Cegedim : 2015 revenues grew by 3.3%

Full-Year Financial Information as of December 31, 2015

IFRS - Regulated Information - Not audited

Cegedim: 2015 revenues grew by 3.3%

• Group offerings shifting to the cloud
• BPO revenues up by double digits in Q4 2015
• Stable 2016 EBITDA expected
• Cegedim debt refinanced

Boulogne-Billancourt, January 28, 2016 - Cegedim, an innovative technology and services company, generated consolidated 2015 revenues from continuing activities of €509.9 million, up 0.7% like for like and 3.3% on a reported basis compared with the same period in 2014.

On a like-for-like basis, the revenue growths at the Health Insurance, HR and e-services and Cegelease divisions allow the Group to offset the decline at the Healthcare professionals division.

Robust demand among Cegedim's clients for the Group's cloud-based solutions and new Business Process Outsourcing (BPO) products and services fully validates the decision management made in mid-2015 to speed up the shift to cloud-based software offerings and rapidly roll out Cegedim's new BPO range. During this transitional period, revenues and profitability have taken a hit from the significant investments the Group has had to make in human resources and innovation and from the switch to a new method of cost and revenue recognition. Even so, the numerous innovations the Group brought to market in 2015 helped it to post like-for-like revenue growth of 0.7%.

In light of this rapid evolution, Cegedim is adjusting its 2015 EBITDA estimate lower. The Group now expects 2015 EBITDA to be stable relative to 2014. In 2016, when the largest part of the transition is to take place, the Group believes it can achieve stability with respect to both revenues and EBITDA.

Further out, Cegedim will enjoy greater customer loyalty, closer client relationships, simpler operating processes, more robust offerings and stronger geographic positions. The changes now under way will also boost the share of recurring revenues, improve sales growth and predictability, and enhance the Group's profitability.

The definitive price for the sale of the CRM and strategic data division to IMS Health came to €410.5 million, entirely paid in 2015.

In January 2016, the Group took out a new five-year revolving credit facility (RCF) of €200 million. This facility, combined with the proceeds of the deal with IMS Health, will allow the Group to redeem the entire 6.75% 2020 bond issue before June 30, 2016. Following the redemption, the pro forma financial charges (excluding the early bond redemption premium) will decrease more than nine-fold.

At the same time, the Group will continue to strengthen its businesses through targeted acquisitions. The acquisition of Activus in the UK in late July reinforces the software publishing activity for health and personal protection insurance in English-speaking markets. In early October, the acquisition of Nightingale's US assets provided a boost to the cloud-based/SaaS EHR offering in the US.

• By division, Q4 revenue trends were as follows:

In the fourth quarter of 2015, Cegedim generated consolidated revenues of €143.4 million, up 3.5% on a reported basis and virtually unchanged like for like compared with the same period in 2014. Acquisitions and currency effects had positive contributions of respectively 1.9% and 1.7%.

• By division, 2015 revenue trends were as follows:

In 2015, Cegedim generated consolidated revenues from continuing activities of €509.9 million, up 3.3% on a reported basis and 0.7% like for like compared with the same period in 2014. Acquisitions and currency effects had positive contributions of respectively 0.8% and 1.9%. Group revenues, including the first-quarter revenues of activities sold on April 1, 2015, came to €611.6 million.

Analysis of business trends by division

• Health insurance, HR and e-services

The division's 2015 revenues came to €236.6 million, up 6.5% on a reported basis. The July 2015 acquisition of Activus in the UK made a positive contribution of 1.7%. Currencies had virtually no impact. Like-for-like revenues rose 4.7% over the period.

The Health insurance, HR and e-services division represented 46.4% of consolidated revenues from continuing activities, compared with 45.0% over the same period a year earlier.

The division's Q4 2015 revenues came to €69.1 million, up 7.7% on a reported basis. The July 2015 acquisition of Activus in the UK made a positive contribution of 4.0%. Currencies had virtually no impact. Like-for-like revenues rose 3.6% over the period.

