Redcare Pharmacy N.V.

Quarterly Report • Nov 1, 2021

INTERIM REPORT

30 SEPTEMBER 2021

TABLE OF CONTENTS.

INTERIM GROUP MANAGEMENT REPORT.

BUSINESS MODEL, GROUP STRUCTURE AND CORPORATE GOVERNANCE.	5
BUSINESS DEVELOPMENT.	5
SEGMENT PERFORMANCE.	8
ASSETS, LIABILITIES AND FINANCIAL POSITION.	10
RISKS AND OPPORTUNITIES.	10
IMPORTANT EVENTS DURING THE REPORTING PERIOD.	11
EVENTS AFTER THE BALANCE SHEET DATE.	11
FORECAST.	11

01

APPENDIX.

RESULTS PER SEGMENT.	13
UNAUDITED INTERIM CONSOLIDATED STATEMENT OF PROFIT AND LOSS.	15
UNAUDITED INTERIM CONSOLIDATED STATEMENT OF FINANCIAL POSITION.	16
UNAUDITED INTERIM CONSOLIDATED STATEMENT OF CASH FLOWS.	17
GLOSSARY.	18
CONTACT	18

KEY FIGURES.

Continuously increasing our strong growth across europe.

GROSS MARGIN: INCREASED TO 24.9%.

INTERIM GROUP MANAGEMENT REPORT. 01

BUSINESS MODEL, GROUP STRUCTURE AND CORPORATE GOVERNANCE.

The statements made in the 2020 annual report regarding the business model, the group structure, the management system and the corporate governance practices still apply at the time of publication of this interim report.

BUSINESS DEVELOPMENT.

Consolidated revenues and results of operations.

Sales of prescription and non-prescription pharmaceuticals and pharmacy-related beauty and personal care products are subject to seasonal fluctuations, with demand for pharmaceuticals especially high during the first and fourth quarters of the year. In the past and current year, however, typical seasonal patterns have been distorted by the effect of the Covid 19 pandemic.

After a temporary slowdown due to capacity constraints from May to mid-September, SHOP APOTHEKE EUROPE N.V. got back on track in the third quarter. The company increased its group revenues during the first nine months of 2021 by 9.8% year-over-year to EUR 772.3 million. Q3 sales were EUR 237.9 million, almost at last year's high level (–0.3% vs. sales of EUR 238.7 million after 9M 2020).

The number of active customers grew to 7.3 million as of 30 September 2021, an increase of 1.4 million compared to 30 September 2020 and an increase of 1.0 million YTD.

The number of orders increased by 16.4% compared to the corresponding period last year, reaching 14.2 million (9M 2020: 12.2 million) with the size of the average shopping basket at EUR 61.98 for YTD, around 5.8% below the previous year's 9M level of EUR 65.84. This development is mainly driven by faster growth of non-Rx orders than Rx orders. The share of repeat orders was 83% for Q3, exactly on par with the previous year while the return rate remained minimal at significantly less than 1%.

		2019				2020			2021
Performance indicators Group	Q1	Q2	Q3	Q4	Q1	Q2	Q3	Q4	Q1	Q2	Q3
Page visits (million)	34.8	32.1	31.9	35.1	44.4	52.3	54.6	57.0	71.4	67.5	62.1
Mobile page visits (million)	23.2	21.7	21.7	23.2	30.0	35.5	37.4	39.7	50.4	48.0	44.4
Ratio mobile (in %)	67	68	68	66	68	68	69	70	70	71	71
Orders (million)	3.1	2.8	3.0	3.3	4.2	4.0	4.0	4.4	5.1	4.7	4.4
Orders by existing clients (in %)	78	81	82	83	82	79	83	83	81	82	83
Return rate (in %)	0.9	0.9	0.8	0.6	0.7	0.5	0.7	0.7	0.7	0.8	0.6
Active customers (million)	4.0	4.2	4.5	4.7	5.0	5.5	5.9	6.3	6.8	7.1	7.3
Average shopping cart (in €)	65.0	67.7	66.9	67.9	65.2	65.5	66.9	68.0	63.5	61.5	61.0

