CGM Cegedim

First-half financial information at June 30, 2024IFRS - Regulated information - Audited

Cegedim: Revenue and EBITDA both increased in the first half of 2024

• Revenue grew 6.0% as reported and 4.6% LFL to €319.0 million
• EBITDA rose 6.9% to €52.2 million
• Recurring operating income(1) (REBIT) fell 3.4% to €10.3 million

Boulogne-Billancourt, France, September 26, 2024, after the market close

Cegedim generated consolidated H1 2024 revenues of €319.0 million, a 6.0% year-on-year increase as reported, and EBITDA of €52.2 million, a €3.4 million or 6.9% increase. Recurring operating income fell €0.4 million, or 3.4%, to €10.3 million.

Consolidated revenues rose €18.0 million, or 6.0%, to €319.0 million in H1 2024 compared with €301.0 million in 2023. The positive scope effect of €3.7 million, or 1.2%, was attributable to the first-time consolidation in Cegedim’s accounts of Visiodent starting March 1, 2024. The positive currency impact was €0.5 million, or 0.2%, chiefly owing to appreciation of the pound sterling against the euro. In like-for-like terms(2), revenues rose 4.6% in the first half, in line with the Group’s announced outlook. The performance was attributable to seasonality and the non-recurrence of Ségur public health investments in 2024.

EBITDA(1) rose €3.4 million between the first half of 2023 and 2024, or 6.9%. The improvement is the result of good management of personnel costs and external costs, in moderate growth as a percentage of revenues even though the amount of R&D capitalization fell and the Group had an additional quarter of start-up costs for its biggest BPO contract.

-------------(1)    Alternative performance indicator See pages 112-113 of the 2023 Universal Registration Document.(2)   At constant scope and exchange rates.

Depreciation and amortization expenses rose €3.7 million, chiefly due to a €3.1 million increase in R&D amortization (€22.7 million at June 30, 2024 compared with €19.7 million a year earlier) driven by development efforts in recent years.

Recurring operating income(1) fell €0.4 million to €10.3 million in H1 2024 compared with €10.7 million in 2023.  It amounted to 3.2% of 2024 revenue compared with 3.6% in 2023. The fine EBITDA performance did not drop through to recurring operating income solely because of higher depreciation and amortization. Excluding the impact of Ségur subsidies and at comparable levels of amortization of capitalized R&D, Recurring operating income would have more than doubled.

Other non-current operating costs(1) amounted to €2.6 million in H1 2024 compared with €1.4 million in the same period in 2023.  The principal items in 2024 were restructuring costs related to the Group’s decision to refocus software for doctors in the UK on Scotland and fees related to the Visiodent acquisition.

Taking these elements into account, operating income came to €7.7 million at June 30, 2024, compared with €9.3 million a year earlier.

Financial result was a loss of €5.0 million compared with a €5.6 million loss in H1 2023. Dividend income over the period more than offset the increase in the cost of financial debt.

Tax was back to normal levels at €2.6 million in H1 2024 compared with €12.4 million in H1 2023. As a reminder, in 2023 the Group made a non-cash adjustment that caused it to record a deferred tax charge corresponding to the downward revision of its estimated remaining deferred tax assets.

Analysis of business trends by division

(*) As of January 1, 2024, our Cegedim Outsourcing and Audiprint subsidiaries—which were previously housed in the Software & Services division—as well as BSV—formerly of the Flow division—have been moved to the Cloud & Support division in order to capitalize on operating synergies between cloud activities and IT solutions integration.

• Software & Services: H1 2024 revenues posted a €1.5 million increase, and recurring operating income (REBIT)(1) improved by €1.1 million to a loss of €1.4 million, compared with a €2.5 million loss a year earlier.

-------------(1)    Alternative performance indicator See pages 112-113 of the 2023 Universal Registration Document.

As expected, Cegedim Santé felt the impact of increased R&D amortization (nearly €1 million) and a demanding comparison owing to the non-recurrence of Ségur public health investments (€4.4 million in H1 2023 revenues). The consolidation of Visiodent starting March 1, 2024, only partly offset those two items. Recurring operating income was nearly stable over the first half, but EBITDA increased as expected.

