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| PRESS RELEASE |
First-half financial information at June 30, 2023
IFRS - Regulated information - Audited
Cegedim: Revenue and earnings both up in the first half of 2023
- Revenue of €301.0 million and like-for-like growth of 12.1%
- Recurring operating income(1) up 57% to €10.7 million
- EBITDA up 17.2% to €48.8 million
Boulogne-Billancourt, France, September 20, 2023, after the market close
Cegedim generated consolidated H1 2023 revenues of €301.0 million in 2023, an increase of 12.5% as reported, and operating income of €9.3 million, a €6.8 million increase.
| H1 2023 | H1 2022 | Change | ||||
| in €m | in % | in €m | in % | in €m | in % | |
| Revenue | 301.0 | 100.00% | 267.6 | 100.00% | 33.4 | 12.5% |
| EBITDA(1) | 48.8 | +16.2% | 41.7 | 15.6% | 7.1 | 17.2% |
| Depreciation & amortization | -38.1 | -12.7% | -34.8 | -13.0% | -3.3 | -9.4% |
| Recurring operating income(1) | 10.7 | 3.6% | 6.8 | 2.5% | 3.9 | 57.0% |
| Other non-recurring operating income and expenses(1) | -1.4 | -0.5% | -4.4 | -1.6% | 3.0 | 68.5% |
| Operating income | 9.3 | 3.1% | 2.5 | 0.9% | 6.8 | 272.6% |
| Financial result | -5.6 | -1.9% | -4.4 | -1.7% | -1.2 | -25.7% |
| Total tax | -12.4 | -4.1% | -3.5 | -1.3% | -8.9 | -255.2% |
| Share of net profit (loss) of equity method companies | -0.5 | -0.2% | -0.7 | -0.2% | 0.2 | 21.5% |
| Consolidated net profit | -9.2 | -3.1% | -6.1 | -2.3% | -3.1 | -50.1% |
| Non-controlling interests | -0.4 | -0.1% | -1.3 | -0.5% | 0.9 | 66.3% |
| Group share | -8.8 | -2.9% | -4.9 | -1.8% | -3.9 | -80.4% |
| Recurring earnings per share(1) (in euros) | -0.6 | - | -0.4 | - | ||
| Earnings per share (in euros) | -0.6 | - | -0.4 | - | ||
Consolidated revenues: rose €33.4 million, or +12.5%, to €301.0 million in H1 2023 compared with €267.6 million in 2022. The positive scope effect of €1.7 million, or 0.7%, was attributable to the first-time consolidation in Cegedim’s accounts of new acquisitions Kobus Tech, MesDocteurs, Laponi, Sedia, and Clinityx. The negative currency impact of was €0.7 million, or 0.3%.
Like-for-like(1) revenue increased 12.1% over the period.
Recurring operating income(1): rose €3.9 million to €10.7 million in H1 2023 compared with €6.8 million in 2022. It amounted to 3.6% of 2023 revenue compared with 2.5% in 2022. The increase was chiefly the result of improved earnings at Cegedim Santé and businesses in the UK (catering to both healthcare professionals and insurers), as well as strong performances in human resources, data, and marketing activities.
Other non-recurring operating income and expenses(1): the first-half 2023 figure came to an expense of €1.4 million, compared with a €4.4 million expense in the year-earlier period, and comprised restructuring costs.
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(1) Alternative performance indicator See pages 110-111 of the 2022 Universal Registration Document.
(2) At constant scope and exchange rates.
Depreciation and amortization expenses: this item rose €3.3 million including a €1.4 million increase in R&D amortization compared with 2022.
EBITDA(1): the €7.2 million increase between first half 2023 and first half 2022 was a result of revenue growth and good management of personnel costs.
Financial result: was a loss of -€5.6 million compared with a -€4.4 million loss in H1 2022. Most of the expense was related to the cost of debt, which increased €1.5 million over the period.
Tax: tax increased €8.9 million in the first half of 2023 compared with the year-earlier period, notably due to the recognition of a deferred tax expense of €9.5 million during the period. This entry, which had no cash impact, was done to adjust the value of deferred tax assets on the balance sheet. In response to a tax ruling in July 2023, the Group opted for a more conservative assessment of the unrealized future gains from its remaining tax-loss carryforwards (see Highlights section below).