Share of mobile visits (%)

Share of repeat orders (%)

With a growth rate of 24.9%, gross profit at group level rose significantly faster than sales, from EUR 156.9 million during the first nine months of 2020 to EUR 195.6 million for the period under review. Compared to a year earlier, the consolidated gross margin rose by 3.0 pp to 25.3% for the first nine months of the year. In Q3, the consolidated gross margin was 24.9% compared to 21.9% the previous year. The higher gross margins were driven by product and country mix as well as one offs related to the corona assortment last year.

Adjusted selling and distribution (S&D) expenses as percentage of sales were up 4.1 pp year-over-year to 21.7% for the first nine months. The consolidated S&D ratio was at 22.7% in Q3 compared to last year's 17.6%. This is largely due to greater marketing expenses. These were lower in 2020 due to high demand related to Europe's Covid-19 outbreak. This year, SHOP APOTHEKE EUROPE invested in higher growth to further boost sales after overcoming the capacity constraints at the beginning of the quarter.

Administrative costs for the first nine months 2021 were EUR 30.5 million (previous year: EUR 21.6 million) and included one-off expenses and employee stock option expenses amounting to EUR 6.5 million (2020: EUR 3.4 million). The adjusted administrative cost ratio was 3.1%, up 0.5 pp from 2.6% a year earlier.

Adjusted EBITDA was EUR 4.7 million compared to EUR 15.5 million for the first nine months of 2020, translating into an adjusted EBITDA margin of 0.6% after 2.2 % in the corresponding period 2020. Including depreciation of EUR 18.4 million (previous year: EUR 10.9 million), EBIT was EUR –21.9 million (9M 2020: EUR 1.2 million). After net finance cost and income tax, the net result was EUR –31.7 million compared to EUR –9.5 million a year earlier.

Nine-month consolidated financial information

	Jan 1 – Sep 30, 2021	Jan 1 – Sep 30, 2020
	EUR 1,000	EUR 1,000
Revenues	772,296	703,345
Gross profit	195,598	156,861
Selling & distribution costs	–168,706	–123,231
Administrative costs	–30,509	–21,577
Administrative costs (adjusted)	–23,975	–18,151
EBITDA	–3,559	12,067
EBITDA adjusted	4,680	15,493

Third quarter consolidated financial information

	Jul 1 – Sep 30, 2021	Jul 1 – Sep 30, 2020
	EUR 1,000	EUR 1,000
Revenues	237,854	238,684
Gross profit	59,342	52,378
Selling & distribution costs	–54,811	–41,977
Administrative costs	–9,720	–7,629
Administrative costs (adjusted)	–7,721	–6,189
EBITDA	–5,167	2,772
EBITDA adjusted	–2,191	4,212

SEGMENT PERFORMANCE.

DACH segment.

During the first nine months of 2021, DACH – SHOP APOTHEKE EUROPE's largest segment by revenues, covering business activities in Germany, Austria and Switzerland – grew by 4.5% compared to the same period a year earlier. Revenues rose to EUR 618.3 million after EUR 591.7 million for the first nine months of 2020 although Rx revenues decreased by 30.6% to EUR 110.3 million due to the impact of the Rx bonus ban in Germany. During the same period, gross earnings were up more than 19% year-over-year, from EUR 128.7 million to EUR 153.5 million. The gross margin rose by 3.1 pp to 24.8% compared to 21.7% last year. The adjusted EBITDA for the first nine months of 2021 was EUR 17.6 million compared to EUR 25.1 million during the same period of last year.

International segment.

Sales for SHOP APOTHEKE EUROPE's International Segment (Belgium, France, Italy and the Netherlands) grew considerably faster during the first nine months of 2021 – up 37.9% to EUR 154.0 million (previous year: EUR 111.6 million). Segment gross earnings rose by 49.6% – from EUR 28.2 million to EUR 42.1 million with a gross margin at 27.4% (last year: 25.3%). The adjusted EBITDA for the first nine months of 2021 stood at to EUR –13.0 million from EUR –9.6 million a year earlier.

