Ladies and gentlemen, thank you for standing by. I'm Natalie, your Chorus Call operator. Welcome, and thank you for joining today's CompuGroup Medical Investor and Analyst call. Throughout today's recorded presentation, all participants will be in a listen-only mode. The presentation will be followed by a question-and-answer session. Questions are possible for those participants dialed in via telephone. If you would like to ask a question, you may press Star followed by 1 on your touchtone telephone. Please press the Star key followed by 0 for operator assistance. I would now like to turn the conference over to the Corporate Vice President, Investor Relations, Claudia Thomé. Please go ahead.
Good morning, everyone, and welcome to the CompuGroup Medical Investor and Analyst conference call for the 4th quarter and full year 2021 preliminary results. Great to have you with us, whether you have dialed in via the phone or are following via the webcast. You will find all the relevant information, such as this presentation, lean quarterly statement and the press release, which we published early this morning on our website. We're going to start with presentations by our CEO, Dirk Wössner, and our CFO, Michael Rauch, followed by the Q&A session. Before we start, there are some housekeeping remarks. Let me remind you on our safe harbor statement, which is shown at the beginning of the slide presentation and is valid for the entire call. Thanks for your patience. Now let us start. I hand over to Dr. Dirk Wössner, the CEO of CompuGroup Medical.
Dirk, over to you.
Sorry, I was on mute. Good morning. Thank you, Claudia. Good morning, everyone, ladies and gentlemen, and a warm welcome also from my side to today's conference call for the preliminary results Q4 and full year 2021. There's true purpose in what we do and which we follow through and executed in 2021 at CompuGroup Medical. Our legendary founder, Frank Gotthardt, has put it into his words, and this is what we get up for every morning: Nobody should suffer or die because at some point medical information was missing. We can make a difference for people's lives, for their health by enabling the digitization and interoperability between all the healthcare providers and professionals and customers in the sector. We delivered in 2021 on our path to digitize the healthcare sector.
Our investment program for sustainable growth in the future has been successfully executed as planned and is already bearing fruits. Additionally, with eMDs and Cerner, we successfully integrated the 2 largest acquisitions in our history to strengthen our already excellent market position and built a foundation for further growth. Last year, we announced our midterm ambitions, and we delivered. We successfully achieved more than 5% organic growth in 2021 and took a massive step change in digitalization in many of our markets. Michael will talk about the financial in more detail later on. This great progress would not have been possible without the fantastic team here at CGM. Even during challenges like the ongoing pandemic or the cyber incident in December 2021, we have seen that the whole CGM family stood together to successfully overcome these challenges and emerge even stronger. We're operating in an attractive market.
We have an excellent market position, and we're building on a strong and experienced team. CGM is well-positioned for future growth. We delivered an excellent financial performance in 2021. We achieved more than EUR 1 billion in revenues for the first time in CGM's history. Our strong organic growth rate of more than 5% had a decisive role in this success. By the way, this 5.8% growth rate is the strongest organic revenue growth since more than 10 years, when you disregard the 1 year effect of the TI introduction in 2018. Despite the investments into future growth we have made in the last 12 months, we have reached a strong adjusted EBITDA exactly in line with our guidance. All this is based on a resilient and future-proof business model as the already high share of recurring revenues has increased once again.
Michael will give you more details in a few minutes. However, we will not rest on this success as there's still a long way to achieve our midterm targets. 2021 has shown that we're on the right way. As you can see in our first year of the +5% organic growth CAGR ambition until 2025, we ended the year with +5.8%. We also introduced a midterm margin target last September for the first time. A result of our investment initiative in 2021, we have seen the planned decline in our margin. In 2022, we're going to leave the margin trough behind and deliver a first step towards our target of around 25% in 2023 and around 27% in 2025.
At the same time, we increased the quality of our revenues, taking the share of recurring revenues to 65%, a big step towards our ambition of more than 70%. An excellent position to realize growth opportunities with strong market positions in Europe and the U.S. We've added significant scope during the past year and see increasing traffic within the digital CGM network. In our German ambulatory business, more than 1 million KIM messages, that's the Communication in Medicine, have been processed now that the actual use cases are landing in doctors' practices. Meine Gesundheit, our e-health record offering for private insurances, has reached more than 1 million users. In the U.S., 80% of key resellers agreed to market our electronic data interface services to their customers, reaping a big benefit from joining our 2 businesses in the U.S.
In the hospital segment, where we're the clear number 2 in the DACH region, we have won with excellent high-profile orders won over the last quarters. In Poland and Spain, we have shown strong growth recently. With this excellent market position, we will focus on our 5 organic growth drivers to benefit from the digitization momentum and unleash the next stage towards our midterm ambitions. Our investments are bearing fruits, especially in the AIS segment, where we enhanced our existing products and services with new modules and functions to push the digitization in the ambulatory sector to a new level. Following the successful integration of eMDs, CGM achievements in 2021 demonstrate a successful year in the U.S. Going forward, we will use our high potential of cross-selling in this market.
