Zur Rose Group AG: Cautious Optimism in Earnings Call

Zur Rose Group AG ((CH:DOCM)) has held its Q4 earnings call. Read on for the main highlights of the call.

The recent earnings call of Zur Rose Group AG reflected a cautiously optimistic sentiment, highlighting several positive developments alongside some challenges. The company reported a significant increase in Rx customers and profitability in its non-Rx business, driven by strategic growth plans. However, the earnings call also revealed lower than expected EBITDA and limited short-term guidance, primarily due to the ongoing capital raise efforts. Overall, the sentiment was one of cautious optimism, with a strong emphasis on future growth prospects.

Significant Increase in Rx Customers

Since the introduction of CardLink in April 2024, Zur Rose Group AG has witnessed a remarkable fivefold increase in new Rx customers. This surge underscores the company’s successful strategic initiatives aimed at expanding its customer base and enhancing its market presence.

Profitability Achieved in Non-Rx Business

DocMorris AG, a subsidiary of Zur Rose Group, achieved profitability in its non-Rx business. This milestone was attributed to strategic efforts and the successful execution of a breakeven program, showcasing the company’s ability to optimize operations and drive financial performance.

Revenue Growth Across All Segments

The company reported a 7% increase in revenue, with contributions from all business segments. This growth reflects the company’s robust performance and its ability to capitalize on market opportunities across various segments.

Teleclinic Revenue Doubled

Teleclinic, another segment of the company, achieved a significant milestone by doubling its revenues in 2024. This performance highlights the segment’s strong growth trajectory and attractive profitability metrics.

Strategic Capital Raise for Growth

DocMorris plans to raise approximately CHF200 million to support Rx growth and refinance the convertible bond due in 2026. This strategic capital raise is aimed at bolstering the company’s financial position and supporting its growth initiatives.

Sustainability Targets Met

Zur Rose Group successfully met its sustainability targets for 2024, aligning with the European Sustainability Reporting Standard. This achievement underscores the company’s commitment to sustainable practices and its alignment with broader environmental goals.

Lower Than Expected EBITDA

The company’s adjusted EBITDA came in lower than last year, primarily due to additional marketing expenses for the eRx business. This reflects the company’s investment in growth initiatives, albeit at the cost of short-term profitability.

Challenges with Rx Growth in Early 2025

For Q1 2025, the company anticipates a further decrease in Rx growth in absolute value, at a rate of about 50%. This presents a challenge for the company as it navigates the evolving market dynamics.

Limited Guidance Due to Capital Raise

Due to restrictions related to the upcoming capital raise, DocMorris is unable to provide detailed short and midterm guidance. This limitation poses a challenge for investors seeking clarity on the company’s future performance.

Forward-Looking Guidance

In the recent conference call, DocMorris AG provided guidance for the upcoming fiscal year, highlighting several key metrics and strategic initiatives. The company reported a 7% increase in overall revenue for 2024, with a notable fivefold increase in new Rx customers since the introduction of CardLink. The non-Rx business reached profitability, contributing to an end-of-year cash balance of CHF95 million. For 2025, DocMorris aims to further expand Rx growth and plans to raise CHF200 million in capital to support this initiative and refinance a convertible bond due in 2026. Additionally, the Teleclinic segment doubled its revenues to CHF11 million, with a positive EBITDA of over CHF3 million, and is expected to continue its growth trajectory. The average order value for eRx customers reached €110, while over 85% of these customers utilized the app for prescriptions, resulting in a next-day home delivery rate exceeding 95%. The company also emphasized its commitment to sustainability, aligning its activities with the European Sustainability Reporting Standard. Despite a temporary lack of detailed guidance due to ongoing capital raising efforts, DocMorris expressed confidence in its strategic direction and market opportunities.

In summary, the earnings call of Zur Rose Group AG painted a picture of cautious optimism, with several positive developments and strategic initiatives aimed at future growth. The company reported significant increases in Rx customers and profitability in its non-Rx business, alongside challenges such as lower than expected EBITDA and limited short-term guidance. Despite these challenges, the company remains focused on its strategic direction and market opportunities, with a strong emphasis on sustainability and growth.