Earnings Call: Q3 2020

Nov 5, 2020

Well, good morning, everybody. Jasper and I, we are want to welcome you to Shop Apertinia Europe's Q3 earnings release. We're going to walk you through what we think was a very strong quarter for Shop Apotheca. I want to say another strong quarter for Schoppapotica, but we also want to share with you what we're doing to make sure that Schoppapotica is ready for the challenges of the future. Okay, let's go to next chart. We are presenting today for the 2nd time from our new headquarters here in Severnem. We did this the first time with the Q2 release in August, and we're now happy to share with you that not just the offices have moved, but we are now in the middle of also transitioning our logistics activities from our old facility, which was in Venlo, but actually it's a stone throw away from our new facility here in Severnem. The first customer package was sent to a customer in Italy on the 21 October, but we're going to say more about this in a moment. Last time, we received a lot of favorable feedback on doing our earnings releases via video web cast. So we certainly know we want to continue with this practice. We still have a technical limitation that for right now, I know the provider is working on this to find a solution, but right now we still cannot take via video webcast live questions. So we want to ask you to submit once again your questions via the chat function. You see this on the left hand side of the screen. We have to admit last time we were a little bit overwhelmed by the success of the chat function, so we got a lot of questions. We didn't get through all of the questions. We followed up on some of them. But this time, we would ask you to ask really pointed questions, meaning relatively short questions and one question at a time during the first go around. If we get more questions than we can handle, we will be a little bit selective. But rest assured, we're not trying to avoid any tough questions that you might have. So jumping right into the performance of the Q3. As I already mentioned, Q3 was another strong quarter for Schott Abbotik driven by both strong top line growth but also a solid bottom line performance. We looking at the growth, we grew our top line by almost 40% to almost €240,000,000 in the 3rd quarter. This was driven by one of our hallmark competencies of the Q3 stands again for one of our hallmark competencies, excellence in execution. The growth came from, again, both new customers. We gained 400,000 unique active customers in the Q3. If you compare this to September 2019, we added 1,400,000 unique active customers. Of course, by now, we have crossed the 6,000,000 active customer threshold. The strong top line growth cascaded throughout our P and L, and we once again delivered a positive clearly positive adjusted EBITDA margin of 1.8%. The key drivers were gross margin expansion, scale effects and partially then these benefits offset by a onetime effect. But Jasper in a moment is going to walk you through the details Just to take pause for a moment and looking at the year over year improvement on a year to date basis, so for the 1st 9 months of the year, Chomapotica's adjusted EBITDA improved by over €27,000,000,000 from the 1st 9 months of 2019 to the 1st 9 months of this year. In addition, we generated a positive operating cash flow in the same period of almost €11,000,000 Driven or enabled by the strong development of our share price, we decided to go from early conversion of our €135,000,000 convertible bond. The process was tightly managed and driven by Jasper. So kudos from the management team that was really exceptional. And as a result of this, we ended we now have an even stronger balance sheet. I hope you agree with our conclusion that Q3 was another strong quarter for Schop Aboetica after a strong Q1, after a strong Q2. But in parallel, of course, we're working on our key strategic initiatives to make sure that we will be ready to take advantage and to take, as we always say, a disproportionate share of the opportunities that are around the corner. We have started the transition of our logistics activities to our new facility. The internal project name is Venlo 2020. We are on track with our preparations for the introduction of e prescriptions. I'm going to say more about this later. And in terms of our marketplace, we're looking at 2 dimensions. We have expanded our same day offering under the label of Shop A Boutique Now. And we are on track to go live with our portfolio expansion, meaning offering a broader portfolio of healthcare related products beyond the traditional boundaries of a typical pharmacies. Again, looking again at our top line growth, I already mentioned the 40% growth at a group level, but if you break it down by reporting segment, we grew by 34% in the DACH region. And this includes a 17% growth of our Rx business and the International segment. International segment grew by more than 80%, and we are now approaching quarterly sales in our International segment of €40,000,000 Again, International segment comprises of Italy, of France, of Belgium and of our business in the Netherlands. In the Q3, we defended or extended our market leadership positions in Austria and Belgium. And just again, going back a little bit in time, you might remember when Jasper and I, when we shared the Q4 2019 earnings with you around the middle of March, this was just at the beginning of the corona pandemic, we cautioned everybody and we emphasize that we are in all likelihood going to experience