Our HIS business will also support us on our growth path, where we benefit from a new G3 platform and governmental programs such as the Hospital Future Act. We've already seen great success through the rollout of telematics infrastructure modules in the hospital sector. Here we are focused on new user groups also like physiotherapists, midwives in the future. In the last quarters, we laid the foundation for new growth driver, the data business, and I will come back to this topic in more detail in a couple of minutes. Numerous governments in Europe have realized the need to modernize and digitize the healthcare sector. The COVID pandemic has accelerated this even further. Besides being able to offer digital processes wherever possible, the value of aggregated anonymized data in healthcare has never been so visible in our everyday life during the pandemic.
It has become obvious that the healthcare community is not sufficiently digitized and connected to be able to deliver the best outcome for our patients. Significant government initiatives have been launched to further digitize the healthcare space with massive funding provided by regulatory bodies. Germany has been on the path of accelerating digitization and enabling interoperability for years with the telematics infrastructure roadmap. The Hospital Future Act is providing additional funding for digitization of hospitals within the next couple of years. In France, there's Ma Santé 2022 and Ségur du Numérique en Santé, a powerful initiative by the government to fundamentally modernize and digitize the French healthcare system. The goal is to speed up the adoption of new digital usage by both healthcare professionals and patients, and we expect the rollout to accelerate in 2022 considerably.
In the Netherlands, a new professional guideline for prescribing, delivering, administering, risk assessment of medication and related data exchange. The goal is to reduce the number of medication errors related to hospital admissions and thus lower healthcare costs. 2021 has been a step change already, and we expect more progress in 2022, enabling our customers to implement new digital offerings. To name only one example, the secure email communication is one of the key elements in the digital journey in countries across Europe. In Germany, for example, the telematics infrastructure-based secure communication tool, KIM, the new communication standard in German medicine, is the prerequisite for doctors being able to issue e-sick notes and other tools.
CGM achieved roughly 30,000 KIM installations already, and so far almost 880,000 e-sick notes and a total of more than 1.25 million KIM messages have been processed within the CGM network alone, representing over 30% market share. There are more innovative tools to come, like tools based on our new growth driver, the data business. Access to data is becoming more and more important for healthcare practitioners in a connected world. Based on unparalleled data access from our entire network, we provide intelligent solutions to make doctors' lives easier, improve decision-making and offer additional value. Increasing interoperability will speed up this trend going forward, and we're offering business intelligence tools that support doctors, for example, in their practice management.
Intelligent database solutions like THERAFOX enable doctors to identify adverse drug reactions, where we've seen a significant increase in usage in 2021. The cloud-based product informs doctors about potential risks that a certain prescription might cause in the context of the individual patient's treatment. Today, THERAFOX already handles up to 8 million requests every week, and CGM continues to leverage this innovative solution to improve utility and experience for healthcare practitioners. Special attention obviously is paid to quality assurance and extensive security checks. We see the data business as an essential growth driver for the future, and we're only at the beginning. In addition to the digital transformation in the healthcare sector, an ongoing focus on changing customer needs resulting from it, the environmental, social and governance framework is playing an increasingly important role at CGM. The key components for CGM here are diversity, employee engagement, and environmental and climate protection.
We're more diverse already. I will come back to our more diverse international executive board in a minute. We have set the clear goal of getting to 30% women in leadership by 2023, and we've already achieved more than 20%. The whole company has become more international, and to support non-German speakers in Germany, we're offering German classes for our colleagues. We've introduced employee surveys with a newly introduced tool in 2021 and will now regularly take the pulse of the organization going forward. This will serve as a basis for further targets and measures. Across all 3 ESG focus areas, a clear target program will be developed in 2022, followed by a program of measures. Now I'm very happy to introduce you to our recently strengthened management board. With Angela Mazza-Teufer, we're adding great experience in IT and digitization.
Angela Mazza-Teufer will be responsible for Ambulatory Information Systems in DACH and telematics infrastructure. Angela Mazza-Teufer joins us from Oracle, has great experience in the digital transformation and the optimization of value creation on the customer side. She's a fantastic leader, and we're very happy to have her. Additionally, I'm very proud that we're promoting internal talent, such as Emanuele Mugnani, who's been appointed to the board as managing director for Ambulatory Information Systems Europe, continuing the growth story there. Emanuele Mugnani will be responsible for AIS Europe and the pharmacy information system segment. Emanuele Mugnani has been extremely successful in his 8 years with CGM in various international roles, among them running our pharmacy business and being country manager for Italy. Please note that CGM's external segment reporting split into Ambulatory Information Systems, Hospital Information Systems, Consumer and Health Management Information Systems, and Pharmacy Information Systems segments remains unchanged.
