Transcript for "Q4 Report 2025"
00:00:03 - 00:01:00
John Stubbington: Morning everybody. It's John here, and welcome to our Q4 results. It's another good quarter
for us. We've made some good progress, we've got continuing strong performance, double-digit growth again,
and we're seeing margin expansion, which is really, really pleasing. The performance remains strong. We're
seeing that with good demand across all of our markets and particularly from our fee-for-service segment.
Margins are improving, and good cost control is in place. We're well-positioned. We predicted a bit of softness
in some of our lines in the previous quarter, and we have seen that, and we said that it would continue for a little
bit longer, but we do see the beginnings of signs of recovery, certainly in Q4. We're watching this space as we
go through to Q1.
00:01:00 - 00:01:27 John Stubbington: We got continued organic growth and profitability improvements in
healthcare services, particularly driven by our sports and wellness business, our ambulatory business, and our
diagnostic services team. They've continued their momentum. They've got double-digit growth in all of the feefor-service markets, and test volumes have increased significantly. Well done to the team. It's really great to see.
00:01:27 - 00:02:25 John Stubbington: We predicted that our leverage would come down, and we see that
happening. Down at 3.1. The board has recommended a dividend increase, which I think really reflects our
progress. On the right-hand side, you can see organic growth of 10.6%, which is really solid. We see continuing
operating leverage coming through on our adjusted EBITA, up 20.9%. Again, an encouraging trend for us in the
fourth quarter. Different season, different quarter, and in terms of margin improvement, you can see that that's
followed through as well with a really decent margin increase. Operating cash flow. Very pleasing indeed, up
56%. That's very good for us, and a good quarter in that respect.
00:02:25 - 00:03:29 John Stubbington: If we move on and look at it from a different perspective in terms of our
growth, we've got, as I said before, continued double-digit growth coming through the business. Again, just to
remind everybody, this is despite the fact that we've exited Hungary. When we take the Hungarian figures into
consideration, it increases even further. Revenue by country. There's a bit of a change in some of the numbers
here, but in Poland, strong. Germany reflects the reform change that we're going through, and we're still
navigating well. Romania, a decent return for us. India, from a Euro perspective, they're seen as zero, but from a
local currency perspective is up 15%, which is in line with some of the comments that we made in the previous
quarter. We're seeing some good momentum, which we'll talk about later. From a payer perspective, it's
relatively stable.
00:03:29 - 00:04:11 John Stubbington: If we look at healthcare services. Healthcare services have got good
revenue growth, 8.5% from an organic perspective, going up to 11%, a good percentage of that coming from
price, which reflects our position of when we've been dealing with inflation, that we've not been scared to be
able to show the power of our proposition and make sure that we get the right price to deliver the right services.
The team has done well there. India's revenue 14.7% in local currency. Remember, this is despite the fact that
we had a strike in one of our main states in October.
00:04:11 - 00:04:59 John Stubbington: Momentum, which I think is the most important word for us when it
comes to India. Our momentum is increasing, and I've always said that this is the business end of our journey in
India when it comes to IPO, and we need to get our figures into the right order. It's pleasing to see that the kind
of doctor recruitment that we've done is now starting to see the first signs of maturity. Sports and wellness, key
contributors to the fee-for-service growth as well as the EBITDA margin improvement. I'll move into that space,
which has been very, very successful. If you look at our membership, our growth is relatively small, but of
course, we've taken out one of our key countries in terms of Hungary in that journey.
00:04:59 - 00:05:47 John Stubbington: We have to balance this with how our business has moved over time.
We're a much bigger fee-for-service business nowadays, and that's one of the reasons that we made the decision
to share with you the customer relationship number within healthcare services. As you can see, Q3, when we
gave it to you the first time, it was 3.6 million, and we're now up to 3.8. Growth on the right-hand side is good.
You can see the revenue mix by country is again pretty stable, and from a margin perspective, we've got a very
strong margin improvement in healthcare services, going from 15 to 17. Really pleasing progress from the team.
00:05:47 - 00:07:12 John Stubbington: If we look at diagnostic services, the momentum continues.