capacity constraints over the coming months. I'm very happy and proud to report that until today, and I don't think that's going future. We haven't had to reject a single customer order. And again, big kudos to our operations and logistics team. They just succeeded in teasing out additional capacity by looking and improving processes and structures, workflows in our operations and along the value chain. I already mentioned that we were close to 6,000,000 unique active customers by the end of Q3. We maintained throughout the Q3 a very high Net Promoter Score of 70. I think that is reflective of our of Shop Apotakers' focus on the end consumer and a very convincing end to end customer journey. Of course, our ambition is that we want to continue to improve this. But if you're familiar with the calculation of the NPS score, you know that the air is getting thinner the higher you climb this ladder. In terms of our average shopping basket value, it remains compared to prior year at around 70 €67 euros But keep in mind, in our biggest market as of the 1st July this year, we had a VAT reduction, a 3% VAT reduction. The numbers that the average order value that you're looking at right now includes VAT. So if we adjust it for the VAT reduction compared to Q3 2019, you would actually see a little bit of an increase of our average order value. Switching to web traffic, not a surprise and this is not news to you if you follow ShopUp and take it closely, but we are with a by a significant margin, we are the most popular, meaning most frequently visited website, pharmacy website in Germany. On this chart, we're showing the total weekly visits, that's the orange line, and we're showing the year to date growth, the weekly web traffic growth versus the same week a year ago. Again, going back to the absolute numbers of the weekly web and app visits since the beginning of the pandemic, since April, we've been consistently atorabove4,000,000 weekly visits, meaning that the demand that is also reflected, of course, in our sales numbers hasn't abated yet. We are getting questions from investors or also from journalists. Do we anticipate the demand is going to return to pre corona levels? We don't anticipate this to be clear about this and the numbers are not indicating this at all. When you look at the growth, the traffic growth versus prior year, you see a spike in April May. Since then, it has come down a little bit. But again, look at the scale on the right hand side. Through every week, our web traffic has grown compared to the year before by 50% or more. Switching now to our repeat order share. This is the green line. It remains at around 80%, meaning 80% of our orders come from customers who have placed orders in the past. It went up a little bit from Q2 from 79% to 83%. Not a surprise. You might remember we added a record number of new customers in Q2 and of course and that is the whole the holy grail of e commerce. Our objective then is to make sure that these customers are going to place the second and the third order with Shop A Boutique and then the churn will come significantly down. So the bump is reflective of the fact that the record number of new customers gained in the Q2 have now, to a large extent, become repeat customers. We think that 80 percent repeat customer ratio is a good level that we're also aiming for going forward. In terms of the plain customer orders that were executed over the last three quarters. You see that we constantly have remained above €4,000,000,000 Again, the demand that we experienced towards the end of Q1 and then certainly in Q2 hasn't abated yet. And I'm repeating myself, I know, but we don't anticipate that it is going to go back to pre corona levels in the future. And with this, I'll hand it over to Jesper to walk us through the financials. Yes. Thank you, Stefan. And good morning and thank you those on the call or in the video for joining this meeting. On this slide are all the key P and L lines from sales up to and included EBITDA in one overview. In the next two slides, I will give more color on specifically the gross margin development and the S and D development. But first, this total overview on one slide, first Q3 and then year to date. On sales, you see that last year Q3, we achieved €170,900,000 of sales. And this year, we increased by almost €68,000,000 to €238,700,000 which is an increase of 40%. Year to date, we stand at a growth of 38%. And I want to repeat that this is all organic growth, both in the Q1 year to date. So that's all growth driven by the same websites and by the same brands in the same countries. We achieved these numbers with at the same time a gross profit margin that increased in quarter 3 from 18.9% last year to 21.9% this year. So that's an increase of 3 percentage points compared to the comparable quarter last year. And drivers here are more favorable net pricing, continuous sourcing improvements and also in part mix of our portfolio. Year to date, the gross profit margin is also well above the 20% at the 22.3% year to date, and that's 2.7 percentage points higher than the 1st 9 months of last year. Selling and distribution, the next line, in the case of shop up or take, that's mainly fulfillment, marketing and the last mile cost all combined, they arrived at 17.6% of sales in the 3rd quarter, which was slightly worse than it was in the same quarter last year, As you will see in 2 slides, all explained because of our deliberate choice to invest in our strategy of growth through marketing. And year to date also here