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Edited Transcript of COP.DE earnings conference call or presentation 8-Aug-19 1:00pm GMT

Q2 2019 Compugroup Medical SE Earnings Call

KOBLENZ Aug 16, 2019 (Thomson StreetEvents) -- Edited Transcript of Compugroup Medical SE earnings conference call or presentation Thursday, August 8, 2019 at 1:00:00pm GMT

TEXT version of Transcript

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Corporate Participants

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* Michael Rauch

CompuGroup Medical Societas Europaea - CFO & Member of Management Board

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Conference Call Participants

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* Andreas Wolf

Warburg Research GmbH - Research Analyst

* Charlotte Friedrichs

Joh. Berenberg, Gossler & Co. KG, Research Division - Analyst

* Knut Woller

Baader-Helvea Equity Research - Analyst

* Nikolas Mauder

Kepler Cheuvreux, Research Division - Junior Equity Research Analyst

* Robin Brass

Hauck & Aufhäuser Privatbankiers AG, Research Division - Equity Analyst

* Uwe Schupp

Deutsche Bank AG, Research Division - Small and Mid-Cap Analyst

* Victoria Kruchevska

Commerzbank AG, Research Division - Equity Analyst of Technology

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Presentation

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Michael Rauch, CompuGroup Medical Societas Europaea - CFO & Member of Management Board [1]

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Good afternoon, ladies and gentlemen, and a warm welcome also from my side to our conference call about CompuGroup's results in the second quarter of 2019.

Let me kick it off by walking you through the key items of our second quarter performance before addressing the financial items in more detail, and thereafter, spending some more time with the development within each of our business segments. At the end of the presentation, I will be available for questions.

Looking upon our second quarter highlights, we report EUR 186.6 million as revenue figure that is in line with our expectation and is reflective of the strong growth in recurring revenue. With 10% growth in recurring revenue versus second quarter of last year, we significantly strengthened our value base and managed to almost fully compensate the exceptional revenue from Q2 2018, which marked the peak of the telematics infrastructure installations. This 10% increase in recurring revenue is driven by new subscription revenue in the general practitioner segment, showing a 13% increase versus Q2 2018 and by a strong 7% increase in the hospital segment as well as by positive 4% increase in the pharmacy segment.

By end of June 2019, about 54,000 orders for TI installations had been received with about 52,500 having been delivered. Whilst we see an expected reduction in TI installations for general practitioners, we are pleased to report a positive organic growth in all of our segments, ranging from a low single-digit growth rate in the AIS segment, excluding TI installations, towards plus 5% in the pharmacy segment, plus 6% in the Health Connectivity Services segment and a very strong plus 12% in the hospital segment. Here, we've just signed in May this year, the largest order in corporate history with more than EUR 100 million revenue to be recognized over a 10-year period to deploy CompuGroup's new Hospital Information System, CGM CLINICAL, in the lower Austria region.

With regards to future revenue potential, we welcome the new e-health regulation and see ourselves well positioned to benefit from the strong momentum for new revenue streams.

Following the peak of TI installations in Q2 of last year, we report an operating result in the second quarter of this year amounting to EUR 44.3 million on a pro forma basis, which is about EUR 10 million lower than the extraordinary prior year quarter. On a reported basis, our operating result before interest, taxes, depreciation and amortization is EUR 37.4 million due to a nonrecurring onetime effect for 2019, which I'm going to explain in some minutes.

Operating cash flow has grown strongly in the second quarter to EUR 37.8 million, up EUR 15 million versus the same period last year, supported by strong working capital improvement, thereof about EUR 12 million improvements in receivables, which is to a larger degree a consequence of the TI installation peaking in Q2 2018.

Cash net income per share for the second quarter 2019 was EUR 0.53 on a pro forma basis, EUR 0.08 below the extraordinary result of Q2 2018. Cumulative, for the first half in 2019, cash net income per share on a pro forma basis is plus 3% above last year with EUR 1.15 versus EUR 1.11 in the first half of 2018.

So summing up on the highlights for the second quarter 2019, we see a strong increase in recurring revenues with a solid margin. This determines our value and gives us also leeway for further growth. We continue to be particularly pleased with the good revenue development in the Pharmacy Information Systems, Hospital Information Systems and Health Connectivity Services segments, which all had grown faster than expected. And we have further grown the TI installation base and subsequent subscriptions, together with positive organic growth in the AIS segment, leading for the overall company to a plus 1% revenue and also plus 1% EBITDA growth on a pro forma basis for the first half 2019 versus first half 2018.

We herewith confirm our 2019 full year guidance of a revenue between EUR 720 million and EUR 750 million and an EBITDA range of EUR 190 million to EUR 205 million.

This brings me to the special 2019 onetime effect. As long time known, our previous CFO had been granted stock options since September 2008, which have significantly appreciated in value following the strong increase in CompuGroup share price over the 11-year holding period of the stock options. Due to formal restrictions, the stock options could not be settled in equity, and in acknowledgment of a settlement obligation, the Supervisory Board decided following legal advice to settle the stock options by virtue of cash payment, however, at a reduced value. This resulted in onetime EBITDA burden of EUR 6.9 million for Q2 2019 and of EUR 11.5 million for the first half of 2019. And please note that for Q3, there will be a onetime positive EBITDA impact of EUR 7.6 million since the recipient's partial renouncement occurs in Q2 -- Q3, sorry -- occurred in Q3 of 2019. For the full year 2019, there will be a net onetime EBITDA burden of EUR 3.9 million. Let me reiterate that we reaffirm the 2019 full year guidance absorbing this full year negative EUR 3.9 million onetime EBITDA impact. Our full year 2019 revenue is expected in the range of EUR 720 million to EUR 750 million versus EUR 717 million in 2018, and EBITDA, including the before-mentioned onetime impact, is expected, as mentioned before, in the range of EUR 190 million to EUR 205 million versus EUR 183 million in 2018.

Let's now turn to the usual financial slides, starting on Page 4 with the key figures for the second quarter.

Reflecting the before-mentioned onetimer, I would like to draw your attention to the underlying pro forma columns. Without repeating myself, I want to qualify the results in the light of the peak in TI installations in the second quarter of last year, which obviously also had a positive impact on profitability. With the current Q2 2019 level, we are back to Q2 2017 profitability level of around 24% for second quarter. For transparency purposes, we have also added on Slide 5, a half year pro forma view of our key figures, showing a slight increase in pro forma EBITDA and the profitability level of around 26% for both half years 2018 and 2019, however, with a much stronger operating cash flow this year, benefiting from a better working capital development. This 26% is, by the way, also within our full year guidance range, ranging from 25% to 28%.

