the financial income. There are always various effects affecting the financial income. We would just expect basically that our net income comes in line with our guidance in order to come to the EPS range, which we have guided for.

[Knut Woller, Analyst]

Okay. Just -- understood, Michael. Still I give it a try to get a better feeling for it. Is it more likely that you'll be in Q4 then again around H1 levels? Or do you expect these tailwinds to persist into Q4?

[Michael Rauch, CFO & Member of Management Board]

Yes. Knut, I don't want to go into specifics here, if that is okay for you. So -- but we don't have any -- if that was your question, we don't have any extraordinary impacts forecast that were seen here for Q4.

[Operator]

[Operator Instructions] And the next question is from Andreas Wolf, Warburg Research.

[Andreas Wolf, Research Analyst]

It's Andreas Wolf, Warburg Research. Congratulations on the successful rollout. A couple of questions from my side. So the first one would be regarding the additional budgets for hospitals. By how much would the stimulus provided by the government increase hospitals room to maneuver or increase their IT budgets? Could you give us a bit of a feeling insight here?The second question is on your cooperation with IhreApotheken. So what might the economics look like for CompuGroup here going forward? What might be the potential revenue benefit? And then the third set of questions is regarding your product pipeline. So obviously, the EHR and e-prescription deadlines are approaching, I guess, your products are more or less already ready for the rollout going forward. If not, maybe you could update us what are still the obstacles that you see in front of you. And could you also provide an idea what the monetization might look here?

[Michael Rauch, CFO & Member of Management Board]

Yes. Thank you, Andreas. I would like if that is okay with you to start in the reverse order. I'm not shying away from the Hospital Future Act question, but basically, just starting with your questions regarding e-prescription and what's going to happen here and then move into EHR particularly. So according to our knowledge, basically, 2022 still is a year for e-prescription, and we are at the end of 2020. So obviously, everything is still very early, and we don't have yet enough clear visibility. But rest assured that us being here in the market with our low official operations in the German market and obviously, also being in talks and discussions with pharmacies as well as with the different regulators, that we have a clear view and intention of what to do here in terms of e-prescription, but this is nothing which I can disclose here on a conference call. So as soon as we have basically some numbers out in order to guide you with, in order to give you some impacts, also in order to display maybe potentially some product features, we will do. So typically, Capital Markets Day would be a nice one in order to also go a bit into product features, so we can discuss that at a later stage. With regards -- but we are not worried at all when e-prescription comes in 2022 to be prepared. With regard to IhreApotheken, the Ihre was at cooperation here also with NOWEDA. We basically stated and we released that early on that this is cooperation formed, and the terms and concrete conditions of the cooperation are basically obviously confidentially being discussed. And once we also have here a moment and time reached where both parties actually say now is the time to release something to the press, we would also upgrade them in terms of revenue impact or in terms of EBITDA impact or what have you. And now your first question with regard to the Hospital Future Act, it's really a little bit for us looking into the glass ball. We all know that we have that above EUR 4 million amount -- EUR 4 billion, sorry, EUR 4 billion amount for the hospitals available. I said basically when going through the slides today that we estimate around 13% of that for IT security measures. So the question is, how will it be spread out? How will it be allocated? What part will be taken into the hospital budgets for 2021 already? That is something where we don't have more visibility on than the market, of course, for some individual clients we might have. But on a general level, we cannot basically quantify that yet.

[Claudia Thomé, Head of Investor Relations]

All right. Thank you very much for all your questions. And since we don't have anyone else in the line right now, we thank you for dialing in and contributing. And if there are any further questions, don't hesitate to contact me on the phone or by e-mail. Thank you very much from Coupland, and have a great day.

[Operator]

Ladies and gentlemen, thank you for your attendance. This call has been concluded. You may disconnect.