the improvement is impressive from 19% of sales last year over the 1st 9 months to 17.5% this year, an increase of 1.5 percentage points. This is in part reflective of the very strong operational start in the first half of twenty twenty and the not so very strong start a year earlier in 2019. We then go to the next line, administrative expenses, both in quarter 3 and year to date at 2.6% of sales, and they are well reflecting the scale that we have achieved here of respectively 0.4percent.3percentagepointsinquarter3 and year to date. If you sum up all the items that I just mentioned, then you get to the adjusted EBITDA. And if you get to the adjusted EBITDA, the 1,000,000 of euros then in quarter 3 last year it was minus €2,000,000 and now plus €4,000,000 So that's an increase of €6,000,000 And year to date, a number that Stefan already mentioned in his key highlights at the start of the presentation, we went from minus €12,000,000 last year to plus €16,000,000 this year is an unrounded increase of 27.2 percent of sales. Looking at this from the adjusted EBITDA margin perspective, then the margin increased from minus 1.2 percent quarter 3 last year to plus 1.8% this year, an increase of 3 percentage points and year to date at a positive 2.2 percent, the increase is 4.5 percentage points. The EBITDA year over year improvement is in the same ballpark as the adjusted EBITDA. And I want to repeat that we are very strict. We have a very narrow definition of what we include in adjustments. It is only the P and L impact of the non cash and pre stock option program that we exclude and identifiable one off costs related to projects. Nothing else, that's it. Those are the only adjustments in quarter 3, it was in total €1,400,000 and in year to date overview, it's €3,600,000. Next slide, please. €6,000,000 Next slide please. And then the gross margin, as I said already from 18.9% last year to 21.9% the same quarter this year. I want to start with the negative one, which is the minus 2.1% in other And this is virtually entirely related to a similar item we also addressed in the 2nd quarter. And this is the write down we had to absorb from specific corona related assortments, where in hindsight in the heat at the start of when corona came to Europe in March April, we were too eager in getting the right assortment in serving our customers and doing a good business. And in hindsight, we paid too much for those inventories. And this valid at the end of quarter 3, this is our best estimate of the fair market value that we have on our bench. So we are clean here now. That was the item of other. If we now start at the start, how we went from the 18.9% last year to the 21.9 percent now. Sourcing seems to be a small block with the huge other blocks we have on this slide. Normally, according to my definition, a 0.6% improvement is an impressive improvement in sourcing. Elements impacting the improvement are better conditions with our partner suppliers, more direct deliveries instead of through a wholesaler and also already a bit and in the future more favorable impact of own brands. Then we get to the big improvement of net pricing. Well, basically you are seeing here that in the total portfolio, in the total proposition of short hop and take care where we continuously try to optimize our entire proposition, we did not need to be as aggressive in promotions as we had to be in the Q3 of last year. That's the main driver. And on top of that, it's one of the items we focus on in getting the proposition, which assortment and pricing are very important elements in the most optimal shape. Country and product mix includes the fact that we are growing with OTC faster than Rx. So of course, the mathematical outcome in euros, we are also very happy with Rx sales. All in all, including this one off, the year over year improvement of 3 percentage points. Next slide please. And then the selling and distribution expenses as a percentage of sales, 17.4% last year, slightly worse this year. Here I start at the left with marketing. Marketing was 1.2 percentage points higher than last year. It's reflective of our strategy to invest in accelerated growth. We have already presented the total numbers. I think it's a very good strategy that we are following at this moment. But similar proud, I am, of the numbers thereafter, because in these times where we have the capacity constraints, where we are opening a new facility, where we are in the corona situation, we have been able to keep the operational costs of shipping, packaging, payments, operational labor at a comparable level to last year. And that's, I think, an achievement we are really proud of. And the operational labor, of course, if you go under the hood, then you will see that there are increases related to COVID and there are slight cost increases for our operations, but we were able to offset those through efficiency, scale in the departments that are in operational labor. The other element here is nothing to do has nothing to do with this year. This is actually just the fact that we cycle and the peak we had in IT related expenses last year, which by the way we had in Q3 and Q4 last year. But underlying the key message of this slide is all the operational costs are well under control in these challenging times, and we spend more on marketing because that's our strategy. Next slide, please. On this slide, the adjusted EBITDA both in euros, in 1,000,000 and as a percentage of sales from a negative territory last year to a positive territory, both in Q3 and