Earnings Call: Q3 2019

Nov 6, 2019

must advise you that the call is being recorded today, Wednesday, 11/06/2019. Shall now hand over to your host for today, Fredrik Ragmark. Please go ahead. Hello, and this is Fredrik Ragmark and Jo Rhine from our Head of Operations Stockholm. We're very happy and pleased to present for you our third quarter twenty nineteen interim report. And then I flip on to Slide three that you have in front of you that headline, the long history of sustainable organic growth. We are very, very pleased with the results of the third quarter. It confirms our long history of strong organic growth, which is further ticking up despite the company being several times larger. We have significant margin expansion, which shows and illustrates our ability to turn scale and efficiency into additional profits. And it also, I think very well highlights the advantage with Medicover in terms of several dimensions of diversification across geographies, across payers, and across service models. So those are the three most important messages that I'll take you through here. We have put on the graph that you've seen before in terms of our we had a ten year history when we listed three years ago. Now we've added three more years. We've been compounding more than 20% top line growth now for thirteen years. You see we put in the LTM, so the last twelve months figure as of September, just short of €800,000,000 And I remind you, we listed in 2017, but 2016 being the last full calendar year when we were just short of 500, so some 60% larger since we listed less than three years ago. So indeed, very strong growth. This comes across pretty much everything we do. We have put down some pie charts from this presentation that you haven't seen before that will help you that will help us illustrate that for you. I'll talk you through that just in a second. We're operating in a very favorable growth environment. There's a high level of demand for private pay healthcare services. We have a super strong brand. Medicover is a very well established, recognized and appreciated brand. And we have strong market position in pretty much all our marketplaces. And again, the strength of the diversification not to be underestimated. You see these two pie charts, the left one when we look on payor where fee for service, which represents I. E. Where customers pay private out of pocket to us, represents more than 50% of overall revenue, up 29%. That's a figure worth repeating 29% up. That's a very strong number. Our funded business, where employer pays us for looking after all of their staff up 11%. And our public business up on the back of some of our acquisition work, up also a very strong 46%. So it's really important to see the balance of those three payer groups giving the stability and predictability both in revenue growth and earnings growth. Secondly, you see the geography diversification where Poland, as you know, is still our largest geography, up some 29% impressive Germany, second largest geography, up 19% Romania, up 25% Ukraine, up 40% and all other smaller places up a combined 28%. So what I want to try and illustrate to you with this is that this is not a one off thing happening in one country or in one business line. It is solid underlying growth pretty much across everything we do, so indeed very strong. Then going specifically into the quarter, so revenue grew 27%. So that is organic growth ticking up to above 17%. I think last quarter round, we were just above 14%, which was strong indeed. So this is another three percentage points on top of that. And then we're adding some 10% acquired revenue growth on that to come up to 27%. So if we're looking at annualizing the absolute growth we pulled in this quarter, that's some EUR 179,000,000 or more than a third of the entire size of the group when we listed less than three years ago. So one can express the strength in this growth numbers in many ways, but I think I've sort of made that message to you now. Fee for service already mentioned up 29% and representing more than half of what we do. We have our publicly stated financial targets since the IPO, which are expiring by the end of this year. And we now state that we expect to be above this mid term financial target of 18% to 20%. As we will come to in a second, we are quite significantly above this quarter and the nine month year to date figure. And despite 2018 being below on a weak outcome in Germany, we now confirm that for the three year period, we expect to be above. So that's a strong message. If I then turn on to the earnings slide, so our main results measure, EBITDA grew very strong by 41% up to $32,500,000 and 160 basis points margin expansion. You recall, we had quite a strong margin expansion already the prior quarters. So this is a continuation of the trend that we have been reporting for a few quarters. But of course, it is particularly pronounced, so particularly happy to be able to show this to you. Adjusted EBITA, a similar trend. And the alternative performance measure that we have introduced, as you know, the EBITA L where we bring back our lease costs to be similar to the old EBITDA before the