Congratulations to everybody in diagnostics. Revenue increased by 13.5%. Organic was 9.3. Price was a smaller
part of the increase here. Remember that a big part of our business in diagnostics is in Germany, and the
regulations on prices in Germany were affected by the reform. We've got double-digit growth in all of our feefor-service markets, and that's been further supported by public payers, particularly in Ukraine, who have had an
incredible year and an incredible work considering the conditions that they operate in. A big thank you to our
team in Ukraine, based on the fact that they're doing a fantastic job despite the circumstances. Germany, private
pay growth, again, we're seeing signs of that starting to move up as a consequence of the public funding
changes. However, overall, if we look at all of 2025 and consider the reform that happened in Germany, we've
really navigated that position well. We mentioned earlier that we got a strong test increase by 17.6%, which is a
really good result for the team.
00:07:12 - 00:08:43 John Stubbington: If we go across, we've got good growth in revenue. We've got a
relatively stable revenue by country, but some really good increases in different lines. We still have a margin
increase in diagnostic services as well, 17.3 from 16.1, which again is really pleasing. Here, you can see the lab
tests are starting to move up, and that is strong. Some of this momentum is caused by Copernicus, which started
with the Synlab acquisition, which is starting to show through in our numbers, and as expressed before, we're
fully on track now with our activities in that area. If we go and have a quick look at 2025, I think 2025 was a
very strong year for us. We've made significant progress as a team. We've got organic growth of 12.7%. Our
revenues overall have grown 13.7%, and really, really good. We've made excellent progress from an EBITA
perspective, good progress from a margin perspective, cash flow is really good, and a positive impact from a
dividend perspective. We've got a really strong track record in terms of stating the direction that we will take
over a three-year period and looking to make sure that we outperform what we say.
00:08:43 - 00:09:34 John Stubbington: If you remember back three years ago, when we first went through these
numbers, it was seen as quite a challenging position for us. We've navigated the German reform really well in
2025. I think we've got another quarter to go before we see the full effects. The acquisitions we've done have
been embedded very, very well. As a consequence of that progress, you can see that our return on invested
capital has increased quite nicely and is getting into a more appropriate zone. We're really pleased with that.
Then, if you look at the '23 to '25 targets, we're in a very lucky position, a very privileged position. A lot of hard
work has gone into being able to deliver this, but we're basically saying from a revenue perspective tick, from an
EBITA perspective tick, from a leverage perspective tick, and from a dividend policy perspective tick.
00:09:34 - 00:10:08 John Stubbington: Then even if we look at our alternative measures, we've got a couple of
ticks in the boxes there. It's nice to see so many things being ticked off and being achieved, but this is all history
now. It's all part of our past. It's not part of our future, and we'll move on as we go through today and tomorrow
to tell you much more about how we intend to improve on this over the future years. Now I'll hand over to
Arnold, who will talk you through more of the financial details of the quarter, and I'll come on at the end, and
then we'll answer the questions.
00:10:08 - 00:10:58 Anand Patel: Thank you, John, and good morning, everyone. As John said, another solid
quarter for Medicover ending FY25. From a revenue perspective, 611 million, which is double-digit growth on a
total basis, and also strong organic growth year on year, which has already been mentioned. In terms of profit
measures, good year-on-year growth in terms of margin growth. Hence, our EBITDA and the EBIT lines were
growing faster than our revenues. If you look at EBIT, for example, in the quarter, EBIT was 35.2 million,
strong growth with a margin of 5.7%, which is 150 basis points year-over-year. Also, another thing to note is,
Net profit was 17.3 million at a margin of 2.8%. Strong flow through of our revenues into the quarter.
00:10:59 - 00:11:48 Anand Patel: The final profit metric I'll talk about is the EBITDA number, because leases
are a part of our cost base and how we grow our business. EBITDA of 57 million, up 30%, with a margin
increase of 140 basis points year on year to 9.3%. I would say a solid quarter, and in line with the messaging
that John and I gave at the end of Q3. If you look across the business units, again, similar messages of growth
that we saw in prior quarters, but not as pronounced year on year, I would say. Looking at healthcare first,
organic revenue up 11%, price driving 6%, and volume driving 5%, EBITDA of 72.5 million, growth at 23%.
John's already mentioned that we had margin expansion of 200 basis points in the quarter, so really pleasing.
00:11:48 - 00:12:39 Anand Patel: I guess I'll touch on the EBITDA loss on the immature hospitals. Year on
year, the loss is slightly less, moving from 3.3 to 3.1. Quarter on quarter, though, as we opened a new hospital.
