Zur Rose Group AG

Investor Presentation • Mar 19, 2020

Zur Rose Group

2019 Results – Analyst & Media Conference Call Walter Oberhänsli | Marcel Ziwica | Olaf Heinrich 19 March 2020

Today's Presenters

Zur Rose Group Walter Oberhänsli Founder, Group CEO Marcel Ziwica Group CFO

Olaf Heinrich Head Germany

2019 in review

Law on the launch of e-prescriptions enacted in Germany	Shop-in-shop and webshop: Migros and Zur Rose step up co-operation through joint ventures	Strong growth in Germany reinforces clear market leadership	Digital health processes without media breaks: partnerships with KRY, the German Association of General Practitioners and the German Association of Specialist Doctors
Revenue up 30%	Debate on bonus ban continues	Physician business sees 7.6% revenue growth	Proof of concept: pilot project for e prescriptions with TK health insurer
Bond: 200 CHF Million raised	Zur Rose part of insurance models to reduce costs	apo-rot site in Hamburg closed	Market entry France

COVID-19 impact

Covid-19 impact

Acceleration of e-commerce & digital healthcare

«The covid-19 epidemic has brought millions of new patients online. They are likely to stay there.»

• Short term sales boost
• Digitalisation receives significant public acceptance
• Covid-19 catalyses shift towards e-commerce pharmacy and eRx
• Associated risks to be evaluated and managed

Summary FY2019 Financial Results

2019 targets achieved

Sales of CHF 1.6 billion (including medpex)

Sales FY 2019: CHF 1'569 Mio.

Sales growth of over 30% y-o-y (including medpex)

+32.8% y-o-y in local currency

EBITDA margin at least in line with 2018 (minus 1.0 per cent) CHF -13.8 Mio. (-1.0% margin)

Group sales grew 30%

in CHFm

Group KPIs B2C & Marketplace

Notes: Figures reflecting performance of entire business regardless of consolidation progress of the acquired businesses; all numbers reflecting the performance in the last twelve months period ending 31 December 2018 and 31 December 2019 respectively | 1 Customers placing an order within the past twelve months | 2 Share of orders from existing customers in relation to total number of orders | 3 Number of website visits | 4 Basket size equals average value of the purchase per order | 5 Number of orders per active customer and year

Income statement

In CHFm	FY 2018(1)	%	FY 2019	%
Sales incl. medpex			1'568.7
Sales	1'207.1		1'355.5
Gross profit	191.2	15.8	208.7	15.4
Personnel expenses	-93.7	-7.8	-117.5	-8.7
Marketing expenses	-41.3	-3.4	-53.2	-3.9
Other operating income & expenses	-70.3	-5.8	-51.8	-3.8
EBITDA	-14.0	-1.2	-13.8	-1.0
EBIT	-32.9	-2.7	-45.7	-3.4
Net income	-39.1	-3.2	-52.4	-3.9

Balance Sheet

In Mio. CHF	2018(1) 31 Dec	%	31 Dec 2019	%
Cash and cash equivalents	230.7		204.7
Receivables	116.5		152.6
Inventories	69.4		70.6
Property, plant & equipment	34.3		77.1
Intangible assets	264.6		465.3
Other assets	11.0		21.5
Total assets	726.5		991.7
Financial liabilities	34.1		125.5
Payables & accrued expenses & liabilities	115.4		127.2
Bonds	114.1		312.1
Other liabilities	19.2		21.4
Equity	443.6	61.1	405.5	40.9
Total equity and liabilities	726.5	100.0	991.7	100.0

Management additions

Moving towards an agile business model driven organization

Management additions

Management team strengthened by recent additions

Betül Susamis Unaran Chief Strategy & Digital Officer

Bernd Gschaider Chief Operations Officer

David Masó Head Europe / Marketplace

• Former Global Head of Digital Medicines at Novartis
• Former Head of Digital at Ferring Pharmaceuticals

Zur Rose Group

• Industrial Engineering degree from Bogaziçi University in Istanbul & MBA from INSEAD
• Former Country Director Logistics Germany and Austria at Amazon
• Mechanical engineering degree from RWTH Aachen
• Co-founder of PromoFarma and several start-ups in Spain
• Telecommunications engineering degree from UPC Barcelona
• MBA from ESADE Barcelona & Stanford Executive Program