IFRS 16 change this year. That was up a whopping 50% versus the prior year to 22,300,000. And the point I just made on the public target, you see up 28.3% for the quarter and 23.4% for the nine months vis a vis an 18% to 20% target, so indeed strong. Our net profit, you recall last year round, we had quite a significant amount of other income relating to the financial instruments around our investment in MaxCure, the Indian hospital business. So if we exclude the other income element and look at the underlying earnings, our net profit for the quarter is up just short of 26% and for the nine month period is up some 44%. So also the net profit figure excluding other income illustrates the growth in profitability coming through the scale and efficiency effects. So all good on that side, I think. Then looking specifically at our Healthcare Services division and our colleagues there, you see the two pie charts to start with, where the private pay business of course is dominating as you know in this division, private pay growing an impressive 20% and public pay being very, very, very much larger on the back of principally the NeoMedic acquisition that we did in Krakow that is performing very well. And you also see the country split where Poland obviously is very dominating, it's up an impressive 32% revenue wise as a geography in healthcare services, Romania an even stronger 40%. And the other category here in this division then is mainly India and Hungary. So indeed, revenue growth of 30%, that's something to salute, I must say, and organic growth just short of 20% in this division, very well done, an impressive figure. Fee for service, is growing ahead of the rest here, and at 32%, largely on the back of a number of acquisitions, but also underlying fundamental strong organic growth and is now reaching up to 39% of divisional revenue, so a strong number. EBITDA up just short of 30 to 14.9% margin, good. EBITDA L, the alternative performance measure here up 33% and a smaller margin expansion. We had member growth of 11% and it's worthwhile to point out that I consider that to be a strong member growth. And that is despite a very disciplined pricing policy, where we have said goodbye to one particularly large client in the financial services industry on profitability concerns. And despite that, we can show strong member growth. So very pleased with that. And point I already made, the results we see here in this division as in DX is really all lines of businesses contributing to the very, very positive top line and efficiency development, which generates strong profit growth, so good picture. Then flipping over to Diagnostics Services. And again, I start with the two new pie charts. And you look at the payor split here, which is a little bit different. So our private business in DX is up 27%. Again, numbers that I sort of never want to forget, 27% growth in our private pay DX business is a very significant number. And 17% up in the public pay business is certainly not poor either. So again, a very strong picture. You see the geographic split in diagnostics. Germany, the largest geography, the largest health care economy in Europe is up 22% for us, significant. Romania, where our diagnostic history started once upon a time up 14%, Ukraine up 39%, 39% up in Ukraine, Poland up 11%, and all our other smaller lab markets up a combined 28%. Again, same message here, you can see that the growth numbers are universal and they cut across everything we do, so very solid picture. So organic growth 15% out of this. And fee for service is growing strongly, the 27% I already mentioned. Now, this is coming through. You remember that we arguably had a weaker third quarter last year round, particularly in this division on the back of Germany. I remind you that nothing has really changed. That regime is still there, but we just have managed it in a really good way. Our colleagues in Germany have managed that in a really good way. So we have seen a significant margin rebound out of Germany, plus we have grown the business with scale effects in the other geographies. So you see a two fifty basis points margin expansion up to 18.4% EBITDA, 43% profit growth, 49% profit growth in the alternative profit measure. So again, just really strong. 11% growth in the laboratory test numbers. We see strong underlying demand for our services really across the board. We have opened a net 18 new BDPs during the quarter, take us up to a total of six to seven, and we will keep on opening more BDPs as we go forward. Flip on to Max Cure, our Indian associate hostel business. And I put on some nice looking pictures on the right hand side here. And it's very pleasing to tell you that we have, since about a month or two months back, completed a rebranding of the 11 MaxCure hospitals into Medicover. And these pictures obviously don't show you a hospital, but I thought this would be more entertaining for you to see this time around. This is Hyderabad, the city of Hyderabad, which is sort of origin of MaxCure. And straight through Hyderabad runs a Skylink train. That's the pillars you see on the left, where we now have I think there's 60 of these pillars