Then the loss increased from 2.7 million to 3.1 million in the quarter. I would summarize that as a good quarter
for healthcare and doing what we said we would do. In terms of diagnostics, John's already said it was a really
strong performance by the team, so well done to them. Organic growth of about 10%, with price driving 3% and
volume driving 7%. We talk about Germany a lot, and I think, even in Germany, although we have the reduction
in prices, we're still getting good, strong volume growth in that market.
00:12:39 - 00:13:42 Anand Patel: From an EBITDA perspective, 33.3 million, margin increased by 120 basis
points year on year to 17.3%. John mentioned there's a good move in terms of the FFS markets and a positive
performance in Germany as well, from a payer mix perspective. In summary, a strong quarter to end the year in
diagnostics, too. If I wrap up the full year, I guess I would say a stellar year in terms of consistent growth across
both business units, with double-digit revenue growth and profit measures growing faster than revenue, resulting
in an improvement in margins. The other thing I'd add is actually a really strong performance in cash, and a step
up on return on investment metrics, too. Highlighting a couple of measures, revenue just under 2.4 billion,
growing 13.7%, EBIT more than doubling to 155.7 million at a margin rate of 6.5%, which is up 310 basis
points year on year. EBITDA of 243.1 million, growing 40%, up 190 basis points year on year.
00:13:42 - 00:14:34 Anand Patel: All the above are leading to a really strong EPS, so our EPS was 51.4 cents,
up from 11.2 cents last year. As John's already mentioned, we beat the externally guided targets that we gave
you for FY 25 across all measures. On this slide, you can see what some of the other metrics are. From a
leverage perspective, John's talked about it already in terms of 3.1, down from 3.4 last year, and a reduction
quarter on quarter as well, so a good result. Effective tax rate 26.1%, in line with what we had shared
previously. I would pull out a really strong performance in cash on the quarter and the full year. Our net
operating cash of 100 million is up 56% year on year. On a full-year basis, it was 3.7 million, which is up 31%
year on year.
00:14:35 - 00:15:10 Anand Patel: I think if you look at free cash flow, you can see that in the quarter, it was
8.4% of our revenue. A really big step up compared to the prior year. The other thing I'd say in that slide is
actually a really strong improvement in ROIC. You'll have seen that we started the year at 6.7% at the end of
FY24, and we've nearly doubled it to 13%, so kind to give comfort that, as we expand our margin and invest in
white space opportunities, the profit flow through is actually flowing through and impacting our investment
metrics.
00:15:13 - 00:15:42 Anand Patel: On the next slide, you can see where we are on CapEx. CapEx in the quarter
was just under 57 million. There was a bit of catch-up in CapEx from prior quarters in terms of the percentage
of revenues, but from a full-year perspective, we're about 6.7% revenues, which is in line with what we've
shared previously. As you can see from the chart on the left, there continues to be clear white space between our
free cash flow and our investment growth CapEx. A good sign, and we expect that to continue in the future.
00:15:42 - 00:16:44 Anand Patel: In terms of the spend in the quarter, as expected, predominantly in healthcare
services, which is a common theme from this year, and in terms of growth and maintenance, split, roughly 72%
was growth, 28% was maintenance, and that's broadly the same split for the full year as well. Finally, in terms of
new medical space, in the year we added 77,000 square meters, we ended at 986,000 square meters at the end of
the financial year. Undoubtedly, we'll break past the million in Q1. In summary, a good quarter to end the year
in totality, a strong year in FY25. As John mentioned previously, a year in which we beat the targets that we set
externally. Now looking forward, and please bear in mind, most of the talking we expect about the future in
terms of our numbers and how we get there, is expected to be tomorrow. Today is meant to be predominantly
about the final quarter and answering any questions you have on FY25.
00:16:44 - 00:17:43 Anand Patel: What the future targets are, as follows, and are in a similar vein. There are
three-year targets that take us to the period of 2028. To summarize, we expect organic revenues to be in excess
of 3.25 billion. We expect adjusted organic EBITDA to be in excess of 600 million, leverage to be under three
or at or under three, which is lower than the previous measure of 3.5, and dividends to be 50% of net profit. On
an illustrative basis, to help you with your models, you can see we expect to be EBIT to be in excess of 290
million. You can calculate the EBIT figures from that based on where we are at the moment. Expect to see
strong EBIT growth and adjusted EBITDA to be in excess of 430 million. You can see the targets that we've
got. I think they are ambitious but challenging and reflect the strength of our business and the opportunity that
we see ahead of us. With that, I'll hand it back to John.