Let me now highlight our 2022 priorities on focus for another successful year. We want to be a top player and key enabler in the digital patient journey, where we deliver the best service every day to our customers. We wanna innovate on a scalable platform and be lean and reduce complexity at the same time. As described earlier, we'll focus on our data business and want to become a leader in that area. Finally, it is mandatory to offer the best place to work to attract the talent that we need to support our growth. Let me summarize before I hand over to Michael. Again, we're operating in an exciting market that is innovation-driven. Our deep industry know-how and mentality to win makes us ideally positioned to benefit from this transition in the sector.
We're ready to transform the entire healthcare sector, and we're investing along with that. We've communicated the clear ambition, how to accelerate growth and increase margins with the support of our founder and an entrepreneurial spirit within CGM as a whole. We're able to execute fast and agile decision-making that is part of our culture, and we're ready to capture this fantastic opportunity going forward. Thank you very much, and with that, I'll hand over to Michael.
Thank you, Dirk, and good morning also from my side. Today, we publish the preliminary results of a successful landmark year. Please let me remind you that these preliminary results, that these are preliminary results, and there may be minimal changes as a result of the still ongoing audit process, as we will release our audited financials on April 7th. We're happy to report a strong 2021, where we fully achieved our group guidance. Group revenues have grown by 22% year-on-year and by 5.8% organically, as just explained by Dirk, which is fully in line with our more than 5% CAGR, so compounded annual growth rate ambition until 2025, resulting in revenues of more than EUR 1 billion in 2021 for the first time in the history of CGM.
Please let me highlight that the revenue quality is getting better and better as our share of recurring revenues increased by 2 percentage points to 65%. As expected, the adjusted EBITDA margin is down year on year due to the growth investments we made, but remains on a high level with 21.9%, slightly better than the midpoint of our guidance. For the first time, free cash flow crosses the EUR 100 million mark and ended up higher than originally expected at the beginning of last year, and also higher than indicated at the beginning of this year when we increased our expectations for free cash flow to more than EUR 90 million. Our adjusted earnings per share came out with EUR 1.95 at the top of the upper range of the guidance.
Here we benefited from a one-time tax benefit of about EUR 3 million. Even excluding this, kind of like 6 cent impact, we would have been above the midpoint of our EPS guidance. Let's take a closer look at the segment performance against 2021 guidance. First of all our operating segments posted revenues above last year's level and 3 of them with double-digit growth rates. Our biggest segment, AIS, grew by 27% to EUR 476 million, which is slightly below the originally guided range, but fully in line with our Q3 communication. Excluding acquisitions, AIS achieved 4% organic sales growth in 2021, which is twice as much as a 2% organic growth for AIS in 2020.
Both the HIS and the CHS segment exceeded the guided range with very strong growth rates also organically. I will come back to these segments in a couple of minutes. Summarizing, this is an excellent performance in all of our businesses, further progressing based on a strong foundation for the future. We actually consider this to be the beginning. We are clearly boosting the growth in revenue to a new level, and we are aiming to do this also in 2022. With an expected CAGR of 15% from 2020 until the end of this year, we set the course for a new level of revenue.
While we have taken a bit of steam out of EBITDA growth due to the investment into further revenue growth in 2021, we are still improving our profitability on an already high level, delivering an attractive adjusted EBITDA with a CAGR of 7% in the respective period. Please let me highlight that the high growth rate is not only a result of M&A activities. It is crystal clear that this was supported by ongoing step-up in the organic growth we reported over the last years. Taking an even closer look at the organic growth. In 2021, every segment delivered an organic growth rate in line with our midterm targets or even more.
As a result, we are fully in line with our midterm target ambitions to deliver an organic growth CAGR for the group of more than 5% until 2025. The main drivers have been the CHS and the HIS segment, where we saw an increasing usage of our innovative offerings. Our flagship, the AIS segment, is driving digitization in doctors' practices across Europe, and since last year, also even stronger in the U.S. As you know, this has been supported by acquisitions, but organic growth has shown a strong development of 4% in 2021, mainly driven by the excellent DACH business and a strong progress in the digitization in France. We've been guiding you towards a digitization progress in the European healthcare sector in the last years, and now many of the features discussed for years are becoming reality.
We've been successfully rolling out numerous modules to doctors, enabling a more digital doctor-patient interaction, the use of e-health records, secure digital communication between healthcare participants, and creating added values for customer-tailored services. The ambulatory practices are adopting our innovations, resulting in a significant increase of usage and traffic. The COVID pandemic presented our customers with additional challenges, such as vaccination. CGM supported them with additional modules and features to handle this extraordinary challenge in a professional and efficient way in Europe and in the U.S. To summarize, the development in the AIS segment is an excellent growth of 27%, including the eMDs acquisition in the U.S. and also strong organic growth of 4%, mostly due to additional modules like the e-health record and the vaccination certificates in 2021.