that are plastered with Medicare. Now our hospital is sort of just next to this Skylink that goes straight to the so called high-tech city where Amazon's and Google's and IKEA and all the big companies have their big campuses. Now, the bottom right picture here the Skylink Metro Station that has been rebranded, renamed into Medicover Hospital High-tech City Station. And I think there's about 3,000,000 people passing through that station every day, seeing and hearing a name Medicover. So we're really proud and pleased over how our Indian colleagues have been able to pull this campaign together. So I'm sure we're going to build a very strong brand recognition of Medicover in India on the back of this fairly quickly. So revenue for our hospital business in India was $17,600,000 for the quarter, local currency growth of some 20%. I remind you, these are 11 hospitals, just short of 2,000 beds in the Andhra Pradesh and Kalagana states, and so far one hospital in the state of Maharashtra, which is the most recent one in the city of Nashik that we're busy developing. We hope to be able to launch a second large hospital project next year in the state of Maharashtra. We're also busy developing two big cancer facilities now, in a city called Nelor next to one of our facilities and also here in Hyderabad next to the main hospital facility. So all of these development works plus local currency borrowing has pushed MaxCure for the nine month period into a net loss position. So we have picked up our piece of that. Our ownership now is just short of 50%. And Joe will talk a little bit more about that in a second when it comes on to him. So we're very pleased about the development in India and we look forward to MaxCure Medicare hospitals to soon becoming part of the group also on a consolidated basis. So with that, I hand over to Joe. Thank you, Fredrik. So a very pleasing set of numbers indeed. So if you step over to Slide number 10 with the figures, so very strong revenues. Operating profit up 67%. If you look at the preferred alternative measure that we use, EBITDA adjusted for leases, where we're up some 46% for the quarter. And if you look at also a number, which I think a lot of analysts look at, which is the EBITDA number, so including the depreciation charges. That is up some 67% as well. And if you look at the divisions, margin improvement at the EBITDA measure up 2.3% percentage points in the DX division and in the health care services side up point 2%. That's a smaller increase in terms of the EBITDA margin, but that's even after some some one off costs which we had going through, which we we don't really break out or anything. But underlying, we've got very good very good numbers. These are all, just to remind you, IFRS 16 numbers, including the comparatives. We did a full restatement. The front loading impact from IFRS 16, in comparison to the older beta measure, that is here in these numbers. So year to date, we have about €800,000 impact negative in respect of, this new measure, EBITDA versus the old measure of EBITDA. So 800,000 front loading impact. Last year, this for the infant nine months, that was a 1,000,000 front loading impact. So a similar sort of size of number. So just flipping over, strong growth, really happy with that margin expansion. But also, the point is worth making that we've been investing now since always. We've been investing in terms of expanding the greenfield. And in addition to that, since the IPO in terms of inorganic acquisitions as well. So this is a combination really of those previous investments we've done. And as you see on the cash flows in terms of our investments for capital spend, we continue to invest, but that's going to be driving the growth for 20 and further on, such as the dental, inpatient activities, and and and our BDP networks. Pricing has been disciplined in our core benefit markets. That's very important that we make sure that we actually get paid and make the right return on the work we've done. And that includes also moving clients out who we don't see that as something which they're willing to pay for. We have plenty of demands. We have plenty of people who are willing to pay us the right price for our services. So we prefer to work with those. Our acquisitions activity over the last quarter, bought in the minority that which didn't own in, Okay Systems. This is a Polish employee benefit fitness product business, where they're selling health and and fitness really. So the same in customer bases we have for our medical services. So we bought in the remaining part of that. We own that a 100% now, which is great. It means that we can fully invest in that and expand that, without any restrictions from having a minority. So we're busy now expanding our network of our own clinics to support the future expansion and growth and the attractiveness of that product. We acquired the beginning of the quarter, we acquired a dental clinic in Poland, 3,200,000.0, not individually significant, but we now also, since the end of the quarter, required two other businesses and at about €4,000,000 that we spend on a dental acquisition in Poland. We've invested since the IPO, up