The significant revenue growth in 2015, even though a portion of Cegedim Insurance Solutions' offering was being switched over to the cloud, was chiefly the result of:

• A strategy of innovative BPO offerings, which experienced double-digit growth in 2015 and picked up speed in the final quarter. This included Cegedim SRH's SaaS platform for human resources management, which saw double-digit growth for the seventh consecutive year in 2015. It also included BPO activities for health insurance, with iGestion and operation of the GIS SaaS platform for electronic data flows by Cegedim e-business, including payment platforms.
• Double-digit growth in managing third-party payer flows, as well as the acquisition of Activus, a publisher of health and personal protection insurance software, which allowed Cegedim Insurance Solutions to reach new markets (UK, US, Middle East, APAC, etc.).
• Digital communications activities, which posted double-digit growth in Q4 following the successful transition to digital. In 2016, this business will benefit from a new partnership with Carrefour hypermarkets, among other things.
  • Healthcare professionals

The division's 2015 revenues came to €152.1 million, virtually stable on a reported basis. Currency effects made a positive contribution of 6.0%. There was virtually no impact from acquisitions or divestments. Like-for-like revenues fell 6.1% over the period.

The Healthcare professionals division represented 29.8% of consolidated revenues from continuing activities, compared with 30.9% over the same period a year earlier.

The division's Q4 2015 revenues came to €39.1 million, down 4.2% on a reported basis. There were no acquisitions or divestments, and currency effects made a positive contribution of 5.8%. Like-for-like revenues fell 10.0% over the period.

This performance was chiefly the result of:

• A slowdown in the UK doctor computerization business owing to the market's migration to cloud-based offerings. That said, investments in developing a cloud offering should make it possible to progressively restore sales momentum in 2016.
• The impact on revenues of rolling out the Revenue Cycle Management (RCM) range in the US. This offering will let the Group manage the process of obtaining reimbursement from multiple US insurers on behalf of doctors. The ramp-up of business with clients in the first half of 2016 will see Pulse Systems back on the path to growth. Revenues from RCM offerings are recognized over the life of the contract.
• With the US regulator's definitive adoption of the ICD-10 standard in October 2015, we foresee a progressive return of the EHR range's sales momentum in 2016 after a period during which doctors were hesitant to invest.
• Lastly, the acquisition of Nightingale's US assets in October 2015 will give the Group product offerings in both client-server and cloud environments. Nevertheless, it is important to remember that the switch from a perpetual license model to an SaaS model, especially in the first years, has a negative impact on revenues.
• Growth in the computerization of doctors, nurses and physical therapists in France.
• Growth in the Claude Bernard medication database, whose sales are also growing in the UK.

The successful launch in December 2015 of Docavenue, an innovative online medical appointment scheduling solution, has been a success. This platform gives patients direct access to their healthcare professional's schedule for making appointments. Once the appointment is confirmed, the patient is notified by text message. This service also gives patients access to information on illnesses and medications via the Claude Bernard database. It meets a growing demand for vetted information on treatments, symptoms, side-effects and contraindications both before and after a patient's doctor visit. The Group plans to expand the Docavenue offering to new countries in the coming months.

• Cegelease

The division's 2015 revenues came to €117.0 million, up 1.7% on a reported basis and like for like. There were no currency effects and no acquisitions or divestments.

The Cegelease division represented 23.0% of consolidated revenues from continuing activities, compared with 23.3% over the same period a year earlier.

The division's 2015 revenues came to €33.7 million, up 5.4% on a reported basis and like for like. There were no currency effects and no acquisitions or divestments.

The increase in 2015 revenues stemmed mainly from a different mix of self-financed and resold contracts in 2015 compared with 2014. Cegelease also benefited from its eyewear partnership.

• Activities not allocated

The division's 2015 revenues came to €4.2 million, up 7.8% on a reported basis and like for like. There were no currency effects and no acquisitions or divestments.

The Activities not allocated division represented 0.8% of consolidated revenues from continuing activities, compared with 0.7% over the same period a year earlier.

The division's Q4 2015 revenues came to €1.4 million, down 8.2% on a reported basis and like for like. There were no currency effects and no acquisitions or divestments.

The trend in 2015 was attributable to billing for services, including IT services provided to IMS Health.

Highlights

• Sale of the CRM and strategic data division to IMS Health

On April 1, 2015, Cegedim announced the completion of the sale of its CRM and strategic data division to IMS Health. The definitive sale price came to €410.5 million and was entirely paid in 2015.