Strategy update

Key initiatives eRx opportunity 1. Ressource allocation shift OTC to eRx while maintaining #1 position 2. Launch eRx marketplace app 3. Scaling of pilot project Integration & synergies 1. Strengthen leadership team 2. Warehouse ramp-up and further integration steps 3. Branding strategy E-Health Ecosystem 2 3 1 2 3 1 Covid-19 OTC market opportunity France 1. Evaluation of chances and risks 2. Acceleration e-commerce & digital healthcare 1 2 1.1 Market entry strategy 1. 1 Integrating key partners

1. Alternative insurance models as blueprint for Germany

CH Insurance cooperations 1. Increasing eRx customer base

Initiativen Massnahmen Ziel

DC 2 Update

Formen

Branding decision

of concept» zu Flächenansatz Launch eRx Marketplace App Ressourcenshift OTC zu eRx

Vorgezogene Integration

Aufbau Ökosystem Partnerschaften 1. Launch of reputable

1. Proof of concept Flächenansatz

2. Sicherstellung

partnership

Marktführerschaft

1. Erhöhung eRx Kundenbasis 2. Blueprint für Deutschland

eRx Skalierung Pilot von «Tech proof

Insurance Cooperations Ausbau Kooperationen und neue

Integration & Synergien Führungsstruktur DE

Frankreich

Skript herausarbeiten shift

to eRx

Law to introduce eRx in Germany enacted with strong role for Gematik

Key topics of the law:

• eRx introduced as alternative to paper script
• Gematik (51% owned by Ministry of Health) is mandated to implement technical infrastructure for eRx
• Focus on safe connection of physicians and pharmacies to a national eRx server

Gematik timeline for Telematik infrastructure:

— Connect remaining doctors (currently approximately 80% connected)

19

• Connect pharmacies until Q3 2020 (start Q2 2020)
• National eRx server planned to be ready in 2021

Regulation currently drafted to define operations for eRx ramp-up in 2021

• Access to eRx server will be possible for all market participants
• EU mail-order pharmacies will be able to connect
• Competition for eRx between pharmacies via valueadd services
• Gematik solution planned with connectivity to third party solutions

Opportunity to scale eRx via eHealth-Tec B2B solution and partnerships

• eHealth-Tec technology solution for professionals (physicians and pharmacies) can be integrated seamlessly into existing physician and pharmacy software via download
• Partnerships with relevant stakeholders can catalyse eRx roll-out ahead of Gematik solution

eRx opportunity

Launch of eRx marketplace app targeted for H2 2020

• eRx marketplace business model in place
• Launch of DocMorris branded eRx marketplace app on the basis of existing marketplace technology of the group in 2020
• Repeat script, stock availability at local pharmacies, pick-up and 2 hour delivery as core functions

Case study - Fully digital eRx process in Techniker Krankenkasse pilot project

• Techniker Krankenkasse established fully digital eRx process from physician to patient to pharmacy to insurance company
• eRx already issued
• Proof of concept

Investing in technology

Large and quickly growing team in Barcelona, Berlin and Zurich leading the tech development for the Group

• —3 great Tech Hubs Berlin, Barcelona, Zurich(1)
• —Agile culture and continous deployment
• —150+ employees from 20 nationalities
• —Tech background: software engineers, data scientists, UX designers and product managers
• —Product focus: marketplaces, eRx, digital health platforms

Integration & synergies

Integration & synergies

Zur Rose Group integration strategy – a combination of four pillars

Brands

Organisation Culture

Target picture One brand

Target 2020 Branding strategy

Target picture Shared DNA and vision

Target 2020 Expansion of management team

Target picture One unified platform

IT Platform

Target 2020 Launch eRx marketplace in Germany

Logistics

Target picture One logistics hub for Germany

Target 2020 Expansion of Heerlen site

Key additions to the German management team to address growth and operational excellence Integration & synergies

• Integration of medpex founders into segment leadership after Earn-out settlement
• Ex-Amazon logistic manager Gschaider to take over COO Group and Germany role
• Marketplace specialist Dr. Malte Dous to lead the eRx marketplace build-up in Berlin

Integration & synergies

apo-rot Scaling up Heerlen site

OTC market opportunity France

OTC market opportunity France

Legislator considering opening the French OTC market for ecommerce

• Draft law to accelerate and simplify public trade includes measures to ease OTC e-commerce for French pharmacies
• EURbn 6 French OTC market to be liberalized for mail-order
• OTC market entry under review

