21.03.2018 – 07:16

Zur Rose AG

EQS-News: Zur Rose Group implements successful growth strategy

EQS Group-News: Zur Rose Group AG / Key word(s): Final Results
Zur Rose Group implements successful growth strategy

21.03.2018 / 07:00

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Press release

2017 operating result

Zur Rose Group implements successful growth strategy

The growth strategy introduced by the Zur Rose Group at the end of 2016 is
bearing fruit. Europe's leading online pharmacy in 2017 increased sales by
double digits to CHF 982.9 million. The dynamic growth is the result of the
marketing campaign in Germany and an encouraging performance in Switzerland. For
2018, management expects further accelerated growth of more than 20 percent in
local currency terms.

For the Zur Rose Group, the 2017 financial year marked a milestone in the
company's 25-year history. By raising funds under the IPO and the listing on the
SIX Swiss Exchange, the company has created the capital base for implementing a
dynamic growth strategy. The net proceeds from the IPO of CHF 215 million have
enabled the defined growth initiatives to be pursued and the corporate bond of
CHF 50 million to be repaid. With an equity ratio of 64.4 percent, the company
is solidly financed and also has a stable anchor shareholder base.

Investments in the market are paying off - The Zur Rose Group in 2017
successfully continued the broad-based marketing campaign in Germany aimed at
attracting new customers for the purpose of accelerated growth. Consolidated
sales increased by 11.8 percent year-on-year to CHF 982.9 million. The growth
momentum confirmed the effectiveness of marketing expenses at the expense of
short-term profit performance. Profit was burdened as scheduled by around CHF 15
million due to further future-oriented expenses and non-recurring costs in
connection with the IPO. The reported operating result (EBITDA) is minus CHF
21.2 million and net income/(loss) is minus CHF 36.3 million. Adjusted for the
aforementioned extraordinary expenses, EBITDA would amount to minus CHF 6
million.

Cooperation and innovation boost the Swiss business - In 2017, Zur Rose
succeeded in strengthening its strong market position by further developing
innovative services and partnerships with Migros, Medbase and health insurers.
With sales up 6.3 percent to CHF 500 million, Zur Rose in Switzerland grew well
above the market average. In the doctors' segment, the company increased its
market share by 0.6 percentage points to 23.6 percent. The partnership with
Medbase, Switzerland's largest service provider in basic outpatient medical
care, was launched in 2017. Zur Rose exclusively supplies all Medbase centres
with drugs. The retail business grew for the first time again since the Federal
Court ruling of 2015 restricting the mail-order dispatch of over-the-counter
drugs (OTC). Both the realignment of the specialty care business and the two new
inpatient pharmacies in Bern contributed to this. The successful launch of the
shop-in-shop concept as part of the cooperation with Migros has prompted the
company to open two more in-store pharmacies in 2018 at the Migros branches
Claramarkt Basel and Limmatplatz Zurich. Additional locations are under
consideration above all in cantons without medical self-dispensation. Zur Rose
combines its in-patient presence with the e-commerce business as part of an
omnichannel strategy, thereby enabling its customers to access drugs across all
channels at the same preferential rates as via the online channel.

Strengthening of market leadership in Germany - The Zur Rose Group in 2017 also
further expanded its leading market position in Germany. Due to the increased
marketing activities of DocMorris targeting both chronically ill patients with a
regular need for medication and OTC customers, sales of the Germany segment
increased by 18.1 percent to CHF 483.2 million. With an increase in sales of
38.7 percent in the mail-order business with non-prescription drugs, DocMorris
once again grew significantly faster than the market as a whole in local
currency terms, making it one of Germany's leading mail-order pharmacies in the
OTC sector. The proportionately larger prescription drug business (Rx) increased
by 10.2 percent in local currency terms. As a result of the marketing offensive,
the number of active DocMorris customers increased by 32 percent to 1.8 million
in the year under review.

Synergies through the bundling of mail-order activities - In 2018, the Zur Rose
Group will complete the integration of Eurapon and Vitalsana, acquired at the
end of 2017. The sales of the two companies with a sustained impact on the Group
would have amounted to EUR 85 million in 2017. The mail-order volumes handled in
Heerlen from mid-2018, which are the result of the realignment of the Halle
site, and the integration of Vitalsana will generate sustainable synergies. In
the medium term, the mail-order business of Eurapon will also be handled in
Heerlen.

Aftermath of the ECJ ruling - The coalition agreement between the CDU/CSU and
SPD includes a passage on the implementation of a ban on mail-order sales of
prescription drugs. It states: "To strengthen local pharmacies, we are committed
to a prohibition on mail-order trade in prescription drugs." Prohibitions were
rejected by politicians in 2008 and 2012 for constitutional reasons. Both
European and constitutional arguments against a ban were significantly
strengthened by the ruling of the European Court of Justice in 2016. In the past
legislative period, a draft bill for a corresponding law failed because of
opposition from a wide range of stakeholders. A recent report commissioned by
the Federal Ministry for Economic Affairs and Energy came to the conclusion that
a ban on the mail-order business was not justified in the light of nationwide
coverage. The Zur Rose Group is therefore observing and analysing all
developments and if need be will take all necessary legal and operational steps
against a possible ban in the interest of patients both in Germany and at the
European level.