Moving on, you will find the next charts, sorry -- moving on, you will find on the next charts the usual quarterly key figure development depicted over a longer time horizon, with the bars showing absolute million euro values and the lines showing percentage values in relation to revenues. The profitability line and the personnel expense bars have been adjusted for the nonrecurring onetime stock-based compensation expense for 2018 and '19. Having already commented on the revenue, EBITDA and operating cash flow development before, let me here with just turn towards the COGS development.

Here, we reported decrease of expenses for goods and services by EUR 4.7 million year-on-year, with a gross margin of 79%, which is higher than the second quarter last year. The lower cost of goods and the higher gross margin is related to reduced purchases of card readers, connectors and outsourcing of installation and training services in connection with the lower number of Telematics Infrastructure installations as well as the acquisition of AIS sales and service partners in Germany, where previously outsourced support services have shifted to internal operating expenses, mainly into personnel expenses. This line shift between COGS and personnel expense only partly explains the very high increase in reported absolute personnel cost. In addition to this effect, and in this chart backed out nonrecurring onetime expense for stock-based compensation, the absolute personnel expenses are also impacted by additional hiring for software development, for the various market penetration initiatives, and our new products and services like our CGM CLINICAL and also the software connector development as well as smaller changes in the composition of the general workforce, plus salary inflation. So by and large, the reported 25.8% increase corresponds to a mid-single-digit personnel increase if you adjust for stock options, acquisitions and the intensified software development.

Not separately shown here, but also worth mentioning are the other expenses, which are slightly lower compared to last year with a face value of EUR 28.5 million in the second quarter. Even if the size of the organization has grown significantly, the new accounting standard IFRS 16 leases lower certain operating expenses compared to last year. Based on this new standard, all leases become a finance lease right-of-use assets and have to be recognized on balance. For us, the effect for 2019 is a decrease in operating cost, predominantly office buildings and car leases by approximately EUR 4 million per quarter, and thereby an increase in EBITDA also by approximately the same amount as already shown during the Q1 quarterly call in May.

Now this brings me to the capital expenditures, as shown on Slide 10 of this presentation. With EUR 16.5 million, we report Q2 2019, a much lower CapEx number compared to our first quarter 2019, where we had reported EUR 34.7 million. Main difference here is acquisitions, having recorded EUR 23.4 million in Q1 2019 for the AIS dealers in Germany, so the Hospital Information System in CoSi and also for Qualizorg in the Netherlands. We acquired in April 2019, the Eurosof2000, a pharmacy software company based in Southeastern Spain and giving us access to over 390 serviced pharmacies with access to the broader Spanish pharmacy software market.

We continue to capitalize the increased use of outsourced research and development related to completion -- or accelerated completion, I should better say, related to accelerated completion of the new models for the CGM CLINICAL and the increased activities for the software connector for new TI applications.

And last but not least, we report here and also we already discussed the impact of IFRS 16 with the capitalization of leased office equipment and other tangible assets, previously accounted for as other expenses within EBITDA.

Well, so much for the financials. And now let's turn towards the individual segment performance.

Let's start here with the AIS segment, the segment for software for general practitioners, mainly doctors and dentists. Here we reported EUR 10 million face value decrease in revenue versus prior year quarter. Adjusted for acquisitions, this decrease amounts to EUR 16 million, thereof EUR 22.6 million purely related to one-off TI installation revenue differences between the second quarter last year and the second quarter of this year. Whilst we recorded about 6,500 delivered installations in the second quarter of this year, this compares to an extraordinary high number of deliveries with 18,000 installations during the peak phase in second quarter of 2018. So as expected, we have seen and also continue to see a slowdown in TI installations going forward. But at the same time, we are also very pleased to report a significant increase in recurring revenue from a higher installed base. With a plus 13% increase in recurring revenue in the ambulatory segment for Q2, we strengthen our value base going forward. In addition, we've also seen a positive organic growth, excluding TI in the ambulatory segment and expect further synergies from the in-sourced sales and service partner activities resulting from the acquisitions of CoSi and (inaudible) Information Systems.

Well, let's now come back to the elephant in the room, the situation on Telematic Infrastructure, on the one side within the AIS segment, but then also on the other side, in the broader context going forward. With now 52,500 TI installations in total delivered by the end of the second quarter, we forecast to reach approximately 56,000 running installations by the end of 2019. According to official statements, over 10,000 doctor and dental practices are now connected to the Telematic Infrastructure, and CompuGroup currently holds a share of over 50% in this market. Current expectations are that ultimately, 120,000 to 140,000 practices, including psychotherapists and others where CompuGroup is underproportionately represented, will connect to this network, and this will happen in a gradual process over the next 18 months. In the new draft law, proposed by the Federal Ministry of Health, the financial sanctions towards those providers not connected will be increased in March 2020 from today's 1% reduction in reimbursement to 2.5% reduction in reimbursement. However, the next generation of TI applications is around the corner. The upcoming scheduled software release for the CompuGroup connector will enable the new applications, emergency care dataset, electronic medication plan and electronic doctor letters. All of these are new applications using the qualified electronic signature. The new connector software, which was delivered in its first version to gematik in December 2018 and originally planned for certification and release in August 2019 is now expected to be finished either at the very end of 2019 or early 2020. The latest specification changes from gematik were published in June 2019 and CompuGroup has now completed the corresponding changes in the software and will start the new security certification process in August. The question on when and how to do field testing is still open and financing mechanisms have already been agreed between the statutory health funds and the provider organizations to cover the IT costs and additional effort of these new services.

We believe in the further rollout of the Telematics Infrastructure in pharmacies and hospitals and see the nationwide rollout of the important value-added applications such as emergency data records, signed electronic doctor letters and electronic medication plans as very important and encouraging for our market in Germany, potentially also setting new standards on a broader European base.

The Federal Ministry of Health has been highly active on the regulatory front over the last period, and has in 2019 already passed and proposed several new laws, which all support further digitalization and more use of IT in the German healthcare sector. The new appointment service and care law was approved by the parliament in March 2019 and came into force in May. One of the key provisions of the new law is that it obliges health insurance companies to offer their insured persons an electronic patient file by 2021 at the latest. If they do not do that, there's a threat of a cut in administrative expenditure. Patients should also be able to access their medical data with a smartphone or a tablet. And from 2021 on, doctors must submit work disability certificates for their patients electronically to their health insurance.