00:17:44 - 00:18:56 John Stubbington: Thank you, Arnold. In terms of key takeaways, 2025 is a strong year.
We've successfully achieved our three-year financial targets, which I think is very positive for us. We've got
good organic growth and very significant improved margins from both divisions, and a really strong fee-forservice line, which is a good revenue stream for us. There is room for us to improve. We know that. We see that,
and that's really reflected in our future targets. We believe we can improve from a growth perspective, and we
believe we can certainly improve from a margin perspective. We're in very strong markets where we've got the
opportunity to grow the network that we currently have, and we can certainly develop some new products and
some new areas of interest for our customers. Let's not forget that over a long period of time, we put a lot of
investment into our business and increased our square meters for quite a period, and we've still got capacity
utilization to come.
00:18:56 - 00:19:27 John Stubbington: Looking ahead, we're entering a new phase, a phase where we enter it
from a position of strength. We're very excited, and we're looking forward to it. We're in a good place, and just
really to end with a big thank you to all of the people in Medicover who have committed a lot to be able to
achieve the numbers that we committed to three years ago, and who will continue to commit a lot to be able to
make sure that we do it again in three years’ time. Thank you very much.
00:19:38 - 00:19:58 Speaker 3: If you wish to ask a question, please dial pound key five on your telephone
keypad to enter the queue. If you wish to withdraw your question, please dial pound key six on your telephone
keypad. The next question comes from Philip Ekengren from ABGSC. Please go ahead.
00:19:59 - 00:20:24 Speaker 4: Good morning, guys. I'll stay away from asking you about the notoriety and
keep that for tomorrow. On margins, adjusted EBITDA margins increased by 200 basis points year over year.
Could you give us some of the key drivers behind that increase? Perhaps also, if you can split up how much is
operational leverage and how much is price, so that increase, please.
00:20:26 - 00:21:57 John Stubbington: Well, from a price perspective, you can see it in the numbers that we've
published. If you go through not only the quarter but for the year, you'll see that from a healthcare services
perspective, the price component is much stronger. Obviously, from a diagnostic services perspective, it's a lot
weaker. The increase from a diagnostic perspective, the increase in the volume of tests, as we all know, with the
diagnostic business, once you put more tests through the lines that you've already got, it's quite a sweet position
for you. If the team continues to drive that extra volume, that extra volume will result in operational leverage,
and it's pretty similar in healthcare services, but not to the same extent as the margin increase. You've got to do a
bit more volume from a healthcare services perspective to get the same outcome in the financial numbers.
However, capacity in healthcare services, that's where most of our square meters have gone on, you've got a bit
of a mix in there as well. Q4 was a slightly strange quarter with all the holiday patterns as well. That happened
over Christmas, which was quite unusual. Lots of different factors in there, but certainly price, certainly
capacity, certainly a bit of volume. The usual levers that then have an impact on the model.
00:21:59 - 00:22:12 Speaker 4: Makes sense. In India, it's continuing to show some double-digit growth in local
currency. What are you seeing on the market starting on January '26? Can you say something about that?
00:22:12 - 00:23:07 John Stubbington: We usually talk about Q1 at the end of Q1, but I can understand you
asking the question, because it's such an important component of the story that we've been talking about in
recent times. I'll make two comments on Q1 as I start. If you look at Europe, there's been a very strange weather
pattern that's hit us, which is very unusual in our key markets at this time. You've got negative 20-degree
positions. Then, of course, in India, you don't get that. I think that Europe will be affected a bit by that weather
position, and I think that from an Indian perspective, as I said earlier, the keyword was momentum, and that
momentum that we said would build in Q4 has started to build in Q4.
00:23:07 - 00:23:29 John Stubbington: We expect it to build as we go through the year because that's what we
need to be able to continue with plan A, and we're certainly on plan A from an IPO perspective. The team has
done a good job so far. We'll see how Q1 turns out. It has a little bit of ups and downs in Q1 because of holiday
patterns, et cetera, so we'll see.
00:23:30 - 00:23:53 Speaker 4: I appreciate it. Thanks for the comments. Then perhaps the final one for me.
You mentioned some softness ahead of Q4 in the Q3 reports in the call. Now you talked about some early signs
of improvement. Could you elaborate a bit on that? Is it a change of the underlying sort of macro, or is it your
mitigating factors that're working?