The revenue quality has always been high in this segment, but with 76% of recurring revenue, 2021 has been one percentage point better than the year before. The hospital business has delivered a major step-up in revenue in 2021, not only driven by the latest acquisitions, be it from Cerner in 2020 or the VISUS and KMS acquisitions in 2021. Organic revenues went up by +8% by strong business development, particularly in Germany, Poland, and the lab business. Here, the high-profile orders we won in the last year from Universitätsklinikum Hamburg-Eppendorf and from Bethel are a strong proof of our technology leadership in the next generation platform, G3.
The Hospital Future Act, the large governmental initiative in Germany to drive digitization, modernization in hospitals, is keeping the HIS colleagues busy. Until today, we received confirmed orders relating to the Hospital Future Act of more than EUR 25 million, thus delivering our expectations published last year. The project funnel continued to evolve, with the main areas being care management, patient portals, and medication. Based on the latest projections, we expect a total of EUR 50 million-EUR 80 million revenues over the next couple of years from this initiative. Over the last years, we've seen a fantastic revenue development with an adjusted EBITDA margin CAGR of +50% . A strong signal of an increasing importance of our HIS segment and our midterm targets demonstrate that we are confident that the excellent development will continue. We're very happy about the development in the consumer health management information system segment.
We delivered a double-digit revenue CAGR with a strong adjusted EBITDA margin, recently impacted by our investment initiatives, where we built the foundation for sustainable growth in the future. 2021 has been a strong year in CHS. We finalized the rollout of our connectors to pharmacies at the beginning of the year, followed by strong card reader sales and provided our TI customer base with the next generation connector upgrade in the second half of 2021. These have been big revenue drivers, and the new setup in doctor practices and pharmacies is finally enabling new use cases like e-health records and the enhanced electronic signature, which is beneficial for a number of applications in the daily practice of doctors and the admin support. Dirk already mentioned our new growth driver, the data business.
We are really excited about the steps we took in building up new opportunities, and there's a clear market demand for our solutions. We see significant increase in the numbers of users. More than 3,000 doctors from 11 specialty groups have already signed up for CGM Benchmarks BI. Arznei aktuell, an innovative app for drug and medication checks, has been relaunched and already records more than 250,000 users. There are many other solutions like THERAFOX or a tool for detection of rare diseases. We will, of course, keep you updated in the future about the exciting paths CGM has embarked on. The development of our PCS segment can be explained short and crisp. A solid performance, again, has been recorded in our pharmacy business.
Even against a prior year of quite interesting comparisons at 2020, revenues went up slightly in 2021, where our colleagues from Italy delivered a strong revenue growth in a challenging market environment, while the margin has seen a stable development and a gross CAGR of 6.5% over the last years. Now, as a CFO of a strong cash generation company, I'm happy to talk about the next slide, particularly. CGM recorded a free cash flow above the magic hurdle of EUR 100 million for the first time in the company's history, and we are willing to do that again, of course, in 2022.
Originally expected to end 2021 above EUR 80 million and after increasing our expectations to more than EUR 90 million, we are now reporting EUR 101 million for the full year 2021 after a strong Q4, as already explained and expected in our Q3 call. Let me support you in terms of modeling the cash flow for the next quarters. Due to the cyber incident at the end of 2021, we've seen a delayed invoicing resulting in a lower expected free cash flow in the 1st quarter of 2022. To make this clear, this is only a timing effect. We will catch up within the next quarter and expect the free cash flow to be again above EUR 100 million for the full year at the end of 2021.
However, we will come out a bit lower in the 1st quarter of 2022 in free cash flow versus prior year. Net debt and leverage have increased last year. At the end of 2021, we stood at EUR 633 million net debt, corresponding to a leverage of 2.8 times. This includes payments for acquisition of EUR 89 million and a share buyback was around EUR 96 million. Let me give you more granularity on our expected development for the running year with our guidance for 2022.
Regarding organic revenue, we continue to expect a growth rate of 3%-8% with a midpoint of 5.5%, fully in line with our midterm ambitions of a CAGR of more than 5% until 2025. As communicated at our capital markets day 2021, we aim at improving the quality of our revenue with a share of recurring revenue of 65% or more. Finally, let me highlight our margin development. We announced our investment initiative and the corresponding decline in margin to build the foundation for an ever more successful CompuGroup Medical in the future. We reported the expected decline in 2021, and now we will leave the margin trough behind with the first step-up of an adjusted EBITDA margin of 22.5% in 2022 in the midpoint.