year to date. And the year to date increase is more than €27,000,000 Next please. Cash, we had more cash at the end of the quarter than we had at the start of the quarter. The total balance of cash and cash equivalents including other short term financial assets was €157,000,000 at the end of quarter 3. And if we go from the left to the right, the start of the quarter to the end of the quarter, we generated €4,000,000 of cash from our operating results. Our working capital needs improved by €1,000,000 We invested €16,000,000 mainly in our new facility, but of course also in IT. And the financing element here is a positive one because there was an inflow related to our ESOP plans offset by the regular interest and use payments. All in all, €157,000,000 at the end of the quarter. And this gives me also the opportunity to say a few words now that we're talking about cash and balance sheet, about the earlier incentivized conversion of the bonds. It was a very favorable momentum for us looking at the total situation of our balance sheet and on the market and on the demand that there was a possibility in a win win situation with the large institutional investors in our convertible bonds to have the bonds converted earlier. This will improve has improved already as you will see in the Q4. Our balance sheet, it's even more robust as it was before. And as a side effect, as of 2021, you will see related to this convertible bond significant reduction of the interest expenses because we no longer paid the 4.5% on this loan because this bond is away. That was it. Stefan, let's go to the second part. Thank you, Jesper. Well, then so far about our ShopUp and Eco Europe performance in the Q3, just want to give you a quick update on what we're doing to be ready for the future. If we look at what is at the end of our journey or what do we want to be in a few years from today, We're starting with what ShopUp and Kicker actually is today. We are not exclusively, but predominantly we are an e pharmacy retailer today. And our ambition is that over the coming years, we're going to develop into an even more customer centric e pharmacy platform. In other words, we're convinced we are a good pharmacy today. We want to further solidify and leverage our strength. And in the future, we want to become, we want to be, we will be an even better pharmacy. At the core of Shop A Boutique's success has, of course, been our relentless focus on our customer. And when I talk about the customer, I mean the end consumer. And as we become a better pharmacy, we're going to give our customers more and more reasons to return to Shop A Boutique Europe for their health care needs. This is going to improve our customers' loyalty. Increased customer loyalty is going to translate into higher customer lifetime values. And of course, higher customer lifetime values are going to translate into tangible bottom line improvements over time. With our new distribution center, we are really going to enter into a new era for Shop Aptaker. But you might be wondering why are we showing you a picture here on the left hand side of loading or delivery docks. We just want to illustrate with this picture the magnitude of the change. At our current facility, we are actively using 5 loading or delivery docks. At our new facility, we're going to have over 40 loading and delivery docks, meaning and this is just one indicator and I'm going to talk more about capacity on the next chart, but this means that we will be ready for the growth that we anticipate over the coming years in the non prescription area in Germany, in the other markets in which we operate today and potentially additional markets we're going to enter over the coming years. But also we will in terms of the expected growth triggered by the introduction of e prescriptions in Germany, again, starting next year but then going into full swing at the beginning of 2022 with e prescriptions becoming mandatory. So just to be a little bit more specific, we're talking about capacity. In our current or now I would say our old facility, we have around 20,000 square meters on one level. In our new facility right here in Severnam, we're going to have almost 50,000 square meters on two levels. In terms of packages sent per day, we on average, we sent around 39,000 packages a day in our old facility. Here in Severnum, we're going to have capacity in excess of 100,000 packages a day, and this translates in an annual capacity of being able to handle more than 35,000,000 customer orders every year. And this is, of course, before we continuously improve our workflows, our processes, our systems. So there's probably more that will eventually be teased out of this new facility. By the way, the picture that we are looking at here, I have to admit, is a little bit outdated. Of course, construction has, of course, been finalized. The intra logistics equipment is up and running. We're putting right now the finishing touches on this equipment. This is a little bit the transition from the old facility is a little bit like an open heart surgery. We cannot just stop everything and focus for 2 weeks on transitioning everything from the old to the new facility. Therefore, we are going to stretch the transfer over an extended period of time of 6 months or even a little bit more. We are right now in the process. I already mentioned that we shipped the first package to a customer in Italy on the 21st October. Many, many more customer orders have left our new facility, of course, since 21st October. But why are we