The other businesses in the division posted REBIT(1) of €1.2 million. A solid performance by HR solutions, which managed to keep costs under control during a phase of strong growth, compensated for slower pharmacy equipment sales post-Ségur. The international businesses got a boost from dynamic sales for doctors in Spain and for insurers in the UK. As we shift our operations, narrowing the focus of our UK doctor’s software business to Scotland continued to generate costs in the first half.

• Flow: Revenues rose 5.8%, driven by Cegedim e-business (process digitalization and electronic data flows), both of whose businesses made positive contributions; by Invoicing & Procurement, which rebounded in France and is benefiting from the upcoming reform in Germany; and by Healthcare Flow Management, which has dynamic new offerings for hospitals to make their drug purchasing secure. Over the same period, Third-party payer systems posted 3.6% growth. As a result, REBIT(1) rose 12.8%, with Third-party payer systems making the biggest contribution, as Cegedim e-business recorded a large R&D amortization charge.
• Data & Marketing: Trends differed at this division—Marketing is still going strong, with 20% growth, whereas Data revenues fell 2.8%, particularly abroad. REBIT(1) of €6.6 million was down €1.3 million over the first half owing to high fixed costs in Data and increased depreciation and amortization costs at C-Media (+€1 million) due to heavy investments in updating its digital signage equipment.
• BPO: Revenue jumped more than 21% over the first half, buoyed notably by a full six months of the contract with Allianz, which started on April 1, 2023, and is expected to generate losses in the early years. But the division reined in those losses so well that REBIT(1) rose €0.5 million in the first half of 2024 to reach €1.9 million, also getting a boost from the HR BPO and digitalization businesses.
• Cloud & Support: H1 2024 REBIT(1) was a loss of €1.3 million, compared with breakeven a year earlier. The drop was due to surcharges related to the launch of a new cloud offering and recruitment of new offshore teams.

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(1) Alternative performance indicator See pages 112-113 of the 2023 Universal Registration Document.

Highlights

Apart from the items cited below, to the best of the company’s knowledge, there were no events or changes during H1 2024 that would materially alter the Group’s financial situation.

• Acquisition of Visiodent

On February 15, 2024, Cegedim Santé acquired Visiodent, a leading French publisher of management software for dental practices and health clinics. Visiodent launched the market’s first 100% SaaS solution, Veasy, at a time when it was significantly expanding its organization. Its users now include the country’s largest nation-wide networks of health clinics, both cooperative and privately owned, as well as several thousand dental surgeons in private practice. Visiodent generated revenue of c.€10 million in 2023 and began contributing to Cegedim Group’s consolidation scope on March 1, 2024.

• Tax

Cegedim S.A. has been subject to two tax audits since 2018, which have resulted in reassessments relating to the use of tax-loss carryforwards contested by the tax authorities. Cegedim, in consultation with its lawyers, believes that the reassessments are unfounded in light of the applicable tax law and jurisprudence. The Company has therefore taken, and continues to take, all possible avenues of contestation.

As these appeals are not suspensive, Cegedim has paid the amounts reassessed over time (a total of 23 million euros already paid, including 10.9 million euros disbursed in February 2024). The remaining risk of future disbursements in respect of this dispute thus amounts to only 5 million euros at June 30, 2024.

However, these disbursements have never given rise to the recognition of a tax charge in the P&L, since the Company considers that these sums will be recoverable at the end of the proceedings (they are recognized as advances paid on the assets side of the balance sheet). Should the outcome be unfavorable, a charge of 28 million euros (of which 23 million has already been paid) would have to be recorded in the consolidated income statement.

In addition, the consolidated balance sheet must show the future tax savings still realizable in respect of tax loss carryforwards. This “deferred tax asset” amounted to 6.9 million euros at June 30, 2024. Should the outcome be unfavorable, the probability of realizing these future savings would become nil, and an adjustment of 6.9 million euros would have to be recorded in the consolidated income statement (with no cash impact, since these gains have never yet been realized).