In July, the government approved the Draft Digital Healthcare Act, presented by Federal Health Minister, Jens Spahn. The proposed law contains regulations on how doctors can prescribe the apps from the patients in the future -- sorry, for the patients of the future. The law also regulates how these apps should be subject to a fast and easy approval procedure. For physicians, it contains further regulations and sanctions if not connected to the Telematic Infrastructure. So just to reiterate, the 2.5% reduction in reimbursement from March 2020 as well as less money for the dispatch of medical reports by regular mail and fax. It is also clarified that reimbursement will be given for telemedicine consultations and that doctors can advise these offers online -- sorry, advertise, and advise these offers online. The bill also provides for an extension of the Telematics Infrastructure. Pharmacies and hospitals are required to be connected to the Telematics Infrastructure, pharmacies by September 2020 and hospitals 3 months later, by January 2021. Midwives and maternity nurses, physiotherapists and nursing rehabilitation facilities are given the opportunity to connect to the TI and the cost for the voluntary connection will be reimbursed.

So in a nutshell, we remain very confident in our strong position with doctors, dentists, pharmacies, hospitals, rehabilitation care facilities and other service providers that enable us to build and implement all the important, exciting and helpful products for our customers that are needed for smart connectivity services, not the least with the citizens.

Let me now turn to the next segment. Our pharmacy software business achieved a strong 5% organic growth in the second quarter 2019. This is better than expected after the exceptional growth in 2018, which was partially driven by the special Italian tax incentives that have now been discontinued. So far, in 2019, both the German and Italian markets are developing positively with well-established products and services. A consistent business model and revenue mix over the last 12 months drove 4% year-on-year growth in recurring revenue in the PCS segment, and following a better-than-expected start in the first 6 months, we've also increased our full year revenue outlook in this segment.

With regard to the Telematics Infrastructure in German pharmacies, we have already started to sell TI connection packages to pharmacies and have so far accumulated 350 orders. With own customers and cooperation agreements already in place with other pharmacy software vendors, we would benefit from the primary software side and cover basically about 40% of German pharmacies with respect to TI connections. Officially, however, the nationwide rollout of the Telematics Infrastructure is expected to start towards the end of 2019 or early 2020. And in the new draft law, proposed by the Federal Ministry of Health, German pharmacies will have until September 2020 to connect to the Telematics Infrastructure. The financing agreement for pharmacies similar to the one available for doctors and dentists had already been agreed and signed in December 2018. And here, the pharmacies do require a connector offering emergency care data set and electronic medication plan services.

I briefly touched upon our latest addition of acquisitions already, the Eurosof2000 acquisition in Spain. So in terms of further business development, the Spanish pharmacy software market is a focus area in 2019 based on the initial position taken through the acquisition of 2 smaller market players, the OWL computer in 2016 and Farmages in 2017. In April 2019, we acquired the business operations of Eurosof2000 as part of a business combination by transferring the net assets in an asset deal. Eurosof2000 is the pharmacy software company based in Barajas, that is the capital of the Extremadura region in Southeastern Spain. The Farmalog software from Eurosof currently runs in more than 390 pharmacies and the Farmalog e-prescription module is already approved and used in pharmacies in 4 Spanish regions, giving us yet further upside potential.

Moving on to the hospital segment. The HIS segment, H-I-S segment continued with an excellent 12% year-on-year organic growth in the second quarter 2019. This is better than expected, and is driven by strong overall performance in the German-speaking region and a rebound in the hospital market in Poland. The significant growth in rehabilitation beds in Germany during 2018 with about plus 5% market share gain. So part of the 7% increase in recurring revenue in the HIS segment.

In September 2018, financing agreement became available also for the hospitals with over EUR 400 million available for hospitals to cover investments in card terminals, connectors and necessary digital certificates as well as required changes to the hospital software infrastructure and operating concepts that accompany the Telematics Infrastructure. Compensation for annual operating costs had also been set at a lump sum totaling around EUR 18 million per year. Even if dedicated connectors are so far not available, the CompuGroup connector can be used if it supports the emergency care dataset, the electronic medication plan and electronic doctor letters. The support for these applications in the CompuGroup connector is currently planned for certification and release towards the end of 2019 or early 2020.

We remain upbeat about opportunities in the HIS segment and continue intensified efforts to further fine-tune and enhance our newly developed CGM CLINICAL software solution.

In this context, let me now please draw your attention to our NÖKIS project shown on Page 25 of this presentation. In May 2019, the Niederösterreichische Landeskliniken-Holding, so that is the Lower Austrian Regional Hospital Holding selected CGM CLINICAL Hospital Information System from CompuGroup as the basis for a harmonized and centralized information system group-wide in medicine and care. Over the next 6 years, NOLK the abbreviation here for the Niederösterreichische Landeskliniken-Holding and CompuGroup are planning to roll out the system in a total of 19 hospitals with more than 706,000 beds -- sorry, more than 7,600, I do apologize, more than 7,600 beds at 27 locations under the project name NÖKIS. The project partners estimate that the contract volume will exceed EUR 100 million to be recognized over the next 10 years. NÖKIS thus becomes the largest hospital IT project to date and that entirely relies on the strong benefits of CompuGroup's new and innovative HIS solution. We are convinced that the NÖKIS project, based on CGM CLINICAL will set an example for seamless patient care in a large hospital network, and it will show how such a large network of hospitals can effectively harmonize its information system throughout the care delivery. The collaboration with NOLK confirms our hospital strategy of recent years based on product leadership. And yes, we have made a considerable investment in the next global generation of our Hospital Information System, CGM CLINICAL and have managed to create a solution that has the potential to become a game changer. Hence, it is now upon us to reap the benefits. And the project work has already started, and we are confident to realize the first revenues towards the later part of the second half 2019 with official go-live of one of the hospitals already planned in the first quarter of 2021.

Let's now briefly turn towards our fourth segment, the Health Connectivity Services. As you know, these services focus on customers with the healthcare sector that are outside of the healthcare providers in the other 3 segments. Important customer groups in this segment are pharmaceutical companies, health insurance companies or other healthcare IT companies and consumers. During the second quarter, we recorded an organic growth of 6% coming predominantly from more ad-hoc projects with the pharmaceutical companies. We anticipate this trend to continue and have thus correspondingly increased our revenue outlook also in this segment.

Which, in essence, brings me to the guidance and my closing remarks before entering into the Q&A part of this call.