doing this? Why are we right now already transitioning the business in our international markets from the old to the new facility. Well, we wanted and we need to create space at our old facility to be in a position to fully handle the Q4 demand, but more importantly, to be ready for another expected jump in the month of January next year. We wouldn't have been able to do this if we hadn't provided some relief already to the existing to the old facility. In January, we are also going to start the new Intralogistics equipment. We're going to have a much, much high degree of automation. For those of you who have visited our old facility, you probably saw a very efficient but almost completely manual process In our new facility, we're going to have a much higher degree of automation. The degree of automation is going to get close to 50%. And this, of course, over time is going to translate, is going to yield lower cost per customer order. The whole transition will be concluded in the Q2 next year and the last country that is going to transition is our biggest and our most important market, of course, Germany. We want to be 100% sure that the software works properly, that the equipment works properly before we move orders from our customers in Germany. Well, our new facility is not just about capacity, higher degree of automation and lower cost per customer order. It's also about providing an inspiring open space environment for our employees that work in an office setting. You might remember that we moved the offices in the month of July, and I can tell you that our workforce was that the new office environment was very well received. I dare to say was enthusiastically received. Well, unfortunately, at this point of time, many of these employees are not in a position to benefit from the open space environment for obvious reasons. Many of them are working from home. But while they were here, we already witnessed a higher degree of collaboration across departments, within departments and improved communication flow. Also in this respect, again, this was an important move for shop apotheker. The new facility is also an important step on our sustainability journey, but it's only one step. I want to emphasize again that the management of Shop Apotheker, we are committed to sustainability, not because it's fashionable, not because some of you are making this an issue for us. We are fully convinced that this is the right thing to do, and it's our responsibility as a corporation to make our contribution again on the journey towards the sustainability. Our efforts have already yielded a first rating upgrade. You might have seen that our ESG MSCI rating was upgraded to BBB. Again, that is not the key motivation for us, but it's nice that our efforts are recognized also in this way. Over the coming quarters and years, we will certainly share more tangible benefits and results that come out of this sustainability initiative. Well, talking about journey, looking at our strategic journey, looking at what we are doing today to make sure that our strategic ambitions will be filled with life, sustainability is part of our strategy. But we also have a couple of key strategic initiatives that we want to share an update with you on. We are starting with our own brands. You certainly remember that in 2018, Chobhapatique acquired NewFree, a functional food company based in Berlin. That business is developing very nicely and I can say that this was certainly a very successful acquisition. The management team of NU3 is also in charge of developing our RedCare label. You might remember, we started the RedCare brand in February with launching nasal spray and paracetamol. Since then, many more products have added every quarter, and we're going to add more RedCare products in the future. Our RedCare business is developing as we had anticipated, and it looks very promising for the future. In terms of our marketplace, I've already alluded to this. We're looking at this in 2 dimensions. 1st, we have our same day offering under the brand of Shop Apotheque Now. You remember, we had a we concluded we successfully concluded a pilot program in the Rhein Ruhr area and we continued offering same day in the Rhein Ruhr area that covers everything from the Bonn Cologne area up to the city of Dortmund. In the Q3, we expanded our same day offering to 2 additional metro areas in Germany, to Munich and to Berlin. More metro areas are going to follow till the end of the year. And next year, we'll be in a position to cover all of the metro areas in Germany with Schott Apotheken now. Of course, we're not going to stop at the borders of Germany. But again, that's something we'll talk more about in the future. In terms of the other dimension of our marketplace initiative, the product expansion, meaning us offering a broader portfolio of healthcare related products to our customers. Again, we always come up with the example of contact lenses, which we are not selling today at ShopUp Atigabut will be offering to our customers through a marketplace partner in the future. But there's just one category. We're making progress. We are onboarding marketplace partners. We'll go live in the coming months. At this point of time, there's still a possibility that we might go live with the 1st marketplace partners before the end of this year. In terms of our online doctor service and telemedicine cooperation, You certainly remember that we started our cooperation with Zaba last year in December as a fulfillment partner. Since March, our