Outlook - The Zur Rose Group intends to continue on its path of growth and also
in the coming years to consistently utilise the long-term market developments
marked by an ageing society, steadily rising cost pressure in the healthcare
sector and online penetration lagging behind the consumer goods industry for the
benefit of its business model. This also includes an active role in
consolidating the OTC mail-order market through appropriate acquisitions. Based
on continued double-digit organic growth, management expects sales growth of
more than 20 percent in local currency terms in 2018 and aspires to break even
at the EBITDA level adjusted for exceptional items. To this end, taking
advantage of profitable growth opportunities in the medium term is preferred
over short-term profit improvements.

Key financials,in CHF million                                          2017
2016

Net revenue                                                            982.9
879.5

Year-on-year change in %                                               11.8%
5.4%

Gross margin in % of revenue                                           14.9%
15.0%

Earnings bevor interest, taxes, depreciation and amortisation (EBITDA) -6.0
2.1
after adjusting extraordinary costs 2017

in % of revenue                                                        -0.6%
0.2%

EBITDA                                                                 -21.2
2.1

Earnings before interest and taxes (EBIT)                              -18.1
-7.1
after adjusting extraordinary costs 2017

in % of revenue                                                        -1.8%
-0.8%

EBIT                                                                   -38.3
-7.1

Net operating income after adjusting extraordinary costs 2017          -16.3
-12.8

in % of revenue                                                        -1.7%
-1.5%

Net operating income                                                   -36.3
-12.8

Equity                                                                 294.2
103.8

in % of total assets                                                   64.4%
39.7%

Investments                                                            22.0
21.2

Number of employees (in full-time equivalents) at year end             1'106*
752
 
* Including the companies Eurapon and Vitalsana consolidated as of 31 December
2017

The full online 2017 Annual Report can be found atgb.zurrosegroup.com.

At 2 p.m. CET today there will be a telephone conference in English for analysts
and the media.
Dial-in numbers: UK: +442030092452 | USA: +18554027766 | DE: +4969222229043 |
CH: +41225805970
Conference ID: 63253964#
The associated presentation (without audio) is available
at:www.audio-webcast.com| password: zurrose0318
Alternatively, the presentation can be followed via live audio webcast using the
following link:
http://www.audio-webcast.com/cgi-bin/visitors.ssp?fn=visitor&id=5393

Investor and analyst contact
Marcel Ziwica, Chief Financial Officer
e-mail:  ir@zurrose.com, telephone: +41 52 724 00 64

Media contact
Lisa Lüthi, Head of Corporate Communications
e-mail:  lisa.luethi@zurrose.com, telephone: +41 52 724 08 14

Agenda
18 April 2018 Q1 Trading Update
24 May 2018 Annual General Meeting
15 August 2018 Half-year report (analyst and media conference)
24 October 2018 Q3 Trading Update

Zur Rose Group

Operating under the Zur Rose and DocMorris brands, the Swiss-based Zur Rose
Group is Europe's leading online pharmacy and one of Switzerland's foremost
wholesale suppliers to medical doctors. Through its business model, it helps to
ensure safe, reliable and high-quality pharmaceutical care, while also excelling
in developing innovative medicines management services to increase the
effectiveness of the medication process. This creation of added value, the
strong focus on patients and the commitment to supply medication at low cost for
the benefit of payors and patients make the Group an important strategic partner
for all healthcare stakeholders.

The Zur Rose Group is headquartered in Frauenfeld, from where it also serves the
Swiss market. Customers in Germany and Austria are primarily supplied from
Heerlen (NL). Furthermore, the Group holds a majority interest in BlueCare in
Winterthur, the leading provider of networking systems in the Swiss healthcare
market. Employing more than 1000 people at its various locations, Zur Rose Group
generated revenue of CHF 983 million in 2017. Zur Rose Group AG's shares (ticker
symbol ROSE, Swiss security no. 4261528, ISIN CH0042615283) are traded on SIX
Swiss Exchange. More information at zurrosegroup.com.

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End of Corporate News
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Language: English

Company:  Zur Rose Group AG

          Walzmühlestrasse 60

          8500 Frauenfeld

          Switzerland

Phone:    +41 52 724 08 14

Internet: www.zurrosegroup.com

ISIN:     CH0199729366, CH0042615283

Listed:   SIX Swiss Exchange



 

End of News EQS Group News Service

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666435  21.03.2018