These investments made are bearing fruits in terms of higher organic revenue growth, as we can already see in 2021. We see that we are on the right way to deliver a bigger step-up in the next year towards our promise of an adjusted EBITDA margin of 25% in 2023 and 27% in 2025. Now, looking forward in terms of upcoming disclosure events, we will publish our audited annual report for the full year 2021 on April 7, and we will publish our Q1 2022 financials on May 5. The annual shareholder meeting is planned again virtually for May 19. With that, we would like to thank you for your attention and are now looking forward to your questions. I'm handing back to the operator. Thank you.
Ladies and gentlemen, at this time, we will begin the question and answer session. Anyone who wishes to ask a question may press star followed by 1 on their touchtone telephone. If you wish to remove yourself from the question queue, you may press star followed by 2. If you're using speaker equipment today, please lift the handset before making your selections. Anyone who has a question may press star followed by 1 at this time. One moment for the first question, please. The first question is from the line of Charlotte Friedrichs from Berenberg. Please go ahead.
Good morning, and thank you for taking my questions. 3, if I may. The first one is if you can give us an update on how much TI accounted for in terms of revenues in 2021. That will be the first one.
Sorry, Charlotte, you said 3 questions?
Yeah. No. I would take them one by one, if that's okay.
Okay.
Would you want me to take them all in the beginning?
Yeah, of course. I do the first question. That's EUR 104 million TI revenues in 2021.
Okay. That is mostly in the CHS segment with only a small impact in the other ones, right?
Yes. As you know, we shifted all of the TI revenues from the AIS segment and the PCS segment towards the CHS segment. Everything is recorded in the CHS segment.
Okay, perfect. Second question would be around pricing and inflation, your thoughts on this, what your contract structure looks like, and what your views on wage cost inflation at the moment.
I was just referring a little bit earlier and that due to the ransomware attack, we were only in a position to invoice our customer a bit later than we originally do at the beginning of the year. When we did the invoicing, we of course reflected upon the overall situation in the market in terms of the inflation hikes, in terms of the projected interest rate hikes, and have also been reflecting this in the invoicing to the customers. That shall cover also the increased inflation impact, which we expect a little bit also on personnel cost side.
Okay, understood. Final question before I go back to the queue would be around the data business and sort of the revenue split between the different products here. Can you give us an idea of which ones are the largest products in terms of the revenue contribution here?
We don't split the individual components of the data business in a sense of giving out basically on how much revenue we do with the various activities here on data business. As you know, we have a broad base of various data activities as we have been talked about also at the Capital Markets Day. The revenue comes from all of the elements in data.
Okay, thank you. I'll go back to the queue.
The next question is the line of Knut Woller from Baader Bank. Please go ahead.
Yeah, thank you. Also a couple of questions. Looking first at the Q4 results, other operating income had a good tailwind while other operating expenses were up quite substantially. What drove these developments, and how should we think about that? I would ask my other questions later on.
Okay. Today is a one-on-one session. Hello, Knut. With regards to your question, we have basically, on the other operating income, basically benefited from the release of a couple of provisions which we had built. Like for instance, we had a provision for former management built, which we had to release because of the different payout structure, and that was another operating income benefit which we recognized. At the same time, we had to build provisions for instances like, for instance, for the IT attack, which we also had to cover with the provision. Typically, you have other operating income, other operating expenses, just based on the changes in provision building and releasing.
Okay. Looking at the malware attack impact, are there still any costs to be expected in 2021, and could you quantify them?
Yes, we can. We adjusted for malware impact costs in the 1st quarter of 2021, in the amount of a little bit more than EUR 3 million, as you can see also in the published report from this morning. We expect also in the 1st quarter of 2022, costs around that magnitude. We always said it's going to be a single-digit million EUR amount in total for the malware or ransomware attack of costs. As we had to rectify our systems also in Q1 2022, we could only recognize these costs then in Q1 2022, and you will see that when we release our results in the beginning of May.
Awesome. Lastly on margins, Michael, how should we think. You gave some insight on the free cash flow. Given still the investments, are you confident already to deliver margin expansion in the first half of the year? Or due to the spillover effect of the investment, should we rather model something like that for the second half of the year? Lastly, on the delta between EBITDA and EBIT margin, should we also expect here to see this narrowing going forward? Thank you.
Let me start with the first question in terms of modeling. We will have very similar development as we saw also in the last 2 years with the typical margin being stronger in the second half of the year. Again, in the first half of the year, we would expect basically the margins lower than to be in the second half of the year. The same pattern we've seen in 2020 and 2021. We will want to have margin expansion throughout the year, but that depends also a lot, for instance, on when the next upgrade for the TI infrastructure is going to come. We moved away from giving specific guidance per the quarters because that really has a lot to do with the regulatory changes.