customers are able to access an online doctor consultation through the Shop Apotheque customer journey with Zaba. This is also the business is developing as we had anticipated. We are already processing every day hundreds of digital prescriptions that come out of the cooperation with Zaba. But the main focus at this point of time is on gaining experience, understanding what works, what doesn't work from a customer perspective and to continuously enhance the product that we are offering to our customers. And if I had to rank order the strategic initiatives on this list, of course, in terms of importance, the one at the top of the list are the preparations for the introduction of e prescriptions in Germany. Based on everything that we're hearing and we are constantly talking to key players, the Gmertik remains on track with introducing the telematics infrastructure and the e prescription app as we had anticipated. And of course, also our internal preparations are fully on track. Talking a little bit more about our internal preparations, we already established a task force. We call it the ERX First Task Force in 2019 to do what is necessary to be ready for the introduction of e prescriptions. The task force actually is an agile product team. Throughout this year, we have added participants to this task force, again acknowledging that this is the single most important initiative for short uptake. We split the task force into 2 sub teams. The first one focuses on the front end, meaning to ensure that we offer the best in class customer journey, not only for non prescription products, but also for e prescriptions going forward. Just last week, as a management team, we looked at the first set of click thumbnails to get an idea of what this customer journey is going to look like. The second sub team focuses on the back end processes to make sure that all of our systems, all of our processes are optimized for the launch of e prescriptions. Just to give you one example, at our new facility here in Severnem, we are introducing a whole new warehouse management system, all the features that are required for handling e prescriptions by a warehouse management system are already reflected in the software that is about to go live. For those of you who've been following Schott Apertijeka for an extended period of time, You remember that we are involved with the RX market and the RX business for almost 20 years. Most of the experience came from our Hooper boutique, which was fully integrated into Schoppaper boutique in 2017. We are also managing 5 patient support programs addressing 5 chronic diseases under the brand label of Smart. Again, what I want to say is we don't just understand the market, but we also understand the needs of patients, of our ex customers. And that will be reflected in the customer journey that we're going to offer. Electronic prescriptions, or let's say digital prescriptions, another novelty for Chon Appertig. I already mentioned that today we are handling 100 of digitally received prescriptions through our cooperation with Zava. Furthermore, when we get a paper prescription today and you see one here on the left hand side, after we have opened the envelope, every data point on this paper prescription is transferred into an electronic data set. So internally, once this has happened, we are already handling digital prescriptions today. The picture that we always use is that when you come to our facility, you're not going to see anybody in our fulfillment center that is walking around with a stack of paper prescriptions and then filling boxes. All this is already handled electronically. And last but certainly not least, we're constantly talking to all the players or almost all the players in the market assessing whether it makes sense for them, for us to join forces and to do something together. Just in Q3, we joined the TK pilot. That is, number 1, a political statement we want to make. Number 2, we want to gain some experience because there are some electronic prescriptions that will be received through the TK pilot, but also and those of you who are following all the pilot programs closely, you know that at this point of time, the volume that is going through any of these pilots is very, very small. Okay. So before I hand over to Jasper again to walk you through our guidance update for 2020, a quick regulatory update from our side. You might remember in August with the Q2 release, we walked you through the legal framework and the timeline for the introduction of e prescriptions. If you have any questions, please go back. Everything that we said 3 months ago is still valid. But now, of course, we're talking about the BOASG, the law to strengthen local pharmacies in Germany. The law passed the lower house of the German parliament, Bundestag, at the end of December. It's very likely that it's going to pass the upper house of the German parliament, the Bundestag, at the end of November. And sometime in December, the law will go into effect. That's our assumption at this point of time. Of course, the BOSG contains 2 stipulations that are relevant for online pharmacies, the Rx Bonus Band as well as the temperature control requirements. Let me start with the temperature control requirements because that's a little bit more concise. I just want to be crystal clear there. We are complying with all the requirements, the temperature control requirements today. We will comply with all the temperature control requirements in the future. We have carefully looked at the law. And based