Zur Rose Group

Today Tomorrow

1 E-Commerce Pharmacy in Europe

Sell Rx, OTC, beauty and personal care products

Become the "E-Health Ecosystem of Europe"

Deliver solutions and services in addition to products

Focus on transactional business

Zur Rose Group 32

Ensure the efficacy of pharmaceuticals with the help of digital solutions

Taking healthcare where retail, entertainment, travel and mobility have already gone

The opportunity to evolve into the E-Health Ecosystem in Europe is now

Zur Rose Group

Zur Rose is building on existing assets to evolve its core business

Zur Rose Ecosystem

From today's transactional business…

Zur Rose Group 35

…to a technology and data-driven leader

Financial outlook

Financial outlook

Current developments in the markets are creating very strong momentum

Any effect of the Covid-19 virus on the business is not reflected in the outlook

As the strategic focus is shifting from pure OTC growth to eRx, management targets sales increase of around 10 per cent in 2020 (including medpex's total annual sales) and as a consequence overproportional Rx growth acceleration starting 2021.

The aim is to break even in 2020 at the EBITDA level after adjusting for expenditure on additional growth initiatives, especially in electronic prescriptions and European opportunities.

The medium-term target for the EBITDA margin after adjusting for growth initiatives is around 8 per cent, with revenue in excess of CHF 3 billion.

Implementing the healthcare ecosystem will generate further relevant EBITDA potential over the long term.

Outlook

Mid-term financial targets – path to profitability

Thank you

Walter Oberhänsli Founder, Group CEO

ir@zurrose.com +41 58 810 11 49 Marcel Ziwica Group CFO

Zur Rose Group financials

Income Statement

	2019		2018(1)		2017
	CHF m	%	CHF m	%	CHF m	%
Sales	1355.5	100.0	1207.1	100.0	982.9	100.0
Cost of goods	(1146.9)		(1015.9)(2)		(836.3)
Other income	42.0		3.1(2)		9.7
Personnel expenses	(117.5)	(8.7)	(93.7)	(7.8)	(78.3)	(8.0)
Marketing expenses	(53.2)	(3.9)	(41.3)	(3.4)	(33.7)	(3.4)
Distribution expenses	(41.9)	(3.1)	(33.1)	(2.7)	(26.6)	(2.7)
Administrative expenses	(34.9)	(2.6)	(24.9)	(2.1)	(27.4)	(2.8)
Rent expenses	(4.0)		(6.0)		(4.2)
Fair Value adjustment	(2.9)		(1.5)
Other operating expenses	(10.1)		(7.9)		(7.3)
EBITDA	(13.8)	(1.0)	(14.0)	(1.2)	(21.2)	(2.2)
D&A	(31.9)		(18.9)		(17.1)
EBIT	(45.7)	(3.4)	(32.9)	(2.7)	(38.3)	(3.9)
Financial result	(4.4)		(5.7)		1.8
EBT	(50.1)	(3.7)	(38.5)	(3.2)	(36.5)	(3.7)
Income tax expenses	(2.3)		(0.6)		0.2
Net income	(52.4)	(3.9)	(39.1)	(3.2)	(36.3)	(3.7)

Zur Rose Group financials

Balance Sheet		31 Dec 2019 31 Dec 2018						(1) 2017 restated
	CHF m	%	CHF m	%	CHF m	%
Cash and cash equivalents	204.7		230.7		107.8
Current financial assets	0.2		0.2		0.2
Trade receivables	126.7		92.3		84.0
Other receivables & prepaid expenses	25.8		24.2		22.3
Inventories	70.6		69.4		59.3
Current assets	428.1	43.2	416.7	57.4	273.5	59.2
Property, plant & equipment	77.1		34.3		29.7
Intangible assets	465.3		264.6		147.6
Other assets(2)	21.3		10.9		11.0
Non-current assets	563.7	56.8	309.8	42.6	188.3	40.8
Total assets	991.7	100.0	726.5	100.0	461.8	100.0
Current financial liabilities	87.4		3.5		10.4
Trade payables	92.1		83.1		75.3
Other payables & accrued expenses(3)	33.1		32.3		33.4
Short-term liabilities	212.6	21.4	119.0	16.4	119.1	25.8
Non-current financial liabilities	38.1		30.6		32.0
Bonds	312.1		114.1		0
Pension liabilities	15.2		13.7		13.0
Deferred taxes & long-term provisions	8.2		5.5		3.5
Long-term liabilities	373.6	37.7	163.9	22.6	48.5	10.5
Equity	405.5	40.9	443.6	61.1	294.2	63.7
Total equity and liabilities	991.7	100.0	726.5	100.0	461.8	100.0