00:23:53 - 00:24:46 John Stubbington: Well, that's always a very difficult one to be able to quantify because, as
it moves, it could be economic factors, it could be the fact that what we've actually done has resonated with the
consumer. What we know from history is that when we've hit this kind of patch, it's taken us one, two,
sometimes maybe three quarters to reprofile, and then we’ve reprofiled and pushed through. I think we will get
some positive impacts from an economic perspective, where we're seeing this softness, and I think we will get
our teams doing what they've managed to do over a period of time. It's just a question of how long that takes. Q4
versus our expectations was a little bit better than we thought. Q1, let's see.
00:24:49 - 00:24:51 Speaker 4: Okay. That was all for me. Thanks very much.
00:24:51 - 00:24:52 John Stubbington: Thanks a lot.
00:24:56 - 00:25:02 Speaker 3: The next question comes from Julia Angeli Strand from Handelsbanken. Please
go ahead.
00:25:03 - 00:25:20 Speaker 5: Good morning, and thank you for taking my question. I have a couple, and I'd
start off with a question on India. How much did the strike affect you? Was there a pent-up demand effect or
more of a negative effect in this quarter?
00:25:21 - 00:26:42 John Stubbington: Well, it was negative for us. Let's quantify it against what everybody
remembers. This is in one state where, for the governmental pay business, which is a smaller percentage of our
overall, every provider in that state basically didn't provide care unless it was an emergency for members of the
public who were entitled to it. This was because the local government had taken quite a long time to be able to
settle all of its bills. It lasted for all of October. Maybe a little bit longer, but certainly most of October. It did
affect us. It did have a negative impact on us. I'm not going to quantify what that impact is, but from our
perspective, we've moved through that in the quarter very successfully. I think that's the important soundbite. It
won't be there in Q1 because things have returned to normal for the time being. We fully expect, as I said
earlier, that momentum is a really key word when it comes to India, and we expect that word to be something
that we talk about after Q1.
00:26:45 - 00:26:54 Speaker 5: Okay. Understood. Could you disclose how much of the revenue in India comes
from mature hospitals?
00:26:58 - 00:27:03 John Stubbington: I don't think we put that on the public record. I don't think I can,
unfortunately.
00:27:04 - 00:27:17 Speaker 5: Okay. Understood. Could you instead say something about when you expect to
reach mature occupancy in India, given the hospital facilities you have open today?
00:27:18 - 00:28:04 John Stubbington: I'll frame it slightly differently. If you're looking at our occupancy
journey and what will need to happen, I think we've been quite open and clear about that in many discussions
that we've had in many different places. We have improved our occupancy, but it's never really been seen
because as we've done that, we've opened more and more facilities, and that suppressed things. The opening of
the new hospital, which happened in soft launch at the beginning of the year, is the last major investment that
we have planned. Now we look to mature our occupancy rates. It's a really key driver. It's one of the three key
drivers that we talk about.
00:28:04 - 00:28:49 John Stubbington: The other two being doctor recruitment and the other one being the
average revenue per occupied bed. Currently, we're below the 50s. Before we talked about being in the 50s, so it
all depends on the bed mix and what's happening. We fully expect that if our momentum picks up in the way
that we need it to pick up, we will see that occupancy start to move. If that occupancy moves even a 10%
movement up, it will be a very significant impact on our operating model. If we go further than that, then it will
be an even bigger impact. We're at the business end. We realize that, and the next couple of quarters are going to
be key. We're really looking forward to talking to you over the next couple of quarters about India.
00:28:51 - 00:29:08 Speaker 5: Okay. That's clear. Then just one last question from me. How should we think
about the fee for services in diagnostics? Is this an indirect effect of German reimbursement or just a strong
momentum?
00:29:08 - 00:29:58 John Stubbington: No, I think that the German market will need a period of time to mature
when it comes to fee-for-service. We'll see signs of fee-for-service growth, both coming from the fact that it's
been reformed, but also from a lifestyle perspective, consumers want different things when it comes to things
like anti-aging, longevity, all that type of thing. There'll be a mix change as well, and some of those things are
not covered under the national scheme. Germany will take quite a while, I think, before we sit here and say
we've got a fee-for-service market in Germany. It will be more complementary when it comes to fee-for-service.
If that line grows in Germany, from a margin perspective, it should be good for the model.