Consequently, the risk associated with this dispute is not (or very little) in terms of cash, but rather in terms of a possible adjustment to the consolidated income. The maximum P&L adjustment risk is known: it amounts to 34.9 million euros and will remain unchanged. Only its breakdown varies at each closing: the amount of disputed tax savings (28 million to date) will continue to increase, and that of remaining future savings (6.9 million to date) will decrease accordingly until exhausted.

In the last quarter of 2023, the Company referred this dispute to the administrative court, which is likely to continue for several years.

Significant transactions and events post June 30, 2024

Apart from the items cited below, to the best of the company’s knowledge, there were no post-closing events or changes after June 30, 2024, that would materially alter the Group’s financial situation.

• New financing arrangement

On July 31, 2024, Cegedim announced that it had secured a new financing arrangement consisting of a €230 million syndicated loan. The arrangement is split into €180 million of lines drawn upon closing to refinance the Group’s existing debt (RCF and Euro PP, which were to mature in October 2024 and October 2025 respectively) and an additional, undrawn revolving credit facility (RCF) of €50 million. This new financing arrangement will bolster the Group’s liquidity and extend the maturity of its debt to, respectively, 5 years (€30 million, payments every six months); 6 years (€60 million, repayable upon maturity); and 7 years (€90 million, repayable upon maturity).

Outlook

Based on the currently available information, the Group expects 2024 like-for-like(2) revenue growth to be in the range of 5-8% relative to 2023. Recurring operating income should continue to improve, following a similar trajectory as in 2023.  

Recurring operating income(1) is expected to grow, notably thanks to the initial returns on investments made in Cegedim Santé and refocusing international activities.

These targets may need to be revised in the event of unexpected developments (pandemic, etc.) and/or a significant worsening of geopolitical and macroeconomic risks. The Group reiterates that it has no activities or exposed assets in Russia or Ukraine.

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The Audit Committee met on September 25, 2024. The Board of Directors, chaired by Jean-Claude Labrune, met on September 26, 2024, and approved the consolidated financial statements at June 30, 2024, of which the statutory auditors have conducted a limited review. The Interim Financial Report will be available in a few days’ time, in French and in English, on our website.

2024 financial calendar

Financial calendar: https://www.cegedim.fr/finance/agenda/Pages/default.aspx

DisclaimerThis press release is available in French and in English. In the event of any difference between the two versions, the original French version takes precedence. This press release may contain inside information. It was sent to Cegedim’s authorized distributor on September 26, 2024, no earlier than 5:45 pm Paris time.The figures cited in this press release include guidance on Cegedim's future financial performance targets. This forward-looking information is based on the opinions and assumptions of the Group’s senior management at the time this press release is issued and naturally entails risks and uncertainty. For more information on the risks facing Cegedim, please refer to Chapter 7, “Risk management”, section 7.2, “Risk factors and insurance”, and Chapter 3, “Overview of the financial year”, section 3.6, “Outlook”, of the 2023 Universal Registration Document filled with the AMF on April 3, 2024, under number D.24-0233.

About Cegedim:Founded in 1969, Cegedim is an innovative technology and services group in the field of digital data flow management for healthcare ecosystems and B2B, and a business software publisher for healthcare and insurance professionals. Cegedim employs more than 6,500 people in more than 10 countries and generated revenue of €616 million in 2023.

Cegedim SA is listed in Paris (EURONEXT: CGM).To learn more please visit: www.cegedim.frAnd follow Cegedim on X: @CegedimGroup, LinkedIn, and Facebook.

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(1) Alternative performance indicator See pages 112-113 of the 2023 Universal Registration Document.(2) At constant scope and exchange rates.Annexes

Consolidated financial statements at June 30, 2024

• Assets au 30 juin 2024

• Liabilities et shareholders’ equity at June 30, 2024

• Income statement at June 30, 2024

• Cash flow statement as of June 30, 2024

• Financial covenants

The Group complied with all its covenants as of June 30, 2024.

(1) Alternative performance indicator

Attachment

• Cegedim_Earnings_1H2024_ENG

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