We reaffirm our guidance for full year 2019, as promulgated with the release of the 2018 annual report. This means we continue to expect revenue in the range of EUR 720 million to EUR 750 million. And we continue to expect operating income in the range of EUR 190 million to EUR 205 million, and that is absorbing the nonrecurring onetime stock-based compensation expense with 2019 full year charge of EUR 3.9 million. As usual, this outlook reflects all currently available information and management forecasts regarding speed of market penetration, market share developments, price evolution as well as regulatory initiatives related to the further rollout of the Telematics Infrastructure in Germany in 2019.

In line with previous statements, the guidance does not include revenue and costs associated with potential and currently undetermined further acquisitions during 2019. And it also represents for 2019 management's current best estimate on market conditions that will exist in 2019 and how the business segments of CompuGroup will perform in this environment.

Whilst we reaffirm the revenue guidance for the total CGM Group, we have updated on the next page, our revenue outlook per segment as follows: For the Ambulatory Information Systems segment, we revised our revenue expectation downward towards EUR 447 million to EUR 471 million versus previously communicated outlook range of EUR 464 million to EUR 488 million. This is reflective of the lower expected revenue from TI rollout with doctors and dentists and includes a bit higher revenue from acquired businesses, but no change, I'd say again, no change to normal underlying growth in the remaining part of the segment. It does not include any revenue from the connector software upgrades. So this would be basically upside potential, not reflected here. And for all of the other 3 segments before we go into detail into them, actually, we have revised our revenue outlook upwards. So there's only basically the TI impact, if you want to say so, where we have done a revenue downward revision.

For the pharmacy Information Systems, we now expect in that segment EUR 115 million to EUR 117 million versus previously EUR 109 million to EUR 111 million, expecting a 1% to 3% organic growth on top of the exceptional growth in 2018.

For the Hospital Information System segment, we now expect EUR 113 million to EUR 115 million versus previously EUR 104 million to EUR 106 million, expecting double-digit, 11% to 13% organic growth.

And for the Health Connectivity Services segment, we now expect EUR 45 million to EUR 47 million versus EUR 43 million to EUR 45 million before. Here expecting a 4% to 9% organic growth for the full year.

This brings me to the financial calendar for the remainder of the year with the next highlight coming up shortly. Within a little more than a month from now, we'll host our annual Investor and Analyst Conference Day. This is, for me personal, also a huge opportunity to get together with you in person. Basically, it's just some -- what is now -- 33, about 33 working days after having started here at CompuGroup. And you will also get to personally meet our new Head of Investor Relations, Claudia Thomé, whose arrival for September 1 had been announced 2 days ago. So Claudia, I'm sure you're listening to this call, welcome onboard. The Investor and Analyst conference will feature insights also from my fellow Board colleagues about the individual performances of the 4 business segments as well as selected deep dives. And thereafter, we'll hear each other again on November 7 in the conference call about our Q3 2019 results.

Now before handing back to the moderator for the Q&A session, let me reiterate 3 important messages to you. Message #1, our strong position with doctors, dentists, pharmacies, hospitals, rehabilitation and care facilities and other service providers enables us to build and implement all the important, exciting and helpful products for our customers that are needed for smart connectivity services, not the least with citizens. Message #2, the figures presented today show us plus 10%, a further strong increase in recurring revenues with a solid margin. This further strengthens the stability of our revenue and profit base and gives us leeway for further future growth. And last but not least, Message #3, we reaffirm our 2019 guidance for the full year, even absorbing the onetime stock option charge effect mentioned.

With that, I will hand back to the moderator, and be happy to take your questions. Many thanks.

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Questions and Answers

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Operator [1]

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We have the first question coming from Andreas Wolf from Warburg Research.

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Andreas Wolf, Warburg Research GmbH - Research Analyst [2]

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Michael, it's Andreas Wolf with Warburg Research. Welcome to CompuGroup. I have a couple of questions. So the first one would be on the Telematic rollout. Obviously, you expect less installations going forward, and I'm curious to know what the reason for this expectation is, for the change in the expectation? Is it pricing by competitors? Was it their direct customer access? And if I look at July, gematik figures, it seems like the estimated 115 installations have already been made. I would assume that includes psychotherapists. You assume that in total 120,000 to 140,000 nodes would connect to the infrastructure. I guess, the others just won't do it. So that would also mean that the Telematic rollout is more or less done. Is it the right way to look at it? That's basically my first set of questions. The second is regarding the electronic health record. RISE was obviously awarded the contract to develop a central EHR. What would be the opportunity for you to monetize your access to the doctors with the centralized EHR, which is provided by RISE? That's my second question. The third one is regarding the strong momentum for new revenue streams based on the new e-health law that you have alluded to. Is it something that you expect or that you already see in the figures? And if you already see it in the figures, which applications are these? And the last question is on the next connector software release. Will it be covered by maintenance fees, or will it enable you to generate additional revenues?

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Michael Rauch, CompuGroup Medical Societas Europaea - CFO & Member of Management Board [3]

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Okay. Very good, Andreas. I did have a deterioration here. So I might need to go back on the question number two, which I did not fully capture. But let me just start with question number one, on the Telematic Infrastructure. So your assumption is right, and that's why we have also basically said we expect about 56,000 installations fully delivered by the end of 2019. What does it mean for us? We basically started, obviously, within our home based first and then went further on. And there are some practitioners, like, for instance, you mentioned yourself, the psychotherapists where we are not so present or underrepresented. And that's why basically going forward, we don't expect too much more onetime revenue here from the installation of the TI infrastructure in, to be precisely, the ambulatory segment. So I talked a bit about the opportunities, which we still see here for us on a larger scale in pharmacy segment where we have started already with your early bird packages, and then also in the Hospital segment on the TI infrastructure that provides for us still an opportunity. And then there are also other areas where we see further growth for us. But on the onetime revenue, you're clearly right, that will level out, and we don't expect so much onetime revenue anymore on the TI side. On the other hand, we continue with the installations that we have done to grow our recurring revenue base, and hence, to enlarge our future opportunities and also have here, basically, the profit pool going forward solidified.

The second question, obviously, I need to go back later on. Then you asked a question on the e-health law. So on the e-health law, yes, we are going to recognize more and more revenue, but you're right, this is yet to come. So just if you do the comparison between the first half and the second half, there has been very limited, recognized in this regard and there's going to be more going forward. Then you had the question number four, on the software connector. And yes, I mentioned that we have achieved certification, and we will go through further testing also in August again in order to be ready. And then this will also be basically installation revenue, which will be more of a onetime nature here, which we will take -- where we will have, to be quite frank, not so much cost of goods against it. So that will be pretty revenue and EBITDA-accretive in almost the same magnitude, if it comes, and we obviously strongly positive that it will come. But timing-wise, like I said before, more probably towards 2020 than in 2019. So on question number two, I would kindly ask you to please restate your question because I didn't -- really didn't copy it in fully.