Analysis of business trends by division
| in millions of euros | Total | Software & services | Flow | Data & Marketing | BPO | Corporate and others |
| Revenue | ||||||
| 2022 | 267.6 | 145.6 | 45.2 | 50.0 | 25.4 | 1.3 |
| 2023 | 301.0 | 161.5 | 48.2 | 54.9 | 32.8 | 3.5 |
| Change | 12.5% | 10.9% | 6.7% | 9.9% | 29.3% | 160.9% |
| Recurring operating income | ||||||
| 2022 | 6.8 | -7.6 | 6.3 | 6.1 | 1.0 | 1.0 |
| 2023 | 10.7 | -2.0 | 5.6 | 6.6 | 1.4 | -0.9 |
| Change | 57.0% | 73.5% | -10.8% | 8.2% | 34.4% | -186.7% |
| Recurring operating margin (as a % of revenues) | ||||||
| 2022 | 2.5% | -5.2% | 14.0% | 12.1% | 4.0% | 74.5% |
| 2023 | 3.6% | -1.2% | 11.7% | 11.9% | 4.2% | -24.7% |
- Software & Services: H1 2023 revenues rose 10.9%, driven by good performances at Cegedim Santé (+25% in H1, o/w €4.3 million related to Ségur de la Santé public health investments), international businesses (+10% on new signings with pharmacies, new sites for doctors in Scotland, and projects for the UK Ministry of Defence), and HR solutions (+10% over the full year).
Recurring operating income (REBIT)(1) amounted to a loss of €2.0 million in H1 2023, a €5.6 million improvement compared with the €7.6 million loss a year earlier. The improvement came from two main sources: Cegedim Santé (REBIT(1) up €4.9 million), which saw robust business activity and kept hiring under control; and international businesses (REBIT(1) up €2.8 million), due to a rebound in revenues and cost structure adjustments. The other companies in the division posted a €2.2 million decrease in REBIT(1) compared with 2022. The fine performance at HR solutions was obscured by delays starting up production in the Insurance segment and by the delay until H2 of the Ségur de la Santé public health investments’ impact on the Pharmacy division in France.
| Software & Services | First half | Change 2023 / 2022 | ||
| in millions of euros | 2023 | 2022 | ||
| Revenue | 161.5 | 145.6 | 15.9 | 10.9% |
| Cegedim Santé | 39.8 | 31.8 | 8.0 | 25.1% |
| Insurance, HR, Pharmacies, and other services | 95.3 | 89.8 | 5.6 | 6.2% |
| International businesses | 26.3 | 24.0 | 2.4 | 9.8% |
| Recurring operating income(1) | -2.0 | -7.6 | 5.6 | 73.5% |
| Cegedim Santé | -1.4 | -6.3 | 4.9 | 77.7% |
| Insurance, HR, Pharmacies, and other services | 3.8 | 5.9 | -2.2 | -36.6% |
| International businesses | -4.4 | -7.2 | 2.8 | 39.4% |
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(1) Alternative performance indicator See pages 110-111 of the 2022 Universal Registration Document.
- Flow: revenues rose 6.7%, led by Cegedim e-business (process digitalization and electronic data flows), whose French and international businesses grew 6% and 18% respectively. Over the same period, Third-party payer systems posted 5.5% growth. The main reason for the decline in REBIT(1) was that invoicing for the third-party payer contract with Allianz was transferred to the BPO division on 1 April.
- Data & Marketing: marketing and data activities made positive contributions of respectively 8.9% and 10.7% to the division’s revenue growth compared with 2022. Division REBIT(1) rose 8.2% compared with 2022, buoyed by all of the division’s businesses.
- BPO: revenue from services managed on behalf of health and personal protection insurers jumped more than 40% over the first half, buoyed by the start of the new contract with Allianz on April 1, 2023. BPO for human resources departments also continued to grow, with revenues up 9.4% in the first half. The division’s REBIT(1) grew a modest €0.4 million over the period. Costs related to starting up the Allianz contract obscured productivity gains in other businesses stemming notably from management process automation.
- Corporate and others: H1 2023 REBIT(1) was a €0.9 million loss, down €1.9 compared with H1 2022. As we explained when presenting 2022 results, the deterioration was caused by an effort to standardize methods for reinvoicing corporate office activities, notably in the areas of R&D and IT systems, as well as lower margins at the offshore corporate centers.
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(1) Alternative performance indicator See pages 110-111 of the 2022 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 2023 that would materially alter the Group’s financial situation.