to the end of the quarter, we've invested just short of 17,000,000 in in acquisitions and also in greenfield investments into Polish dental activity. Now that number is is is in excess of 20,000,000, with these two further ones, and we have made commitments to continue the greenfield expansion, over over next year as well. So expect to be around about €26,000,000 in that business for for 2019. But really, our run rate is probably near €30,000,000 in that business. So that gives you a flavor of what the type of things we're investing in and what's driving our growth there. Our net profit, this was 6.3 versus 6.7 last time around. This was held back on the Max Qur pickup, 900,000 loss we picked up on that. And then these other fair value movements that we have in respect of the Max Q options that we have over shares. These will disappear when we when we consolidate Max Q, probably we do that towards the the end of this year, most likely in the in December to to incorporate MaxSacure into the business as we move above 50% and with our take control of the business fully. Another factor which is it produces volatility to that net profit line, just to really emphasize that for you, is that, you know, you're gonna have things going backwards and forwards in respect of this. It's for IFRS 16. We have foreign exchange movements, which we reflect on the lease lease obligations, which were in foreign currencies. We have a loss of €1,200,000 reflected in the p and l account FX line in respect of that for this quarter. And just to give you an idea of the volatility levels that you see in that, we had a profit of €800,000 last time last year in the same quarter. So that is a volatile number that will go up and down and just distract a little bit from the underlying growth in the profits. So underlying, as I said there, you know, 63% up, 14.3% versus 8.6% on our operating profit line. Net interest cost €2,800,000 for the quarter, which included in that is €1,800,000 for the interest charge for leases, lease liabilities. So our net sort of real interest if you like on our funding is €1,000,000. So that's pretty good, I think, in terms of the amount of debt that we're now running in the balance sheet. So quite quite cost effective. Cash flow from operations, this was at just short of €26,000,000. Working capital was up, so we invested into that in the quarter. Part of that comes from our acquisition in Germany, which we did during at the beginning of the year. Effectively, the way those acquisitions work is that when we do them, we very seldom pick up our working capital balance. So we need to build our working capital. And as we've expanded those businesses, the working capital the the payment effect is delayed. So we ended up with something like about €7,000,000 that we've invested over the year in that that those German acquisitions that we've done. And so that impacts that. But this will normalize and and come down. So that will improve. Projected tax rate, 27% for the year. That's what we said at the beginning of the year, so we we we hold that as our projected tax rate. Equity up on on the profits obviously. Also, translation has been relatively benign for this year. So actually, we have a positive movement up of 1.3 on translation of foreign subsidiaries. And net financial debt including lease liabilities, just short of €350,000,000, up from 200 and, just short of just just under $220,000,000 year end, 18. So if you look at our ratio, on an LTM, a beta basis to, to to the total, obligations, that's at 3.1 times. Just to remind you, that's down from 3.3 times last quarter as we get the annualization impact of the acquisitions we've done. Net financial debt excluding lease liabilities, more akin to how we looked at it before in the past, just short of €200,000,000, and that was 93,000,000 at the year end. That is then reported in terms of l b LTM EBITDA, which is more akin to the older beta. It's adjusted for leases. That was at two two point six times ratio. And just to remind you, that was 2.8 times last quarter, again, coming down on this annualization of the earnings from the acquisition with Neomedic that we did. Lease liabilities, that's gone up just short of €30,000,000 over the nine months from the beginning of the year, two thirds of that being our organic business and one third being the impact from acquisitions. And I think that just reflects the the scale of the investments we're doing in terms of that premises, reflects also the gym expansion as well where we're we're we're we're entering into leases to set up gyms in Poland. Commercial paper program, we launched that at the at the just before the end of q two. So we had now at the end of the quarter a 180,000,000 of debt funded through that program. That is short term, so that changes our profile, but we have behind that the longer term revolving credit facility. So there's no financing issue or or liquidity issue in respect to that. Now to further improve our liquidity and funding profile, we just after the quarter end, we placed a €120,000,000 for longer maturities, five and seven years in the German Schulderschein loan market. For anyone who's not