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Andreas Wolf, Warburg Research GmbH - Research Analyst [4]

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Okay. Just a follow-up question on the connector software, how much would it enable CompuGroup to generate additionally per connected node? What could you charge per doctor? And then with regard to the second question that you have asked me to repeat, the provider RISE, which is an Austrian player was, if my information is correct, was awarded a contract to develop a central electronic cost record. I'm curious to know how in such a context -- in such a scenario with a central EHR which is provided by third-party player CompuGroup will monetize its doctor base, how it will enable you to, let's say, generate additional revenues.

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Michael Rauch, CompuGroup Medical Societas Europaea - CFO & Member of Management Board [5]

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Okay. I need to -- quite frankly state, I'm quite blank on the RISE topic. I do apologize for this, although maybe this has to do with me being on my sixth day in the company. I would just back and -- I'm typically cautious on commenting on competitors. But what I've seen here internally, all of the software development I had a chance to look into already, remains and leaves me very positive that we don't need to fear any competition in that regard. But on the RISE topic, I will need to basically have a follow-up with you. Then on the software side, I honestly don't know what we have disclosed here, particularly. I've gone, obviously, through all of the past calls on potential opportunities here. So I want to recheck with the team on what has been said in the past before I give you number, okay?

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Andreas Wolf, Warburg Research GmbH - Research Analyst [6]

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Okay.

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Operator [7]

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The next question comes from Knut Woller from Baader Bank.

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Knut Woller, Baader-Helvea Equity Research - Analyst [8]

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Yes. Also welcome from my side, Michael, to CompuGroup. A couple of questions. If we look at the TI recurring momentum, we saw a slowdown from recurring revenues from EUR 6.1 million to EUR 5.7 million, where you bridge that in the bridge, if I look at the Q1 and Q2 presentation. So what's the reason for that, first, to start with. Then secondly, if I look at your pro forma comments, I fully understand that you're adjusting the headwind from the stock options, which I agree are onetime in nature. However, you also had some onetime tailwinds in the first quarter, which still, all in all, provide you a slight tailwind overall in a full year perspective with EUR 4.4 million compared to the EUR 3.9 million headwind you're expecting from the stock-based comp issue. So if I would adjust both line items, I would rather come out at the lower end or even below the low end of your EBITDA margin guidance for 2019. Is that something you would share as a fair way to look at things? And then if we look at overall the guidance for 2019, we see that M&A is having a higher impact than at the beginning of the year expected, which all in all means that the underlying momentum is a bit weaker in an organic perspective. Is that something you would share?

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Michael Rauch, CompuGroup Medical Societas Europaea - CFO & Member of Management Board [9]

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Yes, Knut. So I'm starting in reverse order. So I want to start with the organic development. If we exclude the TI situation in the Ambulatory segment, then basically we are organically growing in all of the 4 segments. So I see still continued growth organically in all of 4 segments, with obviously, a differentiated picture as I pointed out per segment. So I'm not worried regarding organic growth opportunities. And I know that everybody here and the team is working very hard. And I see the prospects already for the second half. So I remain very positive on this one. Then just remind me on the second question, sorry, if you go back.

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Knut Woller, Baader-Helvea Equity Research - Analyst [10]

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Yes. The second question was the pro forma discussion. I mean, you adjusted...

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Michael Rauch, CompuGroup Medical Societas Europaea - CFO & Member of Management Board [11]

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Yes. Pro forma discussion. No, no, very fair point. I don't want to shy away from that question. And obviously, we have disclosed, as we have gone out in the first quarter, this impact, a one-time positive impact, which you have mentioned, but that was not adjusted for because that was considered to be something which could always happen, that you have a step-up in PPA or that you have to step down in PPA, and we would not adjust neither for step-up nor stepdown in PPA. That would be just normal part of our reporting EBITDA and will be basically be then part of our guidance. However, the onetime stock compensation issue, which is of non-recurrence, which we talked about, that we clearly consider as one to be adjusted for. And that's why this is the only one we adjust for. And everything else we basically take positive or negatively into our account and is reflected within the guidance. So for me, that is basically not a main issue. Then you asked a question on the question #1 regarding the recurring revenue. So basically, in Q1 2018, the recurring revenue from the TI installation was obviously very minimal, right? Because we have just basically started. And that's why in Q1 2019, obviously, the comparison then shows a higher number. And that's why the high number Q19 -- 2019 Q1 and 2019 Q2 is not coming unexpectedly for us. Does that answer the questions?

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Knut Woller, Baader-Helvea Equity Research - Analyst [12]

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Yes, excellent.

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Operator [13]

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The next question comes from Victoria Kruchevska from Commerzbank AG.

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Victoria Kruchevska, Commerzbank AG, Research Division - Equity Analyst of Technology [14]

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Michael, good afternoon also from my side, and welcome onboard to CompuGroup. Couple of follow-up questions. I'd like to come back to this, you mentioned, elephant in the room. Just to sort of like understand the TI installation dynamics going forward. You've mentioned, you don't expect that much of a hardware one-off sales going forward. Just sort of like to better understand that. CompuGroup has in total of around 60,000 customers. You expect that by the year-end you will get to 56,000 customers. And as of right now, you're having around 40,000 CGM-own customers and around 15,000 are new customers. I guess my original assumption starting back and starting from the very top was that you will be able for like -- CompuGroup will be able to connect all of its existing customers, implying 60,000. And now you are not so like approaching that point. Maybe you can elaborate on that a little bit? And then I will ask my second question.

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Michael Rauch, CompuGroup Medical Societas Europaea - CFO & Member of Management Board [15]

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That's very kind. You notice I can only remember one question at a time. So I do appreciate that, Victoria, many thanks. Regarding the TI Installation situation, you have captured the numbers fully right. So the 40,000 and the 15,000 kind of like split is about the same split we also see here in our numbers. And with regard to the situation, yes, it is true. There will be, from today's perspective, going forward, there will be a base of practitioners that are not going to move to the Telematics Infrastructure. And you see that also in the reaction of the ministry basically by increasing the penalty fee, by deducting 1% reimbursement or 2.5% reimbursement going forward, you basically see how frustrating that situation might also be for the ministry. Whilst it is actually not frustrating for us because we have been at a first mover situation from day 1 and we've been very early on implementing like crazy throughout the last couple of quarters. That's why we have now such a high recurring base, also winning new customers. And we feel quite comfortable. But you're right, we are also within our own customer base, obviously, not converting every single practitioner.