- Tax
On February 21, 2018, Cegedim S.A. received official notice that the French tax authorities planned to perform an audit of its financial statements for 2015 and 2016. The audit resulted in a reassessment notice covering the use of tax-loss carryforwards, which the authorities disputed. On February 21, 2021, Cegedim S.A. received official notice that the French tax authorities planned to perform an audit of its financial statements for 2019 and 2020. That audit did not result in any additional reassessments.
After consultation with its lawyers and based on the applicable tax law and existing tax rulings, the Group believes that the tax authorities’ proposed reassessment is unwarranted. Cegedim S.A. has appealed the decision and continues to explore its options for contesting the reassessment.
Over the first half of 2023, Cegedim S.A. continued to apply the disputed tax-loss carryforwards to its taxable earnings, bringing cumulative tax savings to €24.4 million at June 30, 2023.
Furthermore, as it is permitted to do under this process, in the first half of 2022 tax authorities issued Cegedim S.A. a notice of collection, in response to which the Group paid a total of €12.1 million in respect of tax loss carryforwards used through 2020 and a €0.4 million late payment penalty. The corresponding entry for these payments was not recognized in expenses, but rather as a tax receivable in the balance sheet, as the Company expects these sums to be repaid once the dispute has been resolved in its favor.
As a result, if Cegedim S.A. ultimately loses its appeal, it would have to record a tax charge of €24.4 million in its profit and loss statement, but it would only have to make a cash payment of €12.3 million for the share of taxes not yet paid.
In addition, in accordance with IFRS, Cegedim S.A. records in its consolidated financial statements a deferred tax asset in respect of its unused tax-loss carryforwards, which represents the future tax gain the company may yet realize. Note that the accounting entries related to deferred tax never have cash impact. Through December 31, 2022, deferred tax assets were unchanged at €20 million. At June 30, 2023, those assets amounted to €10.5 million owing to a €9.5 million downward adjustment recorded in deferred tax expenses in the consolidated profit and loss statements. In response to a recent tax ruling in July 2023, the Group opted for a more conservative assessment of the unrealized future gains from its remaining, disputed tax-loss carryforwards.
If Cegedim S.A. ultimately loses its appeal, the entirety of the deferred tax assets in the balance sheet at June 30, 2023, would have to be recorded as a €10.5 million charge in the profit and loss statements, with no cash outlay.
Cegedim S.A., in consultation with its attorneys, believes that it still has a solid case for dismissal of the reassessment, consistently with the position currently reflected in its financial statements. As a result, Cegedim is preparing to appeal the dispute to the administrative court, an effort which could take several years. Cegedim is confident in its chances of success and has not recorded any provisions in respect of the dispute.
The maximum amount of risk from the potential tax charges cited above is expected to remain constant at €34.9 million, but the breakdown could change: the €10.5 million deferred tax asset would decrease as tax savings are realized, incrementally increasing the €24.4 million already used.
The maximum potential cash payment, which came to €12.3 million at June 30, 2023, will continue to rise as future tax savings are realized, but could also decrease if the tax authorities issue additional notices of collection while the appeal is ongoing.
Significant transactions and events post June 30, 2023
Apart from the items cited below, to the best of the company’s knowledge, there were no events or changes during the period that would materially alter the Group’s financial situation.
- War in Ukraine
The Group does not do business in Russia or Ukraine and has no assets exposed to those countries.
Outlook
Despite the economic, geopolitical and monetary uncertainties facing the world, we are confident we will be able to grow our revenues. Based on the currently available information, the Group expects 2023 like-for-like revenue(2) growth to be at least 10% relative to 2022.
Recurring operating income(1) is expected to grow, notably thanks to the initial returns on investments made in Cegedim Santé and international activities.
These targets may need to be revised if there is a resurgence in the Covid-19 pandemic and/or a significant worsening of geopolitical and macroeconomic risks.
The Group does not expect to make any significant acquisitions in 2023.
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The Audit Committee met on September 18, 2023. The Board of Directors, chaired by Jean-Claude Labrune, met on September 19, 2023, and approved the consolidated financial statements at June 30, 2023, 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 and the Cegedim IR app.
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(1) Alternative performance indicator See pages 110-111 of the 2022 Universal Registration Document.
(2) At constant scope and exchange rates.