• S&P has upgraded Cegedim's rating to BB- with positive outlook

Following the announcement of the transaction, rating agency Standard and Poor's upgraded Cegedim's rating to BB-, with positive outlook, on April 13, 2015.

• Redemption of the 7.0% 2015 bond

Cegedim redeemed the full €62.6 million amount of the 7.0% 2015 bond remaining in circulation upon maturity on July 27, 2015 (ISIN: FR0010925172).

• Cancellation of factoring agreements

In the first half of 2014, the Group cancelled factoring agreements covering the divestment of client receivables, with no possibility of recourse, for a total of €38.0 million. These agreements amounted to €14.2 million at end-December 2014. The agreements dealt chiefly with companies sold to IMS Health.

• Redemption of Cegedim Bonds

Between May 6, 2015, and December 31, 2015, Cegedim redeemed on the market its 6.75% bond, maturing April 1, 2020, ISIN code XS0906984272, for a total principal amount of €84,904,000. The company is in the process of cancelling these bonds. As a result, a total principal amount of €340,096,000.00 remains in circulation.

• Acquisition in the UK of Activus

On July 20, 2015, Cegedim announced the acquisition of 100% of Activus, one of the UK's leading suppliers of health and protection insurance software. This deal gives Cegedim Health Insurance access to new markets (UK, US, Middle East, APAC, Africa, etc.) and strengthens its software offering for international clients. Activus generated revenue of around €7 million in 2014.

This move is part of the Group's strategy of making bolt-on acquisitions to expand its international positions. The deal was financed with internal financing. It began contributing to Cegedim's consolidated results starting from the acquisition date.

• Favorable exchange rate movements

At end-December, movements in exchange rates were positive, contributing €9.2 million to consolidated 2015 revenues from continuing activities.

• Competition Authority

On September 24, 2015, the Paris Court of Appeal rejected Cegedim's request and upheld the Competition Authority decision of July 8, 2014. Because the fine was paid in full in September 2014, this decision has no impact on Cegedim's accounts. Cegedim has appealed this decision to the Court of Cassation.

• Acquisition of Nightingale's US assets

In early October 2015, Cegedim announced that its US subsidiary, Pulse Systems, Inc., had acquired the US healthcare management activities of Nightingale Informatix Corporation.

Pulse will now be able to offer its clients healthcare and EHR management products in client-server and cloud formats.

Apart from the items cited above, to the best of the company's knowledge, there were no events or changes during the period that would materially alter the Group's financial situation.

Significant post-closing transactions and events

• Redemption of Cegedim Bonds

Since January 1, 2016, Cegedim redeemed on the market its 6.75% bond, maturing April 1, 2020, ISIN code XS0906984272, for a total principal amount of €24,682,000.00. The company is canceling these bonds. As a result, a total principal amount of €315,414,000.00 remains in circulation as of January 28, 2016.

• New credit facility

In January 2016, the Group took out a new five-year revolving credit facility (RCF) of €200 million. This facility, combined with the proceeds of the deal with IMS Health, will allow the Group to redeem the entire 6.75% 2020 bond issue before June 30, 2016. Following the redemption, the pro forma financial charges (excluding the early bond redemption premium) will decrease more than nine-fold.

Apart from the items cited above, to the best of the company's knowledge, there were no post-closing events or changes that would materially alter the Group's financial situation.

Outlook

Considering the rapid development of the Group's BPO offering and the transition of its entire software range from a perpetual license to an SaaS/cloud model, and the investments those changes entail, Cegedim is adjusting its 2015 EBITDA growth forecast downward from 5% to stable. For 2016, when the largest part of the transition will take place, the Group believes it can achieve stable revenues and EBITDA.

The Group does not expect any significant acquisitions in 2016 and is not issuing any earnings guidance or estimates.

Financial calendar

Additional Information

Complete financial information and a presentation on Cegedim's 2015 revenues are available on our website: www.cegedim.com/finance.

This information is also available on Cegedim IR, the Group's financial communications app for smartphones and iOS and Android tablets. To download the app, visit: http://www.cegedim.fr/finance/profil/Pages/CegedimIR.aspx.

Appendices

• Revenues by division and by quarter:

Year 2015

Year 2014

• FY 2015 Revenues from continuing activities, breakdown by geographic zone

• Revenue from continuing activities, breakdown by currency as of Q1 2015

• Glossary