Dirk, for instance, mentioned also the Ségur program in France, where we need to see on when and how we can recognize revenue. The same needs to happen with the Hospital Future Act, where we need to see on how we can recognize the revenue and then have the P&L impact. What is for sure clear is you will see a stronger second half in terms of margin than the first half. Your second question was with regard to the difference between EBITDA and EBIT, and you're rightly alluding to the D&A part, so depreciation and amortization. Yes, with the larger acquisitions, which we have started being doing since the Epsilog acquisition in December 2019, we've incurred higher costs, so to speak, of amortization.
Yes, the goodwill is tested against impairment, but then there are certain elements which have to be amortized over a period of time. We have seen the Cerner acquisition amortization peaking in 2021. That will go down in 2022 and following. The eMDs will stay on a high level, and the recently acquired VISUS and KMS, and their amortization will also stay on a high level. Not counting in any future acquisitive moves that CompuGroup might make, we will see the difference between EBITDA and EBIT a bit shrinking, but not too much.
Okay. Thank you.
Ladies and gentlemen, as a reminder, if you would like to ask a question, please press star followed by 1 on your telephone. The next question is from the line of Nikolas Mauder from Kepler Cheuvreux. Please go ahead.
Hello, good morning. 2, if I may. First one is on holding costs in the 4th quarter of 2021. It seems to me they have been a bit low. Can you please comment on whether that goes back to the issue of release provisions that was discussed earlier, but actually that should have been adjusted in EBITDA, as you said? Any color is appreciated here. The second one is a strategic one. At the beginning of the call, you stressed the issue of interoperability. One of your main barriers to entry is sort of the high cost of switching for your customers when systems become more interoperable. Is that a good or a bad thing for CGM? Thank you very much.
Hello, Nikolas. I take the first question, and then hand over to Dirk for the question on interoperability. On your first question, and just to say loud and clear in terms of adjustments, we want to adjust for as little as possible. In terms of management compensation, we only adjust for the option component, right? Any kind of short-term incentives or longer-term incentives which are not option related are not being adjusted. I can say very directly, we had 2 former members of management here in the Board that were not compensated via options, and therefore, the release of those provisions were not adjusted.
That's the effect you see in the holding costs, why the holding costs are better in terms of the costs which you would typically expect, because there's the operating income recognized, which is not adjusted. Then I hand over to Dirk.
Yeah. Thank you, Michael. Regarding the question of interoperability, I think we look at this as generally a big opportunity for CGM. Now, you refer to, is this a risk because, you know, switching costs are high for physicians in the core systems. The primary system switching costs continue to be high. We don't expect those to go down. That has less to do with interoperability, but a lot with, you know, people being used to the way that they work, the depth and strength of our systems that we have, i.e., it's not that easy to replace the core systems. However, those systems are becoming increasingly modular, i.e., it is possible to add modules to those systems. We do that ourselves, by the way, by providing. I mentioned THERAFOX earlier on.
THERAFOX , you can look at something that plugs into the primary system and then delivers the service to the doctor. We have done this many times in the past. For example, I think we have 400 or something interoperability features in our main product, MEDISTAR. But bringing this more to standard will actually make it easier to complement our products, both for ourselves but even for third-party products. The second question then is how do you control would you have the control point, i.e., is it just easy to open this interoperability without us being able to control this? Or are there certain elements of, I would say, a win-win situations that can be generated with third-party providers?
Great example is DiGA, for example, in the German market, where a lot of DiGA manufacturers are coming to us and saying, "Hey, guys, can you integrate our DiGA better into your recommendation engines?" That goes back to advertising, goes back to data revenue that we mentioned earlier. Secondly, I think the more you look into the flow of data within the patient journey, it will become very, very important to be interoperable between the core primary system and for example then offers where you have to process e-prescriptions or patient data that can be exported. Again, we would usually find mutually attractive agreements with providers, always providing that there's anonymization of the data that is provided, and obviously if there's data is provided, also consent from both doctor and patient.
Again, once you are more interoperable, it becomes a lot easier for this information to flow and new business systems are emerging. Is there a certain risk that, you know, others come in and use this interoperability to connect their systems? While we've seen this in the past as well, so there it is. It exists. However, we think it's very manageable. I hope that answers your question.
Thank you, Dirk. Thanks, both.
We have a follow-up question from Charlotte Friedrichs. Please go ahead.
Thank you for taking the follow-ups as well. I'll do them all in one go now, if you prefer that. The first one would be how much in TI one-off revenues you had in 2021, and if you already have an idea roughly how much that is going to be in 2022. For example, the connector replacements. Second question would be, if you already have an idea about the savings over time of revenues, under the Hospital Future Act. Then finally, a broader question would be about the churn rate in the AIS division. Specifically the question is, have there been any changes here in recent years in terms of the churn rate? Thanks.