9M 2021 Segment development

	Dach	International	consolidated
	EUR 1,000	EUR 1,000	EUR 1,000
Revenues	618,301	153,995	772,296
Gross Profit	153,462	42,136	195,598
EBITDA	10,940	–14,499	–3,559
Adjusted EBITDA	17,638	– 12,958	4,680

9M 2020 Segment development

	Dach	International	consolidated
	EUR 1,000	EUR 1,000	EUR 1,000
Revenues	591,696	111,649	703,345
Gross Profit	128,669	28,192	156,861
EBITDA	22,157	–10,090	12,067
Adjusted EBITDA	25,063	–9,570	15,493

Q3 2021 Segment development

	Dach	International	consolidated
	EUR 1,000	EUR 1,000	EUR 1,000
Revenues	189,404	48,450	237,854
Gross Profit	46,201	13,114	59,342
EBITDA	–110	–5,084	–5,167
Adjusted EBITDA	2,305	–4,496	– 2,191

Q3 2020 Segment development

	Dach	International	consolidated
	EUR 1,000	EUR 1,000	EUR 1,000
Revenues	200,582	38,102	238,684
Gross Profit	43,458	8,920	52,378
EBITDA	7,208	–4,436	2,772
Adjusted EBITDA	8,430	– 4,218	4,212

ASSETS, LIABILITIES AND FINANCIAL POSITION.

Assets and liabilities.

As of the reporting date, the balance sheet total was EUR 808.7 million after EUR 536.9 million at the end of 2020. Within the non-current assets, the increase is mainly related to intangible assets which rose by EUR 91.7 million as a result of the acquisitions of SMARTPATIENT and MEDAPP in Q1 2021. Current assets increased by EUR 178.3 million from EUR 254.1 million to EUR 432.4 million, virtually entirely related to the cash inflow from the issuance of new convertible bonds in January 2021. As a result, cash and cash equivalents grew from EUR 90.5 million to EUR 280.0 million. For the same reason, loans and borrowings within the noncurrent liabilities increased from EUR 32.8 million as per the end of the 2020 fiscal year to EUR 250.3 million.

The equity capital ratio was c. 56 percent as of the reporting date.

Liquidity situation.

Operational cash flow was EUR 28.4 million compared to EUR 10.9 million during the same period of fiscal year 2020. This development was substantially driven by lower inventory levels as well as a favourable development of trade and other payables as of the reporting date.

EUR –70.9 million was used for investing activities in the first nine months of 2021 (previous year: EUR –22.7 million). The increase was mainly due to the acquisitions of SMARTPATIENT and MEDAPP in Q1 2021. Net of cash acquired, the cash outflow for these investments amounted to EUR –44.5 million (previous year: EUR 0). EUR –8.6 million (9M 2020: EUR –19.5 million) were investments in property, plant and equipment, mostly for the new logistics facility in Sevenum, the Netherlands, including its automation.

Total cash flow from financing activities stood at an inflow of EUR 232.1 million vs. EUR 65.9 million last year, essentially driven by the issuance of new convertible bonds in January 2021 with a net cash inflow of EUR 222.2 million. A further capital increase of EUR 10.8 million was related to the employee stock option programme.

Overall, cash and cash equivalents increased by EUR 189.5 million during the reporting period and amounted to EUR 280.0 million as of the balance sheet date.

RISKS AND OPPORTUNITIES.

Compared to the assessment in the 2020 Annual Report, the company's risk profile remains largely unchanged.

Principally, SHOP APOTHEKE EUROPE's business is subject to regulatory changes, which could have a significant favorable or unfavorable impact on its prospects.

During the second quarter of 2021 we have also seen impact from the currently tight labour market. For more details on risk management, see also the Half Year Report.