00:29:58 - 00:30:45 John Stubbington: The other markets that we have are mainly led by fee-for-service, and
we're a strong player in those markets. We have a good proposition, and we have excellent service. We have a
broad base of tests that we can give to people, and we have great technology that provides a platform in that
network for us to take advantage of things. I think what you're seeing is some of that benefiting us, and of
course, the Synlab acquisition is also benefiting us, which is driving some of the overall positivity. It's positive. I
think that's the keyword there. Those markets are very positive for us and are doing really well, and as I said
before, congratulations to the team.
00:30:47 - 00:30:51 Speaker 5: Okay, thank you for that. Those were all of my questions.
00:30:51 - 00:30:51 John Stubbington: Thank you.
00:30:56 - 00:31:00 Speaker 3: The next question comes from Mattias Vadsten from SEB. Please go ahead.
00:31:03 - 00:31:35 Speaker 6: Hi. Good morning. Thanks for taking my questions. I have a few here as well.
First one. India again. Rephrasing it a bit, perhaps. It must have improved quite a lot through the quarter. What
is basically the key contributor here? Am I correct to say the key is that you have removed the bottleneck from
lack of talent to care for patients through good recruitment, or is it something else that you want to add to that or
how should we think about it? That's the first one.
00:31:42 - 00:32:44 John Stubbington: We said in the previous quarter that we focused a lot on retention and
recruitment. In that previous quarter, we also said that when you bring some of these doctors in, they're very
good doctors, but it takes a period of time for customers to realize where they are and where they move to, and it
takes a period of time for our excellent marketing team to get out there and spread the word, et cetera.
Recruitment is definitely a key part of it for us, and then there are other things, from operational leverage. From
our model in India, once you increase the revenues, it starts to get positive for us. We've put a lot of technology
changes into India as well, which stops some of the revenue leakage in the patient flows. There are a lot of
developments that are going on in India, but the key one, you’re right, is recruitment, not retention.
00:32:44 - 00:32:56 Speaker 6: Perfect. Thanks. Then, Germany, could you provide some commentary on the
EBITA margin movement in 2025 as a whole, so we understand?
00:32:58 - 00:33:19 John Stubbington: I'll hold that till tomorrow, Mattias. I think there'll be something
tomorrow that shows you that over a couple of years' period. The only comment I'll make about it, I won't go
into specifics. I'll just say that if you look at Germany over a two-year period, rather than just a year of reform,
that's a very positive position for us. I think we'll share that tomorrow.
00:33:21 - 00:33:37 Speaker 6: Okay, good. I guess we'll come back with this as well tomorrow. However,
could you give a high-level commentary on the anticipated CapEx to revenue ratio through 2028 and a rough
split between the segments?
00:33:41 - 00:34:08 Anand Patel: I guess we continue to see opportunities to invest. I would assume if I were
you guys, that will keep roughly the same percentage of revenues as organic CapEx spend over the next two or
three years. I would envisage that, broadly speaking, the split would be geared towards health care more than
diagnostics as well. That's our view and all we can say for now really.
00:34:10 - 00:34:19 Speaker 6: Thanks. One last one for me, a short one. How did the seasonality with
Christmas and so forth impact margins in Q4 versus last year?
00:34:20 - 00:35:34 John Stubbington: Yes, the holiday pattern was very frustrating for us because for those
who didn't work it out, you only had to take a few days' holiday, and then you were off for about three weeks, I
think. There was definitely a slowdown that occurred. There was also a longer delay in people returning postChristmas. However, I think when you look at our Q4, if that hadn't happened, in our Q4, I think it would have
been even stronger. It's hard to say exactly the position that we would have been in, but roughly, from our point
of view, our Q4 is kind of in line with where we expected it to be, if not a little bit better in terms of some of the
things we were navigating, which stands us in good stead. It was there. It's just one of those things. It's not one
of those things that happens every single year. We just have to navigate it, move on, and in our long-term
journey and our long-term objectives of what we want to do, I don't think we'll be talking about Christmas 2025
too much in our future.
00:35:37 - 00:35:40 Speaker 6: Perfect. Thanks, John, and I look forward to tomorrow.
00:35:41 - 00:35:42 John Stubbington: Look forward to seeing you. Thanks.
00:35:42 - 00:35:43 Speaker 6: Thanks.
00:35:48 - 00:35:53 Speaker 3: The next question comes from Kristofer Liljeberg from Carnegie. Please go
ahead.