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Victoria Kruchevska, Commerzbank AG, Research Division - Equity Analyst of Technology [16]

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Okay. And what's the reason for that? Is -- sort of is it taken over by T-Systems then?

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Michael Rauch, CompuGroup Medical Societas Europaea - CFO & Member of Management Board [17]

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No, no, no. That is not -- obviously, we're very close in contact with our customers. There's just, to a certain degree, honestly, there's a unwillingness to move into the Telematic Infrastructure. And it's not peculiar of ourselves or particular of ourselves, it has to do with the industry and with the way practitioners operate.

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Victoria Kruchevska, Commerzbank AG, Research Division - Equity Analyst of Technology [18]

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All right. But you do expect that, let's say, in 2020, you do expect some catch-up effect in terms of TI installations? Or that is just really game over in terms of hardware sales?

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Michael Rauch, CompuGroup Medical Societas Europaea - CFO & Member of Management Board [19]

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Okay. So generally, I'm very careful regarding forward-looking guidance here. But just touching upon that TI. We don't know, but what we do see is, obviously, that we see a slowdown, and that's why we thought about the slowdown in TI, and we expect that slowdown also going forward. That's why we come to the number of 56,000 installed bases and delivered bases by the end of 2019. Yes, we do hope that there's going to be more maybe pressure exercised or maybe more dynamic that voluntarily, some of the practitioners are also going to move into the Telematic Infrastructure, as we consider this is very beneficial for all participants within the health care sector. So talking not only about the practitioners or the insurance companies but obviously also about the patient. And then knowing the ambitions that the ministry has under Jens Spahn, connecting everybody also with the patient record and the electronic health records, obviously, a connected Telematic Infrastructure would help for everybody.

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Victoria Kruchevska, Commerzbank AG, Research Division - Equity Analyst of Technology [20]

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Right. And then the other follow-up question regarding the recurring revenue or the maintenance revenue. Just so like I understand kind of like to get a better idea. If I look at the first quarter this year, you've generated, let me start what you report on this on the slide AIS revenue bridge. I get the number for the first quarter EUR 7.6 million and in the second quarter EUR 5.7 million. So there is a declining dynamics. And I'm just wondering given that the total number of customers is actually growing, why is that the maintenance revenue goes down? Just to have a better understanding of that trend.

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Michael Rauch, CompuGroup Medical Societas Europaea - CFO & Member of Management Board [21]

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Okay. That one particularly, I need to come back with -- I can do that after the call, I need to look into it.

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Victoria Kruchevska, Commerzbank AG, Research Division - Equity Analyst of Technology [22]

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All right. Okay. And yes, so the very, I guess, the very last one. You have also apart from other segments where you increased the guidance, in the pharmacy segment, you also increased, obviously, the guidance. What is -- like what is the main driver for this positive sort of like revenue development also expected in the second half of the year?

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Michael Rauch, CompuGroup Medical Societas Europaea - CFO & Member of Management Board [23]

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Yes. We see further rollout potential. I talked about the Spanish market, for instance, where we did the acquisition and where we are basically going more into the breadth of the market. And then also within Italy, and Italy was already strong in the past, and it remains to grow actually above our expectations in the pharmacy market also in 2019.

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Victoria Kruchevska, Commerzbank AG, Research Division - Equity Analyst of Technology [24]

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All right. Okay. And the very last one, sort of like the bookkeeping question. It has been already asked regarding the EBITDA figures, I mean you have adjusted -- you have adjusted this 6.9%, the one-off impact, which is sort of like clarify the IFRS 16 impact of around EUR 3 million is in the numbers. So just to make it real like for like with last year, or the last quarter, we have to -- this IFRS impact is included in the numbers? That's pretty much my question.

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Michael Rauch, CompuGroup Medical Societas Europaea - CFO & Member of Management Board [25]

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Yes. So everything positive or negative is included in the EBITDA numbers. The only thing that basically comes through here as a one-off and which we now include also in our guidance, obviously, because we say we're going to swallow that, was the EUR 3.9 million. And it is actually for the full year, onetime charge here on the stock expense or stock option expense. But you're right, we benefit in that sense. And that's fair to say we benefit in that sense from the IFRS 16, so nothing to hide here.

If everybody allows me to just include, because you asked a question regarding what would be the expected prices for the software connected if we can go out? And what is maintenance? And what is basically one time? In the meantime, I had some chance to look through some files here, and it is roughly about EUR 500. That is the current estimate, roughly about EUR 500 on a one-time basis. And then there is a small -- basically maintenance fee that you can get. But we're talking about EUR 1 or EUR 1.50 per quarter. Okay. Happy to take the next question.

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Operator [26]

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Next question comes from Uwe Schupp from Deutsche Bank.

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Uwe Schupp, Deutsche Bank AG, Research Division - Small and Mid-Cap Analyst [27]

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Welcome too, Michael. Firstly, how keen are your pharmacy customers to hook up to the Telematics Infrastructure. Are they directionally more keen than the doctors or less? What is your initial feedback you're having from this customer group?

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Michael Rauch, CompuGroup Medical Societas Europaea - CFO & Member of Management Board [28]

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Yes. So that's just starting, and we were actually early out with the early bird starters, as I called it. And we were quite surprised to get quite quickly the first 350 orders. So it remains to be seen. I think it's too early, and there's a lot of debate going on. So it depends on also when not only individual pharmacies are going to move, but also when some chains are going to make a move.

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Uwe Schupp, Deutsche Bank AG, Research Division - Small and Mid-Cap Analyst [29]

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Right. And just on the certification of the connector and the upgrade that doctors need to buy, you say there was additional certification unforeseen. And so this will be happening towards the end of this year. So if you had to make a guess, that revenue contribution probably will be something for next year, i.e., if we call it around about 56,000 connectors x EUR 500, that would be a EUR 25 million incremental contribution early next year. Is that the right way to think about it?

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Michael Rauch, CompuGroup Medical Societas Europaea - CFO & Member of Management Board [30]

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Yes. If you have the capacity, basically, and everybody is ready, change everybody at the same time, then you would basically get that all done within a year. But I mean let's also take into account the way, and I happen to know some doctors quite well, the way the doctors operate, they prefer to basically change their system on the weekend or maybe if we are lucky then on Wednesday afternoon, so you need to have also the capacity even if it's only a software upgrade, because they don't want to do it during normal operating times. And that's why, on how this is split basically over the periods, it depends. But you're right on the rough calculation number. And you're also right on your assumption, I would have the same assumption. It's safe to assume that there will be very limited amount of revenues still and profit to be picked up in 2019 from this.