familiar with that, that is a type of bond. It's not really a bond, but it's between a bond and a loan. And that's a particular feature of the German market, but it's not only German investors, it's also international investors. So we're very happy to have Polish investors, strong presence from Germany, and then also another range of international investors as well that helps diversify our funding base and was well received in the market. So that money is now reduced in the CP program and it's a market where we will come back to in the future for financing. It works very well with us. It fits very well with our profile, with our German presence and the types of banks that invest in there see us as a good credit. Then coming on to, just a summary of where we are versus our targets. So, growth has been fantastic. Really happy on that. Well above our guidance. So great set of growth figures coming through. On top of that, then we have the the inorganic acquisitions that also have boosted the growth, but just even on our organic growth, it's it's fantastic. And then we have our profit targets. So as Fredrik mentioned earlier, we expect we're we're above there. We we expect to come in above our three year stated targets seventeen, eighteen, 19 for the for the whole period. And then on the interest structure and the debts on the on the debt structure and the debt levels we have, those coming down from 3.3 last time to 3.1 now for for the total debt versus EBITDA and 2.8 to 2.6 for the EBITDA figure. I'll hand back to you, Kurvej. Yes. So that was the messages and the information we wanted to take you through. So we're happy to take any questions you may have on these results. Thank you very much. Our first question for today is from Christopher Liberberg from Carnegie. Please go ahead. Yeah. Hi. Can you hear me? Yeah. Can you hear me, Christopher? Very good. I have quite a number of questions. I start with three, if that's okay, and I can then get back to the queue. The first one is the pretty impressive margin in diagnostics in the quarter. I think seasonally, we have seen in the past that margin is rather down third quarter versus the second quarter. That's not the case this time. So if you could explain that and how much that might be an effect of the positive currency development in Ukraine? The second quarter also on the margin, but for the Healthcare business, quite similar, but the other way around, why that margin is not more up, up more sequentially in a seasonally strong quarter? There any extra type of cost there? And then I wonder if you could comment on fee for service, very strong growth, but how much of that is organic growth? I guess quite a lot of it comes from the acquisition. Yes. So on the DX side, I think you can say like this, Christophe, that more than half of the margin improvement is not due to Germany. That is due to just a very underlying strong volume and hence margin development in other countries. I mean, you look at that geographic split out and the growth numbers on the DX side, you will see pretty much all geographies pushing their revenue much stronger than historically. And that turns into a significant profit growth, which is feeding through to that margin despite a third quarter. So it's a solid picture across the German rebound, if I use that word, is is is significant. But I said it's it's it's less than half of the overall picture. So, you know, you can only say it's good. I mean, you can't sort of really pronounce it in in any other way. And then on the on sorry. Joe wants to Yeah. And then just on Ukraine about the the the currency impacts. Obviously, that helps a little bit, but in in our organic numbers that we report, those are adjusted for constant currency. So Yeah. Sorry. On on Ukraine, I was thinking more about the the diagnostic margin. I guess that means you're not lowering prices, but you could purchase, reagents, etcetera? There is a little bit of that. But remember, this currency strength has been from the beginning of the year. So in the earlier quarters of the of the year, we still had our old stock that we bought at more expensive exchange rates. So we there is a little bit of that coming through, but it's not that significant. The the the volume impact is considerably more significant. Okay. Great. And and and on, you know, on the health care services side, I would say, you just you say it's sort of the other way around. It it's Underlying, it's good. I made the point that we have we're sticking to really disciplined pricing. So in the quarter, we have terminated one particular large financial services contract, which arguably over a month or two, is so you're actually dropping out quite a bit of contribution short term from that. But we're filling it up quickly with other business. That has a little bit of impact, although not particularly pronounced. And then we're, you know, we we we have a number of development projects. So I wouldn't, I wouldn't read too much into that, Christopher. It's not a seasonal issue. It's not something which will change the picture. So, you know, that's that's that's gonna be good going forward. So I wouldn't be particularly