2023 financial calendar
| WEBCAST ON SEPTEMBER 20, 2023, AT 6:15 PM (PARIS TIME) |
| The webcast is available at: www.cegedim.fr/webcast |
| The first-half 2023 results presentation is available:
|
| 2023 | October 26 after the close | Q1 2023 revenues |
Financial calendar: https://www.cegedim.fr/finance/agenda/Pages/default.aspx
| Disclaimer This 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 20, 2023, 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 2022 Universal Registration Document filled with the AMF on April 12, 2023, under number D.23-0266. | |||
| About Cegedim: Founded in 1969, Cegedim is an innovative technology and services company 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 6,000 people in more than 10 countries and generated revenue of €555 million in 2022. Cegedim SA is listed in Paris (EURONEXT: CGM). To learn more, please visit: www.cegedim.fr And follow Cegedim on Twitter @CegedimGroup, LinkedIn and Facebook. | |||
| Aude Balleydier Cegedim Media Relations and Communications Manager Tel.: +33 (0)1 49 09 68 81 aude.balleydier@cegedim.fr | Jérôme Moreau Cegedim Group Director of Management Control Head of Financial Communication Tel.: +33 (0)7 85 63 61 99 jerome.moreau@cegedim.com | Céline Pardo .becoming Media Relations Tel.: +33 (0)6 52 08 13 66 cegedim@becoming-group.com | |
Annexes
Consolidated financial statements at June 30, 2023
- Assets at June 30, 2023
| In thousands of euros | 6/30/2022 | 12/31/2022 |
| Goodwill | 199,628 | 198,761 |
| Development costs | 31,628 | 3,081 |
| Other intangible assets | 165,997 | 185,004 |
| Intangible non-current assets | 197,625 | 188,085 |
| Land | 544 | 544 |
| Buildings | 1,765 | 1,872 |
| Other property, plant, and equipment | 43,946 | 39,467 |
| Advances and non-current assets in progress | 88,205 | 133 |
| Rights of use | 348 | 88,988 |
| Property, plant, and equipment | 134,809 | 131,004 |
| Equity investments | 0 | 1 |
| Loans | 15,599 | 15,642 |
| Other financial assets | 6,310 | 5,053 |
| Long-term investments – excluding equity shares in equity method companies | 21,909 | 20,696 |
| Equity shares in equity method companies | 21,592 | 20,578 |
| Deferred tax assets | 20,910 | 30,385 |
| Prepaid expenses: long-term portion | 0 | 0 |
| Non-current assets | 596,473 | 589,509 |
| Goods held for resale | 7,883 | 6,495 |
| Advances and deposits received on orders | 140 | 177 |
| Accounts receivables: short-term portion | 169,747 | 151,757 |
| Other receivables: short-term portion | 60,325 | 50,497 |
| Current tax credits | 15,147 | 16,557 |
| Cash equivalents | 0 | 0 |
| Cash | 27,879 | 55,553 |
| Prepaid expenses: short-term portion | 22,465 | 19,370 |
| Current assets | 303,587 | 300,406 |
| Total assets | 900,060 | 889,915 |
Liabilities and equity at June 30, 2023
| In thousands of euros | 6/30/2022 | 12/31/2022 |
| Share capital | 13,337 | 13,337 |
| Consolidated retained earnings | 285,260 | 271,344 |
| Group exchange gains/losses | -11,613 | -13,141 |
| Group earnings | -8,793 | 13,624 |
| Shareholders’ equity, Group share | 278,191 | 285,164 |
| Non-controlling interest | 18,537 | 18,971 |
| Shareholders’ equity | 296,728 | 304,135 |
| Financial liabilities | 186,794 | 188,913 |
| Current lease liabilities | 75,236 | 75,907 |
| Deferred tax liabilities | 7,818 | 6,137 |
| Post-employment benefit obligations | 27,765 | 25,397 |
| Provisions | 2,192 | 2,355 |
| Non-current liabilities | 299,805 | 298,709 |
| Financial liabilities | 7,393 | 3,854 |
| Current lease liabilities | 16,121 | 15,916 |
| Trade payables and related accounts | 51,585 | 55,709 |
| Current tax liabilities | 264 | 247 |
| Tax and social security liabilities | 110,119 | 112,341 |
| Provisions | 1,419 | 2,172 |
| Other liabilities | 116,626 | 96,832 |
| Current liabilities | 303,527 | 287,071 |
| Total liabilities | 900,060 | 889,915 |
- Income statement at June 30, 2023
| In thousands of euros | 6/30/2022 | 6/30/2022 |
| Revenue | 301,011 | 267,560 |
| Purchases used | -14,739 | -13,516 |
| External expenses | -66,371 | -58,223 |
| Taxes | -4,291 | -4,704 |