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Uwe Schupp, Deutsche Bank AG, Research Division - Small and Mid-Cap Analyst [31]

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Right. And then just lastly, sorry to come back to this, but just more clarification on the option payment or rather the cash payment now to your predecessor. So if I make the calculation and I look at my old notes, we were talking almost [360,000] shares. If you are multiply it by EUR 70 per share, I come to a EUR 24 million payment, but you only booked EUR 11 million now. So what about the rest? Was there also a share payment after all? Or what if -- any clarification, I guess, would be very helpful.

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Michael Rauch, CompuGroup Medical Societas Europaea - CFO & Member of Management Board [32]

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No. That's an excellent question, and your math, basically, in terms of the entitlements and the number of stock options that yes, is somewhat right. So I mean we promulgated that information or disseminated it in the annual report. So it's a 375,000 entitlement option rights or share rights, my predecessor basically had. And with that, you're right. We restated, and that's very important. We restated not only 2019, but also prior years in the year 2018. And that's basically booked in 2018 and what you see in 2019 is the pure EBITDA expense in 2019, and that's why the pure EBITDA expense in 2019 is EUR 3.9 million, which we carry. But you are right. If we look into the amount that basically my predecessor got, that is a higher amount. But it's definitely south of the EUR 24 million that you calculated, because, as I mentioned, there was in the Q3 a partial renouncement by my predecessor to basically say he's going to forgo an amount to which he could have been entitled to depending on negotiations.

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Uwe Schupp, Deutsche Bank AG, Research Division - Small and Mid-Cap Analyst [33]

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Right. So the -- give or take, net amount of about EUR 17 million, again, most of that was booked this year. But again, the remainder was then booked already by our restatement in 2018. That is the way to think about it?

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Michael Rauch, CompuGroup Medical Societas Europaea - CFO & Member of Management Board [34]

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For the IFRS accounting rules, exactly, you need to restate then also the prior year period, that's why. Fully correct.

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Operator [35]

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Next question comes from Robin Brass from Hauck & Aufhäuser.

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Robin Brass, Hauck & Aufhäuser Privatbankiers AG, Research Division - Equity Analyst [36]

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I would also like to come back to the AIS segment. Here you took down the guidance by EUR 17 million, but also added EUR 6 million from M&A. So the total adjustment will be EUR 23 million. So that means if you don't change the organic growth, that means you have like maybe 9,000 less TI systems you are expecting to roll out, is this correct? And the question would basically be, why the sudden change? I mean what really has changed since basically 3 months ago? And also, if I remember correctly, you also, if I understood you, you downward adjusted Q1 EBITDA, right? I mean before it was EUR 49.9 million, but now I think it should also be less because of the stock payment? And I would like to understand, I mean, if I adjust it upwards to the EUR 49.9 million, which it was, and look at the EUR 44 million in Q2. Why is still EBITDA down EUR 5 million despite higher revenues?

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Michael Rauch, CompuGroup Medical Societas Europaea - CFO & Member of Management Board [37]

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Okay. So just basically to confirm on the TI numbers. And what we had forecast or was previously forecasted during the Q1, you're right, there's a change. So as I mentioned, regarding TI, we remain much more cautious now and expect to have close to 56,000 installations and invoice those by the end of 2019. And that is right. So we took that number down, and that has an impact in the AIS segment. So I have nothing else to say, but just to confirm, basically, what you said. Why is that then we can speculate a lot, but we see -- we just see a slower progress here on TI installations. It might have to do that also some practitioners are just hesitant regarding the overall situation on the regulations, and they're just waiting and it's going to come in 2020, but I just want to stay on the cautious side, and that's why I feel more comfortable with the 56,000 mentioned. So then on your calculations, so first of all, it is to confirm for everybody EUR 11.5 million was the onetime charge for the nonrecurring stock option expense taken in the first half of 2019. And that basically is rightly split, as you said, into Q1 and Q2. And then you're also right when you look into the EBITDA development, that the EBITDA development in Q 2019 versus Q2 2018 is much lower. So you see that also on the profitability. That's why I gave you basically the pro forma numbers. And I mentioned throughout one of the slides that we are right now, it's a pro forma -- for Q2, 24% about EBITDA over revenue. And that is the number, 24%, which we also had in Q2 2017, which is obviously 400 basis points below the 28%, which we had in Q2 2018. Does that answer your question?

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Robin Brass, Hauck & Aufhäuser Privatbankiers AG, Research Division - Equity Analyst [38]

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Yes. Okay.

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Operator [39]

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Next question comes from Nikolas Mauder from Kepler Cheuvreux.

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Nikolas Mauder, Kepler Cheuvreux, Research Division - Junior Equity Research Analyst [40]

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I will come back to the eHealth topic, again, where we already talked about a lower conversion rate of your own customers. The first question would then be, is there a risk to conversion rates for the upcoming applications like the Electronic Medication Plan and so on and so forth? And especially on KOM-LE, do you see a risk to converting the existing installations to these upcoming applications? And the second one on eHealth is, are you going to provide us with further details on the related business cases for the upcoming eHealth applications at the CMD, just as sort of a sneak peek or a preview? And the last one, and a housekeeping question, could you update us on the number of employees that you had at the end of Q2?

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Michael Rauch, CompuGroup Medical Societas Europaea - CFO & Member of Management Board [41]

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All right. So a lot of questions here, happy to take those, Nikolas. So just basically -- go back to your first question, sorry, I just lost it for a second.

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Nikolas Mauder, Kepler Cheuvreux, Research Division - Junior Equity Research Analyst [42]

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Yes. So are you going to convert all of your installations, your TIs?

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Michael Rauch, CompuGroup Medical Societas Europaea - CFO & Member of Management Board [43]

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Back on track. So for the installed base, we don't see a risk that there is not a conversion into those new products. So that we see and consider very minimal. So here, we feel comfortable.

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Nikolas Mauder, Kepler Cheuvreux, Research Division - Junior Equity Research Analyst [44]

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Okay. Are you going to -- okay, are you going to provide us with details on the business cases you're quite optimistic about at the CMD? Or is it too early to talk about them in 1 month's time?

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Michael Rauch, CompuGroup Medical Societas Europaea - CFO & Member of Management Board [45]

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Yes. We will discuss it internally on what we are going to provide at the Capital Markets Day. But obviously, we're going to give you as much color as possible, so that you can update your forecasting models.

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Nikolas Mauder, Kepler Cheuvreux, Research Division - Junior Equity Research Analyst [46]

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And finally, on the number of employees at the end of Q2?