worried about that. On the on the fee for service side, you know, that's mainly inorganic growth. The fact that looks such a super strong figure is driven by our acquisition activity underlying. So that's really where you see this. We made the point many times before that in the in health care services, you're really not buying anything in the funded business. So but of course, so then all the acquisition activity in that part of the business is concentrated in that fee for service segment. But this in terms of for the last twelve months numbers, Christopher, you haven't got very much coming from from, from from inorganic growth. You know, we've invested heavily in terms of the capital spend that we invest. A lot of that goes into the fee for service arena. So so it's not such a big the inorganic part in in in in this quarter is not such a significant amount. The the the organic part is is is way, way, way, way bigger. And that's a that's a reflection of the investments that we've done in the past and where we've got Greenfield and where they start to fill up and where we can start to expand them. And remember, these are held back as well, I mean, the margin things where we where for instance, take a dental clinic where it's it's two times or two and a half times the size that we have that we actually use at the beginning. So, you know, you've got 60% extra capacity, which we carry with us. And then we as we build up the volumes, we expand the facility in terms of putting more chairs in, for instance, for dental clinics. Okay. Great. Thanks. The next is from James Vein Tempest from Jefferies. Please go ahead. Hi. Good morning. Thanks for taking my questions. Just a comment on Poland, if I can. I think previously, you sort of mentioned that the employment generally across the country is quite high. So I'm just curious how we should think about growth in plan membership as we get into 2020 and particularly if there is any wobbles in the economy in Poland? Second question is, again, on the Healthcare business. If you're looking at the split on the publicly funded, it looks as if in Q3, there was strong growth in the public from around 2,000,000 to €12,000,000 in revenue. So if you could clarify that, that would be helpful. And then if you are sort of anticipating to the question, consolidate MaxSCure, now that it's close to 50%. Just wondering when that does kind of cross the threshold, how we should think about capital allocation. Two other quick other questions, if I can, please. Just them here. The minority in Poland, you mentioned, what is the benefit of that on a full year basis, please, just for modeling purposes, so we can look at the minority line? Thank you very much. Okay. So I kick off and then I give over to you. So James, the Polish employment growth, we have made the point many times that I think the sort of biggest midterm issue for Polish GDP growth and the Polish economy is the access to labor, where it's you know, we're sort of approaching zero unemployment in all urban areas. So, you know, that's a significant issue. Now, you know, that's obviously in one way short term good for our funded business, because on the margin, the attraction of having an additional benefit package for your people is increasing in importance. But growth rates will start to trickle down because employers will be unable to find the amount of labor they are looking for over the midterm unless something more sort of structural happens. So that's an issue. It's an issue we talked about and many other people talked about that. I'm sure we're going to see that going into 2020 a bit more pronounced. And then on public funding side, you're correct. That's on the back James, of our NeoMedic funding. So the sorry, the NeoMedic acquisition. So most of the work in the hospital group down in Krakow is publicly funded work. So that's what you see coming through in that amount of money being much, much larger like that. Then regarding MaxCure consolidation and the minority, I'll let Joe comment on this. Thank you, Frederic. Yes. So Max Quray, James, I expect we'll probably go over that threshold probably. I expect December something like this. So we have contractual rights to buy in additional shares, and then we've also done some funding with them with with convertible loans. So I think we'll probably convert a part of those loans as well probably December or or early next year. But I think that we'll go through that that consolidation level in in December. So I think you'll see in the year end numbers, you'll see MaxxCool being consolidated. What does that mean really in terms of the business? Well, you know, you can see how we disclose the quarterly revenues. So you can get an idea of the size of the business from there. Then we have around about external debt, something like around about 25 odd million euros of external debt, not including the debt that we have we we provided them, which is convertible, which sort of disappears upon consolidation. And then you're looking at sort of where they are in terms of the run rate for the beta level sort of mid teens, around about there, in terms of the beta level. We will, most likely