00:35:57 - 00:36:11 Speaker 7: Hi. Good morning. Two questions. Is it possible to maybe comment on the cost
synergies from the Synlab acquisitions and how far you have come with that?
00:36:16 - 00:37:33 John Stubbington: We haven't obviously gone through a full cycle of a complete year of
seeing the benefits of this. However, in terms of the acquisition and post-acquisition implementation plan, we
are almost complete from a Synlab perspective. The things that we've got left to do are things that are left to do
based on the fact that the timeline would take us a little bit longer. Things such as our purchasing coming
together and getting the benefits of those things in terms of any duplication that we had that needs to be
resolved, and things such as systems, and things such as sending some of our more advanced tests to be
centralized in Romania or Germany. Those kinds of things are super well progressed. From a maturity curve
against ambition versus activation, the team is almost complete. Now, we've got to just make sure that comes
through positively in our numbers as we go through the course of the next 12 months.
00:37:34 - 00:37:43 Speaker 7: Is it possible to quantify the cost savings and how much more of that we should
expect in 2026?
00:37:44 - 00:38:41 Anand Patel: No, I'll take that one. Not now. I think what we will do is in the annual report
for the first time, when we report that, you'll see the split of the revenues and net income between the CityFit
and Synlab. You'll see the numbers in there in terms of how they're flowing through into profitability. We're not
showing that in this Q4 interim statement. As John said previously as well, we've said that the sports business
report had a strong start and carried on, and that's fair to say that's happened. From the Synlab perspective, still
lots of opportunities there, but we had a slower start. We're catching up now. As John said, we're getting to the
run rate where we need to be in terms of delivering on synergies and the profits that we expect, although they're
both still accretive versus the underlying medical business, which is what I'd say. In the annual report, you'll get
a bit more information about it, and that's all kind of we can say for now.
00:38:43 - 00:39:10 Speaker 7: Okay. My second question is the margin outlook here for 2026. The reason I'm
asking is, of course, we see the Q4 margin, and it was lower than the two-year level for 2025. Could you say
anything about how we should think about 2026 modern, and particularly maybe in the first half of the year?
00:39:10 - 00:40:11 John Stubbington: Yes, the first half of the year for us with the softness and whatever that
we'll need to navigate that we don't disclose margins, by quarter or give forward projections on these things
other than the mid-term targets that we've said. If you look at it from a mid-term target perspective, we're
confident that over the next three years, we'll build an even stronger business model. We've mentioned weakness
started to mention that in Q3, saying we're going to have to navigate it over a few quarters. That sends a slight
message, and we'll see how it goes, but we're positive that we can move our margins up over a period of time
because we've got some levers that we feel we can pull. We're in a good position, although we don't disclose as
a say.
00:40:13 - 00:40:31 Speaker 7: Okay, but if we have to take the seasonal effects that were discussed here
previously. From a seasonal perspective, Q1 versus Q4, is the model stronger in Q1 than in Q4?
00:40:31 - 00:41:00 John Stubbington: Yes, it will be. Q4, I think, particularly given the mix in the sports
business is a little bit lower in terms of how the margins flow through from a profitability perspective. Yes, there
would be better, but remember, as I've said in prior calls, we had stellar margin rate growth in Q1, Q2, and Q3.
We've got strong comps to the anniversary as well. Yes, the seasonality levels are in terms of the movement, but
strong comps to offset that.
00:41:01 - 00:41:03 Speaker 7: Okay. Thank you very much.
00:41:09 - 00:41:13 Speaker 3: The next question comes from Kane Slutzkin from Deutsche Bank. Please go
ahead.
00:41:17 - 00:41:44 Speaker 8: Excuse me. Morning, guys. Just a quick one. On Germany, you mentioned
you've seen good volume growth there despite the reform. Are you seeing competitors being squeezed out there,
or is it the sort of volume share gains? Then how much of the margin expansion in the diagnostics business is
coming from a shift towards more advanced testing and things like genetics versus the sort of more standardized
testing? Thanks.
