Cegedim: 2013 like-for-like* revenues down slightly

Regulatory News:

Cegedim, a global technology and services company specializing in the healthcare field, saw its revenues decline by 0.5% like for like in the fourth quarter of 2013. Its consolidated revenues fell by 2.6% on a reported basis, to €254.0 million. Over the full year 2013, revenues amounted to €902.3 million, down 2.1% on a reported basis and 0.5% like-for-like*.

In the fourth quarter, organic growth at the Insurance and services division and stability at the CRM and strategic data division offset nearly all of the decline at the Healthcare professionals division. Over the full year, organic growth at the Healthcare professionals and Insurance and services divisions nearly compensated for the decline at the CRM and strategic data division.

The Group continues to prioritize innovation; given its unique positioning, this allows Cegedim to anticipate the transformational shifts in the health market and maintain leadership positions in all of the markets in which it operates. This focus on innovation has enabled the Group to launch a number of new products and services that are already contributing positively to the top line.

This annual revenue figure, just shy of the Group’s estimate, is the result of a weaker performance at the Healthcare professionals division owing to French pharmacists putting off investment decisions and continued tough conditions in market research. Thus, Cegedim now expects its 2013 operating margin from recurring operations to improve by 0-50 basis point.

With conditions still challenging, Cegedim continues to prioritize debt reduction and is still pursuing efforts to improve its operating leverage.

In order to provide more relevant information on its divisions that more closely reflects its internal reporting, Cegedim will now report on four divisions: CRM and strategic data, Healthcare professionals, Insurance and services and Reconciliation.

The Reconciliation division encompasses the activities the Group performs as the parent company of a listed entity, as well as the support it provides to the three operating divisions. The support activities are invoiced to the client subsidiaries at market prices and notably include bookkeeping, human resources and cash management, legal assistance and marketing. The parent company activities are not billable and notably include managing Group strategy, producing consolidated information and financial communications. The Reconciliation division’s activities are performed chiefly by the parent company, Cegedim SA, which also carries out certain operational activities, the most important of which is CRM. Previously, Reconciliation division activities had been housed within the division to which Cegedim SA’s principal operational activity belongs: CRM and strategic data. The new distinction will help to clarify the impact that this unit has on the Group’s accounts.

• The change in revenues per division for the fourth quarter of 2013 is as follows:

In the fourth quarter of 2013, Cegedim generated consolidated revenues of €254.0 million, down 2.6% on a reported basis and 0.5% like for like* compared with the same period in 2012. Acquisitions had a marginal impact and currencies had a negative effect equal to 2.2%.

* at constant scope and exchange rates

• The change in revenues per division over FY 2013 is as follows:

Over the full year 2013, Cegedim generated consolidated revenues of €902.3 million, down 2.1% on a reported basis and 0.5% like for like* compared with the same period in 2012. Acquisitions and divestments had a positive net impact of 0.2% and currencies had a negative effect equal to 1.8%.

* at constant scope and exchange rates

Analysis of business trends by division

• CRM and strategic data

In the fourth quarter of 2013, the division’s revenues amounted to €133.2 million, down 3.4% on a reported basis. Currencies had a negative impact of 3.5%, whereas the effects of acquisitions were marginal. Like-for-like* revenues rose 0.1% over the period.

Like-for-like* revenues for the full year 2013 fell by 3.0% relative to 2012. Acquisitions and currencies had negative impacts of respectively 0.4% and 2.9%. Thus, division revenues at year’s end beat its expectations.

The CRM and strategic data division represented 50% of the Group’s consolidated revenues compared with 52% a year earlier.

Business stabilized in the fourth quarter even though market research revenues fell by more than 10% in the quarter. The drop was offset by:

• Double-digit growth in Compliance activities, particularly in the US and France due to those countries’ setting up of "Transparency” regulations;
• Strong growth by offerings linked to the OneKey database. The number of users rose substantially in Europe and, to a lesser extent, in the US. User numbers in China took off late in the year, proof that Cegedim is taking the right approach to the market.

The launch of new Compliance offerings, CRM tools for the medical devices market, and services related to OneKey are promising sources of future growth. The Group continues to pursue its investment policy, which will soon enable Cegedim to enrich its offering of products for the medical affairs market, among other areas.

The Cegedim Strategic Data activity (Market Research) having not achieved its 2013 financial target, the Group is currently reviewing the mid-term trends for this division.

• Healthcare Professionals

In the fourth quarter of 2013, the division’s revenues amounted to €75.2 million, down 4.4% on a reported basis. Acquisitions had a positive effect equal to 0.2%, whereas currencies had a negative impact of 1.0%. Like-for-like* revenues fell 3.5% over the period.

Like-for-like* revenues for the full year 2013 rose by 0.4%. Acquisitions had a positive effect equal to 1.3%, whereas currencies had a negative impact of 1.1%. Thus, division revenues grew over the year, but by less than initially expected.