refinance some of the debt, reduce the cost of that post acquisition, and that should that should help us. We'll do that off our own balance sheet. We will have still a considerable minority. Obviously, they will be picking up through the minority part of the cost of the debt that we bring into there. So, yeah, we expect that to go reasonably well over next year and and continue the development. We'll have to change the name. We call it Max Qur now, but now it's rebranded as Medicover. So we'll have to stop referring to it as Max field. Yeah. Yeah. The minority in Poland, this minority is the only real minority, I think, that we have in Poland, was was was in this business with, with OKSystems. But, it's it's still relatively small. It's not something which, we really talk about that much because it's not really, from a group perspective, significant. So taking in the minority isn't really gonna change anything in in there. I think the minority interest that we have larger elsewhere. We have in Germany and somewhere else. Thanks very much. I'm just kind of for my third question if I can on MaxGear. I'm also mainly interested in terms of as we get into next year, how are you going to prioritize CapEx needs across the business between what you're building in Poland, Romania, etcetera, versus what you're trying to achieve in India? And then just another follow-up question. On Germany, I didn't see the revenues and margins for the Diagnostic business. I just wondering if could clarify those for me too, please. On the first question there, in terms of capital allocation for India, I mean, we will invest. We have a project which probably won't start next year, but we'll certainly be investing over next year for for another hospital in in Maharashtra. So, that will be an amount of money, but we won't be investing in the real estate. We will lease the real estate. So, the amount of money will not be so significant. Likewise, for the cancer care facilities, we've actually invested quite a bit of the money already, this year in the physical structure. Here we own one of them outright, the facilities and the and one of the other one is is leased, but we're doing the fit out costs. So we've put quite a bit of that through already on the balance sheet in in in MaxScale. So so I don't think from a group perspective, it's gonna be you're gonna see, you know, some some big change in terms of our capital allocation. You know? So I expect next year that it'll probably be, you know, less than €10,000,000 of the order of money that we will put into capital spend through through through act activities in in India. There could be some some smaller acquisitions, which makes sense, but, you know, we're not seeing really in terms of that we're gonna be doing anything larger in India. Great. Thank you. And Germany? I didn't quite understand the question, James. I didn't see historically, you've given us a sense of clinics and revenue growth, in the German piece of the business within Diagnostics, but I didn't see that this time around. I just wonder if you can give us a comment on the profitability of German Clinics business now as you've done over previous periods and the revenues. Apologies if I did miss it in the release. No. I mean, we're actually we did not comment on that. We can comment on it in the call like this. So we're, you know, we're we're we we we grow the business. You saw the you saw the pie chart on Germany, which I showed where I think what did I say? Germany is up in DX. Did I say 16%? I think that's what I said. Yeah. Just hold on one second. No. I said even 22%. So so Germany is up 22%. Now a a good chunk of that, James, is inorganic on the back of the Kline diagnosis sorry, the Genetic acquisition, but there's good underlying organic growth. And the margins keep progressing. So we're pleased with the development. But we have, we've stopped splitting it out in our public reporting. But we're progressing the margins, so we're pleased with developments. That's great. Thanks for asking my questions. I know it's more than three. Thank you. Thank you very much. I think we have a follow-up from Christopher. Please go ahead. Your line is open. Yeah. Thank you. Two follow-up questions, if that's okay. The first one is the impact we could expect on on the health care business from the slower membership growth. So it's been going from 15% to 17% now down to 11%. So how will that impact organic growth for the health care business in 2020? And what's the possibility to compensate with the strong growth for fee for service? That's the first one. So I think there's no scientific answer to that, Christopher. Now, the point we have made before many times that the employee paid business is a cyclical business. And I've said that at the worst troughs we have had, that has probably grown 4%, 5%. And at the very peaks, it's sort of been growing 14%, 15%. Now it's down to sort of 11 ish. What do we expect for next year? Probably sort of high single digits, low double digit, that sort of thing, I think, that level of area. So I think it's going to trickle down a little bit versus what we have seen this year. I think we will have