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by Ralf Witzler, Euro am Sonntag
VBefore the treatment comes the paperwork. Anyone from the state of digitalization If you want to get a picture of the health care system in Germany, you just have to look at how many forms have to be filled out before an operation: on paper, with or without a carbon copy and the same questions and answers over and over again. Online input? Mostly nil.
A look at the so-called EMRAM scale, an indicator for the digitization of hospitals, provides information about the status. The scale ranges from zero, which means no digitization, to seven, i.e. complete data acquisition and networking. In Germany, only one clinic reaches level seven, only two hospitals achieve level six. On average, German hospitals have a value of a little over two and are therefore digitized below average, not only in European comparison. Countries such as the USA or Turkey are much more developed.
This is tedious for patients, but it offers providers of IT solutions in the healthcare sector good market opportunities. Because there are signals that much more new technology will find their way into clinics and medical practices in the future – Corona makes it possible. Also because of the pandemic, the federal government is channeling three billion euros into the expansion of modern emergency capacities and the IT infrastructure in the healthcare system as part of the Hospital Future Act. The federal states contribute another 1.3 billion. In addition, the start of the electronic prescription, which is planned for the beginning of next year, offers significant growth opportunities for the industry.
Last but not least, the pandemic has reduced reservations about digitalization in the healthcare sector. “The perception that digitization in the healthcare system in Germany needs a noticeable boost has grown rapidly in recent months,” says Michael Rauch, CFO of the software company CompuGroup. There is now a much greater social consensus here. That was not always so. In a study by the Federal Ministry of Economics from 2018, 78 percent of companies in the health sector considered digitization to be strategically unimportant, only two percent used data analysis and other digital methods at the time. In both categories, the healthcare sector was at the bottom of the industry comparison.
CompuGroup is rightly regarded as a digitization veteran. For more than 30 years, the company has developed into one of the market leaders in the field of digitization of medical practices and hospitals through strategic acquisitions.
Most recently, the purchase of the German activities of the US competitor Cerner and the takeover of the Italian H&S Qualità nel Software stood out. Together with the Cerner shares, CompuGroup secured its position in the top group in the German hospital software market. The purchase of the Italian provider of telemedicine and patient telemonitoring shortly before the start of the COVID-19 crisis strengthened business in this area, which is important for coping with the pandemic.
The business figures for the second quarter of 2020 prove the resilience of the business model: compared to the same period of the previous year, which had benefited from several one-off effects, sales fell by only four percent to around 180 million euros. The operating result (Ebitda) rose by one percent to just under 45 million euros. In addition, the company raised its 2020 forecast for sales and operating profit.
Stable in the crisis
As a software provider, Nexus is also driving the expansion of the infrastructure of hospitals and care facilities. The first half of 2020 brought organic growth of around nine percent, mainly driven by increasing services. This is all the more gratifying because the service area was still clearly in the red in the same period of the previous year. In contrast, the business with licenses declined slightly due to Corona, because customers postponed larger and longer-term investments in favor of smaller projects that directly support the work in the hospitals.
Business was stable, especially in the home market in Germany, while in Switzerland, Poland and France the effects had a negative impact due to stricter Corona regulations. Overall, the business model is proving to be robust and we can expect reliable growth. Liquid funds of around 50 million euros allow acquisitions for an additional boost.
Shop Apotheke operates online pharmacies in the DACH region and in other European countries. In Germany, the company should benefit from the introduction of the e-prescription. The Dutch who recently rose to the MDAX already have experience with digital recipes in other countries. Additional services can be offered and monetized for digital prescribing. It will be interesting to see how the mail-order pharmacy market develops. In 2018, Amazon took over the online pharmacy Pillpack in the USA and in 2019 added “by Amazon Pharmacy” to it. Industry observers believe the Internet giant’s entry into the European market is likely. One or the other company could then become takeover candidates.
The specialist for software and IT applications in the healthcare sector has strategically expanded its business through acquisitions. The high need for digitization in the DACH region, the Hospital Future Act, the introduction of the e-prescription and the changed attitude towards digitization due to the pandemic speak for continued profitable business. After a jump in profits in 2020, experts expect further growth in earnings of around ten percent in 2021 for CompuGroup.
With a good first half of the year, the business model has shown resilience. The provider of software for the infrastructure of hospitals and care facilities is also well positioned in the medium and long term. He benefits from high customer loyalty and the expansion of the range. The share had recently performed very well, but it appears comparatively expensive compared to its competitors.
After the stock market debut in 2016, the share initially performed cautiously. Then Corona came and it went from around 40 euros to more than 160 euros. Because of the lockdown, online drug purchases increased. The company is well positioned to launch the e-prescription. There should be a lot of imagination in the course. If Amazon hits the market in Europe, takeover speculation could drive the course. Too expensive at the moment. Wait.
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Image sources: Bernhard Lelle / Istockphoto