IMPORTANT EVENTS DURING THE REPORTING PERIOD.

Guidance Update on 22 July.

Based on the developments in the first and especially in the second quarter, the Management has come to a new assessment of the forecast for the 2021 financial year. The updated guidance is reflected in the forecast provided below.

EVENTS AFTER THE BALANCE SHEET DATE.

No events have occurred after the reporting date that would materially affect the presentation of the group's situation in this interim report.

FORECAST.

Based on the year's developments to date, SHOP APOTHEKE EUROPE has narrowed its guidance for 2021. For the full year 2021, the company expects year-over-year sales growth at the lower end of the 10–15% range, i.e. around 10%. The adjusted EBITDA guidance is narrowed down to around –1% for the full year (– EUR 10M). Guidance of capex excluding acquisitions is unchanged at EUR 45 million for the full year.

RESULTS PER SEGMENT.

Segment information Q3 2021 – non adjusted and adjusted.

30.9.2021	DACH	International	Total
	EUR 1,000	EUR 1,000	EUR 1,000
Revenue	618,301	153,995	772,296
Cost of sales	–464,839	–111,859	–576,698
Adjusted cost of sales	–464,624	–111,806	–576,430
Gross profit	153,462	42,136	195,598
Adjusted gross profit	153,677	42,189	195,866
% of revenue	24.8%	27.4%	25.3%
Other income	47	11	58
Selling & distribution	–123,819	–44,887	–168,706
Adjusted S&D	–122,627	–44,642	–167,269
Segment EBITDA	29,690	-2,740	26,950
Adjusted segment EBITDA	31,097	-2,442	28,655
Administrative expenses	–18,750	–11,759	–30,509
Adjusted AE	–13,459	–10,516	–23,975
EBITDA	10,940	–14,499	–3,559
Adjusted EBITDA	17,638	–12,958	4,680
Depreciation	–11,296	–7,084	–18,380
EBIT	–356	–21,583	–21,939
Adjusted EBIT	6,342	–20,042	–13,700
Net finance cost and income tax			–9,762
Adjusted net finance cost and income tax			–9,762
Net loss			–31.701
Adjusted net loss			–23.462

RESULTS PER SEGMENT.

Segment information Q3 2020 – non adjusted and adjusted.

Total	International	DACH	30.9.2020
EUR 1,000	EUR 1,000	EUR 1,000
703,345	111,649	591,696	Revenue
–546,484	–83,457	–463,027	Cost of sales
–546,484	–83,457	–463,027	Adjusted cost of sales
156,861	28,192	128,669	Gross profit
156,861	28,192	128,669	Adjusted gross profit
22.3%	25.3%	21.7%	% of revenue
14	2	12	Other income
–123,231	–30,407	–92,824	Selling & distribution
–123,231	–30,407	–92,824	Adjusted S&D
33,644	–2,213	35,857	Segment EBITDA
33,644	– 2,213	35,857	Adjusted segment EBITDA
–21,577	–7,877	–13,700	Administrative expenses
–18,151	–7,357	–10,794	Adjusted AE
12,067	–10,090	22,157	EBITDA
15,493	–9,570	25,063	Adjusted EBITDA
–10,874	–3,970	–6,904	Depreciation
1,193
4,619	–13,540	18,159	Adjusted EBIT
–10,651
–10,651			Adjusted net finance cost and income tax
–9,458
–6,032
	–14,060	15,253	EBIT Net finance cost and income tax Net loss Adjusted net loss

UNAUDITED INTERIM CONSOLIDATED STATEMENT OF PROFIT AND LOSS.

Period ended	Period ended 30.9.2020
	EUR 1,000
	703,345
	–546,483
195,598	156,862
	14
–184,328	–132,474
–33,266	–23,208
–21,938	1,194
	190
	–11,306
–9,261	–11,116
	0
0	0
–31,648	–9,922
–53	464
–31,701	–9,458
–31,701	–9,458
	30.9.2021 EUR 1,000 772,296 –576,698 58 183 –9,444 –449

UNAUDITED INTERIM CONSOLIDATED STATEMENT OF FINANCIAL POSITION.