00:41:47 - 00:43:14 John Stubbington: From a German market perspective, when we talked about reform all the
way back in the early quarters of 2025, we talked a lot about the tail, and that reform always ends up cutting the
tail of some of the smaller competition. We fully expect that to come through. Again, when things change come
like this, people want to try and trade out of it, and then eventually some of them realize that they can't. I think
there's more to come yet. Then, from an advanced diagnostic perspective, in our German advanced diagnostics,
which includes, I'll include it generically with our genetics business, is a strong part of our proposition. We'll
show that a bit more tomorrow in terms of how that works and why that's important for us. We do see growth in
that particular area, and we have invested further in that area in 2025 because we firmly believe it's a strong
place for us to be, and we can grow quite strongly. We'll talk about that more tomorrow. That will give a bit
more flavor to it.
00:43:17 - 00:43:19 Speaker 8: All right. Thanks very much.
00:43:27 - 00:43:34 Speaker 3: There are no more questions at this time. I hand the conference back to the
speakers for any written questions and closing comments.
00:43:36 - 00:43:48 Speaker 9: We got a couple of other questions. In the report, you note that you see the
recovery members' additions. Could you elaborate more on what is driving this recovery?
00:43:49 - 00:44:47 John Stubbington: Yes, from a member perspective, we have to put everything into context.
Our biggest membership business is Poland, is much smaller in Romania, but our Polish position, if you look
back in history over the last couple of years with the extreme inflation that we were having, our focus was very
much on making sure our business model was robust and that our pricing was appropriate and that we could
deliver high quality services to our customers as a consequence of the pricing position. We didn't take a stance
to say, let's use this to drive a high volume of membership growth, and that's what you've seen. The inflationary
position will still be relatively high, but not super high as it was, and our focus will move more towards building
membership.
00:44:47 - 00:45:41 John Stubbington: Again, a bit tomorrow, you'll see some of that, but also, I'll mention
today that some part of that will be about product development and how that product development can increase
our membership. We've done some of that already, and we see some early signs of success on some of that
product development, and we see some good pipelines being developed. We're back into a different kind of
mode as we go through '26, '27, from a membership perspective. If you look at our business mix now, we've got
funded members, and we've got fee-for-service members, and you can see extreme increases in our relationships
that we have from a consumer perspective, which will always start also standards in good terms. I think we're
reasonably well placed on both lines.
00:45:42 - 00:45:49 Speaker 9: What scope do you see for pricing our healthcare services for 2026 in view of
the more challenging Q4 25?
00:45:49 - 00:46:38 John Stubbington: Yes, we'll take our normal pricing position, which is that appropriate
pricing will be put in place based upon what we see in terms of utilization and what we see in terms of medical
inflation. If we go back to the last couple of years, our pricing has been a little bit higher. You would expect it to
normalize to positions we had before, but we are not an organization that will discount prices to get volumes.
We're an organization that wants to price appropriately so that we can add value to the customer and have a nice
balance between them paying an appropriate fee and us delivering a fantastic service to them.
00:46:38 - 00:46:46 Speaker 9: The last question. Would it be possible to mirror the sports wellness success in
Poland in other markets, or is it very particular to just Poland?
00:46:46 - 00:47:22 John Stubbington: Currently, our focus is very much on Poland. It's been a fantastic
addition to our portfolio. Our customers appreciate the diversity of the proposition that we can now give them.
In Poland, there's a slightly different pricing dynamic that comes into play because Poland has the funds from
the businesses, the independent funds that can be used, and the social funds, which aren't necessarily available in
other countries. We've got quite a big expansion to do in Poland. We've got laser focus on Poland, the present.
00:47:25 - 00:47:32 Speaker 9: The final one. If you look at your last page and where you talk about where
growth will come from, how do you look at the split between network expansion projects?
00:47:34 - 00:47:55 Anand Patel: I think John kind of broadly answered that on page six of the pack. If you look
at Poland, that was 16% growth year on year in the quarter. The majority of that growth was driven by sports
and wellness, which we mentioned already. The other material areas of growth in the quarter in health care were
in Romania. Obviously, we've got Romanian hospitals in healthcare. That's probably it.
00:47:57 - 00:47:58 Speaker 9: That's the final question.
00:47:58 - 00:48:32 John Stubbington: Okay. Thank you, everybody. Thank you for the questions, really good
session. We're really pleased with the quarter that we've had, we're really excited about the targets ahead, they're
challenging, they're ambitious, everything that Medicover was about. We're very happy to take those on board
and are looking forward to developing the business to be able to achieve them. For those of you who are joining
us tomorrow, we look forward to seeing you, whether you're face-to-face or online. We wish you a good day.
Thank you very much.