Charlotte, I'll take the first question with regard to the TI, right? You wanna know of the EUR 104 million, I just answered a bit earlier of TI revenues for 2021, how much of that is the recurring portion and what is the non-recurring? That's actually split half and half, 50/50. So, 52 on one side, 52 on the other side. That's exactly the split. Then on the Hospital Future Act, I would hand over to Dirk, please.
Maybe I'll take the second part of your TI question first, which is the 2022 connector upgrade.
Now, 2022 is going to be an interesting year because as you might be aware of, the original connectors that were deployed in 2018, and the following years are actually running out by design, after 5 years. i.e., there's certain security specification in the devices that they actually become unusable after 5 years. That means there has to be a replacement of, or an upgrade of those connectors. The original design was a replacement of the connectors. That would mean that we have, for example, 40,000 connectors running out until the end of the 1st quarter of 2022. That would mean these connectors would have to be replaced. That is our clear recommendation.
That is also currently in discussion both with gematik and the respective associations that pay for this. However, it's not finally decided. We are ready to do this, and we would recommend this way going forward. Again, the finalization of whether this is going to happen, what price this is going to happen is unclear. However, it will have to start in the third quarter of this year because then again, machines are running out. The second thing then is that there is also an additional upgrade to the connector, which is called the PTV5 upgrade, that delivers certain features like MIOS and other things that would be delivered, which are additional. That would be an additional upgrade.
There's 2 big things in TI going on. The one is the extension of lifetime respective connector replacements, and the second piece would be the upgrade with the new features around ePA 2.0 and KIM and other things. Let me just clarify. Earlier, I said 40,000 connectors running out until the 1st quarter of 2022. It's the 1st quarter of 2023, obviously, that those are running out. I'll get quickly to your changes in churn rate. We have not seen a significant change in churn rate in our markets. Again, this is a quite stable business, so there's nothing that would indicate that there's any substantial changes in those numbers. Regarding the Hospital Future Act, I think I can add, again, we're very confident. We're winning programs.
We're making good progress on a lot of the projects. However, this also, I've said this before, the final approval of those projects by the respective authority is still lagging. I think the last time I looked, we were around EUR 300 million or EUR 400 million of the EUR 4.3 billion being finally approved and released. So the vast majority of this is still in, I would say, in bureaucracy and being approved. We have handed in our offers. We're confident that we will get those projects. The question is when do they finally start and the revenue can be realized? I think that's the big question about the Hospital Future Act, but overall very, very confident.
The one thing actually that surprised or didn't surprise us, but that was a positive outcome, was that all of the EUR 4.3 billion actually have been requested, which is quite unusual if you look at other government programs, where actually a lot of the funds that are provided are not even being asked for. This has been the case with Hospital Future Act, that's great. However, we're still now in the, how do you say that? The grindstones of bureaucracy, to get the final approvals there. Lotta, I hope that answers your question.
Yes, it does. Couple of follow-ups if I may. Did I hear correctly that, so far EUR 400 million roughly have been approved out of the EUR 4.3 billion in potential funding?
That is the last number I had in my head, but that I think it was published in January. I'm not 100% sure this is a public number, we could check that, but it's a smaller amount and the EUR 400 million is probably 3 months old or 2.5 months old, so I don't have the latest numbers there.
Okay. What is the momentum currently with programs in other countries like, for example, Ma Santé in France?
Ma Santé in France or the Ségur program has a big momentum there. There are actually deadlines for the delivery of the data which are in Q2 to deliver the features. The first phase of the rollout will happen in the second half of this year. That has been clearly outlined by the French government, so you will see a big part of that money being spent in the second half of this year. There are several elements to this program which then come in over the coming months. I think the first phase has been clearly aligned and the second phases are pending. The French government has, I think, a surprisingly high speed here in terms of rolling out these kind of programs.
In terms of the magnitude, could you give us also an idea about sort of how big Ma Santé is for CompuGroup, the way that you have provided a guidance for the German Hospital Future Act, so order intake or something like that?
We don't have a detailed breakdown. As I said before, the overall program is, I think, north of EUR 1 billion. I think it's EUR 1.3 billion for that part of the program. That then has been split again into certain phases. The details of how that breaks down into this is not 100% clear. We have, however, included that into our AIS guidance for this year. I think that is important. The big part of the first part, which is the larger part of that, we would expect to drop in the first half of this year, and that's one of the reasons why we're confident.
Sorry, in the second half of this year, and that's the reason why we're confident to also see again good growth in the AIS Europe segment in the second half of the year.
Perfect. Thank you very much.
The next question is from the line of Andreas Wolf from Warburg Research. Please go ahead.