	30.9.2021	31.12.2020
	EUR 1,000	EUR 1,000
Assets
Non-current assets
Property, plant and equipment	76,509	74,545
Intangible assets	296,389	204,661
Deferred tax assets	120	120
Other financial assets	1,810	1,730
Investments in equity-accounted joint ventures	1,151	1,151
Investments in associates	305	605
Investments in equity-instruments	10	10
	376,294	282,822
Current assets
Inventories	74,857	81,240
Trade and other receivables	42,355	44,591
Other financial assets	35,204	37,771
Cash and cash equivalents	280,032	90,485
	432,448	254,087
Total assets	808,742	536,909
Equity and liabilities
Shareholders' equity
Issued capital and share premium	565,190	552,019
Reserves/accumulated losses	–113,477	–126,881
	451,713	425,138
Non-current liabilities
Deferred tax liability	6,644	4,347
Loans and Borrowings	250,351	32,810
	256,995	37,157
Current liabilities
Trade and other payables	65,760	53,147
Loans and Borrowings	4,937	5,384
Amounts due to banks	38	39
Other liabilities	29,299	16,044
	100,034	74,614
Total equity and liabilities	808,742	536,909

UNAUDITED INTERIM CONSOLIDATED STATEMENT OF CASH FLOWS.

	Period ended 30.9.2021	Period ended 30.9.2020
	EUR 1,000	EUR 1,000
Cash flow from operating activities
Result from operations	–21,938	1,194
Adjustments for: – Depreciation and amortisation of non-current assets	18,380	11,002
– Result subsidiaries	–449	0
– Share-based payment charge for the period	5,185	2,395
Operating result adjusted for depreciation and amortisation	1,178	14,591
Movements in working capital
– (Increase)/decrease in trade and other receivables	3,442	–10,744
– (Increase)/decrease in inventory	6,392	–16,294
– (Increase)/decrease in trade and other payables	17,458	23,134
Working capital movement	27,292	–3,904
Corporate income tax paid	–117	226
Net cash (used in)/generated by operating activities	28,353	10,913
Cash flow from investing activities
Investment for property, plant and equipment	–8,626	–19,558
Investment for intangible assets	–20,671	–13,978
Investment for/divestment of associates	300	0
Investment for/divestment of other financial assets	2,442	10,626
Acquisition of subsidiary, net of cash acquired	–44,497	0
Interest received	138	190
Net cash (used in)/generated by investing activities	–70,914	–22,720
Cash flow from financing activities
Interest paid	–4,454	–6,423
Capital increase	0	63,381
Capital increase exercised share options	10,827	11,508
Issue convertible bond	222,197	0
Issue/repayment other long-term liability	7,752	–27
Cash-out lease payments	–4,214	–2,558
Net cash (used in)/generated by financing activities	232,108	65,881
Net increase/(decrease) in cash and cash equivalents	189,547	54,075
Cash and cash equivalents at the beginning of the period	90,485	62,653
Cash and cash equivalents at the end of the period	280,032	116,728

GLOSSARY.

For definitions of non-IFRS terms, please refer to the Annual Report 2020, pages 146 and 147 which you will find on SHOP APOTHEKE EUROPE's Corporate Website www.shop-apotheke-europe.com in the Investor Relations section.

CONTACT.

SHOP-APOTHEKE EUROPE N.V. Erik de Rodeweg 11/13 5975 WD Sevenum

Trade and popular media: Sven Schirmer Tel: +49 221 99 53 44 31 Email: presse@shop-apotheke.com

Financial media: Bettina Fries Tel: +49 211 75 80 779 Email: presse@shop-apotheke.com

Investor relations: Carmen Herkenrath Tel.: +31 77 850 6109 Email: carmen.herkenrath@shop-apotheke.com