The Healthcare professionals division represented 32% of consolidated Group revenues compared with 31% last year.

Pharmacy computerization activities were hurt by:

• French pharmacists’ hesitancy to invest in a difficult economic period and in light of future release of new Group offers, and
• The completion of the electronic prescription roll-out in the UK.

The decline was partly counterbalanced by robust growth in computerization activities for doctors, physical therapists and nurses in Europe, particularly in France.

The launch of cloud solutions for use in medical centers offers promise for future growth, and the upcoming "patient portal” will allow Cegedim to enrich its offering still further.

• Insurance and services

The division’s fourth quarter 2013 revenues came to €45.3 million, up 2.2% on a reported basis and like for like*. Currencies had virtually no impact and there were no acquisitions or divestments.

Revenues for the year 2013 grew by 5.8% on a reported basis and like for like* relative to 2012. As a result, the division’s full year growth outpaced its initial expectations.

The Insurance and services division represented 18% of consolidated Group revenues compared with 16% the previous year.

Division revenues grew in the fourth quarter despite a demanding comparison. Growth was driven notably by:

• Cegedim SRH, provider of human resources solutions, which continues to garner numerous commercial successes, resulting in double-digit growth; and
• Cegedim e-business, provider of electronic document solutions, which generated brisk growth owing to the ramp-up of SEPA business.

The launch of SEPA solutions is already providing promising sources of future growth, and the expansion of payment offerings will enable Cegedim to further enrich its range of products and services.

2013 highlights

On March 20^th, Cegedim issued a €300 million senior Reg S/144A bond with a coupon of 6.75% maturing April 1, 2020. The issue price was 100% of the nominal value. Cegedim used the proceeds to:

• Redeem 7% bonds maturing in 2015 as part of a redemption offer at a price of 108% on a principal amount of €111.5 million. Including accrued unpaid interest, the total amount was €121.5 million. There are €168.6 million in bonds still outstanding;
• Repay a term loan of €140 million;
• Repay amounts drawn on a revolving credit;
• Pay fees and charges related to these transactions.

On April 26^th, 2013, Standard and Poor’s upgraded its rating on Cegedim and its two bonds to "B+ with stable outlook”.

Following the appointment of Valérie Raoul-Desprez to replace Jacques-Henri David in January 2013, Cegedim Board of Directors welcomed, last September, Anne-Sophie Hérelle as the permanent representative of Bpifrance. Anne-Sophie Hérelle replaced Nicolas Manardo.

Apart from the items cited above, 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.

Significant post-closing transactions and events

In January 2014, Cegedim acquired:

• Certain assets from French company Kadrige, a pioneer in SaaS e-detailing and collaborative solutions. The deal strengthens Cegedim’s multi-channel offering with the addition of reliable and scalable solutions that fit seamlessly into its Mobile Intelligence CRM platform. The acquisition was financed by internal financing. The acquired assets represent annual revenues of around €2.5 million and will contribute to the Group’s consolidated figures from January 1, 2014.
• Webstar Health, the UK leader in health IT consulting and services for pharmacists. The deal adds to Cegedim’s expertise and experience in managing primary care services in UK pharmacies. Financed by internal financing, the acquired business represents annual revenues of around €1.2 million and will contribute to the Group’s consolidated figures from January 1, 2014.

Apart from the items cited above, 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.

Outlook

Cegedim continues to work on improving its operating leverage, while still prioritizing innovation and debt reduction.

Considering the level of revenues at end-2013, the Group expects its operating margin from recurring operations to improve in a range of 0 to 50 basis points.

Unless market trends change significantly, the Group expects stable revenues in 2014 and around half a point improvement in its operating margin from recurring operations.

Financial calendar

March 10, 2014 (after the stock market closes)

• 2013 Results announcement

March 11, 2014 - 11h30am - Boulogne-Billancourt (France)

• SFAF meeting

April 29, 2014 (after the stock market closes)

• Q1 2014 Revenue announcement

May 27, 2014 (after the stock market closes)

• Q1 2014 Results announcement

July 29, 2014 (after the stock market closes)

• Q2 2014 Revenue announcement

September 18, 2014 (after the stock market closes)

• H1 2014 Results announcement

October 28, 2014 (after the stock market closes)

• Q3 2014 Revenue announcement

November 27, 2014 (after the stock market closes)

• Q3 2014 Results announcement

Additional information

Complete financial information is available on our website: www.cegedim.com/finance.

A presentation of Cegedim FY 2013 revenues is also available on the website.

Appendices--

# Figures rounded to the nearest unit

* at constant scope and exchange rates

• 2013 Revenues by division and by quarter^#:

• 2013 revenues by division and by region:

• 2013 revenues by division and by currency:

Glossary