Thank you for taking my question. The first one would be on the Cerner takeover by Oracle. My question would be whether this has any implications for the business that you have already taken over from Cerner, i.e., are there any product links that might have existed to the previous or to the still remaining Cerner assets that remained in the Cerner portfolio? Then your view on HIS following the Hospital Future Act. So obviously there's going to be accelerated momentum. How should we look at the period after the Hospital Future Act? Would you expect projects which have not been carried out in this period to kick in and to support the business thereafter?
Are these Hospital Future Act related projects basically more or less a replacement of business that you would have done anyway? Thank you.
Andreas, thank you. Very good questions both, and they're actually linked interestingly. Let me start with the Hospital Future Act. I would say if you look at the EUR 4.3 billion, and I'm just taking that number roughly, obviously some of the hospitals are using this to do investments that they would have done anyway. I don't think that if you look at the total market, the EUR 4.3 billion is something that can be added 100% to what would have happened, without this. I would say a large part, probably the majority of that money is actually additional money, that wouldn't have been spent otherwise.
The second thing we need to take into account with the Hospital Future Act, it was originally designed, if you remember, to be all allocated by the first half of 2021 and then being spent until the end of 2023. We expect this to be delayed just for 2 reasons. One, obviously these are complex projects. I mean, these are complex IT integration projects. They usually run more than 2 years. The second thing is, as I said earlier, the approval phase has also, it's still ongoing, so we're probably 6-9 months delayed on approving this project. Again, nothing that we wouldn't have expected, nothing that is unusual in these kind of projects.
It's just always interesting, you know, when the government comes out with those numbers, but maybe they do to then actually get to a more realistic timeline. We would expect the Hospital Future Act to go on at least for another 3 years, with maybe some effect after that. That was the one thing. The second question you asked is what's gonna happen after Hospital Future. In the next sort of 3 to 5 years. That is interestingly linked to the Cerner, Oracle or Cerner's strategy going forward, let's put it that way. Interestingly, Cerner has been in Europe for a while, and I'm focusing on Europe right now.
has been in Europe for a while with several different projects and things, and they've never really been that successful or overall had a great direction here. One of the reasons they sold parts of their business to us, we feel quite comfortable about this. We do not see any direct impact of the Oracle acquisition on the business that we bought from Cerner, which was the so-called medical business, which, if you know, they had previously bought from Siemens. They then have a large part of the business which still is run by them and by some other competitors of our competitors in the market, which is, if you want, the i.s.h.med business, which is based on actually SAP technology.
That's going to be very interesting how that folds up because these are old products. They're end of life. They will need to be replaced. I personally, we don't have any clear statements from Cerner what they are going to do with that. I would not expect that Oracle would go in to actually replace that old technology with a specifically designed hospital product for Europe. If you look at our expectation in the market is that probably these customers will be up for grabs in the midterm. Likewise, I think that applies to a couple of other competitors. If you look at the European or German HIS market, there's probably 15-20 competitors.
If you take the top 2 or 3, if you take Europe, the top 4 I think make up 30-ish% of market share. If you compare that with the U.S., where you have the top 4 players, Epic, Cerner, Allscripts, and CPSI, making up 85% or 80% of the market share, you can see that consolidation in Europe will come. That will not happen overnight. That will happen over probably the foreseeable future. Again, think about these projects run. A usual hospital project runs for 5, 6 years, including implementation, so these are very long-term processes. However, we don't believe that the structure as it is here in the moment, given that there's a lot of old product in the market and given that there's a lot of small competitors, will stay like this.
I think there's an opportunity for market consolidation, especially when you have strong product out in the market in a good market position.
Thank you for the insight.
You're welcome.
We have a follow-up question from Knut Woller. Please go ahead.
Yeah. Hi, and thanks. Just a quick follow-up on the financial targets and just to double-check the margin commitment that you have provided, this is including further M&A activity. Is that the right way to look at things? Thank you.
Hello, Knut. No, it's not, to say it loud and clear. We always give basically an outlook going forward, excluding M&A. If there's M&A included, we would certainly specify that. M&A would come on top.
M&A would come on top, and that could also have a dilutive impact on margins in case you would see an attractive asset.
I mean, think about that. If there's an interesting technology out which is maybe not making any relevant margin now, but in the future might do in the hands of CompuGroup, then why wouldn't we want to acquire that?
Okay.
I think in addition to that, Knut, my view would be also on the hospital sector. If you look at hospital EBITDA margins in the HIS segment, those are usually lower than our AIS margins. I think you have to adjust for acquisitions if we actually acquire some business that might be more margin dilutive. That would have an effect. Again, but it would have to be quite large to actually have an effect on the overall margin development.
Okay. Thank you. That's quite clear and helpful. Thanks.
All right. Since we do not have any further questions, we would like to thank you for dialing in today and taking the time. If you have any further questions, Investor Relations, meaning Frederic and I are available for you, please give us a call or send us an email. We wish you a great day. Thank you, and bye-bye.