Zur Rose Group

Note: 1 See note 6 change in consolidation scope of the financial statements 2018 | 2 Includes investments in associates and JVs, non-current financial assets and deferred tax assets | 3 Includes other payables, tax payables, accrued expenses and short-term provisions

Zur Rose Group financials

Cash Flow Statement

	2019	2018(1)	2017
CHF m
Net income	(52.4)	(39.1)	(36.3)
D&A	31.9	18.9	17.1
Non cash items financial result	(2.2)	3.2	(4.6)
Non cash income and expenses	(35.3)	3.4	3.6
Income taxes paid	2.3	0.6	(0.1)
Change in trade receivables, other receivables and prepaid expenses	(37.3)	(12.2)	(13.1)
Change in inventories	(3.4)	(10.3)	1.0
Change in trade payables	13.5	4.1	6.4
Change in provisions	0.4	(1.8)	3.8
Cash flow from operating activities	(82.6)	(33.2)	(22.2)
Acquisition & Sale of subsidiaries, net	(103.1)	(108.6)	(40.9)
Purchase of property, plant and equipment	(10.4)	(10.3)	(5.1)
Acquisition of intangible assets	(31.1)	(21.2)	(16.6)
Investments/ (disposal) of financial assets	1.4	(0.2)	0.3
Cash flow from investing activities	(143.2)	(140.3)	(62.2)
Proceeds from capital increases	0.5	191.1	222.4
Transaction costs of capital increase	(0.3)
Increase in financial liabilities	205.0	114.1	0.0
Repayment of financial liabilities	(5.0)	(1.8)	(56.1)
Purchase of treasury shares	(0.0)	(6.4)	(0.4)
Cash flow from financing activities	200.2	297.1	165.9
Total cash flow	(25.6)	123.6	81.5
Fx differences Zur Rose Group	(0.5)	(0.6)	1.1

42 Note: 1 restated

Disclaimer

This presentation (the "Presentation") has been prepared by Zur Rose Group AG ("Zur Rose" and together with its subsidiaries, "we", "us" or the "Group") solely for informational purposes and has not been independently verified and no representation or warranty, express or implied, is made or given by or on behalf of any of the Group. Zur Rose reserves the right to amend or replace the Presentation at any time, and undertakes no obligation to provide the recipients with access to any additional information. Zur Rose shall not be obligated to update or correct the information set forth in the Presentation or to provide any additional information. Nothing in this Presentation is, or should be relied upon as, a promise or representation as to the future. Certain statements in this Presentation are forward-looking statements. By their nature, forward-looking statements involve a number of risks, uncertainties and assumptions that could cause actual results or events to differ materially from those expressed or implied by the forward-looking statements. These risks, uncertainties and assumptions could adversely affect the outcome and financial consequences of the plans and events described herein. Actual results may differ from those set forth in the forward-looking statements as a result of various factors (including, but not limited to, future global economic conditions, changed market conditions, intense competition in the markets in which the Group operates, costs of compliance with applicable laws, regulations and standards, diverse political, legal, economic and other conditions affecting the Group's markets, and other factors beyond the control of the Group). Neither Zur Rose nor any of its respective directors, officers, employees, advisors, or any other person is under any obligation to update or revise any forward-looking statements, whether as a result of new information, future events or otherwise. You should not place undue reliance on forward-looking statements, which speak of the date of this Presentation. Statements contained in this Presentation regarding past trends or events should not be taken as a representation that such trends or events will continue in the future.

This Presentation does not constitute or form part of, and should not be construed as, an offer or invitation or inducement to subscribe for, underwrite or otherwise acquire, any securities of Zur Rose, nor should it or any part of it form the basis of, or be relied on in connection with, any contract to purchase or subscribe for any securities of the Group, nor shall it or any part of it form the basis of, or be relied on in connection with, any contract or commitment whatsoever. This Presentation is not a prospectus and is being made available to you solely for your information and background and is not to be used as a basis for an investment decision in securities of Zur Rose or the Group.