on everything that we have read, we don't anticipate any or any significant impact on our operations, but also not on our financials. So that is more a clarification the way we understand it. Now let's talk about the Rx Bonus Spend. That's a little bit more controversial in nature. Let me start by stating that we are 100% we remain 100% convinced that this ARIX BONE spend is a violation of European law. There are certain reasons, but I don't want to speculate too much, why the German government went for the bonus ban. The non compliance with European law was emphasized by several legal experts during the hearing of the WIO ASG at the German at the Bundestag in September. But again, at this point of time, we are assuming that the bonus ban the law will go into effect in December, and the bonus ban will come into effect into November. However, what this means for us and how we are going to respond to this isn't clear yet, We are waiting for the response from the European Commission. The European Commission has the position was very clear in the past. But at the end of the day, we acknowledge that this is a political decision. But again, if you ask me right now, our assumption is that the European Commission will initiate infringement proceedings against Germany. But again, that is out of our hands. Secondly, we're waiting for the position that the statutory health insurers in Germany are going to take. That is not clear yet. We know that in the past, they're also explicit. We're very explicit that they think a bonus ban would be a violation of European law, and they are committed to complying with European law. But again, that is an unknown at this point of time. Just to be clear, we have not yet decided what we are going to do. Will we continue to offer bonuses to our patients or will we stop offering bonuses to our patients? Depending on what the European Commission does, the position that the statutory health insurers are going to take, That will be a risk and reward assessment that simply because these positionings are not known yet that we cannot do at this point of time. But assuming assuming that we would stop offering the RX bonuses to our customers, what would happen? Well, this is this would not be the first time that we go through the experience because until the European Court of Justice decision in 2016, we had several years when we were not able and not in a position to offer Rx bonuses to our customers. What we saw at the time is that our Rx business didn't grow anymore. That is the best reference point for us at this point of time. But keep in mind, right now, the growth driver for Schott Aperteek is our non prescription business. We grew by almost 40% in the Q3. Our Rx business grew by only 17%, but it's probably a safe assumption that we're not going to see a growth or any significant growth if we decide not to offer RX bonuses to our customers anymore. Last, little reference point there. Keep in mind, our competitors in Germany, the mail order pharmacies in Germany, they haven't been able for the last few years to offer any Rx bonuses and they also have a sizable Rx share. So the Rx bonus is certainly one driver of our Rx business, but it's not the only driver. And before I hand over to Jaspal to talk about our guidance update, keep in mind that the growth reduction in the Rx segment would be temporary in nature. This is all going to change with the introduction of e prescriptions starting next year, but then coming into full force in January 2022. With introduction of e prescriptions, the use case, the primary use case for Rx customers is going to shift from being monetary in nature to being convenience based. And with this, I'll hand it over to Jasper to walk you through our guidance upgrade. Yes, Sven. It's Stefan. Yes, just one slide. And in these exceptional times, we again raised our guidance for the current year this morning. The full year sales growth, we now expect for the year to be north of 35%. And remember the total picture at the start of the year, it's actually our 3rd race this year, because at the start of the year, we had guidance of sales growth of growing around 20%. Then we hired it to at least 20%, then to at least 30%. And as of this morning, we say it's going to be north of 35%. And at the same time, the full year adjusted EBITDA margin, we started the year with an ambitious ambition to continue the very fast growth with also breaking even on the adjusted EBITDA level instead of breaking even, which is around 0. We this morning raised our guidance to the expectation of an adjusted EBITDA margin for the full year of around a positive 2%. And then the 3rd bullet on this side, we continue to invest in customer acquisition. I basically say it in simple words that we are at this moment in an end to end situation. And we are growing very fast and existing customers buying more and we acquire new customers. And from both segments of customers, we get continuously very high customer satisfaction scores. And at the same time, we are not ignoring the bottom line. We are also significantly improving there. And what I want to express with this further bullet with continuous investment in growth is that we also focus on all aspects of capacity to increase there and in all aspects of IT to increase there. We go to the last bullet on the slide that's our long term target profitability. It's EBIT. Let's say that at this moment we are around an EBIT of a positive 0 and our long term target profitability remains unchanged in excess of 6% is our target.