| Employee costs | -163,623 | -149,429 |
| Impairment of trade receivables and other receivables and on contract assets | -2,041 | -432 |
| Allowances to and reversals of provisions | -1,830 | -1,235 |
| Other operating income and expenses | 108 | 296 |
| Share of profit (loss) from affiliates on the income statement | 603 | 1,345 |
| EBITDA(1) | 48,827 | 41,661 |
| Depreciation expenses other than right-of-use assets | -29,030 | -26,471 |
| Depreciation expenses of right-of-use assets | -9,097 | -8,374 |
| Recurring operating income(1) | 10,700 | 6,816 |
| Non-recurring operating income and expenses | -1,385 | -4,358 |
| Other non-recurring operating income and expenses(1) | -1,385 | -4,358 |
| Operating income | 9,315 | 2,459 |
| Income from cash and cash equivalents | 180 | 31 |
| Cost of gross financial debt | -5,633 | -4,175 |
| Other financial income and expenses | -136 | -302 |
| Net financial income (expense) | -5,589 | -4,445 |
| Income taxes | -1,841 | -2,678 |
| Deferred income taxes | -10,588 | -821 |
| Tax | -12,429 | -3,499 |
| Share of profit (loss) from affiliates | -515 | -656 |
| Consolidated net profit | -9,219 | -6,141 |
| Group share | -8,793 | -4,875 |
| Non-controlling interests | -426 | -1,265 |
| Average number of shares excluding treasury stock | 13,658,348 | 13,683,647 |
| Recurring earnings per share (in euros) | -0.6 | -0.4 |
| Earnings per share (in euros) | -0.6 | -0.4 |
(1) Alternative performance indicator
- Cash flow statement as of June 30, 2023
| In thousands of euros | 6/30/2022 | 6/30/2022 |
| Consolidated net profit | -9,219 | -6,141 |
| Share of profit (loss) from affiliates | -88 | -689 |
| Depreciation and amortization expenses and provisions | 37,972 | 35,060 |
| Capital gains or losses on disposals of operating assets | -798 | 1,261 |
| Cash flow after cost of net financial debt and taxes | 27,867 | 29,491 |
| Cost of net financial debt | 5,589 | 4,445 |
| Tax expenses | 12,429 | 3,499 |
| Operating cash flow before cost of net financial debt and taxes | 45,885 | 37,436 |
| Tax paid | -378 | -15,917 |
| Impact of change in working capital requirements | -18,032 | -18,529 |
| Cash flow generated from operating activities after tax paid and change in working capital requirements | 27,476 | 2,990 |
| Acquisitions of intangible fixed assets | -29,550 | -27,957 |
| Acquisitions of tangible fixed assets | -11,759 | -8,083 |
| Acquisitions of long-term investments | -36 | -1,900 |
| Disposals of property, plant, and equipment and of intangible assets | 2,575 | 24 |
| Disposals of long-term investments | 805 | 948 |
| Change in deposits received or paid | -156 | 97 |
| Impact of changes in consolidation scope | -2,172 | 58,277 |
| Dividends received from outside the Group | 30 | 1,457 |
| Net cash flow used in investing activities | -40,264 | 22,863 |
| Capital increase | - | - |
| Dividends paid to minority shareholders of consolidated cos. | - | - |
| Dividends paid to shareholders of the parent company | - | -2 |
| Debt repayments | -193 | -13 |
| Employee profit sharing | 129 | 266 |
| Repayment of lease liabilities | -11,353 | -9,840 |
| Interest paid on loans | -117 | -98 |
| Other financial income received | 596 | 115 |
| Other financial expenses paid | -3,492 | -1,296 |
| Net cash flow used in financing activities | -14,430 | -10,867 |
| Change in net cash excluding currency impact | -27,218 | 14,985 |
| Impact of changes in foreign currency exchange rates | -456 | -123 |
| Change in net cash | -27,674 | 14,862 |
| Opening cash | 55,553 | 24,159 |
| Closing cash | 27,879 | 39,021 |
- Financial covenants
| In thousands of euros | 06/30/2023 | Criterion |
| Net debt(1) | ||
| EBITDA | ||
| Leverage ratio | 1.37 | < 2.5 |
| In thousands of euros | 06/30/2023 | Criterion |
| Interest expense | ||
| EBITDA | ||
| Interest cover ratio | 15.78 | > 4.5 |
(1) excluding employee profit sharing liabilities, the FCB loan, and IFRS 16 liabilities
The Group complied with all these covenants as of June 30, 2023, and there is no foreseeable risk of default.
Attachment