a good opportunity to more than compensate that overall, with fee for service growth. We see very significant demand in that market. And, Joe was commenting particularly on dental, but there's other things that we're busy buying over next year. So I think you will see over calendar year 2020 an ongoing a little bit of sort of re shift of revenue composition towards fee for service in the Polish business, partly on the back of employers slowing a little bit and fee for service keep growing strongly. But the slower growth you have had in the number of members this fiscal year compared with last fiscal year, is that really impacting the sales growth year over year in value, so to say, already? Well, I mean, you know how this is accounted for in terms of we sell business this month. We only account for one month and eleven months is rolling forward. So when you have significant member growth, you always have a lag on the sort of revenue of that. So when members are growing very quickly, you front load your growth. When member growth is slowing down, you sort of back load the revenue slowdown, if you see what I mean. Because over the coming three, six months, you will see accounted for the growth that we have sold over the past six months. So if growth is slowing down in member intake in the fourth quarter a little bit, sort of in revenue wise, that's going to start to be visible second, third quarter next year. That's how the that's how it works out model wise as you know. So I'm just saying it's difficult to track this for you on a month by month basis. But overall, when you look over twelve, eighteen, twenty four month period, you're gonna see growth in that employer business coming down from perhaps 15% to sort of 10 ish overall, that sort of level, I think. Christophe, just to add a little bit flavor of that. Part of the reason that we've been investing in the other areas of healthcare pay paid services, is to, diversify a little bit away from the employer pay side. So we've got a very diversified payer mix space. And now with the Neomedic coming in, that's a really great business, quite heavily dependent in terms of public revenues. But here, we can we combine that with, some of the other products that we have, and they've got a really good name. And that helps us both on the, fee for service, both on the employer paid, and then we also have an additional diversification in our funding with the with with the public paid. So, that's been our strategy for since before the IPO, and, it's working out very well. So I think what we don't lack is growth. Yeah. You know? So anyone looking at this company should not be worried about our growth line. We've got plenty of pockets of growth, good diversification across different markets, and, know, we see our our our job more about making sure we can extract synergies, making more that we can extract the the the the running of the businesses and get the the performance so we can manage our margin well. Sounds very good. The other follow-up question I had going back to MaxSure and the fact that you reported a net loss there. So if you have a mid teen margin, I guess, EBITDA in the quarter should be somewhere in the range of €2,000,000 €2,500,000 Just just just I understand where you're going, Christoph. That that pickup is for the nine months. Okay. But still, you know, financial cost, how much do you pay? Is it, like, 10%, So 2 and a half million a year? Even even a little bit more than that. So, if you work it out, you run take around about €3,000,000 in terms of cost for financing. Take that back from a roundabout for the nine months loss just over €2,000,000. Our pickup is is changed over the over the year. So you come back then to about a profit about a million, but you've got a we we the depreciation charge in the is you know, you've got quite a big heavy asset base, and we depreciate it at the same rates as we depreciate in our European business. So it's a much faster depreciation rate than is normal in in India. They use the assets for much longer, but we unified the depreciation rates. So they're quite aggressive depreciation rates. You got quite a big dollar level in there as well. Okay. So depreciation of of sales, what's that approximately? Are you looking at around about in most of the assets, you're looking around about if you take an average period around about six years, something like that as being the depreciation, that sort of level. Okay. And if I take that as as part of sales, what what would that be? I can't remember the number now off the top of my head, Christopher. Okay. No. But I I think it will be important now when you consolidate this so so we get the estimates correctly. Yeah. But okay. Yeah. That's all for me. Thank you very much. Thank you very much. Currently, there are no further questions waiting. All right. Well, thank you for listening, and thank you for the questions. And, we look forward to, if not before, seeing you and talking to you at the year end in three months' time then. Thank you. Thank you very much, sir. Ladies and gentlemen, that does conclude the call for today. Thank you all for participating. You may now disconnect.