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Michael Rauch, CompuGroup Medical Societas Europaea - CFO & Member of Management Board [47]

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I would need to look that up and come back to you in a second. So can we take the next question? But I didn't forget, so I need to look it up and then come back to you.

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Operator [48]

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Next question comes from Charlotte Friedrichs from Berenberg.

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Charlotte Friedrichs, Joh. Berenberg, Gossler & Co. KG, Research Division - Analyst [49]

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And we'll take the questions one by one. Can you give us maybe an update on how many installations your competitors have completed now? So what do you think, how many does T-Systems have right now?

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Michael Rauch, CompuGroup Medical Societas Europaea - CFO & Member of Management Board [50]

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Honestly, I don't know, but if what we hear is right that basically about 100,000 in total have been done, then the remainder basically must be somebody else, right? So -- but I don't have the figures...

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Charlotte Friedrichs, Joh. Berenberg, Gossler & Co. KG, Research Division - Analyst [51]

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And you don't have a feeling for which one's the strongest? I'm guessing T-Systems is the strongest one, but you don't have precise figures?

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Michael Rauch, CompuGroup Medical Societas Europaea - CFO & Member of Management Board [52]

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I don't know. I don't have numbers.

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Charlotte Friedrichs, Joh. Berenberg, Gossler & Co. KG, Research Division - Analyst [53]

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Okay, cool. And I think that's probably a follow-up also for later but it would be good to see also the absolute numbers in terms of the maintenance TI revenue, just to get a feeling for how quickly this has been going on over the past quarters, but I think we can take that one later on. And second question would be around the margin development in the AIS segment, what is your feeling for the rest of the year? Is there going to be a big change in the EBITDA margin for the AIS segment? Or are we going to probably stay at the level that we saw in the second quarter?

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Michael Rauch, CompuGroup Medical Societas Europaea - CFO & Member of Management Board [54]

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So we don't give the margin guidance on the segment. But just taking on average the model, we don't see so much of the upside yet in the AIS segment.

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Charlotte Friedrichs, Joh. Berenberg, Gossler & Co. KG, Research Division - Analyst [55]

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And compared to this -- the second quarter margin or the H1 margin?

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Michael Rauch, CompuGroup Medical Societas Europaea - CFO & Member of Management Board [56]

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H1 margin.

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Charlotte Friedrichs, Joh. Berenberg, Gossler & Co. KG, Research Division - Analyst [57]

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H1 margin, okay. Good. And then maybe more on the positive side, we see lower Austria contract and can you give us an idea of how back-end loaded that's going to be? So if you talk about EUR 100 million revenues over 10 years, is most of that in the outer years? Or how should we think about that?

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Michael Rauch, CompuGroup Medical Societas Europaea - CFO & Member of Management Board [58]

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Yes. This is actually a large project, and you know about IFRS percentage of completions and everything. So clearly, in 2019, the revenue portion will be very low. So -- but we plan to take some first revenue already in 2019, and then it will build up, so it is back-end loaded, confirmed..

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Charlotte Friedrichs, Joh. Berenberg, Gossler & Co. KG, Research Division - Analyst [59]

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Okay. Understood. And maybe a more sort of conceptual question that also ties in with the previous ones in terms of converting your existing TI customers onto the medical applications. What do you think is the main sort of thing that has been holding them back? Do you think they're going to be more positive now that they can actually use the connector for something rather than just having to spend money on it? And also related to that, what's the feedback that you have already from offering the medical access plus bundle that you've started advertising over the past months? Has there been much uptake here yet?

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Michael Rauch, CompuGroup Medical Societas Europaea - CFO & Member of Management Board [60]

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What I would suggest, because I think that is the question of interest to everybody. And I noticed that. So I would clearly suggest that we do a deep dive here. I mentioned some deep dives at the CMD on TI to give everybody a bit of color on how the practitioners think about it, where they are, how do we see the market, how do we see basically the look towards competition, and we're happy to provide you that on the CMD.

By the way, I want to come back to everybody regarding the question that Nikolas still had and that was left open regarding the employees by the end of Q2 2019, and the number is 5,000 to 100 (sic) [5,100] about at least we had by the end of Q2 2019, 5,100.

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Operator [61]

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Next question comes from Knut Woller from Baader Bank.

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Knut Woller, Baader-Helvea Equity Research - Analyst [62]

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Michael, just 2 quick follow-ups. The first one, just because it was basically my question as well that Victoria asked regarding the TI recurring. So if we look at Slide #13, the EUR 5.7 million, is that an absolute number or an incremental number? Because I understood your answer to my question as Q1 '18 had a low contribution and hence the impact is basically has been higher in Q1 '19 than it was in the second quarter 2019. So as Victoria said, down from EUR 7.6 million to EUR 5.7 million, so just a clarification, how to read this number? And then secondly, on the add-on services for TI. If I remember former discussions with Christian correctly, I think from your own installed base, if it's a CompuGroup customer, you can probably up-sell everything to them, but if it's a non-CompuGroup customer, then you would need access to the code of the software, which is unlikely out of my perspective. So is that a fair way to look at things? If we look at your installed base, the up-sell potential is, therefore, your own installed base, but not the customers you want outside of your installed base in the course of the TI rollout?

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Michael Rauch, CompuGroup Medical Societas Europaea - CFO & Member of Management Board [63]

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Yes. Perfect, Knut. I want to start with the first one, just to confirm the EUR 5.7 million is an incremental one. So you're rightly looking into that and that is absolutely correct. And then I don't know -- on the second question, I don't know particularly what was stated regarding this, but it's clear obviously that within our own installed customer base, we feel very confident that we can up-sell and add additional products and services into the portfolio. But I am not aware that we have difficulties of up-selling into other customers which are basically not within our own installed base. I haven't heard that, and I need to go back to the team to verify. But so far, I remain very positive that it's also possible and that we do get the access also into their software systems.

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Operator [64]

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We have no further questions. (Operator Instructions).

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Michael Rauch, CompuGroup Medical Societas Europaea - CFO & Member of Management Board [65]

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Yes. So Michelle, I would take it here because we've been going on now for over an hour, and I appreciate that we have the time because it's really important that you all better understand on where we are and what we are thinking. And I would like to reiterate my message here. We remain confident regarding our guidance for 2019. And we remain also positive regarding the second half year, and we will give you more color at the Capital Markets Day coming up in about 1.5 months from now. Looking very much forward to meeting you in person and looking forward also to some follow-ups here. And thank you for staying inclined towards CompuGroup. Many thanks to everybody.